[Federal Register Volume 76, Number 41 (Wednesday, March 2, 2011)]
[Proposed Rules]
[Pages 11632-11663]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-4399]
[[Page 11631]]
Vol. 76
Wednesday,
No. 41
March 2, 2011
Part IV
Federal Communications Commission
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47 CFR Parts 36, 54, 61, et al.
Connect America Fund; Developing a Unified Intercarrier Compensation;
Proposed Rule
Federal Register / Vol. 76 , No. 41 / Wednesday, March 2, 2011 /
Proposed Rules
[[Page 11632]]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Parts 36, 54, 61, 64, and 69
[WC Docket Nos. 10-90, 07-135, 05-337, 03-109; GN Docket No. 09-51; CC
Docket Nos. 01-92, 96-45; FCC 11-13]
Connect America Fund; Developing a Unified Intercarrier
Compensation
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
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SUMMARY: In this document, the Federal Communications Commission
(Commission) proposes several specific, near-term steps that will
accelerate broadband investment in unserved areas and set the Universal
Service Fund and Intercarrier Compensation system on a path that is
consistent with the principles the Commission has proposed; the
Commission then describes alternatives for completing the reform
process over the longer term. The Commission intends to monitor the
progress of the near-term reforms and adjust course as necessary as the
Commission completes the reform process from among the longer-term
options.
DATES: Comments are due on or before April 18, 2011 and reply comments
are due on or before May 23, 2011. See Supplementary Information
section for additional comment dates.
ADDRESSES: You may submit comments, identified by WC Docket Nos. 10-90,
07-135, 05-337, 03-109; GN Docket No. 09-51; CC Docket Nos. 01-92, 96-
45, by any of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Federal Communications Commission's Web Site: http://fjallfoss.fcc.gov/ecfs2/. Follow the instructions for submitting
comments.
People with Disabilities: Contact the FCC to request
reasonable accommodations (accessible format documents, sign language
interpreters, CART, etc.) by e-mail: [email protected] or phone: (202)
418-0530 or TTY: (202) 418-0432.
In addition to filing comments with the Secretary, a copy
of any comments on the Paperwork Reduction Act information collection
requirements contained herein should be submitted to the Federal
Communications Commission via e-mail to [email protected] and to
[email protected] and to Nicholas A. Fraser, Office of Management
and Budget, via e-mail to [email protected] or via fax
at 202-395-5167.
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: Patrick Halley, Wireline Competition
Bureau, (202) 418-7550 or Jennifer Prime, Wireline Competition Bureau,
(202) 418-2403 or TTY: (202) 418-0484. For additional information
concerning the Paperwork Reduction Act information collection
requirements contained in this document contact Cathy Williams on (202)
418-2918.
SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's
Notice of Proposed Rulemaking and Further Notice of Proposed Rulemaking
(NPRM) in WC Docket No. 10-90, GN Docket No. 09-51, WC Docket No. 07-
135, WC Docket No. 05-337, CC Docket No. 01-92, CC Docket No. 96-45,
and WC Docket No. 03-109, FCC 11-13, adopted February 8, 2011, and
released February 9, 2011. The complete text of this document is
available for inspection and copying during normal business hours in
the FCC Reference Information Center, Portals II, 445 12th Street, SW.,
Room CY-A257, Washington, DC 20554. The document may also be purchased
from the Commission's duplicating contractor, Best Copy and Printing,
Inc., 445 12th Street, SW., Room CY-B402, Washington, DC 20554,
telephone (800) 378-3160 or (202) 863-2893, facsimile (202) 863-2898,
or via the Internet at http://www.bcpiweb.com. It is also available on
the Commission's Web site at http://www.fcc.gov.
Pursuant to Sec. Sec. 1.415 and 1.419 of the Commission's rules,
interested parties may file comments and reply comments on or before
the dates indicated on the first page of this document. 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 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.
[cir] 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 [email protected], and include the following
words in the body of the message, ``get form.'' A sample form and
directions will be sent in response.
[cir] 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, Office of the Secretary, Federal
Communications Commission.
[cir] 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.
[cir] 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.
[cir] U.S. Postal Service first-class, Express, and Priority mail
should be addressed to 445 12th Street, SW., Washington, DC 20554.
In addition, one copy of each pleading must be sent to 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; phone: 1-800-378-3160. Furthermore, three copies of
each pleading must be sent to Charles Tyler, Telecommunications Access
Policy Division, Wireline Competition Bureau, 445 12th Street, SW.,
Room 5-A452, Washington, DC 20554; e-mail: [email protected].
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.
[[Page 11633]]
Copies may also be purchased from the Commission's duplicating
contractor, BCPI, 445 12th Street, SW., Room CY-B402, Washington, D.C.
20554. Customers may contact BCPI through its Web site: http://www.bcpiweb.com, by e-mail at [email protected], by telephone at (202)
488-5300 or (800) 378-3160 (voice), (202) 488-5562 (tty), or by
facsimile at (202) 488-5563.
To request materials in accessible formats for people with
disabilities (Braille, large print, electronic files, audio format),
send an e-mail to [email protected] or call the Consumer & Governmental
Affairs Bureau at (202) 418-0530 (voice) or (202) 418-0432 (TTY).
Contact the FCC to request reasonable accommodations for filing
comments (accessible format documents, sign language interpreters,
CART, etc.) by e-mail: [email protected]; phone: (202) 418-0530 or TTY:
(202) 418-0432.
To view or obtain a copy of this information collection request
(ICR) submitted to OMB: (1) Go to this OMB/GSA web page: http://www.reginfo.gov/public/do/PRAMain, (2) look for the section of the web
page called ``Currently Under Review,'' (3) click on the downward-
pointing arrow in the ``Select Agency'' box below the ``Currently Under
Review'' heading, (4) select ``Federal Communications Commission'' from
the list of agencies presented in the ``Select Agency'' box, (5) click
the ``Submit'' button to the right of the ``Select Agency'' box, and
(6) when the list of FCC ICRs currently under review appears, look for
the OMB control number of this ICR as shown in the Supplementary
Information section below (or its title if there is no OMB control
number) and then click on the ICR Reference Number. A copy of the FCC
submission to OMB will be displayed.
For further information regarding this proceeding, contact Patrick
Halley, Attorney Advisor, Wireline Competition Bureau at (202) 418-
7389, [email protected], or Jennifer Prime, Attorney Advisor,
Wireline Competition Bureau at (202) 418-2403, [email protected].
Initial Paperwork Reduction Act of 1995 Analysis: This document
contains proposed information collection requirements. 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 requirements contained in this
document, as required by the Paperwork Reduction Act of 1995, Public
Law 104-13. Public and agency comments are due May 2, 2011.
Comments on the proposed information collection requirements 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. In
addition, pursuant to the Small Business Paperwork Relief Act of 2002,
Public Law 107-198, see 44 U.S.C. 3506(c)(4), we seek specific comment
on how we might further reduce the information collection burden for
small business concerns with fewer than 25 employees.
OMB Control Number: 3060-0298.
Title: Part 61, Tariffs (Other than Tariff Review Plan).
Form Number: N/A.
Type of Review: Revision of a currently approved collection.
Respondents: Business or other for profit.
Number of Respondents and Responses: 630 respondents; 1,210
responses.
Estimated Time per Response: 50 hours.
Obligation to Respond: Required to obtain or retain benefits. The
statutory authority for this information collection is contained in
sections 1-5, 201-205, 208, 251-271, 403, 502, and 503 of the
Communications Act of 1934, as amended, 47 U.S.C. 151-155, 201-205,
208, 251-271, 403, 502, and 503.
Frequency of Response: One-time, on occasion and biennial reporting
requirements.
Total Annual Burden: 63,000 hours.
Annual Cost Burden: $986,150.
Privacy Act Impact Assessment: No impacts.
Nature and Extent of Confidentiality: The Commission is not
requesting that the respondents submit confidential information to the
FCC. Respondents may, however, request confidential treatment for
information they believe to be confidential under 47 CFR 0.459 of the
Commission's rules.
Needs and Uses: Sections 201, 202, 203, 204 and 205 of the
Communications Act of 1934, (``Act'') as amended, 47 U.S.C. 201, 202,
203, 204 and 205, require that common carriers establish just and
reasonable charges, practices and regulations which must be filed with
the Commission which is required to determine whether such schedules
are just, reasonable and not unduly discriminatory.
Part 61 of the Commission's rules, 47 CFR part 61, establishes the
procedures for filing tariffs which contain the charges, practices and
regulations of the common carriers, supporting economic data and other
related documents. The supporting data must also conform to other parts
of the Commission's rules such as 47 CFR parts 36 and 69. Part 61
prescribes the framework for the initial establishment of and
subsequent revisions to tariffs. Tariffs that do not conform to Part 61
may be required to post their schedules or rates and regulations, 47
CFR 61.72.
In this Notice of Proposed Rulemaking and Further Notice of
Proposed Rulemaking (FCC 11-13), the Commission proposes revised rules
that would require incumbent rate-of-return and competitive local
exchange carriers to file revised tariffs if they engage in revenue
sharing arrangements. We estimate that this could result in a one-time
increase in the frequency of response of up to 50 carriers because they
would have to make the necessary tariff filing within 45 days of the
final rules becoming effective. Any subsequent tariffing requirements
should be encompassed in the ongoing estimates for this information
collection.
I. Summary
A. Legal Authority To Support Broadband
1. Additional Section 254(b) Principle
1. We propose to adopt the principle, as recommended by the
Federal-State Joint Board on Universal Service in November 2010, ``that
universal service support should be directed where possible to networks
that provide advanced services, as well as voice services,'' pursuant
to section 254(b)(7), and seek comment on that proposal. If we adopt
the proposed principle, how should we apply it with respect to the
other criteria in section 254?
2. Commission Authority To Support Broadband
2. We have express statutory authority to extend universal service
support to broadband services that providers offer as
telecommunications services. We believe we also have authority to
extend universal service support to broadband services offered as
information services under section 254, section 706 and/or our
ancillary authority. In any event, we believe we have clear authority
to condition awards of universal service support on a recipient's
commitment to offer broadband service. We seek comment on these issues,
as well as any
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other approaches that would buttress our legal authority.
a. Section 254
3. We seek comment on whether, read as a whole, section 254 may
reasonably be interpreted to authorize the Commission to support
broadband service. Could we provide support to information service
providers consistent with section 254(e) and 214(e)? If not, under what
mechanism could we designate and offer support to information service
providers? What role would the states play in designating eligible
information service providers? Would disbursement of support to
information service providers comport with federal appropriations laws?
We seek comment on these and other pertinent issues.
4. In the event we interpret section 254 to authorize support of
broadband, we also seek comment on adding broadband to the supported
services list. Before modifying the list of supported services, the
Commission must ``consider the extent to which such telecommunications
services--(1) are essential to education, public health, or public
safety; (2) have, through the operation of market choices by customers,
been subscribed to by a substantial majority of residential customers;
(3) are being deployed in public telecommunications networks by
telecommunications carriers; and (4) are consistent with the public
interest, convenience, and necessity.''
5. In 2007, the Joint Board also recommended that the Commission
revise the definition of supported services to include mobility,
concluding that both broadband and mobility satisfied the four part
criteria and should be eligible for federal universal service support.
6. The Commission currently requires ETCs to provide all of the
supported services. If we were to add broadband and/or mobility to the
list of supported services, should we create separate designations for
each supported service (voice, broadband, and mobility) so that a
provider does not need to offer all of the supported services to be
eligible for support, as the Joint Board recommended in 2007? We seek
comment on this proposal. We also ask what would be the impact of such
an approach on Lifeline providers, who today also are required to offer
all supported services.
b. Section 706
7. We seek comment on whether sections 706(a) and (b), alone or in
concert with sections 254 and 214(e), grant us authority to provide
universal service support for broadband information services. We
believe that providing universal service support for broadband would
``remove barriers to infrastructure investment'' by supplying financial
incentives to invest in areas where it may otherwise be uneconomic to
do so. We seek comment on this issue. Would providing support for
broadband information services under section 706 be inconsistent with
the definition of universal service in section 254(c) or the limitation
of support to ETCs in section 254(e)? If we act pursuant to section 706
alone, would we have authority to collect universal service
contributions and disburse them to eligible recipients under the
current universal service mechanisms, or should we develop a separate
mechanism under our section 706 authority? Would the collection and
disbursement of funds comport with federal appropriations laws? What
criteria should we use to determine who is eligible to receive support?
What role should states play? We seek comment on these and other
relevant issues.
c. Title I Ancillary Authority
8. We seek comment on whether the Commission could rely on its
ancillary authority in Title 1 to support broadband information
services. Would providing support for broadband be reasonably ancillary
to the Commission's statutory responsibilities under section 254(b)?
Similarly, would supporting broadband be reasonably ancillary to
section 706 as a ``specific delegation of legislative authority'' to
encourage deployment of advanced telecommunications capability to all
Americans? We seek comment on whether these provisions or others
provide a sufficient statutory basis for exercising ancillary
authority. As with other theories described above, we also seek comment
on what criteria should be used to designate eligible recipients, and
on who should perform the designations. We also seek comment on whether
adopting the competitive bidding process in the first phase of the CAF
and permanent CAF programs pursuant to our ancillary authority would be
consistent with federal appropriations laws. We invite comment on these
and any other relevant issues.
d. Conditional Support
9. We believe the Commission also has authority to direct high-cost
or CAF support toward broadband-capable networks by conditioning awards
of universal service support on a recipient's commitment to offer
broadband service alongside supported voice services. We see no reason
why conditioning the receipt of support on offering broadband is not
permissible under the Commission's general authority to promulgate
general rules related to universal service. We invite comment on this
approach.
e. Other Approaches
10. Forbearance. We seek comment on whether we should exercise our
section 10 forbearance authority, alone or in combination with any of
the theories described above, to facilitate use of funding to support
broadband information services. For example, could we forbear from
applying section 254(c)(1), which defines universal service as an
evolving level of telecommunications services? Could we likewise
forbear from applying sections 254(e) and 214(e), which restrict
universal service support to ETCs? Are the statutory criteria for
forbearance from these provisions met? Are there any other provisions
from which we should forbear? If we grant forbearance, may we adopt
rules that are broader than the statutory provisions? We seek comment
on these issues.
11. Classifying Interconnected VoIP. We also invite comment on
whether we should consider classifying interconnected voice over
Internet protocol as a telecommunications service or an information
service. If the Commission were to classify interconnected VoIP as a
telecommunications service, this would enable the Commission to support
networks used to provide interconnected VoIP, including broadband
networks. We seek comment on this issue. Does interconnected VoIP have
characteristics that warrant classifying it as a telecommunications
service or an information service? If the Commission classified
interconnected VoIP as a telecommunications service, should we forbear
from applying any provisions in Title II to the service? We request
comment.
12. We invite parties to comment on these and any other legal
theories that they believe will provide a sound legal basis for
providing universal service support for broadband.
B. Setting American on a Path to Reform
1. National Goals and Priorities for Universal Service
13. We propose the following four priorities for the federal
universal service high-cost program: (1) To preserve and advance voice
service; (2) to ensure universal deployment of modern networks capable
of supporting necessary broadband applications as
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well as voice service; (3) to ensure that rates for broadband service
are reasonably comparable in all regions of the nation, and rates for
voice service are reasonably comparable in all regions of the nation;
(4) to limit the contribution burden on households.
14. We ask that commenters consider the reform proposals in light
of these reform priorities, and ask commenters to suggest additional or
alternative priorities, and how to prioritize them. We ask whether
advancing the deployment of mobile networks should be its own
independent priority. We seek comment on other priorities, including
competitive neutrality and technology neutrality, and whether our
proposed reforms are consistent section 254(b)(5) that support ``should
be specific, predictable, and sufficient.''
2. Encouraging State Action To Advance Universal Service
15. We seek comment generally on the role of the states in
preserving and advancing universal service as we transition from the
current programs to the Connect America Fund. We welcome the input of
the state members of the Joint Board on these and other important
questions.
16. We seek comment on what level of financial commitment should be
expected from the states and territories to advance broadband, and on
how to address the different features of states, and the various state
efforts to preserve and advance universal service. We seek comment on
how to encourage or require additional commitments to support universal
service by states in partnership with the federal government.
3. Eligible Telecommunications Carrier Requirements
17. We seek comment on how the Commission can best interpret
existing ETC requirements to achieve our goals for reform. We also seek
comment on whether (and if so how) we should modify the ETC
requirements. How would we provide incentives for state commissions to
apply any Commission-adopted requirements to ETCs designated by states?
Alternatively, we seek comment on whether the Commission could or
should forbear from requiring that recipients be designated as ETCs at
all, and if so, in particular whether the Commission could forbear from
applying section 254(e) to entities that are not telecommunications
carriers to allow their receipt of universal service support to serve
rural, insular and high-cost areas under the Act. If we do forbear from
this requirement, what if any requirements should replace it? How
should we transition from existing to any new requirements? How should
existing ETCs be treated during such a transition?
4. Public Interest Obligations of Fund Recipients
18. We seek comment on what public interest obligations should
apply to ETCs going forward, as we reform and modernize the existing
high-cost program to advance broadband. We ask commenters to address
whether the public interest obligations proposed below should vary,
depending on whether broadband is a supported service, or
alternatively, if support is provided to voice recipients conditioned
on their deployment of broadband-capable facilities. We propose that
public interest obligations apply generally to all funding recipients.
We ask commenters to what extent, if any, should the obligations vary
for recipients under the current high-cost funding programs, recipients
of funding in the first phase of CAF funding, and Long-Term CAF
recipients. We ask commenters to consider and explain whether (and if
so how) each of the obligations discussed below should apply under what
circumstances, recognizing that it may be appropriate to tailor
obligations to avoid unfunded mandates. We also ask commenters to
address specifically whether the duties and responsibilities of ETCs
should differ depending on whether they are also the state-mandated
carrier of last resort in a particular area. We seek comment on how
best to balance the costs and burdens associated with the monitoring
of, enforcement of, and compliance with the proposed public interest
obligations with our principles of fiscal responsibility and
accountability and our goal of rapidly increasing broadband deployment
in unserved areas.
a. Characteristics of Voice Service
19. We propose to simplify how we describe core voice service
functionalities into one term: ``voice telephony service.'' Should we
preserve the definition of ``voice grade access'' to the public
switched network in Sec. 54.101 of the Commission's rules? Parties
that support a different definition should provide analysis and data
supporting such a definition. Parties should also explain whether such
a definition would be technology-neutral and if not, the basis for
adopting a definition that is not technology-neutral.
b. Voice Obligations
20. We propose that recipients must provide ``voice telephony
service'' throughout their designated service areas. We propose that
recipients be permitted to partner with another voice provider to
provide ``voice telephony service.'' We propose that recipients be
required to offer voice telephony service as a standalone service. We
propose that recipients continue to be subject to any applicable
baseline state or federal requirements for the provision of voice
service by ETCs. We seek comment on how to create incentives for states
to re-evaluate and harmonize the requirements they impose on the ETCs
that they designate to be consistent with any new federal requirements.
Should there be any additional obligations imposed on recipients
serving areas in which the telephone penetration rate historically has
been substantially lower than the national average (e.g., on Tribal
lands and in Native communities)? Given that we envision a transition
to an integrated voice-broadband network in the future, how should
voice universal service public interest obligations change over time?
In the future, will there be a need for separate voice and broadband
public interest obligations?
c. Characteristics of Broadband Service
21. We propose to adopt metrics for broadband using specific
performance characteristics that would apply to the CAF and also to the
existing high-cost program, until it is transitioned into the CAF. We
seek comment on whether there are reasons to adopt technology-specific
minimum standards that would depend on the technology deployed. We seek
comment on whether we should characterize broadband by its speed,
functional attributes, or in some other way. Commenters should discuss
additional ways of measuring broadband services provided to consumers,
such as throughput, latency, jitter, or packet loss, for purposes of
establishing performance requirements for recipients. We seek comment
on the National Broadband Plan recommendation of 4 Mbps actual
download/1 Mbps actual upload, or, alternatively, of 3 Mbps of actual
download speed/768 kbps of actual upload speed, or a different speed
requirement. We seek comment on whether there are other metrics we
should consider that are unrelated to speed or service quality, such as
mobility.
22. Measuring the Attributes of Broadband. We propose that
recipients test their broadband networks for compliance with whatever
metrics
[[Page 11636]]
ultimately are adopted and report the results to USAC on a quarterly
basis, and that these results be subject to audit. Alternatively,
should we instead require that recipients provide a specific speed
(e.g., 4/1 Mbps) at a ``reasonable service quality,'' and rely on
customer complaints regarding the quality of their broadband as a means
of enforcing service quality? We propose that the attributes be
measured on each broadband provider's access network from the end-user
interface (modem) to the closest peering point between the broadband
provider and the public Internet.
23. Evolution. We seek comment on how often we should re-evaluate
our broadband requirements, and what would be the appropriate
procedural vehicle (e.g., the Commission's annual section 706 inquiry).
d. Broadband Obligations
24. We propose that all existing high-cost funding recipients going
forward and all future CAF recipients must offer broadband service that
meets or exceeds the minimum metrics prescribed by the Commission,
assuming they receive funding for that purpose. We propose that all
recipients should be subject to an annual certification regarding
compliance with any obligations that we ultimately adopt for the
provision of USF-supported broadband services.
(i) Service, Coverage, and Deployment
25. Service Requirement. We seek comment on whether to impose a
service requirement, which would specify that a recipient must provide
service upon request within a reasonable period of time, or a service
requirement and a coverage requirement on recipients. We also seek
comment on whether to adopt specific requirements to ensure providers
are meeting a service requirement.
26. Coverage Requirement. We seek comment on whether to adopt a
coverage requirement (e.g., recipients must cover 99 percent of all
housing units in an area) in addition to a service requirement, and
whether to adopt a specific timeframe or specific milestones for a
deployment schedule. We propose that recipients be permitted to partner
with another broadband provider to provide broadband service in areas
where the recipient has not yet built its network, and seek comment on
whether we should limit the number of housing units in a given service
area that can be served by a partnering arrangement with a satellite
provider in order to most efficiently leverage the capacity of
satellite throughout the unserved high-cost areas across the nation.
Alternatively, we seek comment on whether support recipients should be
allowed to carve out from the coverage requirement a small percentage
of housing units that may be served by high-speed Internet access
service that may not meet the minimum performance metrics adopted by
the Commission. We seek comment on how recipients should demonstrate
compliance with a coverage requirement.
(ii) Affordable and Reasonably Comparable Rates
27. We propose that recipients must offer voice and broadband
(individually and together) at rates that are affordable and reasonably
comparable to rates in urban areas, whether or not broadband is a
supported service, and seek comment on how to measure ``affordable''
and ``reasonably comparable.'' We seek comment on how the Commission
should obtain data on voice and broadband pricing to develop possible
rate benchmarks for supported voice and/or broadband service.
(iii) Additional Considerations
28. Joint Infrastructure Use. We seek comment on the costs and
benefits of applying policies to encourage sharing of infrastructure,
including by residential and anchor institution users.
29. We also seek comment on how USF can best achieve synergies with
the connectivity objectives for schools, libraries, and rural health
care facilities in section 254 of the Act. Where build out is required
to connect these particular types of community anchor institutions,
should this construction be supported through the CAF, E-rate, or Rural
Health Care programs, individually or in combination? Should USF
recipients have any obligations to serve anchor institutions in the
communities in which they serve residential customers?
30. Other Public Interest Obligations. We seek comment on whether
any additional public interest obligations should apply to USF
recipients, such as marketing of broadband service or providing
customers with the option to subscribe to a basic broadband service on
a stand-alone basis, or prohibiting term commitments or early
termination penalties. We also seek comment on public interest
requirements that should apply to carriers providing service on Tribal
lands, such as requiring recipients to provide broadband to Tribal and
Native community institutions.
31. Evolution. We propose that we periodically re-evaluate the
broadband public interest obligations, and seek comment on whether they
should be re-evaluated at the same time the Commission re-evaluates its
broadband metrics, or less frequently. We seek comment on the effect
that changing the obligations would have on program administration and
on funding recipients. We propose that the Commission re-examine
funding levels each time it re-evaluates the public interest
obligations.
32. Remedies for Non-Compliance. We seek comment on remedies for
failure to meet any public interest obligations, including but not
limited to loss of universal service funding and repayment of funds
already disbursed. We propose that USAC recover funds through its
normal processes in instances where an audit or investigation finds
that a recipient has failed to comply with certain CAF program rules
and requirements.
33. Waiver. We propose to allow those carriers that are unable to
meet an adopted deployment schedule to seek a waiver of the requirement
from the Commission, and seek comment on what the criteria should be
for such a waiver.
34. Role of States and Tribal Governments. We seek comment on the
role of states and Tribal governments in enforcing these federally
defined public interest obligations and whether states or Tribal
governments may impose additional obligations on funded providers.
C. Near-Term Universal Service Reforms
1. Rationalizing Loop Support, Local Switching Support, and Interstate
Common Line Support
35. In October 2010, we issued the Mobility Fund NPRM, 75 FR 67060,
November 1, 2010, which proposed a Mobility Fund intended to spur build
out of advanced mobile wireless networks in areas not served by
current-generation mobile networks. We now continue our reform efforts
in this proceeding by proposing steps to spur broadband build out,
whether fixed or mobile, in unserved areas, which exist in every state
as well as the territories. We propose to do this by transitioning
funds from less efficient uses to more efficient uses, including
through the creation of the CAF. We also seek comment on other measures
to reduce inefficiencies, extend broadband, and increase the
accountability of companies receiving support.
36. Three components of the high-cost program primarily support
smaller carriers regulated under ``rate-of-return'' rules: High-cost
loop support (HCLS), which provided $1 billion for
[[Page 11637]]
incumbents in 2010; local switching support (LSS), which provided $276
million for incumbents in 2010; and interstate common line support
(ICLS), which provided $1.1 billion for incumbents in 2010. As
currently structured, these funding mechanisms provide poor incentives
for rate-of-return carriers to operate and invest efficiently. While
individual carriers may act in the best interests of their own
customers and communities, excessive spending by any one community
limits opportunities for consumers in other communities and may not be
in the best interests of the nation as a whole. HCLS, for example,
creates incentives for companies to outspend their peers in order to
receive more funding under the current capped formula. For all three
programs, there are few, if any, benchmarks for determining whether
network investment is justified or appropriate, allowing a company to
spend millions of dollars to build a state-of-the art network that may
serve only a few customers. LSS was originally created to help small
telephone companies that lack economies of scale to afford large
switches, but since then the industry has moved to software-based
routers and switches which can be more easily scaled to a company's
size and even shared among companies. LSS now provides perverse
incentives for companies not to realize efficiencies by combining
service areas. We seek comment on a suite of reforms to these
components, which will increase accountability and start rate-of-return
carriers on the path towards market-driven, incentive-based regulation.
37. Specifically, we seek comment on the following reforms to be
implemented beginning in 2012:
38. Modification of HCLS. We propose to reduce the reimbursement
rates for rural incumbent LECs to 55% and 65%, from 65% and 75%, in
order to encourage more efficient operations and to facilitate more
equitable distribution of HCLS under the HCLS cap. We propose to
eliminate from the rules, HCLS for rural incumbent LECs with more than
200,000 loops because there are no rural incumbent LECs with more than
200,000 lines receiving support and such incumbent LECs are well below
the qualifying threshold. We propose to eliminate the ``safety net
additive'' because it is not working as intended. Many carriers are
qualifying because of the loss of lines, not because of significant
increased investment.
39. Modification of LSS. We propose to eliminate LSS because LSS
was designed when small incumbent LECs had to buy expensive mechanical
switches, however, today's soft switches are more scalable to small
operations. Alternatively, we propose to combine HCLS and LSS into one
high-cost mechanism that would flow to areas with above-average costs
in the same manner as HCLS does now.
40. Modification or Elimination of Corporate Operations Expense
Eligibility for Universal Service Support. We propose to reduce or
eliminate the eligibility of corporate operations (overhead) expenses
for purposes of universal service support. Currently, corporate
operations eligibility is limited for HCLS, but no limited for LSS and
ICLS. We desire to focus finite universal service funds more directly
to investments in network build-out, maintenance, and upgrades--not
highly discretionary expenses.
41. Limits on Reimbursable Capital and Operating Costs. We propose
to improve incentives for efficient operations by establishing
benchmarks for reasonable capital and operating costs for universal
service support purposes. The benchmarks would be based on a simplified
model taking into account key drivers of cost (such as population
density, topography, soil type, etc.). Capital or operating costs above
the benchmarks would not be eligible for reimbursement through high-
cost universal service mechanisms. We also seek comment regarding
whether above-benchmark costs should be reimbursable based on a showing
that such costs are justifiable and alternative means of recovering
above-benchmark costs from other revenue sources.
42. Limits on Total per Line High-Cost Support. We propose to cap
total annual support per line for all companies operating within the
continental United States, e.g., $3,000 per line annually. Eighteen
companies currently receive more than $3,000 per line annually, five
receive more than $10,000 per line annually, and one receives $20,000
per line annually. We seek comment whether companies receiving more
than the cap should be able to make a showing that additional support
is in the public interest.
2. Reducing Barriers to Operating Efficiencies
43. Study area waiver process. We propose to streamline the study
area waiver process that would deem the waiver granted 60 days after
the end of the comment cycle, absent any further action by the Bureau.
We propose to eliminate the one-percent standard in evaluating study
area waivers and focus evaluation on the number of lines at issue,
projected USF support per line, and whether such a grant would result
in consolidation of study areas that facilitates reductions in cost by
taking advantage of economies of scale.
44. Revising the ``Parent Trap'' Rule, Sec. 54.305 of the
Commission's rules. We propose to eliminate the parent trap rule five
years after grant of the relevant study area waiver and if a certain
minimum percentage of the acquired lines, e.g., 30% are unserved by 768
kbps broadband. Section 54.305(b) of the Commission's rules provides
that a carrier acquiring exchanges from an unaffiliated carrier shall
receive the same per-line levels of high-cost universal service support
for which the acquired exchanges were eligible prior to their transfer.
This proposal is to encourage carriers subject to Sec. 54.305 of the
Commission's rules to invest in modern communications networks in
unserved areas. We seek comment on revising Sec. 54.305 of the
Commission's rules so that rural incumbent LECs, subject to Sec.
54.305 of the Commission's rules, would receive either the lesser of
the support pursuant to Sec. 54.305 of the Commission's rules or the
support based on their own actual costs. Some rural incumbent LECs
currently receive support pursuant to Sec. 54.305 of the Commission's
rules, that would not receive any support or would receive lesser
support based upon their own costs.
3. Transitioning Interstate Access Support (IAS) to the CAF
45. We propose to phase out IAS for both incumbent price cap
carriers and competitive eligible telecommunications carriers (ETCs)
over a period of a few years. In 2010, IAS totaled $545 million.
Originally created in 2000 as part of a five-year transitional reform
plan, IAS has long outlived its intended lifespan. The comments
received in response to the USF Reform NOI/NPRM, 75 FR 26906, May 13,
2010, suggest that this fund is not critical to ensuring rural voice
service, and we believe the funds could be more productively used to
support the deployment of broadband to unserved areas. We seek comment
on transitioning IAS to the CAF and the consequences of doing so.
4. Rationalizing Competitive ETC Support Through Elimination of the
Identical Support Rule
46. We propose to eliminate the ``identical support'' rule and to
transition available competitive ETC support to the CAF over a several-
year period. Under the Commission's identical support rule, competitive
ETCs (mostly wireless carriers) receive, subject to an interim cap, the
same per-
[[Page 11638]]
line high-cost support as incumbent carriers serving the same area
regardless of actual costs or needs. As a result, the funding is poorly
targeted--in some areas, as many as four or more providers are
receiving redundant ETC funding, while other areas lack even a single
provider of broadband or mobile voice. Two of the largest ETCs have
voluntarily agreed to relinquish their ETC support in the context of
transactions, and the USF Reform NOI/NPRM record supports the
conclusion that current levels of competitive ETC support are
unnecessary to ensure fixed or mobile voice service in many areas of
the country that receive support today. At the same time, we recognize
the importance of mobile voice and mobile broadband coverage in all
areas of the country and seek comment on how to balance the desire for
universal mobile coverage with other USF priorities. Our proposal in
the Mobility Fund proceeding was intended to provide a one-time
infusion to expand mobile coverage. We seek comment here on how best to
factor the need for mobility into the reforms proposed in this
proceeding to achieve our universal service objectives. Specifically,
we seek comment on transitioning available competitive ETC support to
the CAF, over what schedule such transition should occur, and whether
waivers or exceptions should be made, such as for competitive ETCs
serving Tribal lands or when immediate transition of support to the CAF
would disrupt the availability of wireless service in area.
47. Taken together, the proposed changes to the high-cost program
will enable significant funds to be used to support fixed and mobile
broadband, as discussed below, and potentially a recovery mechanism
associated with ICC reform, where necessary, as summarized below.
5. First Phase of the Connect America Fund
48. In the first phase of the CAF, we propose to award, through a
reverse auction process, non-recurring support for broadband areas
identified in unserved areas, as determined by the forthcoming National
Broadband Map and/or our Form 477 data collection (i.e., areas without
broadband advertised as providing download speeds of at least 768
kbps). That targeted funding will supplement, not replace, other
support provided through the high-cost program in its current form or
as modified as part of the reforms proposed above.
(i) Basic Framework for the Connect America Fund Phase I
49. We seek comment on our authority to establish a program under
which non-recurring support would be provided, based on a competitive
bidding system, to a single entity to deploy and provide broadband
service.
50. We propose to design the first phase of the CAF to use funds
efficiently to expand broadband to as many unserved housing units--that
would be unlikely to be served soon or at all without public
investment--as possible. We propose to fund the first phase of the CAF
with savings realized from certain carriers' voluntary relinquishment
of USF support along with savings realized from other proposed reforms
to existing high-cost mechanisms.
51. We propose to use auctions to determine the entities that will
receive support under the first phase of the CAF and the amount of
support they will receive. We propose to award a fixed amount of
support, paid out in installments, based on the lowest bid amounts
submitted in a reverse auction. We seek comment generally on how to
design a competitive process to determine recipients and support
amounts in light of our goals.
52. We propose to fund no more than one auction winner per unserved
area. We propose to exclude satellite providers from bidding in the
auction but to permit them to partner with a terrestrial (wireless or
wireline) provider. We propose to compare bids across the country,
rather than comparing them within certain subsets of otherwise eligible
areas.
(ii) Identifying Unserved Areas Eligible for Support
53. We propose to use the National Broadband Map to determine what
areas are unserved, and seek comment on how to use the Map for this
purpose; alternatively, should we rely on information from an updated
Form 477. We propose to identify unserved areas on a census-block
basis, but seek comment on whether another unit of geographic area
would better serve our goals.
54. We propose to evaluate bids on an ``amount per unserved unit''
basis. We propose to use unserved housing units to establish a baseline
number of unserved units per census block. We seek comment on whether
the number of unserved units should be adjusted to reflect community
anchor institutions and the like, and, if so, how we would obtain the
necessary data to be able to determine with a sufficient level of
accuracy the number of businesses and other institutions in a given
area.
55. We seek comment on whether we should limit support--or provide
bidding credits--to bidders in states that have taken or are taking
measures to reduce intrastate switched access rates. We seek comment on
whether we should prioritize support for states that have created state
high-cost USF programs. We seek comment on whether we should take into
account states' actions relating to municipal broadband--e.g., whether
there should be bidding credits for projects in states where municipal
broadband is permitted.
56. We seek comment on whether we should reserve funds for Tribal
areas, or provide bidding credits for bidders, including Tribally owned
bidders, who wish to deploy on Tribal lands. We further seek comment on
whether any funds reserved for Tribal lands that remain unawarded
should be treated any differently from unreserved funds that remain
unawarded after the auction. We further seek comment on how to design
the first phase of the CAF to include Tribal governments to ensure
efficient operation on Tribal lands. In addition, we seek comment on
whether we should reserve funds for insular areas, or provide bidding
credits for those who wish to deploy in insular areas.
(iii) Pre-Existing Deployment Plans
57. We seek comment on how to structure the program to avoid
outcomes that would be inconsistent with the goal of increasing
broadband deployment in unserved rural and high-cost areas, not funding
existing facilities or deployment to which a carrier has already
committed to federal or state regulators.
(iv) Public Interest Obligations
58. We propose to have a Commission-defined coverage requirement.
In the alternative, we could use bidder-defined coverage requirements.
We seek comment on both.
59. We propose that recipients build networks of at least 4 Mbps
(downstream) and 1 Mbps (upstream). We seek comment on this proposal
and whether the speed requirement should evolve.
60. We propose that recipients deploy within 3 years of funding. We
propose that obligations last for a specified period of years, such as
5, after completion of buildout. We seek comment on whether to require
support recipients to meet interim deployment milestones.
[[Page 11639]]
61. Given the ongoing nature of our reform efforts, we seek comment
on whether, upon the completion of comprehensive universal service
reform, recipients that ultimately receive support should be relieved
of their obligations under the first phase of the CAF, with those
obligations being replaced by any public interest obligations imposed
on ultimate CAF recipients. We seek comment on what should happen to a
recipient's obligations in the first phase of the CAF once someone in
the area (either the recipient of support in the first phase of the CAF
or another carrier) receives long-term CAF support.
(v) Eligibility Requirements for the First Phase of the CAF
62. We propose that recipients in the first phase of the CAF be
designated (or have applied for designation) ETCs by a state (or the
FCC, as appropriate), as required by the Act; alternatively, we seek
comment on whether to forbear from that requirement.
63. We seek comment on permitting carriers to apply for ETC
designation on a conditional basis, so that they are not required to
satisfy ETC obligations where they don't get any funding.
64. We propose that an applicant must be a terrestrial wireline or
wireless service provider and hold, or have access to, any required
authorization to provide the required services.
65. We propose to limit participation in the auction to those
applicants able to certify that they have submitted all requested
broadband deployment data as part of the State Broadband Data and
Deployment program. Parties that have not been requested to provide
such data would be permitted to certify that they have provided all
data requested. We seek comment on this proposal generally, and on
whether such a limitation should apply to Tribal areas.
(vi) Auction Process
66. We propose rules for and seek comment on certain elements of
the auction process, including the application and bidding process.
67. We propose a two-stage application process similar to the one
we use in spectrum license auctions. Based on the eligibility
requirements for support in the first phase of the CAF, we would
require a pre-auction ``short-form'' application to establish
eligibility to participate in the auction, relying primarily on
disclosures as to identity and ownership and applicant certifications,
and perform a more extensive, post-auction review of the winning
bidders' qualifications based on required ``long-form'' applications.
68. Short Form Application. We propose generally that the short
form application will include basic ownership information about the
carrier and information about any partnerships the carrier has entered
for the first phase of the CAF; identification of areas where the
carrier might possibly bid; and certification that the bidder is
qualified to participate in the auction.
69. Auction Design and Bidding Process. We seek comment on the best
auction design to maximize the deployment of broadband to housing units
where there is no broadband now. We also seek comment on alternative
methods of establishing coverage requirements in areas for which
support is received. We seek comment on how to encourage bidders to go
beyond their Commission- or bidder-defined coverage requirement.
70. We propose to select winning bidders and award support based on
bids that state a price at which the bidder would meet our minimum
performance requirements for the number of housing (or other) units
covered by the bid, ranking bids by price per unit covered. We seek
comment on whether we should use weighted criteria or bidding credits
to adjust the bids to account for commitments to exceed our minimum
requirements and to account for other benefits, such as higher speed,
lower latency, mobility, or a better upgrade path. We could also use
such credits/adjustments to allow tradeoffs, such as allowing a
provider to bid to provide service that does not meet our speed
standard but does offer mobility.
71. We propose that bidders should be able to aggregate census
blocks together to bid on a package, and seek comment, generally, on
how we should design the auction to accommodate package bidding.
(vii) Post-Auction Process and Administration for the First Phase of
the CAF
72. We propose that, following the auction, identified winning
bidders submit long form applications within 10 days.
73. We seek comment on the specific information and showings that
should be required of winning bidders on the long-form application
before they can be certified to receive support and before actual
disbursements in the first phase of the CAF can be made to them. We
propose that an applicant be required to confirm ownership information
provided in its pre-auction short-form application or to update that
information, as appropriate. We further seek comment on whether we
should require applicants in the first phase of the CAF to provide any
other ownership information.
74. We propose that an applicant provide detailed information about
the network it intends to deploy and seek comment on what else we
should require.
(viii) Guarantee of Performance
75. We propose that a winning bidder should post financial
security, such as a letter of credit, and seek comment on whether there
is an alternative that would provide adequate protection; we also seek
comment on whether some carriers should be exempt from this
requirement.
(ix) Disbursing Support
76. We propose that payments be made over time as milestones are
reached; for example, 50 percent paid after winning the bid, then 25
percent paid after 50 percent deployment, and the final 25 percent paid
on completion.
77. We propose to disburse money in a manner consistent with the
Antideficiency Act, which means that if we auction off support that we
do not already have on hand, only the first payment would be
guaranteed, the other payments would be made only on a determination by
the Commission that payment was appropriate. The Commission's
compliance with the Antideficiency Act is currently assured under the
terms of an exemption, scheduled to expire December 31, 2011, which
permits the Commission to obligate certain universal service funds
before they are collected. We seek comment, however, on how to assure
compliance in the event the exemption is permitted to lapse.
(x) Liabilities for Failure To Deploy and Ensuring Compliance
78. We seek comment on what kinds of penalties are appropriate if a
carrier fails to deploy as promised. We propose to require carriers to
agree that support in the first phase of the CAF is contingent upon
completion (or substantial completion) of the buildout in accordance
with specified performance requirements. We seek comment on, among
other things, whether carriers should be subject to additional
liabilities and/or security requirements (such as letters of credit or
performance bonds) to provide them with incentives to perform and to
protect the CAF in case they fail to perform as required.
79. We seek comment on whether bidders that are found to have
failed to meet their obligations relating to the CAF should similarly
be ineligible for
[[Page 11640]]
Commission action until they can demonstrate that they have complied
with their obligations or obtained a waiver.
80. We will require recipients of CAF support to comply with audits
and record retention requirements. We propose to confirm that
deployment is occurring through inspections in the field, and we seek
comment on what kinds of verification procedures are appropriate.
(xi) Delegation of Authority
81. We propose to delegate to the Wireline Competition Bureau and
the Wireless Telecommunications Bureau the authority to determine,
subject to existing legal requirements such as the rules of the Office
of Management and Budget, the method and procedures for applicants and
recipients to submit appropriate information.
6. Targeting Support
a. Disaggregating Support
82. We propose to target support more directly to the areas of
greatest need by requiring rural carriers to disaggregate support
within existing study areas beginning in 2012, pursuant to Sec. 54.315
of the Commission's rules, and invite comment on the proposal.
b. Redrawing Study Areas
83. We seek comment on whether we should begin a process in the
near term to establish new service areas that would be eligible for
ongoing support under the CAF in stage two of our comprehensive reform.
We seek comment on whether we should take steps to encourage states to
redraw existing study area boundaries to create more narrowly targeted
service areas for purposes of the CAF by a specified date, and what
actions we may take if states decline to do so. We seek comment on
issues related to the geographic scope of ETC obligations and ETC
designations.
7. Pending Proceedings and Other Issues
84. We seek comment on proposals in the record and invite parties
to update their proposals as appropriate.
85. Broadband Now Plan. We seek comment on whether and how the
recommendations in the Broadband Now Plan, submitted by a group of mid-
sized carriers in 2009, could be operationalized in the context of the
reforms proposed in this Notice.
86. NCTA Petition for Rulemaking. We seek focused comment on how
the presence of unsubsidized competition should be factored into our
proposals generally. We seek comment on whether we should eliminate
universal service in any study area where there is 100% coverage by an
unsubsidized voice provider, or whether we should create a rebuttable
presumption that universal service support is unnecessary in those
study areas where at least 95% of the households can get service from
an unsubsidized competitor, and on the impact of such a process on the
incumbent and the consumers in that area. We also seek comment on
whether and how to rationalize funding in circumstances in which a
single company operates two or more networks in the same area (e.g.,
telecommunications and cable plant, or wireline and wireless networks).
87. Non-regulated Revenues. We seek comment on how to ensure that
universal service is not inappropriately subsidizing non-regulated
services or excessively subsidizing carriers that have the ability to
recover additional non-regulated revenues as a result of their
deployment of subsidized local loops. We seek comment on the proposal
to include all revenues (including broadband revenues) when evaluating
the rate of return revenue requirement.
88. Interstate Common Line Support for Price Cap Converts. We seek
comment on Verizon's proposal that we should phase down, on the same
schedule as IAS, the ICLS that has been frozen on a per-line basis for
the several carriers that converted to price cap regulation since the
adoption of the CALLS Order.
89. Freezing ICLS for Rate-of-Return Companies. We seek comment on
whether, in order to restrain the growth of ICLS in the near term while
we undertake more comprehensive universal service reform, we should cap
ICLS either per line or per study area for rate-of-return companies on
an interim basis (e.g., for two years), to take effect in 2012.
90. Middle Mile Costs. We seek comment on whether to modify our
universal service rules to provide additional support for middle mile
costs, which a number of parties have suggested that middle mile costs
are a significant component of the costs of serving customers in rural
areas. If we were to do so, how could we ensure that support is
provided for middle mile circuits that are offered on rates, terms, and
conditions that are just and reasonable? What effect would middle mile
support have on incentives for small carriers to continue to seek
efficiencies from cooperatively developing regional networks to provide
lower cost, higher capacity backhaul capability?
91. Separations. We seek comment on how our proposed reforms may
affect or be affected by the existing separations process and any
future separations reform. We also seek comment on whether the
Commission should treat loops used to provide broadband as exclusively
interstate.
92. Accelerated Transition for Rate-of-Return Territories. Under
what circumstances would it be appropriate to accelerate the transition
proposed below of rate-of-return territories moving to an incentive
regulation framework over the longer term, and adopt such measures in
the near term? We also seek comment on whether to allow carriers to
opt-in to any of the reforms on an accelerated timeframe. We intend to
monitor progress in extending broadband under the near-term reforms
discussed above, and we reserve the right to move more quickly to the
long-term reforms set forth below.
D. Long-Term Vision for the Connect America Fund
93. In the second stage of our comprehensive reform package, we
propose to provide all funding through the Connect American Fund. The
CAF would provide ongoing support to maintain and advance broadband
across the country in areas that are uneconomic to serve absent such
support, with voice service ultimately provided as an application over
broadband networks.
1. Supported Providers
94. We seek comment on the National Broadband Plan's recommendation
that there should be at most one subsidized provider of broadband
service per geographic area. We seek comment on proposals to support
both fixed and mobile networks under the CAF, rather than funding only
one provider in a given area.
95. To the extent we provide separate, ongoing support for mobility
within the CAF, we seek comment on two potential funding options.
First, we seek comment on the use of a model to determine high-cost
support for wireless carriers. Second, we seek comment on using reverse
auctions to determine support for competitive ETCs only.
96. To the extent we create long-term alternatives within CAF for
mobile carriers, we propose to limit support one wireless competitive
ETC per geographic area. To the extent we were to fund only one mobile
wireless provider in a given geographic area, we seek comment on
whether it should require that provider to share infrastructure, such
as cell towers, with other non-supported wireless providers.
97. We seek comment on whether and how funding only one wireless
provider
[[Page 11641]]
would impact the Commission's E-rate, Rural Health Care and low-income
programs, and whether it should designate ``Lifeline Only'' ETCs.
98. We seek comment on whether any funding is appropriate in an
area if high-quality voice service and broadband Internet access
services are provided today by an operator without universal service
support.
99. We seek comment on how to address situations where no entity
wishes to serve an area, and the relative roles of the Commission and
the states in determining which carriers are best able to provide
services in unserved areas.
100. To the extent that we ultimately provide ongoing support to
only one provider in each geographic area where support is available,
we seek comment on whether there should be exceptions, for example, for
carriers serving Tribal lands.
2. Sizing the Federal Commitment to Universal Service
101. We seek comment on a proposal to set an overall budget for the
CAF such that the sum of the CAF and any existing high-cost programs
(however modified in the future) in a given year are equal to the size
of the current high-cost program in 2010. Alternatively, if the
Commission were to set an overall budget, should it use a different
year as the relevant baseline, and under what circumstances (if any)
should the Commission adjust the baseline? We also seek comment on
whether total funding should be higher or lower. We seek comment on
what factors the Commission should consider in sizing the CAF. We seek
comment on whether, in determining the size and role of the CAF, it
should take into account the cumulative effect of the four support
programs, acting together, to achieve the goals of universal service.
3. Alternative Approaches for Targeting and Distribution of CAF Funds
102. We seek comment on alternative approaches for determining
ongoing CAF support that ultimately would replace all high-cost
funding. In addition we seek comment on whether these proposals would
be effective on Tribal lands, given the low telephone and broadband
penetration rate and the associated demographic challenges.
a. Competitive Bidding Everywhere
103. We seek comment on using a competitive bidding mechanism to
award funding to one provider per geographic area in all areas
designated to receive CAF support. This competitive bidding mechanism
would be designed to maximize the number of households passed by
broadband networks while ensuring that Americans retain access to voice
service, without exceeding any defined budget for the CAF.
104. We seek comment on whether it should use bidding credits for
bids to provide service exceeding the minimum requirements for features
such as higher speed, latency, mobility, or upgrade potential, or to
provide preferences to carriers serving Tribal lands or insular areas.
We also seek comment on how competitive bidding processes may properly
involve Tribal governments and what impact these processes will have on
the provision of CAF-supported services on Tribal lands.
105. We also seek comment on alternative competitive bidding
mechanisms to maximize the number of households passed by broadband
networks while ensuring that voice service remains available everywhere
without exceeding any defined budget for the CAF.
106. We seek comment on defining areas for bidding that are
aggregations of census blocks.
107. We seek comment on the role of satellite in serving housing
units that are most expensive to reach via terrestrial technologies,
and whether we could designate ETCs to provide service on a nationwide
or multi-state basis. We seek comment on methods for effectively using
funding for satellite, and on which approaches might be best suited to
making the best use of satellite capacity with competitive bidding.
While recognizing that currently unserved areas may be more
economically served by satellite, we seek comment on how to ensure that
consumers currently served by terrestrial broadband or voice services
do not lose access to their terrestrial service.
108. We seek comment on whether we should implement a competitive
bidding process for ongoing CAF support on a phased basis, beginning
with price cap service areas.
b. Right of First Refusal Everywhere, Followed by Competitive Bidding
Where Necessary
109. In the alternative, we seek comment on an approach under
which, in each area designated to receive CAF support, the Commission
would offer the current COLR for voice services (i.e., most likely a
wireline incumbent LEC) model-determined support through a ``right of
first refusal'' (ROFR) to provide both voice and broadband to customers
in the area for a specific amount of ongoing support. We also seek
comment on alternative ways to conduct the ROFR. For example, should we
request that the COLR make an offer of the support level it believe it
needs, which we will accept or reject?
110. We would determine the amount of CAF support to be offered to
the current COLR using a cost model developed in an open, deliberative,
and transparent process with ample opportunity for interested parties
to participate and verify model results. We seek comment on using a
model that would estimate the costs of providing service over a
wireline network or, alternatively, a model that would estimate the
costs of using the lowest-cost technology capable of providing the
required minimum level of voice and broadband service for each area,
which may be wireless in some areas and wireline in others. If it uses
a wireline-only model, we seek comment on how it should define forward-
looking economic costs of a wireline broadband network and what types
of costs it should include. We seek comment on the trade-offs of an
engineering cost model approach relative to a regression-based model.
111. We previously sought comment on considering revenues, as well
as costs, in determining CAF support. Despite the advantages of
including demand-side metrics in the determination of which areas are
truly uneconomic to serve, we recognize that there could be
difficulties in accurately estimating and modeling revenues, and seek
comment on these issues.
112. If the COLR refuses the ROFR, a competitive bidding mechanism
could be used to provide ongoing CAF support to at most one provider in
any given area. Such a competitive bidding mechanism would
simultaneously select the providers of both broadband and voice, or if
necessary, voice-only providers that would receive CAF support, and, as
with the auction approach above, would seek to maximize the number of
households passed by broadband networks while ensuring that consumers
retain access to voice service. We also seek comment on using
alternative competitive bidding mechanisms and specifically ask whether
there is a sequential approach that would first determine the least-
cost method for ensuring that voice service remains available
everywhere and then maximizes broadband coverage subject to a budget
constraint. We seek comment on what factors we should consider when
defining the geographic areas for the auction.
113. We seek comment on how support under the existing programs
would be transitioned to the CAF under
[[Page 11642]]
the ROFR option, and whether a transition is necessary or appropriate
in all circumstances.
114. We seek comment on whether it should implement a ROFR followed
by competitive bidding on a phased basis, beginning with price cap
service areas.
C. Continued Rate-of-Return Reform for Certain Carriers
115. We sought comment above on a package of proposals intended to
improve the incentives for rational investment and operation by small
companies operating in rural areas. If we find that the near term
reforms have adequately improved the incentives for investment and
operation by small, rural companies, we could determine that support
for these carriers should remain based on reasonable actual investment,
rather than a cost model or auction.
116. Accordingly, we seek comment on the need for possible changes
to the current rate-of-return system beyond those discussed in the
previous section. We seek comment on capping ICLS and whether this
would be consistent with rate-of-return regulation or whether we would
need to adopt some form of incentive regulation to accomplish the
objective of limiting the size of the Fund. We also seek comment on
whether the same incentive regulation framework described below in the
intercarrier compensation context could also be used to replace the
ICLS mechanism. We seek comment on whether more detailed, industry-wide
clarifications regarding what should be deemed ``used and useful''
would be helpful to ensure that excess costs are not recovered through
universal service (or carriers' rates). In addition, we seek comment
whether it should initiate a proceeding to represcribe the authorized
rate of return.
E. Increasing Accountability and Measuring Progress To Ensure
Investments Deliver Intended Results
117. Reporting Requirements. We propose to require all high-cost
funding recipients and CAF recipients to report to USAC on deployment,
adoption, and pricing for both their voice and broadband offerings. We
propose to require recipients to file with the Commission each year
annual reports of their financial condition and operations. We propose
that all recipients report intercarrier compensation revenues and
expenses.
118. Internal Controls. We seek comment on measures to strengthen
internal controls in the areas identified for improvement in the GAO
high-cost report. We seek comment on the December 2010 USAC Audit
Report. We seek comment on whether high-cost and CAF recipients should
be subject to additional audit requirements beyond current compliance
audits and IPIA audits. We seek comment on how to improve the
certification process to make it more meaningful (e.g., requiring
additional information from recipients concerning how funds were used
and specifically what information should be submitted). We seek comment
on how to improve the data validation process to correct weaknesses
identified in the GAO high-cost report.
119. Additional Monitoring Procedures. We seek comment on what
types of procedures we should put in place to ensure that recipients
provide services they have committed to provide. We propose to
affirmatively confirm, in the field, that recipients have complied with
their deployment obligations. We seek comment on whether either state
commissions or RUS could play a role in confirming deployment. What
information-sharing mechanisms between the Commission and RUS would
facilitate our ability to confirm deployment? Should we verify that
each and every recipient has fulfilled its obligations, or should we
conduct random audits?
120. Record Retention Requirements. We seek comment on whether any
additional measures are necessary to ensure program participants retain
relevant documentation and provide the relevant and complete
documentation to auditors upon request.
F. Establishing Clear Performance Goals and Measures for Universal
Service
121. We propose that funding of recipients be tied to the following
four specific performance goals for the current high-cost program and
CAF: (1) To preserve and advance voice service; (2) To increase
deployment of modern networks capable of supporting necessary broadband
applications as well as voice service; (3) To ensure that rates for
broadband service are reasonably comparable in all regions of the
nation, and that rates for voice service are reasonably comparable in
all regions of the nation; and (4) To limit universal service
contribution burden on households. We seek comment on the appropriate
output measure and efficiency measure for each goal. We also propose to
review annually whether the program is meeting its goals based on the
results of the performance measures.
G. Intercarrier Compensation for a Broadband America
122. Intercarrier compensation (ICC) is a system of payments
between carriers to compensate each other for the origination,
transport and termination of telecommunications traffic. Under the
present system, the amounts service providers charge each other for
completing such calls can vary considerably depending not on the
service provided but on whether a call starts and finishes in the same
state, or whether it crosses state lines. To complicate matters
further, these charges also can vary based on what technology (e.g.,
wireline, wireless) is used to make a call. Industry wide, these
charges add up to a significant amount of money.
123. The Commission proposes to take action in the near term to
reduce inefficiency and waste in the intercarrier compensation system
while providing a framework for long-term reform. The same proposed
principles that guide universal service reform also inform our
intercarrier compensation reform efforts. Specifically, the changes to
the intercarrier compensation rules discussed below will: (1) Modernize
our rules to advance broadband for all Americans by creating the proper
incentives to invest in new technologies and reduce waste and
inefficiency by taking steps to curb arbitrage; (2) promote fiscal
responsibility; (3) require accountability; and (4) implement market-
driven and incentive-based policies.
124. There are four fundamental problems with the current system:
(1) The system is based on outdated concepts and a per-minute rate
structure from the 1980s that no longer matches industry realities; (2)
rates vary based on the type of provider and where a call originates
and terminates, even though the function of originating or terminating
a call does not change; (3) because most intercarrier compensation
rates are set above incremental cost, they create incentives to retain
old voice technologies and engage in regulatory arbitrage for profit;
and (4) technological advances, including the rise of new modes of
communications such as texting, e-mail, and wireless substitution have
caused local exchange carriers' compensable minutes to decline,
resulting in additional pressures on the system and uncertainty for
carriers.
125. Consistent with the Commission's vision to reform universal
service and intercarrier compensation, it is important that
intercarrier compensation rules create the proper
[[Page 11643]]
incentives for carriers to invest in new broadband technologies so that
consumers have the opportunity to take full advantage of the new
capabilities of this broadband world. The Commission therefore seeks to
comprehensively reform the current system to realign incentives and
promote investment and innovation in IP networks.
H. Legal Authority To Accomplish Comprehensive Reform
126. The Commission seeks comment on its legal authority to reform
intercarrier compensation, and specifically proposes two different
transition paths for consideration. The Commission believes it has the
authority to adopt either of these transition paths, and implement a
transition away from per-minute intercarrier compensation. The
Commission concludes that reducing interstate access charges falls well
within its general authority to regulate interstate access under
sections 201 and 251(g), 47 U.S.C. 201, 251(g).
127. The Commission could apply section 251(b)(5), 47 U.S.C.
251(b)(5), to all telecommunications traffic exchanged with local
exchange carriers (LECs), including intrastate and interstate access
traffic. Thus, the Commission could bring all telecommunications
traffic (intrastate, interstate, reciprocal compensation, and wireless)
within the reciprocal compensation framework of section 251(b)(5), 47
U.S.C. 251(b)(5), and determine a methodology that states would use to
establish the rate for such traffic. Or, the Commission could maintain
the separate regimes of access charges and reciprocal compensation, and
set a different methodology for traffic subject to reciprocal
compensation. If the Commission moves all traffic within the section
251(b)(5), 47 U.S.C. 251(b)(5), reciprocal compensation framework, the
Commission seeks comment on the impact of section 251(f)(2), 47 U.S.C.
section 251(f)(2), which permits states to suspend or modify the
reciprocal compensation obligations for carriers with less than two
percent of the nation's subscriber lines. Doing so could undermine the
proposed reforms, particularly if the Commission moves all traffic
within the reciprocal compensation framework. The Commission seeks
comment on whether it should adopt rules addressing the implications of
suspension or modification under section 251(f)(2), 47 U.S.C.
251(f)(2).
128. The Commission also asks about its authority to take action to
reduce intercarrier compensation charges paid by or to commercial
mobile radio service (CMRS) or wireless providers, including intrastate
and interstate access charges (which are referred to collectively as
``wireless termination charges''). The Commission seeks comment on its
authority under sections 201 and 332, 47 U.S.C. 201, 332, to regulate
charges with respect to interstate traffic involving a wireless
provider, as well as charges imposed by wireless providers regarding
intrastate traffic. In addition, there is support for the proposition
that section 332 of the Act, 47 U.S.C. 332, also gives the Commission
authority to regulate the intercarrier compensation rates paid by
wireless carriers for intrastate traffic--including charges that
otherwise would be subject to intrastate access charges.
129. Alternatively, the Commission could adopt a new methodology
that would reduce reciprocal compensation charges, but would leave the
categories of telecommunications traffic that are currently subject to
the reciprocal compensation obligation under section 251(b)(5), 47
U.S.C. 251(b)(5), unchanged. Doing so would leave intrastate and
interstate access charges under their current regulatory structures and
could permit separate glide paths for different types of traffic.
130. In addition to the Commission's authority to reform interstate
access charges, wireless termination charges, and reciprocal
compensation to eliminate per-minute rates, the Commission also
believes it has authority to establish a transition plan for moving
toward that ultimate objective in a manner that will minimize market
disruptions. Section 251(g), 47 U.S.C. 251, supports the view that the
Commission has authority to adopt a transitional scheme with regard to
access charges. The Commission seeks comment on this interpretation of
section 251(g).
I. Principles To Guide Intercarrier Compensation Reform
131. The Commission seeks comment on the ultimate end-point once
the transition away from per-minute intercarrier compensation rates is
completed as well as concepts to guide sustainable reform. These key
concepts include: addressing arbitrage and marketplace distortions;
cost causation; providing appropriate price signals; and consistency
with all-IP broadband networks. The Commission also seeks comment on
any additional concepts that should guide the Commission's evaluation
of the appropriate end-point for comprehensive intercarrier
compensation reform.
132. The Commission seeks comment on possible intercarrier
compensation methodologies that it might adopt as an end-point for
comprehensive reform. The Commission seeks comment on the merits of a
bill-and-keep methodology, including the scope of functions provided by
a carrier that should be encompassed by the bill-and-keep framework,
and how any bill-and-keep methodology could be crafted in a way that is
sufficiently flexible to accommodate evolving network architectures.
The Commission also seeks comment on its legal authority to adopt a
bill-and-keep methodology either for particular traffic, or for all
traffic generally. In addition, the Commission seeks comment on flat
intercarrier charge proposals and asks whether they would make policy
sense, and be administrable, in the present context as customers
transition to broadband? Would such changes facilitate, or hinder, the
transition from circuit-switched to IP networks? The Commission also
seeks comment on its legal authority to implement a particular flat
charge proposal. Finally, the Commission seeks comment on any
alternative methodologies consistent with the guiding concepts for
long-term reform.
J. Selecting the Path To Modernize Existing Rules and Advance IP
Networks
133. The Commission seeks comment on how to begin the transition
away from the current per-minute intercarrier compensation rates to
facilitate carriers' movement to IP networks. There are multiple the
dimensions of the intercarrier compensation reform transition, each of
which can be calibrated in a variety of ways. The Commission proposes
to work in partnership with the states to reform intercarrier
compensation, and seeks comment on two general options for addressing
the various elements of the transition.
134. The first approach relies on the Commission and states to act
within their existing roles in regulating intercarrier compensation,
such that states would remain responsible for reforming intrastate
access charges. The Commission would reduce interstate access charges,
and adopt a methodology that states would implement to reduce
reciprocal compensation rates; but the categories of traffic under the
reciprocal compensation framework would remain unchanged. Under this
option, the Commission would exercise its broad authority to determine
the transition, stages, and future state for reforming the
[[Page 11644]]
current interstate access charge rules to eliminate per-minute rates,
including any necessary cost or revenue recovery that might be provided
through the CAF. Likewise, the Commission would create a new
methodology for reciprocal compensation, although the scope of traffic
encompassed by the reciprocal compensation framework would not change.
In addition to interstate access and reciprocal compensation, there is
support for the proposition that section 332, 47 U.S.C. 332, of the Act
gives the Commission authority to regulate wireless termination
charges--that is, intercarrier compensation charges paid to wireless
carriers, or paid by wireless carriers--including charges that
otherwise would be subject to intrastate access charges. The Commission
also seeks comment on whether the transition for wireless termination
charges, if reduced separately, should be subject to distinct
transition timing. The Commission seeks comment on the steps it should
take to encourage states to reduce intrastate intercarrier compensation
rates and how to do so without penalizing states that have already
begun the difficult process of reforming intrastate rates or rewarding
states that have not yet engaged in reform. For example, should the
Commission decline to provide cost recovery for intrastate rate
reductions or otherwise limit access to the CAF for states that have
not begun intrastate access reform by a specific date? The Commission
also seeks comment on how this option can work for states that lack
jurisdiction over intrastate access rates. The Commission seeks comment
on whether, after initially relying on states to act pursuant to their
historical role, it should bring traffic within the reciprocal
compensation framework if states fail to act within a specified period
of time, such as four years.
135. Under the second approach, the Commission would use the tools
provided by sections 251 and 252, 47 U.S.C. 251, 252, to unify all
intercarrier rates, including those for intrastate calls, under the
reciprocal compensation framework. Under this framework, the Commission
would establish a methodology for intercarrier rates, which states then
work with the Commission to implement. Under this alternative, the
Commission would bring all traffic within the reciprocal compensation
framework of section 251(b)(5), 47 U.S.C. 251(b)(5), at the initiation
of the transition, and set a glide path to gradually reduce all
intercarrier compensation rates to eliminate per-minute charges
(including any necessary cost or revenue recovery that might be
provided through the CAF). The Commission would adopt a pricing
methodology to govern these charges, which ultimately would be
implemented by the states. The Commission seeks comment on the relative
advantages and disadvantages of this alternative, as well as any
implementation considerations, including what revisions would be needed
to our interstate access rules applicable to price cap and rate-of-
return carriers. The Commission has not previously used the federal
universal service fund to offset reforms to intrastate access charges;
rather, states have addressed intrastate recovery on a case-by-case
basis. The Commission asks whether it has any legal obligation to
offset reductions to intrastate revenues, particularly given its
commitment to control the size of USF. Even so, the Commission seeks
comment on whether it should offset such reductions as a policy matter.
136. Within these approaches, the Commission identifies and
develops a specific set of options for commenters to consider regarding
the sequencing of reductions in specific rates. The Commission also
seeks comment on the appropriate timing of the overall transition and
proposes to complete the transition away from per-minute rates before
implementing the long-term vision for the CAF, which will ultimately
make explicit all subsidies necessary to serve an area (including
subsidies that are currently provided implicitly through the
intercarrier compensation system). In particular, the Commission seeks
comment on whether it should adopt distinct transition timing for price
cap versus rate-of-return carriers, and on whether it should cap
interstate access rates during the transition. In discussing or
proposing particular alternatives, the Commission asks commenters to
discuss how particular approaches balance several potentially competing
considerations: (a) Harmonizing rates and otherwise reducing arbitrage
opportunities; (b) minimizing disruption to service providers,
including litigation and revenue uncertainty; and (c) minimizing the
impact on consumers and on the Commission's ability to control the size
of the universal service fund.
K. Developing a Recovery Mechanism
137. The Commission seeks comment on how to structure any necessary
recovery mechanism for providers, including threshold questions of
whether its evaluation should be based on a provider's cost of
originating, transporting, and terminating a call (i.e., cost recovery)
or whether the Commission should focus recovery on replacing reduced
intercarrier compensation revenues (i.e., revenue recovery), or some
combination thereof. The Commission seeks comment on the objectives for
any recovery mechanism and, relatedly, any Commission obligations with
regard to recovery from both a legal and policy perspective.
138. In adopting a recovery mechanism the Commission asks, as a
threshold matter, whether it should be evaluating carrier costs,
carrier revenues, or some combination thereof. What cost standard or
cost components should be considered when determining what recovery
should be allowed? If the Commission uses a revenue approach for
recovery, what should the baseline criteria be for determining whether
a carrier qualifies for revenue recovery? With regard to revenue
recovery, the Commission recognizes that existing intercarrier
compensation revenues may be a significant source of free cash flow and
regulated revenues for some carriers, and the Commission requests data
to help quantify the impact of intercarrier compensation reform on the
industry and consumers. The Commission requests data to analyze
existing revenues, assess the magnitude of the revenue reductions
resulting from the proposed reforms, and determine the appropriate size
and scope of a recovery mechanism.
139. The Commission does not believe that recovery needs to be
revenue neutral given that carriers have a variety of regulated (e.g.,
not only switched but also special access) and non-regulated revenues.
The Commission asks whether an adequate opportunity for recovery
already exists given the variety of regulated and non-regulated
services provided over multi-purpose networks.
140. In evaluating the criteria for recovery, the Commission seeks
comment on doing so through reasonable end-user charges and the CAF.
The Commission seeks comment on a rate benchmark that would impute
benchmark revenues to carriers before becoming eligible for additional
revenue recovery. The Commission seeks comment on what elements should
be included in a rate benchmark, the appropriate dollar amount for such
a benchmark, and whether, and how, it should change over time. The
Commission's prior reforms of interstate access charges often allowed
carriers to recover at least part of their costs through an increased
interstate subscriber line charge or SLC, which is a flat-rated charge
that recovers some or all of the interstate portion of the local loop
from an end user. The Commission
[[Page 11645]]
seeks comment on the role that interstate SLCs should play in
intercarrier compensation reform and whether and how the SLC could be
used for recovery purposes, including intrastate revenue recovery,
either by modifying how the SLC operates or increasing the caps on
SLCs.
141. The Commission also recognizes that some high-cost, insular,
and Tribal areas may need explicit support to maintain service because
there may be no private business case to serve such areas. The
Commission seeks comment on how to reform intercarrier compensation and
universal service in tandem so that such areas receive any ongoing
support necessary to ensure that they continue to receive quality and
affordable services, and to ensure that providers serving those areas
can continue to advance connectivity where it lags far behind the rest
of the nation. As noted above, one of the proposed principles guiding
universal service reform is controlling the size of the universal
service fund and reducing waste and inefficiency. This proposed
principle likewise informs the Commission's intercarrier compensation
reforms, and the Commission asks commenters how best to calibrate any
intercarrier compensation recovery to be consistent with this
principle. The Commission proposes that a provider first seek recovery
through reasonable end-user charges, if adopted, before receiving
support under the CAF. The Commission seeks comment on what obligations
should apply to any universal service funding a carrier receives as
part of intercarrier compensation reform. To the extent such funding is
provided outside of the CAF, should there be specific public interest
conditions and/or reporting tied to receipt of such universal service
funds, such as broadband build-out requirements, and if so, what
conditions would further the Commission's goals? The Commission also
asks whether there is an objective and auditable metric that balances
the policy goal of a gradual migration away from the current
intercarrier compensation system while not putting undue pressure on a
provider's ability to repay debt and make investment in IP facilities
that were made in reliance on these revenue flows. To minimize such
concerns, the Commission seeks comment on whether it should apply any
criteria at the outset, before reform begins, to determine which
providers are eligible to receive recovery from the CAF and which
providers are not.
142. The Commission also seeks comment on whether any cost or
revenue recovery mechanism could provide rate-of-return carriers
greater incentives for efficient operation. In light of the relative
strengths and weaknesses of rate-of-return regulation and incentive
regulation, and given the direction of proposed universal service
reforms, we believe that it may be possible to adopt a recovery
framework that provides incentives for carriers to operate efficiently,
while still providing reasonable certainty and stability. The
Commission therefore seeks comment on an alternative framework for
determining such recovery, as well as any alternative proposals that
commenters would recommend. Specifically, the Commission seeks comment
on a possible revenue recovery framework for rate-of-return carriers
that departs from traditional rate-of-return principles. The Commission
also seeks comment on whether recovery mechanisms under consideration
may affect and be affected by the existing separations process and any
future separations reform.
L. Reducing Inefficiencies and Waste by Curbing Arbitrage Opportunities
143. The Commission seeks comment on proposals to address the
National Broadband Plan recommendation that the Commission adopt
interim rules to reduce arbitrage and specifically seeks comment on the
applicability of intercarrier compensation to voice over Internet
protocol (VoIP), and measures to address phantom traffic and access
stimulation.
144. The Commission believes that its proposals to address the
treatment of VoIP traffic for purposes of intercarrier compensation and
to adopt rules to address phantom traffic and access stimulation will
reduce inefficient use of resources and promote investment and
innovation. Service providers will benefit from increased certainty and
predictability regarding future revenues and reduced billing disputes
and litigation, enabling companies to direct capital resources toward
broadband investment.
145. The Commission seeks comment on the appropriate intercarrier
compensation framework for VoIP traffic. The Commission has never
addressed whether interconnected VoIP is subject to intercarrier
compensation rules and, if so, the applicable rate for such traffic.
Consistent with the National Broadband Plan recommendation, the
Commission seeks comment on the appropriate treatment of interconnected
VoIP traffic for purposes of intercarrier compensation. The Commission
seeks comment on a range of approaches, including how to define the
precise nature and timing of particular intercarrier compensation
payment obligations. The Commission seeks comment on whether particular
reform options would have retroactive effect, and whether such
retroactivity would be counterproductive. Under one alternative, the
Commission could adopt bill-and-keep for interconnected VoIP traffic.
Alternatively, the Commission could determine that interconnected VoIP
traffic is subject to intercarrier compensation charges under a regime
unique to interconnected VoIP traffic. Further, the Commission could
determine that interconnected VoIP traffic is subject to intercarrier
compensation--whether standard rates or VoIP-specific rates--but only
as of some future date. Another option would be for the Commission to
determine that interconnected VoIP traffic is subject to the same
intercarrier compensation charges--intrastate access, interstate
access, and reciprocal compensation--as other voice telephone service
traffic both today, and during any intercarrier compensation reform
transition. The Commission also seeks comment on other approaches that
have been proposed for addressing the intercarrier compensation
obligations associated with VoIP traffic.
146. In addition, the Commission proposes to amend its rules to
help ensure that service providers receive sufficient information
associated with each call terminated on their networks to identify the
originating provider for the call. The Commission's proposal balances a
desire to facilitate resolution of billing disputes with a reluctance
to regulate in areas where industry resolution has, in many cases,
proven effective. The Commission proposes modifying its rules to
require that the calling party's telephone number be provided by the
originating service provider and to prohibit stripping or altering call
signaling information. The proposed modifications would also require
all providers involved in transmitting a call from the originating to
the terminating provider to transmit, unaltered, information
identifying the calling party to the subsequent provider in a call path
unless industry standards permit or require altering the information.
For service providers using SS7 to pass information about traffic, the
proposed rules require originating providers to populate the SS7
calling party number (CPN) field. The Commission recognizes that some
service providers do not use SS7 signaling, and instead rely on MF
signaling. To the extent that the Commission proposes expanding its
rules beyond SS7, it likewise proposes
[[Page 11646]]
amending the rules to require service providers using MF signaling to
pass CPN information, or the charge number (CN) if it differs from the
CPN, in the Multi Frequency Automatic Number Identification (MF ANI)
field. Further, the proposed rules would clarify, consistent with
industry practice, that populating the SS7 CN field with information
other than the charge number to be billed for a call is prohibited. In
addition, the proposed rules would prohibit altering or stripping
signaling information in the CN as well as CPN field. The proposed
rules would apply to all forms of traffic on the PSTN, including
jurisdictionally intrastate traffic, as well as traffic originated or
transferred using IP protocols.
147. The Commission also seeks comment on specific revisions to its
interstate access rules to address access stimulation. In broad terms,
access stimulation is an arbitrage scheme employed to take advantage of
intercarrier compensation rates by generating elevated traffic volumes
to maximize revenues. Access stimulation occurs when, for example, a
LEC enters into an arrangement with a provider of high call volume
operations such as chat lines, adult entertainment calls, and ``free''
conference calls. Access stimulation imposes undue costs on consumers,
inefficiently diverting the flow of capital away from more productive
uses such as broadband deployment, and harms competition.
148. To address access stimulation, the Commission proposes to
adopt a trigger based on the existence of access revenue sharing
arrangements. Once a particular LEC meets the trigger, it would be
subject to modified access charge rules that would vary depending upon
the nature of the carrier at issue. To address the possibility of
access stimulation activity by a National Exchange Carrier Association
(NECA) tariff participant, under the proposed rules, a carrier would
lose eligibility to participate in the NECA tariffs 45 days after
meeting the trigger, or 45 days after the effective date of this rule
if it currently meets the trigger. Such a carrier leaving the NECA
tariff would have to file its own tariff(s) for interstate switched
access, pursuant to the rules set forth for carriers subject to Sec.
61.38, 47 CFR 61.38. A carrier filing interstate exchange access
tariffs pursuant to Sec. 61.38, 47 CFR 61.38, of the Commission's
rules would be required to file a new tariff within 45 days of meeting
the proposed trigger if the costs and demand arising from the new
revenue sharing arrangement had not been reflected in its most recent
tariff filing. LECs filing access tariffs pursuant to Sec. 61.39, 47
CFR 61.39, of the Commission's rules currently base their rates on
historical costs and demand. Once such a carrier meets the relevant
trigger under the proposed rules, it would lose the eligibility to file
tariffs based on historical costs under that section. Instead, it would
be required to file revised interstate access tariffs using the
procedures set forth for carriers subject to Sec. 61.38, 47 CFR 61.38,
of the Commission's rules, establishing its rates based on projected
costs and demand. The Commission proposes that when competitive LECs
meet the trigger, they would be required to benchmark to the rate of
the BOC in the state in which the competitive LEC operates, or the
independent incumbent LEC with the largest number of access lines in
the state if there is no BOC in the state, if they are not already
doing so. The competitive LEC would have to file a revised tariff
within 45 days of meeting the relevant trigger, or within 45 days of
the effective date of the rule if it currently meets the trigger.
149. The Commission further proposes to require LECs that meet the
trigger to file tariffs on a notice period other than the statutory
seven or fifteen days that would result in deemed lawful treatment.
Both competitive LECs and incumbent LECs would be required to file on
not less than 16 days' notice. The Commission seeks comment on this
analysis of the deemed lawful provision of section 204(a)(3), 47 U.S.C.
204(a)(3), and its proposed filing requirements. Finally, if a LEC
failed to comply with the proposed tariffing requirements, the
Commission would find such a practice to be an effort to conceal its
noncompliance with the substantive rules proposed above that would
disqualify the tariff from deemed lawful status. Such incumbent LECs
would be subject to refund liability for earnings over the maximum
allowable rate-of-return, and competitive LECs would be subject to
refund liability for the difference between the rates charged and the
rate that would have been charged if the carrier had used the
prevailing BOC rate, or the rate of the independent LEC with the
largest number of access lines in the state if there is no BOC.
150. The record contains other alternatives for addressing access
stimulation, on which the Commission seeks comment, including trigger-
based proposals, categorical approaches and other potential actions.
The Commission invites parties to quantify the extent of traffic
stimulation involving reciprocal compensation rates between CMRS
providers and competitive LECs, and the steps that could be taken to
address such stimulation activity. The Commission invites parties to
comment on these proposals as well as on other regulatory and policy
implications of access stimulation.
151. Finally, the Commission seeks comment on whether the actions
it proposes in this Notice should encourage incumbent LECs to move to
IP-to-IP interconnection. The Commission seeks comment on several
issues related to intercarrier compensation reform, including other
steps we can take to promote IP-to-IP interconnection, network edges
and points of interconnection, transiting, and disputes that have
arisen over other technical issues in intercarrier compensation rules
and carrier practices. For each of these issues, the Commission asks
whether it should address the issue as part of comprehensive
intercarrier compensation reform, and if so, at what stage of reform it
should be addressed, and what actions the Commission should take. The
Commission invites parties to refresh the record in this proceeding
regarding: (1) Interpretation of the intraMTA rule; (2) disputes
regarding rating and routing of traffic; and (3) the appropriate
intercarrier compensation regime applicable to virtual central office
code calls to distant ISPs. The Commission also seeks comment on
whether there are any other outstanding technical issues related to
intercarrier compensation reform that the Commission should address,
and, if so, when and how the Commission should address them.
II. Procedural Matters
A. Initial Regulatory Flexibility Analysis Initial Regulatory
Flexibility Analysis
152. 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 a substantial number of small entities by the policies and rules
proposed in this 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. 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.
[[Page 11647]]
1. Need for, and Objectives of, the Proposed Rules
153. The NPRM seeks comment on a variety of issues relating to
comprehensive reform of universal service and intercarrier
compensation. As discussed in the NPRM, the Commission believes that
such reform will eliminate waste and inefficiency while modernizing and
reorienting these programs on a fiscally responsible path to extending
the benefits of broadband throughout America. Bringing robust,
affordable broadband to all Americans is the infrastructure challenge
of the 21st century. To meet this challenge, the NPRM proposes to
fundamentally modernize the Commission's Universal Service Fund (USF)
and intercarrier compensation system, eliminating waste and
inefficiency.
154. Millions of Americans live in areas where they cannot enjoy
the economic, social and civic benefits of broadband. Meanwhile,
fundamental inefficiencies and waste affect both USF and intercarrier
compensation. In many areas of the country, USF does not target
funding, subsidizes a competitor to a voice and broadband provider that
offers service without government assistance, or supports several voice
networks in a single area. Similarly, inefficient intercarrier
compensation rules have led to wasteful arbitrage opportunities like
phantom traffic and access stimulation. We face these problems because
our universal service rules and our intercarrier compensation system,
designed for 20th century networks and market dynamics, have not been
comprehensively reassessed in more than a decade, even though the
communications landscape has changed dramatically. Due to the
interrelationship between USF and intercarrier compensation, and the
importance of both to the nation's broadband goals, reform of the two
programs must be tackled together.
155. In the NPRM, the Commission proposes to transform the existing
high-cost program--the component of USF directed toward high-cost,
rural, and insular areas--into a new, more efficient, broadband-focused
Connect America Fund (CAF).
156. In the first stage of reform, beginning in 2012, the
Commission proposes to update the public interest obligations that
pertain to current and future recipients. The Commission also proposes
to transition funds from less efficient uses to more efficient uses.
Over a period of a few years, the Commission proposes to phase out
Interstate Access Support (IAS) and funding for competitive eligible
telecommunications carriers (ETCs), subject to possible exceptions. In
addition, the Commission seeks comment on a set of proposals to
eliminate waste and inefficiency, improve incentives for rational
investment and operation by companies operating in rural areas, and set
rate-of-return companies on the path to incentive-based regulation.
Specifically, the Commission seeks comment on: (a) Establishing
benchmarks for reimbursable capital and operating costs; (b) modifying
high-cost loop support reimbursement percentages and eliminate loop
support known as ``safety net''; (c) eliminating local switching
support as a separate funding mechanism; (d) eliminating the
reimbursement of corporate operations expenses; and (e) capping total
high-cost support at $3,000 per line per year for carriers operating in
the continental United States.
157. The Commission also proposes to create a CAF program that
would immediately make available support for broadband in unserved
areas and to test the use of a competitive funding process. The
Commission seeks comment on this proposal, including proposed CAF
eligibility requirements, the proposed framework for a CAF auction, and
post-auction process, administration, and management and oversight of
the CAF program.
158. In the second stage, the Commission proposes to transition all
remaining high-cost programs to the CAF, which would provide ongoing
support to maintain and advance broadband across the country in areas
that are uneconomic to serve absent such support, with voice service
ultimately provided as an application over broadband networks. The
Commission seeks comment on options for determining support levels
under the CAF, including the use of a model and/or competitive bidding.
The Commission also seeks comment on an alternative that would limit
the full transition to a subset of geographic areas, such as those
served by price cap companies, while continuing to provide ongoing
support based on reasonable actual investment to smaller, rate-of-
return companies. The Commission also seeks comment on whether USF
should support mobile voice and/or mobile broadband service in all
areas of the country.
159. The Commission further proposes a variety of measures,
including establishing performance goals and improving reporting
requirements to increase accountability and better track performance of
the Fund as a whole.
160. The NPRM also seeks comment on proposals to comprehensively
reform intercarrier compensation in order to bring the benefits of
broadband to all Americans. The current intercarrier compensation
system's distorted incentives and wasted resources are a roadblock to a
world-leading broadband ecosystem. Reform of the current morass of
regulatory distinctions and access charges will help to modernize the
Commission's rules to advance broadband, reduce waste and inefficiency,
increase accountability, and lead to market-driven outcomes that
promote investment.
161. At the outset, the NPRM seeks comment on the Commission's
authority to pursue intercarrier compensation reform, identifies
certain goals of intercarrier compensation reform, and seeks comment on
how possible intercarrier compensation rate methodologies would advance
those goals. The NPRM also seeks comment on the appropriate transition
away from the current per-minute intercarrier compensation rates,
including two possible approaches. One approach relies on the
Commission and states to act within their existing roles in regulating
intercarrier compensation, and the other follows the federal and state
roles established for reciprocal compensation under the 1996 Act.
Within these approaches, the NPRM identifies a range of possible
outcomes for the sequencing of reductions for specific rates and seeks
comment on other implementation details, including the timing of any
transition. In addition, the NPRM seeks comment on how the Commission
could provide a recovery mechanism as part of any comprehensive reform
and how to structure recovery with the appropriate incentives to
accelerate the migration to IP broadband networks.
162. The NPRM also seeks comment on rules intended to reduce
incentives for wasteful arbitrage. First, to address existing
uncertainty, the NPRM invites comment on the appropriate intercarrier
compensation framework for VoIP traffic. Second, the NPRM seeks comment
on: (1) Amendments to the Commission's call signaling rules to address
phantom traffic; and (2) amendments to the Commission's interstate
access rules to address access stimulation and to ensure that rates
remain just and reasonable. Finally, the NPRM seeks comment on other
issues related to intercarrier compensation reform including network
edges and points of interconnection, transiting, and disputes that have
arisen over
[[Page 11648]]
technical issues in intercarrier compensation rules and carrier
practices.
2. Legal Basis
163. The legal basis for any action that may be taken pursuant to
the NPRM is contained in sections 1, 2, 4(i), 201 through 206, 214, 218
through 220, 251, 252, 254, 256, 303(r), 332, 403, and 706 of the
Communications Act of 1934, as amended, 47 U.S.C. 151, 152, 154(i), 201
through 206, 214, 218 through 220, 251, 252, 254, 256 303(r), 332, 403
and 706 and Sec. Sec. 1.1 and 1.1421 of the Commission's rules, 47 CFR
1.1, 1.421.
3. Description and Estimate of the Number of Small Entities to Which
the Proposed Rules Will Apply
164. 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 proposed rules, if adopted. 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. A small-business concern'' is one which: (1) Is independently
owned and operated; (2) is not dominant in its field of operation; and
(3) satisfies any additional criteria established by the SBA.
165. Small Businesses. Nationwide, there are a total of
approximately 27.5 million small businesses, according to the SBA.
166. 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 2007, there were 3,188 firms in
this category, total, that operated for the entire year. Of this total,
3,144 firms had employment of 999 or fewer employees, and 44 firms had
employment of 1,000 employees or more. Thus, under this size standard,
the majority of firms can be considered small.
167. Local Exchange Carriers (LECs). Neither the Commission nor the
SBA has developed a size standard for small businesses specifically
applicable to local exchange services. 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, 1,307 carriers reported
that they were incumbent local exchange service providers. Of these
1,307 carriers, an estimated 1,006 have 1,500 or fewer employees and
301 have more than 1,500 employees. Consequently, the Commission
estimates that most providers of local exchange service are small
entities that may be affected by the rules and policies proposed in the
NPRM.
168. Incumbent Local Exchange Carriers (incumbent LECs). Neither
the Commission nor the SBA has developed a size standard for small
businesses specifically applicable to incumbent local exchange
services. 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, 1,307 carriers reported that they were incumbent local
exchange service providers. Of these 1,307 carriers, an estimated 1,006
have 1,500 or fewer employees and 301 have more than 1,500 employees.
Consequently, the Commission estimates that most providers of incumbent
local exchange service are small businesses that may be affected by
rules adopted pursuant to the NPRM.
169. We have included small incumbent LECs in this present RFA
analysis. As noted above, a ``small business'' under the RFA is one
that, inter alia, meets the pertinent small business size standard
(e.g., a telephone communications business having 1,500 or fewer
employees), and ``is not dominant in its field of operation.'' The
SBA's Office of Advocacy contends that, for RFA purposes, small
incumbent LECs are not dominant in their field of operation because any
such dominance is not ``national'' in scope. We have therefore included
small incumbent LECs in this RFA analysis, although we emphasize that
this RFA action has no effect on Commission analyses and determinations
in other, non-RFA contexts.
170. Competitive Local Exchange Carriers (competitive LECs),
Competitive Access Providers (CAPs), Shared-Tenant Service Providers,
and Other Local Service Providers. Neither the Commission nor the SBA
has developed a small business size standard specifically for these
service providers. The appropriate size standard under SBA rules is for
the category Wired Telecommunications Carriers. Under that size
standard, such a business is small if it has 1,500 or fewer employees.
According to Commission data, 1,442 carriers reported that they were
engaged in the provision of either competitive local exchange services
or competitive access provider services. Of these 1,442 carriers, an
estimated 1,256 have 1,500 or fewer employees and 186 have more than
1,500 employees. In addition, 17 carriers have reported that they are
Shared-Tenant Service Providers, and all 17 are estimated to have 1,500
or fewer employees. In addition, 72 carriers have reported that they
are Other Local Service Providers. Of the 72, seventy 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, Shared-Tenant Service
Providers, and Other Local Service Providers are small entities that
may be affected by rules adopted pursuant to the NPRM.
171. Interexchange Carriers (IXCs). Neither the Commission nor the
SBA has developed a size standard for small businesses specifically
applicable to interexchange services. 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, 359 companies reported
that their primary telecommunications service activity was the
provision of interexchange services. Of these 359 companies, an
estimated 317 have 1,500 or fewer employees and 42 have more than 1,500
employees. Consequently, the Commission estimates that the majority of
interexchange service providers are small entities that may be affected
by rules adopted pursuant to the NPRM.
172. Prepaid Calling Card Providers. Neither the Commission nor the
SBA has developed a small business size standard specifically for
prepaid calling card providers. The appropriate size standard under SBA
rules is for the category Telecommunications Resellers. Under that size
standard, such a business is small if it has 1,500 or fewer employees.
According to Commission data, 193 carriers have reported that they are
engaged in the provision of prepaid calling cards. Of these, an
estimated all 193 have 1,500 or fewer employees and none have more than
1,500 employees. Consequently, the Commission estimates that the
majority of prepaid calling card providers are small entities that may
be affected by rules adopted pursuant to the NPRM.
173. Local Resellers. The SBA has developed a small business size
standard for the category of Telecommunications Resellers. Under that
size standard, such a business is small if it has 1,500 or fewer
employees. According to Commission data, 213 carriers have reported
that they are
[[Page 11649]]
engaged in the provision of local resale services. Of these, an
estimated 211 have 1,500 or fewer employees and two have more than
1,500 employees. Consequently, the Commission estimates that the
majority of local resellers are small entities that may be affected by
rules adopted pursuant to the NPRM.
174. Toll Resellers. The SBA has developed a small business size
standard for the category of Telecommunications Resellers. Under that
size standard, such a business is small if it has 1,500 or fewer
employees. According to Commission data, 881 carriers have reported
that they are engaged in the provision of toll resale services. Of
these, an estimated 857 have 1,500 or fewer employees and 24 have more
than 1,500 employees. Consequently, the Commission estimates that the
majority of toll resellers are small entities that may be affected by
rules adopted pursuant to the NPRM.
175. Other Toll Carriers. Neither the Commission nor the SBA has
developed a size standard for small businesses specifically applicable
to Other Toll Carriers. This category includes toll carriers that do
not fall within the categories of interexchange carriers, operator
service providers, prepaid calling card providers, satellite service
carriers, or toll resellers. 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, 284 companies reported that their primary
telecommunications service activity was the provision of other toll
carriage. Of these, an estimated 279 have 1,500 or fewer employees and
five have more than 1,500 employees. Consequently, the Commission
estimates that most Other Toll Carriers are small entities that may be
affected by the rules and policies adopted pursuant to the NPRM.
176. 800 and 800-Like Service Subscribers. Neither the Commission
nor the SBA has developed a small business size standard specifically
for 800 and 800-like service (toll free) subscribers. The appropriate
size standard under SBA rules is for the category Telecommunications
Resellers. Under that size standard, such a business is small if it has
1,500 or fewer employees. The most reliable source of information
regarding the number of these service subscribers appears to be data
the Commission collects on the 800, 888, 877, and 866 numbers in use.
According to our data, as of September 2009, the number of 800 numbers
assigned was 7,860,000; the number of 888 numbers assigned was
5,588,687; the number of 877 numbers assigned was 4,721,866; and the
number of 866 numbers assigned was 7,867,736. We do not have data
specifying the number of these subscribers that are not independently
owned and operated or have more than 1,500 employees, and thus are
unable at this time to estimate with greater precision the number of
toll free subscribers that would qualify as small businesses under the
SBA size standard. Consequently, we estimate that there are 7,860,000
or fewer small entity 800 subscribers; 5,588,687 or fewer small entity
888 subscribers; 4,721,866 or fewer small entity 877 subscribers; and
7,867,736 or fewer small entity 866 subscribers.
177. Wireless Telecommunications Carriers (except Satellite). Since
2007, the SBA has recognized wireless firms within this new, broad,
economic census category. Prior to that time, such firms were within
the now-superseded categories of Paging and Cellular and Other Wireless
Telecommunications. Under the present and prior categories, the SBA has
deemed a wireless business to be small if it has 1,500 or fewer
employees. For this category, census data for 2007 show that there were
1,383 firms that operated for the entire year. Of this total, 1,368
firms had employment of 999 or fewer employees and 15 had employment of
1,000 employees or more. Similarly, according to Commission data, 413
carriers reported that they were engaged in the provision of wireless
telephony, including cellular service, Personal Communications Service
(PCS), and Specialized Mobile Radio (SMR) Telephony services. Of these,
an estimated 261 have 1,500 or fewer employees and 152 have more than
1,500 employees. Consequently, the Commission estimates that
approximately half or more of these firms can be considered small.
Thus, using available data, we estimate that the majority of wireless
firms can be considered small.
178. Broadband Personal Communications Service. The broadband
personal communications service (PCS) spectrum is divided into six
frequency blocks designated A through F, and the Commission has held
auctions for each block. The Commission defined ``small entity'' for
Blocks C and F as an entity that has average gross revenues of $40
million or less in the three previous calendar years. For Block F, an
additional classification for ``very small business'' was added and is
defined as an entity that, together with its affiliates, has average
gross revenues of not more than $15 million for the preceding three
calendar years. These standards defining ``small entity'' in the
context of broadband PCS auctions have been approved by the SBA. No
small businesses, within the SBA-approved small business size standards
bid successfully for licenses in Blocks A and B. There were 90 winning
bidders that qualified as small entities in the Block C auctions. A
total of 93 small and very small business bidders won approximately 40
percent of the 1,479 licenses for Blocks D, E, and F. In 1999, the
Commission re-auctioned 347 C, E, and F Block licenses. There were 48
small business winning bidders. In 2001, the Commission completed the
auction of 422 C and F Broadband PCS licenses in Auction 35. Of the 35
winning bidders in this auction, 29 qualified as ``small'' or ``very
small'' businesses. Subsequent events, concerning Auction 35, including
judicial and agency determinations, resulted in a total of 163 C and F
Block licenses being available for grant. In 2005, the Commission
completed an auction of 188 C block licenses and 21 F block licenses in
Auction 58. There were 24 winning bidders for 217 licenses. Of the 24
winning bidders, 16 claimed small business status and won 156 licenses.
In 2007, the Commission completed an auction of 33 licenses in the A,
C, and F Blocks in Auction 71. Of the 14 winning bidders, six were
designated entities. In 2008, the Commission completed an auction of 20
Broadband PCS licenses in the C, D, E and F block licenses in Auction
78.
179. Advanced Wireless Services. In 2008, the Commission conducted
the auction of Advanced Wireless Services (``AWS'') licenses. This
auction, which was designated as Auction 78, offered 35 licenses in the
AWS 1710-1755 MHz and 2110-2155 MHz bands (``AWS-1''). The AWS-1
licenses were licenses for which there were no winning bids in Auction
66. That same year, the Commission completed Auction 78. A bidder with
attributed average annual gross revenues that exceeded $15 million and
did not exceed $40 million for the preceding three years (``small
business'') received a 15 percent discount on its winning bid. A bidder
with attributed average annual gross revenues that did not exceed $15
million for the preceding three years (``very small business'')
received a 25 percent discount on its winning bid. A bidder that had
combined total assets of less than $500 million and combined gross
revenues of less than $125 million in each of the last two years
qualified
[[Page 11650]]
for entrepreneur status. Four winning bidders that identified
themselves as very small businesses won 17 licenses. Three of the
winning bidders that identified themselves as a small business won five
licenses. Additionally, one other winning bidder that qualified for
entrepreneur status won 2 licenses.
180. Narrowband Personal Communications Services. In 1994, the
Commission conducted an auction for Narrowband PCS licenses. A second
auction was also conducted later in 1994. For purposes of the first two
Narrowband PCS auctions, ``small businesses'' were entities with
average gross revenues for the prior three calendar years of $40
million or less. Through these auctions, the Commission awarded a total
of 41 licenses, 11 of which were obtained by four small businesses. To
ensure meaningful participation by small business entities in future
auctions, the Commission adopted a two-tiered small business size
standard in the Narrowband PCS Second Report and Order. A ``small
business'' is an entity that, together with affiliates and controlling
interests, has average gross revenues for the three preceding years of
not more than $40 million. A ``very small business'' is an entity that,
together with affiliates and controlling interests, has average gross
revenues for the three preceding years of not more than $15 million.
The SBA has approved these small business size standards. A third
auction was conducted in 2001. Here, five bidders won 317 (Metropolitan
Trading Areas and nationwide) licenses. Three of these claimed status
as a small or very small entity and won 311 licenses.
181. Paging (Private and Common Carrier). In the Paging Third
Report and Order, we developed a small business size standard for
``small businesses'' and ``very small businesses'' for purposes of
determining their eligibility for special provisions such as bidding
credits and installment payments. A ``small business'' is an entity
that, together with its affiliates and controlling principals, has
average gross revenues not exceeding $15 million for the preceding
three years. Additionally, a ``very small business'' is an entity that,
together with its affiliates and controlling principals, has average
gross revenues that are not more than $3 million for the preceding
three years. The SBA has approved these small business size standards.
According to Commission data, 291 carriers have reported that they are
engaged in Paging or Messaging Service. Of these, an estimated 289 have
1,500 or fewer employees, and two have more than 1,500 employees.
Consequently, the Commission estimates that the majority of paging
providers are small entities that may be affected by our action. An
auction of Metropolitan Economic Area licenses commenced on February
24, 2000, and closed on March 2, 2000. Of the 985 licenses auctioned,
440 were sold. Fifty-seven companies claiming small business status
won.
182. 220 MHz Radio Service--Phase I Licensees. The 220 MHz service
has both Phase I and Phase II licenses. Phase I licensing was conducted
by lotteries in 1992 and 1993. There are approximately 1,515 such non-
nationwide licensees and four nationwide licensees currently authorized
to operate in the 220 MHz band. The Commission has not developed a
small business size standard for small entities specifically applicable
to such incumbent 220 MHz Phase I licensees. To estimate the number of
such licensees that are small businesses, we apply the small business
size standard under the SBA rules applicable to Wireless
Telecommunications Carriers (except Satellite). Under this category,
the SBA deems a wireless business to be small if it has 1,500 or fewer
employees. The Commission estimates that nearly all such licensees are
small businesses under the SBA's small business size standard that may
be affected by rules adopted pursuant to the NPRM.
183. 220 MHz Radio Service--Phase II Licensees. The 220 MHz service
has both Phase I and Phase II licenses. The Phase II 220 MHz service is
subject to spectrum auctions. In the 220 MHz Third Report and Order, 62
FR 15978, April 3, 1997, we adopted a small business size standard for
``small'' and ``very small'' businesses for purposes of determining
their eligibility for special provisions such as bidding credits and
installment payments. This small business size standard indicates that
a ``small business'' is an entity that, together with its affiliates
and controlling principals, has average gross revenues not exceeding
$15 million for the preceding three years. A ``very small business'' is
an entity that, together with its affiliates and controlling
principals, has average gross revenues that do not exceed $3 million
for the preceding three years. The SBA has approved these small
business size standards. Auctions of Phase II licenses commenced on
September 15, 1998, and closed on October 22, 1998. In the first
auction, 908 licenses were auctioned in three different-sized
geographic areas: three nationwide licenses, 30 Regional Economic Area
Group (EAG) Licenses, and 875 Economic Area (EA) Licenses. Of the 908
licenses auctioned, 693 were sold. Thirty-nine small businesses won
licenses in the first 220 MHz auction. The second auction included 225
licenses: 216 EA licenses and 9 EAG licenses. Fourteen companies
claiming small business status won 158 licenses.
184. Specialized Mobile Radio. The Commission awards small business
bidding credits in auctions for Specialized Mobile Radio (SMR)
geographic area licenses in the 800 MHz and 900 MHz bands to entities
that had revenues of no more than $15 million in each of the three
previous calendar years. The Commission awards very small business
bidding credits to entities that had revenues of no more than $3
million in each of the three previous calendar years. The SBA has
approved these small business size standards for the 800 MHz and 900
MHz SMR Services. The Commission has held auctions for geographic area
licenses in the 800 MHz and 900 MHz bands. The 900 MHz SMR auction was
completed in 1996. Sixty bidders claiming that they qualified as small
businesses under the $15 million size standard won 263 geographic area
licenses in the 900 MHz SMR band. The 800 MHz SMR auction for the upper
200 channels was conducted in 1997. Ten bidders claiming that they
qualified as small businesses under the $15 million size standard won
38 geographic area licenses for the upper 200 channels in the 800 MHz
SMR band. A second auction for the 800 MHz band was conducted in 2002
and included 23 BEA licenses. One bidder claiming small business status
won five licenses.
185. The auction of the 1,053 800 MHz SMR geographic area licenses
for the General Category channels was conducted in 2000. Eleven bidders
won 108 geographic area licenses for the General Category channels in
the 800 MHz SMR band qualified as small businesses under the $15
million size standard. In an auction completed in 2000, a total of
2,800 Economic Area licenses in the lower 80 channels of the 800 MHz
SMR service were awarded. Of the 22 winning bidders, 19 claimed small
business status and won 129 licenses. Thus, combining all three
auctions, 40 winning bidders for geographic licenses in the 800 MHz SMR
band claimed status as small business.
186. In addition, there are numerous incumbent site-by-site SMR
licensees and licensees with extended implementation authorizations in
the 800 and 900 MHz bands. We do not know how many firms provide 800
MHz or 900 MHz geographic area SMR pursuant to extended implementation
authorizations, nor how many of these
[[Page 11651]]
providers have annual revenues of no more than $15 million. One firm
has over $15 million in revenues. In addition, we do not know how many
of these firms have 1500 or fewer employees. We assume, for purposes of
this analysis, that all of the remaining existing extended
implementation authorizations are held by small entities, as that small
business size standard is approved by the SBA.
187. Broadband Radio Service and Educational Broadband Service.
Broadband Radio Service systems, previously referred to as Multipoint
Distribution Service (MDS) and Multichannel Multipoint Distribution
Service (MMDS) systems, and ``wireless cable,'' transmit video
programming to subscribers and provide two-way high speed data
operations using the microwave frequencies of the Broadband Radio
Service (BRS) and Educational Broadband Service (EBS) (previously
referred to as the Instructional Television Fixed Service (ITFS)). In
connection with the 1996 BRS auction, the Commission established a
small business size standard as an entity that had annual average gross
revenues of no more than $40 million in the previous three calendar
years. The BRS auctions resulted in 67 successful bidders obtaining
licensing opportunities for 493 Basic Trading Areas (BTAs). Of the 67
auction winners, 61 met the definition of a small business. BRS also
includes licensees of stations authorized prior to the auction. At this
time, we estimate that of the 61 small business BRS auction winners, 48
remain small business licensees. In addition to the 48 small businesses
that hold BTA authorizations, there are approximately 392 incumbent BRS
licensees that are considered small entities. After adding the number
of small business auction licensees to the number of incumbent
licensees not already counted, we find that there are currently
approximately 440 BRS licensees that are defined as small businesses
under either the SBA or the Commission's rules. The Commission has
adopted three levels of bidding credits for BRS: (i) A bidder with
attributed average annual gross revenues that exceed $15 million and do
not exceed $40 million for the preceding three years (small business)
is eligible to receive a 15 percent discount on its winning bid; (ii) a
bidder with attributed average annual gross revenues that exceed $3
million and do not exceed $15 million for the preceding three years
(very small business) is eligible to receive a 25 percent discount on
its winning bid; and (iii) a bidder with attributed average annual
gross revenues that do not exceed $3 million for the preceding three
years (entrepreneur) is eligible to receive a 35 percent discount on
its winning bid. In 2009, the Commission conducted Auction 86, which
offered 78 BRS licenses. Auction 86 concluded with ten bidders winning
61 licenses. Of the ten, two bidders claimed small business status and
won 4 licenses; one bidder claimed very small business status and won
three licenses; and two bidders claimed entrepreneur status and won six
licenses.
188. In addition, the SBA's Cable Television Distribution Services
small business size standard is applicable to EBS. There are presently
2,032 EBS licensees. All but 100 of these licenses are held by
educational institutions. Educational institutions are included in this
analysis as small entities. Thus, we estimate that at least 1,932
licensees are small businesses. Since 2007, Cable Television
Distribution Services have been defined within the broad economic
census category of Wired Telecommunications Carriers; that category is
defined as follows: ``This industry comprises establishments primarily
engaged in operating and/or providing access to transmission facilities
and infrastructure that they own and/or lease for the transmission of
voice, data, text, sound, and video using wired telecommunications
networks. Transmission facilities may be based on a single technology
or a combination of technologies.'' The SBA defines a small business
size standard for this category as any such firms having 1,500 or fewer
employees. The SBA has developed a small business size standard for
this category, which is: All such firms having 1,500 or fewer
employees. According to Census Bureau data for 2007, there were a total
of 955 firms in this previous category that operated for the entire
year. Of this total, 939 firms had employment of 999 or fewer
employees, and 16 firms had employment of 1000 employees or more. Thus,
under this size standard, the majority of firms can be considered small
and may be affected by rules adopted pursuant to the NPRM.
189. 700 MHz Band Licenses. The Commission previously adopted
criteria for defining three groups of small businesses for purposes of
determining their eligibility for special provisions such as bidding
credits. The Commission defined a ``small business'' as an entity that,
together with its affiliates and controlling principals, has average
gross revenues not exceeding $40 million for the preceding three years.
A ``very small business'' is defined as an entity that, together with
its affiliates and controlling principals, has average gross revenues
that are not more than $15 million for the preceding three years.
Additionally, the Lower 700 MHz Band had a third category of small
business status for Metropolitan/Rural Service Area (``MSA/RSA'')
licenses, identified as ``entrepreneur'' and defined as an entity that,
together with its affiliates and controlling principals, has average
gross revenues that are not more than $3 million for the preceding
three years. The SBA approved these small size standards. The
Commission conducted an auction in 2002 of 740 Lower 700 MHz Band
licenses (one license in each of the 734 MSAs/RSAs and one license in
each of the six Economic Area Groupings (EAGs)). Of the 740 licenses
available for auction, 484 licenses were sold to 102 winning bidders.
Seventy-two of the winning bidders claimed small business, very small
business or entrepreneur status and won a total of 329 licenses. The
Commission conducted a second Lower 700 MHz Band auction in 2003 that
included 256 licenses: 5 EAG licenses and 476 Cellular Market Area
licenses. Seventeen winning bidders claimed small or very small
business status and won 60 licenses, and nine winning bidders claimed
entrepreneur status and won 154 licenses. In 2005, the Commission
completed an auction of 5 licenses in the Lower 700 MHz Band,
designated Auction 60. There were three winning bidders for five
licenses. All three winning bidders claimed small business status.
190. In 2007, the Commission adopted the 700 MHz Second Report and
Order, 72 FR 48814, August 24, 2007, which revised the band plan for
the commercial (including Guard Band) and public safety spectrum,
adopted services rules, including stringent build-out requirements, an
open platform requirement on the C Block, and a requirement on the D
Block licensee to construct and operate a nationwide, interoperable
wireless broadband network for public safety users. In 2008, the
Commission conducted Auction 73 which offered all available, commercial
700 MHz Band licenses (1,099 licenses) for bidding using the
Commission's standard simultaneous multiple-round (SMR) auction format
for the A, B, D, and E Block licenses and an SMR auction design with
hierarchical package bidding (HPB) for the C Block licenses. For
Auction 73, a bidder with attributed average annual gross revenues that
did not exceed $15 million for the preceding three years (very small
business) qualified for a 25 percent
[[Page 11652]]
discount on its winning bids. A bidder with attributed average annual
gross revenues that exceeded $15 million, but did not exceed $40
million for the preceding three years, qualified for a 15 percent
discount on its winning bids. At the conclusion of Auction 73, 36
winning bidders identifying themselves as very small businesses won 330
of the 1,090 licenses, and 20 winning bidders identifying themselves as
a small business won 49 of the 1,090 licenses. The provisionally
winning bids for the A, B, C, and E Block licenses exceeded the
aggregate reserve prices for those blocks. However, the provisionally
winning bid for the D Block license did not meet the applicable reserve
price and thus did not become a winning bid.
191. 700 MHz Guard Band Licensees. In the 700 MHz Guard Band Order,
65 FR 17594, April 4, 2000, we adopted a small business size standard
for ``small businesses'' and ``very small businesses'' for purposes of
determining their eligibility for special provisions such as bidding
credits and installment payments. A ``small business'' is an entity
that, together with its affiliates and controlling principals, has
average gross revenues not exceeding $40 million for the preceding
three years. Additionally, a ``very small business'' is an entity that,
together with its affiliates and controlling principals, has average
gross revenues that are not more than $15 million for the preceding
three years. An auction of 52 Major Economic Area (MEA) licenses
commenced on September 6, 2000, and closed on September 21, 2000. Of
the 104 licenses auctioned, 96 licenses were sold to nine bidders. Five
of these bidders were small businesses that won a total of 26 licenses.
A second auction of 700 MHz Guard Band licenses commenced on February
13, 2001 and closed on February 21, 2001. All eight of the licenses
auctioned were sold to three bidders. One of these bidders was a small
business that won a total of two licenses.
192. Cellular Radiotelephone Service. Auction 77 was held to
resolve one group of mutually exclusive applications for Cellular
Radiotelephone Service licenses for unserved areas in New Mexico.
Bidding credits for designated entities were not available in Auction
77. In 2008, the Commission completed the closed auction of one
unserved service area in the Cellular Radiotelephone Service,
designated as Auction 77. Auction 77 concluded with one provisionally
winning bid for the unserved area totaling $25,002.
193. Private Land Mobile Radio (``PLMR''). PLMR systems serve an
essential role in a range of industrial, business, land transportation,
and public safety activities. These radios are used by companies of all
sizes operating in all U.S. business categories, and are often used in
support of the licensee's primary (non-telecommunications) business
operations. For the purpose of determining whether a licensee of a PLMR
system is a small business as defined by the SBA, we use the broad
census category, Wireless Telecommunications Carriers (except
Satellite). This definition provides that a small entity is any such
entity employing no more than 1,500 persons. The Commission does not
require PLMR licensees to disclose information about number of
employees, so the Commission does not have information that could be
used to determine how many PLMR licensees constitute small entities
under this definition. We note that PLMR licensees generally use the
licensed facilities in support of other business activities, and
therefore, it would also be helpful to assess PLMR licensees under the
standards applied to the particular industry subsector to which the
licensee belongs.
194. As of March 2010, there were 424,162 PLMR licensees operating
921,909 transmitters in the PLMR bands below 512 MHz. We note that any
entity engaged in a commercial activity is eligible to hold a PLMR
license, and that any revised rules in this context could therefore
potentially impact small entities covering a great variety of
industries.
195. Rural Radiotelephone Service. The Commission has not adopted a
size standard for small businesses specific to the Rural Radiotelephone
Service. A significant subset of the Rural Radiotelephone Service is
the Basic Exchange Telephone Radio System (BETRS). In the present
context, we will use the SBA's small business size standard applicable
to Wireless Telecommunications Carriers (except Satellite), i.e., an
entity employing no more than 1,500 persons. There are approximately
1,000 licensees in the Rural Radiotelephone Service, and the Commission
estimates that there are 1,000 or fewer small entity licensees in the
Rural Radiotelephone Service that may be affected by the rules and
policies proposed herein.
196. Air-Ground Radiotelephone Service. The Commission has not
adopted a small business size standard specific to the Air-Ground
Radiotelephone Service. We will use SBA's small business size standard
applicable to Wireless Telecommunications Carriers (except Satellite),
i.e., an entity employing no more than 1,500 persons. There are
approximately 100 licensees in the Air-Ground Radiotelephone Service,
and we estimate that almost all of them qualify as small under the SBA
small business size standard and may be affected by rules adopted
pursuant to the NPRM.
197. Aviation and Marine Radio Services. Small businesses in the
aviation and marine radio services use a very high frequency (VHF)
marine or aircraft radio and, as appropriate, an emergency position-
indicating radio beacon (and/or radar) or an emergency locator
transmitter. The Commission has not developed a small business size
standard specifically applicable to these small businesses. For
purposes of this analysis, the Commission uses the SBA small business
size standard for the category Wireless Telecommunications Carriers
(except Satellite), which is 1,500 or fewer employees. Most applicants
for recreational licenses are individuals. Approximately 581,000 ship
station licensees and 131,000 aircraft station licensees operate
domestically and are not subject to the radio carriage requirements of
any statute or treaty. For purposes of our evaluations in this
analysis, we estimate that there are up to approximately 712,000
licensees that are small businesses (or individuals) under the SBA
standard. In addition, between December 3, 1998 and December 14, 1998,
the Commission held an auction of 42 VHF Public Coast licenses in the
157.1875-157.4500 MHz (ship transmit) and 161.775-162.0125 MHz (coast
transmit) bands. For purposes of the auction, the Commission defined a
``small'' business as an entity that, together with controlling
interests and affiliates, has average gross revenues for the preceding
three years not to exceed $15 million dollars. In addition, a ``very
small'' business is one that, together with controlling interests and
affiliates, has average gross revenues for the preceding three years
not to exceed $3 million dollars. There are approximately 10,672
licensees in the Marine Coast Service, and the Commission estimates
that almost all of them qualify as ``small'' businesses under the above
special small business size standards and may be affected by rules
adopted pursuant to the NPRM.
198. Fixed Microwave Services. Fixed microwave services include
common carrier, private operational-fixed, and broadcast auxiliary
radio services. At present, there are approximately 22,015 common
carrier fixed licensees and 61,670 private operational-fixed licensees
and broadcast auxiliary radio licensees in the microwave services. The
Commission has not created a size standard for a small business
[[Page 11653]]
specifically with respect to fixed microwave services. For purposes of
this analysis, the Commission uses the SBA small business size standard
for Wireless Telecommunications Carriers (except Satellite), which is
1,500 or fewer employees. The Commission does not have data specifying
the number of these licensees that have more than 1,500 employees, and
thus is unable at this time to estimate with greater precision the
number of fixed microwave service licensees that would qualify as small
business concerns under the SBA's small business size standard.
Consequently, the Commission estimates that there are up to 22,015
common carrier fixed licensees and up to 61,670 private operational-
fixed licensees and broadcast auxiliary radio licensees in the
microwave services that may be small and may be affected by the rules
and policies adopted herein. We note, however, that the common carrier
microwave fixed licensee category includes some large entities.
199. Offshore Radiotelephone Service. This service operates on
several UHF television broadcast channels that are not used for
television broadcasting in the coastal areas of states bordering the
Gulf of Mexico. There are approximately 55 licensees in this service.
We are unable to estimate at this time the number of licensees that
would qualify as small under the SBA's small business size standard for
Cellular and Other Wireless Telecommunications services. Under that SBA
small business size standard, a business is small if it has 1,500 or
fewer employees.
200. 39 GHz Service. The Commission created a special small
business size standard for 39 GHz licenses--an entity that has average
gross revenues of $40 million or less in the three previous calendar
years. An additional size standard for ``very small business'' is: An
entity that, together with affiliates, has average gross revenues of
not more than $15 million for the preceding three calendar years. The
SBA has approved these small business size standards. The auction of
the 2,173 39 GHz licenses began on April 12, 2000 and closed on May 8,
2000. The 18 bidders who claimed small business status won 849
licenses. Consequently, the Commission estimates that 18 or fewer 39
GHz licensees are small entities that may be affected by rules adopted
pursuant to the NPRM.
201. Local Multipoint Distribution Service. Local Multipoint
Distribution Service (LMDS) is a fixed broadband point-to-multipoint
microwave service that provides for two-way video telecommunications.
The auction of the 986 LMDS licenses began and closed in 1998. The
Commission established a small business size standard for LMDS licenses
as an entity that has average gross revenues of less than $40 million
in the three previous calendar years. An additional small business size
standard for ``very small business'' was added as an entity that,
together with its affiliates, has average gross revenues of not more
than $15 million for the preceding three calendar years. The SBA has
approved these small business size standards in the context of LMDS
auctions. There were 93 winning bidders that qualified as small
entities in the LMDS auctions. A total of 93 small and very small
business bidders won approximately 277 A Block licenses and 387 B Block
licenses. In 1999, the Commission re-auctioned 161 licenses; there were
32 small and very small businesses winning that won 119 licenses.
202. 218-219 MHz Service. The first auction of 218-219 MHz spectrum
resulted in 170 entities winning licenses for 594 Metropolitan
Statistical Area (MSA) licenses. Of the 594 licenses, 557 were won by
entities qualifying as a small business. For that auction, the small
business size standard was an entity that, together with its
affiliates, has no more than a $6 million net worth and, after federal
income taxes (excluding any carry over losses), has no more than $2
million in annual profits each year for the previous two years. In the
218-219 MHz Report and Order and Memorandum Opinion and Order, 64 FR
59656, November 3, 1999, we established a small business size standard
for a ``small business'' as an entity that, together with its
affiliates and persons or entities that hold interests in such an
entity and their affiliates, has average annual gross revenues not to
exceed $15 million for the preceding three years. A ``very small
business'' is defined as an entity that, together with its affiliates
and persons or entities that hold interests in such an entity and its
affiliates, has average annual gross revenues not to exceed $3 million
for the preceding three years. These size standards will be used in
future auctions of 218-219 MHz spectrum.
203. 2.3 GHz Wireless Communications Services. This service can be
used for fixed, mobile, radiolocation, and digital audio broadcasting
satellite uses. The Commission defined ``small business'' for the
wireless communications services (WCS) auction as an entity with
average gross revenues of $40 million for each of the three preceding
years, and a ``very small business'' as an entity with average gross
revenues of $15 million for each of the three preceding years. The SBA
has approved these definitions. The Commission auctioned geographic
area licenses in the WCS service. In the auction, which was conducted
in 1997, there were seven bidders that won 31 licenses that qualified
as very small business entities, and one bidder that won one license
that qualified as a small business entity.
204. 1670-1675 MHz Band. An auction for one license in the 1670-
1675 MHz band was conducted in 2003. The Commission defined a ``small
business'' as an entity with attributable average annual gross revenues
of not more than $40 million for the preceding three years and thus
would be eligible for a 15 percent discount on its winning bid for the
1670-1675 MHz band license. Further, the Commission defined a ``very
small business'' as an entity with attributable average annual gross
revenues of not more than $15 million for the preceding three years and
thus would be eligible to receive a 25 percent discount on its winning
bid for the 1670-1675 MHz band license. One license was awarded. The
winning bidder was not a small entity.
205. 3650-3700 MHz band. In March 2005, the Commission released a
Report and Order and Memorandum Opinion and Order, 70 FR 24712, May 11,
2005, that provides for nationwide, non-exclusive licensing of
terrestrial operations, utilizing contention-based technologies, in the
3650 MHz band (i.e., 3650-3700 MHz). As of April 2010, more than 1270
licenses have been granted and more than 7433 sites have been
registered. The Commission has not developed a definition of small
entities applicable to 3650-3700 MHz band nationwide, non-exclusive
licensees. However, we estimate that the majority of these licensees
are Internet Access Service Providers (ISPs) and that most of those
licensees are small businesses.
206. 24 GHz--Incumbent Licensees. This analysis may affect
incumbent licensees who were relocated to the 24 GHz band from the 18
GHz band, and applicants who wish to provide services in the 24 GHz
band. The applicable SBA small business size standard is that of
``Cellular and Other Wireless Telecommunications'' companies. This
category provides that such a company is small if it employs no more
than 1,500 persons. We believe that there are only two licensees in the
24 GHz band that were relocated from the 18 GHz band, Teligent and TRW,
Inc. It is our understanding that Teligent and its related companies
have less than 1,500 employees, though this may change in the future.
TRW is not a small entity.
[[Page 11654]]
Thus, only one incumbent licensee in the 24 GHz band is a small
business entity.
207. 24 GHz--Future Licensees. With respect to new applicants in
the 24 GHz band, the size standard for ``small business'' is an entity
that, together with controlling interests and affiliates, has average
annual gross revenues for the three preceding years not in excess of
$15 million. ``Very small business'' in the 24 GHz band is an entity
that, together with controlling interests and affiliates, has average
gross revenues not exceeding $3 million for the preceding three years.
The SBA has approved these small business size standards. These size
standards will apply to a future 24 GHz license auction, if held.
208. Satellite Telecommunications. Since 2007, the SBA has
recognized satellite firms within this revised category, with a small
business size standard of $15 million. The most current Census Bureau
data are from the economic census of 2007, and we will use those
figures to gauge the prevalence of small businesses in this category.
Those size standards are for the two census categories of ``Satellite
Telecommunications'' and ``Other Telecommunications.'' Under the
``Satellite Telecommunications'' category, a business is considered
small if it had $15 million or less in average annual receipts. Under
the ``Other Telecommunications'' category, a business is considered
small if it had $25 million or less in average annual receipts.
209. The first category of Satellite Telecommunications ``comprises
establishments primarily engaged in providing point-to-point
telecommunications services to other establishments in the
telecommunications and broadcasting industries by forwarding and
receiving communications signals via a system of satellites or
reselling satellite telecommunications.'' For this category, Census
Bureau data for 2007 show that there were a total of 512 firms that
operated for the entire year. Of this total, 464 firms had annual
receipts of under $10 million, and 18 firms had receipts of $10 million
to $24,999,999. Consequently, we estimate that the majority of
Satellite Telecommunications firms are small entities that might be
affected by rules adopted pursuant to the NPRM.
210. The second category of Other Telecommunications ``primarily
engaged in providing specialized telecommunications services, such as
satellite tracking, communications telemetry, and radar station
operation. This industry also includes establishments primarily engaged
in providing satellite terminal stations and associated facilities
connected with one or more terrestrial systems and capable of
transmitting telecommunications to, and receiving telecommunications
from, satellite systems. Establishments providing Internet services or
voice over Internet protocol (VoIP) services via client-supplied
telecommunications connections are also included in this industry.''
For this category, Census Bureau data for 2007 show that there were a
total of 2,383 firms that operated for the entire year. Of this total,
2,346 firms had annual receipts of under $25 million. Consequently, we
estimate that the majority of Other Telecommunications firms are small
entities that might be affected by our action.
211. Cable and Other Program Distribution. Since 2007, these
services have been defined within the broad economic census category of
Wired Telecommunications Carriers; that category is defined as follows:
``This industry comprises establishments primarily engaged in operating
and/or providing access to transmission facilities and infrastructure
that they own and/or lease for the transmission of voice, data, text,
sound, and video using wired telecommunications networks. Transmission
facilities may be based on a single technology or a combination of
technologies.'' The SBA has developed a small business size standard
for this category, which is: All such firms having 1,500 or fewer
employees. According to Census Bureau data for 2007, there were a total
of 955 firms in this previous category that operated for the entire
year. Of this total, 939 firms had employment of 999 or fewer
employees, and 16 firms had employment of 1000 employees or more. Thus,
under this size standard, the majority of firms can be considered small
and may be affected by rules adopted pursuant to the NPRM.
212. Cable Companies and Systems. The Commission has developed its
own small business size standards, for the purpose of cable rate
regulation. Under the Commission's rules, a ``small cable company'' is
one serving 400,000 or fewer subscribers, nationwide. Industry data
indicate that, of 1,076 cable operators nationwide, all but eleven are
small under this size standard. In addition, under the Commission's
rules, a ``small system'' is a cable system serving 15,000 or fewer
subscribers. Industry data indicate that, of 1,076 cable operators
nationwide, all but eleven are small under this size standard. In
addition, under the Commission's rules, a ``small system'' is a cable
system serving 15,000 or fewer subscribers. Industry data indicate
that, of 6,635 systems nationwide, 5,802 systems have under 10,000
subscribers, and an additional 302 systems have 10,000-19,999
subscribers. Thus, under this second size standard, most cable systems
are small.
213. Cable System Operators. The Act also contains a size standard
for small cable system operators, which is ``a cable operator that,
directly or through an affiliate, serves in the aggregate fewer than 1
percent of all subscribers in the United States and is not affiliated
with any entity or entities whose gross annual revenues in the
aggregate exceed $250,000,000.'' The Commission has determined that an
operator serving fewer than 677,000 subscribers shall be deemed a small
operator, if its annual revenues, when combined with the total annual
revenues of all its affiliates, do not exceed $250 million in the
aggregate. Industry data indicate that, of 1,076 cable operators
nationwide, all but ten are small under this size standard. We note
that the Commission neither requests nor collects information on
whether cable system operators are affiliated with entities whose gross
annual revenues exceed $250 million, and therefore we are unable to
estimate more accurately the number of cable system operators that
would qualify as small under this size standard.
214. Open Video Services. The open video system (OVS) framework was
established in 1996, and is one of four statutorily recognized options
for the provision of video programming services by local exchange
carriers. The OVS framework provides opportunities for the distribution
of video programming other than through cable systems. Because OVS
operators provide subscription services, OVS falls within the SBA small
business size standard covering cable services, which is ``Wired
Telecommunications Carriers.'' The SBA has developed a small business
size standard for this category, which is: All such firms having 1,500
or fewer employees. According to Census Bureau data for 2007, there
were a total of 955 firms in this previous category that operated for
the entire year. Of this total, 939 firms had employment of 999 or
fewer employees, and 16 firms had employment of 1000 employees or more.
Thus, under this second size standard, most cable systems are small and
may be affected by rules adopted pursuant to the NPRM. In addition, we
note that the Commission has certified some OVS operators, with some
now providing service. Broadband service providers (BSPs) are currently
the only significant holders of OVS certifications
[[Page 11655]]
or local OVS franchises. The Commission does not have financial or
employment information regarding the entities authorized to provide
OVS, some of which may not yet be operational. Thus, again, at least
some of the OVS operators may qualify as small entities.
215. Internet Service Providers. Since 2007, these services have
been defined within the broad economic census category of Wired
Telecommunications Carriers; that category is defined as follows:
``This industry comprises establishments primarily engaged in operating
and/or providing access to transmission facilities and infrastructure
that they own and/or lease for the transmission of voice, data, text,
sound, and video using wired telecommunications networks. Transmission
facilities may be based on a single technology or a combination of
technologies.'' The SBA has developed a small business size standard
for this category, which is: All such firms having 1,500 or fewer
employees. According to Census Bureau data for 2007, there were 3,188
firms in this category, total, that operated for the entire year. Of
this total, 3144 firms had employment of 999 or fewer employees, and 44
firms had employment of 1000 employees or more. Thus, under this size
standard, the majority of firms can be considered small. In addition,
according to Census Bureau data for 2007, there were a total of 396
firms in the category Internet Service Providers (broadband) that
operated for the entire year. Of this total, 394 firms had employment
of 999 or fewer employees, and two firms had employment of 1000
employees or more. Consequently, we estimate that the majority of these
firms are small entities that may be affected by rules adopted pursuant
to the NPRM.
216. Internet Publishing and Broadcasting and Web Search Portals.
Our action may pertain to interconnected VoIP services, which could be
provided by entities that provide other services such as e-mail, online
gaming, web browsing, video conferencing, instant messaging, and other,
similar IP-enabled services. The Commission has not adopted a size
standard for entities that create or provide these types of services or
applications. However, the Census Bureau has identified firms that
``primarily engaged in (1) publishing and/or broadcasting content on
the Internet exclusively or (2) operating Web sites that use a search
engine to generate and maintain extensive databases of Internet
addresses and content in an easily searchable format (and known as Web
search portals).'' The SBA has developed a small business size standard
for this category, which is: All such firms having 500 or fewer
employees. According to Census Bureau data for 2007, there were 2,705
firms in this category that operated for the entire year. Of this
total, 2,682 firms had employment of 499 or fewer employees, and 23
firms had employment of 500 employees or more. Consequently, we
estimate that the majority of these firms are small entities that may
be affected by rules adopted pursuant to the NPRM.
217. Data Processing, Hosting, and Related Services. Entities in
this category ``primarily * * * provid[e] infrastructure for hosting or
data processing services.'' The SBA has developed a small business size
standard for this category; that size standard is $25 million or less
in average annual receipts. According to Census Bureau data for 2007,
there were 8,060 firms in this category that operated for the entire
year. Of these, 7,744 had annual receipts of under $24,999,999.
Consequently, we estimate that the majority of these firms are small
entities that may be affected by rules adopted pursuant to the NPRM.
218. All Other Information Services. The Census Bureau defines this
industry as including ``establishments primarily engaged in providing
other information services (except news syndicates, libraries,
archives, Internet publishing and broadcasting, and Web search
portals).'' Our action pertains to interconnected VoIP services, which
could be provided by entities that provide other services such as e-
mail, online gaming, web browsing, video conferencing, instant
messaging, and other, similar IP-enabled services. The SBA has
developed a small business size standard for this category; that size
standard is $7.0 million or less in average annual receipts. According
to Census Bureau data for 2007, there were 367 firms in this category
that operated for the entire year. Of these, 334 had annual receipts of
under $5.0 million, and an additional 11 firms had receipts of between
$5 million and $9,999,999. Consequently, we estimate that the majority
of these firms are small entities that may be affected by our action.
4. Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements for Small Entities
219. In this NPRM, the Commission seeks public comment on
comprehensive universal service and intercarrier compensation reform.
The transition to reformed universal service programs and new
intercarrier compensation rules could affect all carriers, including
small entities, and may include new administrative processes. In
proposing these reforms, the Commission seeks comment on various
reporting, recordkeeping, and other compliance requirements that may
apply to all carriers, including small entities. We seek comment on any
costs and burdens on small entities associated with the proposed rule,
including data quantifying the extent of those costs or burdens.
220. In this NPRM, the Commission proposes annual data collection
from high-cost and, ultimately, CAF recipients. The Commission also
proposes to require all such recipients to report on deployment,
adoption and pricing for their voice and broadband offerings.
221. The Commission also proposes to require recipients to file an
annual report of their financial condition and operations, which is
audited and certified by an independent certified public accountant,
and accompanied by a report of such audit. The report shall include, at
a minimum, balance sheets, income statements, statements of cash flow,
and notes to the financial statements, if available. The Commission
further proposes that the information included in these disclosures be
made available to the public to promote increased transparency and
efficiency. To minimize the cost and reporting burden on carriers, the
Commission proposes to allow those carriers that are required to file
financial reports with the Securities and Exchange Commission or the
Rural Utilities Service to satisfy this requirement by providing
electronic copies of the annual reports filed with those agencies to
the Commission so long as the reports meet the minimum information
requirements imposed by the Commission's rules and are filed with the
Commission by the deadline imposed in accordance with this requirement.
The Commission also proposes that recipients must test their broadband
networks for specific metrics on a periodic basis and report the
results to USAC. The results would be subject to an audit.
222. The Commission further seeks comment on any additional
reporting requirements that should be required of high-cost or CAF
recipients. For example, should there be additional reporting
requirements for providers serving Tribal lands and Native communities?
The Commission also seeks comment on how to transition from the current
reporting requirements to more comprehensive reporting requirements
that would apply to all high-cost and CAF recipients.
[[Page 11656]]
223. The Commission seeks comment on ways to target support more
directly to areas that are uneconomic to serve, including by targeting
support through disaggregation within study areas. We propose two
options for disaggregation that may require recordkeeping or reporting:
either a carrier may disaggregate in accordance with a plan approved by
the appropriate regulatory authority, or by self-certifying to the
appropriate regulatory authority a disaggregation plan.
224. The Commission also proposes the creation of a CAF program,
which includes the establishment of performance coverage requirements
and possible requirements applicable to parties receiving support to
demonstrate coverage and compliance with other possible metrics. The
Commission proposes that all recipients of CAF funding comply with
audit and recordkeeping requirements. The Commission proposes that
parties seeking to participate in a CAF auction and receive support to
meet a variety of eligibility criteria, which may involve reporting,
recordkeeping or other compliance requirements. Further, as part of a
CAF auction, we propose an auction process that would require the
completion of a pre-auction ``short-form'' application by all bidders
and a post-auction ``long-form application'' by winning bidders.
Finally, in the NPRM we seek comment on other potential requirements,
including requirements designed to ensure guarantee of performance for
winning bidders as well as certification requirements necessary to
receive CAF support.
225. Further, the Commission proposes to improve internal control
mechanisms to apply to the high-cost program and, ultimately, to the
CAF. We seek comment on improvements that can be made the section
254(e) certification process. We also seek comment on whether high-cost
universal support recipients should be subject to additional audit
requirements and data validation processes. We seek comment on whether
to modify or adopt additional record retention documents as well as
performance coverage requirements.
226. In the NPRM, the Commission seeks comment and data on issues
that must be addressed to comprehensively reform intercarrier
compensation. These issues include the appropriate path or transition
to modernize the existing rules, the ultimate end point for
intercarrier compensation reform, if and how carriers should be allowed
to recover costs or revenues that might be reduced by any intercarrier
compensation reforms, and data to analyze the effects of proposed
reforms and need for revenue recovery.
227. Compliance with a transition to a new intercarrier
compensation system may impact some small entities and may include new
or reduced administrative processes. For carriers that may be affected,
obligations may include certain reporting and recordkeeping
requirements to determine and establish their eligibility to receive
recovery from other sources as intercarrier compensation rates are
reduced. Additionally, these carriers may need to modify some
administrative processes relating to the billing and collection of
intercarrier compensation in order to comply with any new or revised
rules the Commission adopts as a result of the NPRM.
228. Proposed modifications to the rules to address arbitrage
opportunities also will affect certain carriers, potentially including
small entities. To the extent that the Commission addresses the
intercarrier compensation framework applicable to interconnected VoIP,
providers might be required to modify or adopt administrative,
recordkeeping, or other processes to implement that framework.
Moreover, the NPRM considers possible rule modifications to require
that call signaling information is passed completely and accurately to
terminating service providers, which may require service providers to
modify some administrative processes. Further, possible rule
modifications to address access stimulation, if adopted, may affect
certain carriers. For example, carriers that meet the revenue sharing
trigger or other thresholds proposed in the NPRM may be subject to
revised tariff filing or other requirements.
5. Steps Taken To Minimize the Significant Economic Impact on Small
Entities, and Significant Alternatives Considered
229. The RFA requires an agency to describe any significant,
specifically small business, 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 and
reporting requirements under the rules for such 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 such small
entities.''
230. The NPRM seeks comment from all interested parties. The
Commission is aware that some of the proposals under consideration may
impact small entities. Small entities are encouraged to bring to the
Commission's attention any specific concerns they may have with the
proposals outlined in the NPRM.
231. The Commission expects to consider the economic impact on
small entities, as identified in comments filed in response to the
NPRM, in reaching its final conclusions and taking action in this
proceeding.
232. In the NPRM, the Commission seeks comment on several issues
and measures that may apply to small entities in a unique fashion.
Specifically, the Commission seeks comment on whether certain public
interest obligations should be different for small entities. The
Commission also seeks comment on whether there should be an exception
to the proposed phase out of support for competitive ETCs, which could
be based, in whole or in part, on the size of the provider. And the
Commission seeks comment on whether to provide different transition
periods or different reform path for particular classes of carriers.
233. The Commission also seeks comment on the appropriate sequence
and timing of intercarrier rate reductions and alternative intercarrier
compensation methodologies that might be adopted as an end-point for
reform, including bill-and-keep, flat-rated intercarrier charges, or
other proposals. The Commission seeks comment on the impact to small
entities of reduced intercarrier rates under intercarrier compensation
reform transition options, including whether a different transition
period might be appropriate for particular classes of carriers.
234. The NPRM also seeks comment on the appropriate standard for
recovery and on whether reductions in intercarrier compensation rates
would impact all carriers in a similar manner. The Commission asks if
the recovery approach adopted should be different depending on the type
of carrier or regulation. The Commission also invites comment on
specific recovery considerations for rate-of-return carriers and
whether any cost or revenue recovery mechanism could provide rate-of-
return carriers with greater incentives for efficient operation.
235. Finally, the Commission seeks comment on whether separate
consideration for small entities is necessary or appropriate for each
of the following issues discussed in the NPRM: The potential impact of
rules governing interconnected VoIP traffic; the potential impact of
rules related to
[[Page 11657]]
call signaling; the potential impact of rules relating to access
stimulation, including revised tariff-filing requirements; the
potential impact of rules relating to interconnection and related
issues.
6. Federal Rules That May Duplicate, Overlap, or Conflict With the
Proposed Rules
236. None.
B. Paperwork Reduction Act Analysis
237. This document contains proposed new or modified information
collection requirements. 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 requirements contained in this document, as required by the
Paperwork Reduction Act of 1995, Public Law 104-13. In addition,
pursuant to the Small Business Paperwork Relief Act of 2002, Public Law
107-198, see 44 U.S.C. 3506(c)(4), we seek specific comment on how we
might further reduce the information collection burden for small
business concerns with fewer than 25 employees.
C. Ex Parte Presentations
238. This NPRM will be treated as a ``permit-but-disclose''
proceeding subject to the ``permit-but-disclose'' requirements under
Sec. 1.1206(b) of the Commission's rules. Ex parte presentations are
permissible if disclosed in accordance with Commission rules, except
during the Sunshine Agenda period when presentations, ex parte or
otherwise, are generally prohibited. Persons making oral ex parte
presentations are reminded that a memorandum summarizing a presentation
must contain a summary of the substance of the presentation 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. Additional rules pertaining to oral and written presentations
are set forth in Sec. 1.1206(b) of the Commission's rules.
D. Filing Requirements
239. Comments and Reply Comments. Pursuant to Sec. Sec. 1.415 and
1.419 of the Commission's rules, interested parties may file comments
and reply comments. Comments on the proposed rules are due on or before
April 18, 2011 and reply comments are due on or before May 23, 2011.
Joint Board comments are due on or before May 2, 2011. Comments on
Section XV are due on or before April 1, 2011 and reply comments on
Section XV are due on or before April 18, 2011. Written comments on the
Paperwork Reduction Act proposed information collection requirements
must be submitted by the public, Office of Management and Budget (OMB),
and other interested parties on or before May 2, 2011. All filings
should refer to CC Docket No 01-92, WC Docket Nos. 10-90, 07-135, and
05-337 and GN Docket No. 09-51. 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.
List of Subjects
47 CFR Part 36
Communications common carriers, Reporting and recordkeeping
requirements, Telephone, Uniform systems of accounts.
47 CFR Part 54
Communications common carriers, Reporting and recordkeeping
requirements, Telecommunications, Telephone.
47 CFR Parts 61 and 69
Communications common carriers, Reporting and recordkeeping
requirements, Telephone.
47 CFR Part 64
Communications common carriers, Individuals with disabilities,
Reporting and recordkeeping requirements, Telecommunications,
Telephone.
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
Proposed Rules
For the reasons discussed in the preamble, the Federal
Communications Commission proposes to amend 47 CFR parts 36, 54, 61,
64, and 69 to read as follows:
PART 36--JURISDICTIONAL SEPARATIONS PROCEDURES; STANDARD PROCEDURES
FOR SEPARATING TELECOMMUNICATIONS PROPERTY COSTS, REVENUES,
EXPENSES, TAXES AND RESERVES FOR TELECOMMUNICATIONS COMPANIES
1. The authority citation for part 36 continues to read as follows:
Authority: 47 U.S.C. Secs. 151, 154 (i) and (j), 205, 221(c),
254, 403 and 410.
2. Amend Sec. 36.605 by revising paragraph (b) to read as follows:
Sec. 36.605 Calculation of safety net additive.
* * * * *
(b) Calculation of safety net additive support: Until December 31,
2011, safety net additive support is equal to the amount of capped
support calculated pursuant to this subpart F in the qualifying year
minus the amount of support in the year prior to qualifying for support
subtracted from the difference between the uncapped expense adjustment
for the study area in the qualifying year minus the uncapped expense
adjustment in the year prior to qualifying for support as shown in the
following equation: Safety net additive support = (Uncapped support in
the qualifying year -Uncapped support in the base year)-(Capped support
in the qualifying year -Amount of support received in the base year).
For calendar year 2012 payments, the safety net additive shall be 75%
of the amount calculated pursuant to this section. For calendar year
2013 payments, the safety net additive shall be 50% of the amount
calculated pursuant to this section. For calendar year 2014 payments,
the safety net additive shall be 25% of the amount calculated pursuant
to this section. Beginning January 1, 2015, no carrier shall receive
the safety net additive.
* * * * *
3. Amend Sec. 36.621 by revising the last sentence of paragraph
(a)(4) introductory text and adding three additional sentences at the
end of paragraph (a)(4) introductory text to read as follows:
Sec. 36.621 Study area total unseparated loop cost.
(a) * * *
(4) * * * Total Corporate Operations Expense, for purposes of
calculating universal service support payments beginning July 1, 2001
and ending December 31, 2011, shall be limited to the lesser of Sec.
36.621(a)(4)(i) or (ii). For purposes of calculating universal service
support payments in calendar year 2012, total corporate operations
expense shall be limited to the lesser of Sec. 36.621(a)(4)(i) or (ii)
then multiplied by 67%. For purposes of calculating universal service
support payments in calendar year 2013, total corporate operations
expense shall be limited to the lesser of Sec. 36.621(a)(4)(i) or (ii)
then multiplied by 33%. Beginning January 1, 2014, Corporate Operations
Expense shall no longer be eligible for purposes of calculating
universal service payments.
* * * * *
4. Amend Sec. 36.631 by revising paragraphs (c)(1) and (2) and by
removing and reserving paragraph (d) to read as follows:
[[Page 11658]]
Sec. 36.631 Expense adjustment.
* * * * *
(c) * * *
(1) Until December 31, 2011, sixty-five percent of the study area
average unseparated loop cost per working loop as calculated pursuant
to Sec. 36.622(b) in excess of 115 percent of the national average for
this cost but not greater than 150 percent of the national average for
this cost as calculated pursuant to Sec. 36.622(a) multiplied by the
number of working loops reported in Sec. 36.611(h) for the study area.
Beginning January 1, 2012, fifty-five percent of the study area average
unseparated loop cost per working loop as calculated pursuant to Sec.
36.622(b) in excess of 115 percent of the national average for this
cost but not greater than 150 percent of the national average for this
cost as calculated pursuant to Sec. 36.622(a) multiplied by the number
of working loops reported in Sec. 36.611(h) for the study area; and
(2) Until December 31, 2011, seventy-five percent of the study area
average unseparated loop cost per working loop as calculated pursuant
to Sec. 36.622(b) in excess of 150 percent of the national average for
this cost as calculated pursuant to Sec. 36.622(a) multiplied by the
number of working loops reported in Sec. 36.611(h) for the study area.
Beginning January 1, 2012, sixty-five percent of the study area average
unseparated loop cost per working loop as calculated pursuant to Sec.
36.622(b) in excess of 150 percent of the national average for this
cost as calculated pursuant to Sec. 36.622(a) multiplied by the number
of working loops reported in Sec. 36.611(h) for the study area.
* * * * *
PART 54--UNIVERSAL SERVICE
5. The authority citation for Part 54 continues to read as follows:
Authority: 47 U.S.C. 151, 154(i), 201, 205, 214, and 254 unless
otherwise noted.
6. Amend Sec. 54.301 by adding two sentences at the end of
paragraph (a)(1) and by adding three sentences to the beginning of
paragraph (c)(5) to read as follows:
Sec. 54.301 Local switching support.
(a) * * *
(1) * * * Subject to specified exceptions, for calendar year 2012
payments, local switching support shall be 67% of the amount calculated
pursuant to this section and for calendar year 2013 payments, local
switching support shall be 33% of the amount calculated pursuant to
this section. Beginning January 1, 2014, no carrier shall receive local
switching support, subject to specified exceptions.
* * * * *
(c) * * *
(5) For calendar year 2012, for purposes of calculating local
switching support, the amount of corporate operations expense allocated
by this factor shall be multiplied by 67%. For calendar year 2013, for
purposes of calculating local switching support, the amount of
corporate operations expense allocated by this factor shall be
multiplied by 33%. Beginning January 1, 2014, corporate operations
expense shall no longer be eligible for purposes of calculating local
switching support. * * *
* * * * *
7. Add Sec. 54.302 to subpart D to read as follows:
Sec. 54.302 Annual per-line limit on universal service support.
Subject to specified exceptions, beginning January 1, 2012, each
study area in the continental United States shall be limited to $3,000
per-line annually in universal service support. For purposes of this
section, universal service support is defined as the sum of the amounts
calculated pursuant to Sec. Sec. 36.605, 36.631 of this chapter and
Sec. Sec. 54.301, 54.305, 54.309, 54.800 through 808 and 54.901
through 904. Line counts for purposes of this section shall be as of
the most recent line counts reported pursuant to Sec. 36.611(h) of
this chapter. The fund administrator, in order to limit support to
$3,000 for affected carriers, shall reduce safety net additive support,
high-cost loop support, local switching support, safety valve support,
forward-looking support, interstate access support, and interstate
common line support in proportion to the relative amounts of each
support mechanism to total support the study area would receive absent
such limitation.
8. Amend Sec. 54.305 by adding a sentence at the end of paragraph
(a) to read as follows:
Sec. 54.305 Sale or transfer of exchanges.
(a) * * * Five years after approval of the relevant study area
waiver for the sale or transfer of exchanges, the provisions of this
section are no longer applicable to acquired exchanges, if the acquired
exchanges have more than 30% of housing units unserved by broadband, as
indicated on the National Telecommunications and Information
Administration's broadband map and/or the Commission's Form 477 data
collection.
* * * * *
9. Amend Sec. 54.307 by revising paragraph (a) to read as follows:
Sec. 54.307 Support to a competitive eligible telecommunications
carrier.
(a) Calculation of support. A competitive eligible
telecommunications carrier shall receive universal service support to
the extent that the competitive eligible telecommunications carrier
captures the subscriber lines of an incumbent local exchange carrier
(LEC) or serves new subscriber lines in the incumbent LEC's service
area. Subject to specified exceptions beginning January 1, 2016, no
competitive eligible telecommunications carrier shall be eligible to
receive universal service support on the basis of this section. On or
after January 1, 2012, competitive eligible telecommunications carriers
shall be eligible to receive universal service support pursuant to
subpart L and subpart M of this part.
* * * * *
10. Amend Sec. 54.315 by adding a sentence at the end of paragraph
(a) to read as follows:
Sec. 54.315 Disaggregation and targeting of high-cost support.
(a) * * * On or before [60 days from effective date of adoption of
order], all rural incumbent local exchange carriers and rate-of-return
carriers for which high-cost universal service support pursuant to
Sec. Sec. 54.301, 54.303, and/or 54.305, subpart K, and/or subpart F
of Part 36 is available, that previously selected the disaggregation
path as described in paragraph (b) of this section, must select a
disaggregation path as described in paragraph (c) or (d) of this
section.
* * * * *
11. Amend Sec. 54.807 by revising paragraph (a) to read as
follows:
Sec. 54.807 Interstate access universal service support.
(a) Each Eligible Telecommunications Carrier (ETC) that provides
supported service within the study area of a price cap local exchange
carrier shall receive Interstate Access Universal Service Support for
each line that it serves within that study area. Subject to specified
exceptions, eligible telecommunications carriers shall be eligible to
receive Interstate Access Support as follows:
(1) During the 2012 calendar year, the interstate access support
available to incumbent local exchange carriers and competitive eligible
telecommunications carriers shall be capped at 50 percent of the amount
paid in 2011, excluding amounts paid during
[[Page 11659]]
2011 for true-ups or revisions for years prior to 2011. Interstate
access support payments shall be reduced, if necessary, by multiplying
each incumbent local exchange carrier's or competitive eligible
telecommunications carrier's support by the percentage factor necessary
to reduce the aggregate interstate access support to the capped
amounts.
(2) Interstate access support shall be eliminated beginning January
1, 2013, and no eligible telecommunications carrier shall receive
interstate access support, except as for true-ups and revisions related
to prior periods.
* * * * *
12. Amend Sec. 54.901 by adding paragraph (c) to read as follows:
Sec. 54.901 Calculation of Interstate Common Line Support.
* * * * *
(c) For calendar year 2012, for purposes of calculating Interstate
Common Line Support, corporate operations expense allocated to the
Common Line Revenue Requirement, pursuant to Sec. 69.409 of this
chapter, shall be reduced by multiplying the corporate operations
expense allocated by 67%. For calendar year 2013, for purposes of
calculating Interstate Common Line Support, corporate operations
expense allocated to the Common Line Revenue Requirement, pursuant to
Sec. 69.409 of this chapter, shall be reduced by multiplying the
corporate operations expense allocated by 33%. Beginning January 1,
2014, corporate operations expense shall no longer be eligible for
purposes of calculating Interstate Common Line Support.
13. Add subpart M to Part 54 to read as follows:
Subpart M--Competitive Bidding Program
Sec.
54.1001 Purpose.
54.1002 Areas eligible for support.
54.1003 Provider eligibility.
54.1004 Short-form applications for participation in competitive
bidding to apply for support.
54.1005 Competitive bidding process.
54.1006 Communications prohibited during the competitive bidding
process.
54.1007 Long-form application process for winning bidders.
54.1008 Default.
54.1009 Public interest obligations.
54.1010 Disbursements.
54.1011 Oversight.
Subpart M--Competitive Bidding Program
Sec. 54.1001 Purpose.
This subpart sets forth procedures for competitive bidding to
determine the recipients of universal service support available through
the first phase of the Connect America Fund and the amount(s) of
support that they may receive, subject to post-auction procedures
established by the Commission.
Sec. 54.1002 Areas eligible for support.
(a) Support may be made available for specific unserved areas
identified by the Commission.
(b) The Commission may assign relative coverage units to each
identified geographic area in connection with conducting competitive
bidding and disbursing support.
Sec. 54.1003 Provider eligibility.
(a) A party applying for support must be designated an Eligible
Telecommunications Carrier, or have applied for a designation as an
Eligible Telecommunications Carrier, for an area that includes unserved
area(s) with respect to which it applies for support.
(b) A party applying for support must, if specified and required by
the Commission, hold any necessary authority or conditional
authorization to provide voice service in the unserved area with
respect to which it applies for support.
Sec. 54.1004 Short-form applications for participation in competitive
bidding to apply for support.
(a) Public notice of the application process. When conducting
competitive bidding pursuant to this subpart, the Commission shall by
Public Notice announce the dates and procedures for submitting
applications to participate in related competitive bidding.
(b) Application contents. All parties submitting applications to
participate in competitive bidding pursuant to this subpart must
provide the following information in their application in a form
acceptable to the Commission.
(1) The identity of the applicant, i.e., the party seeking support,
including any information that the Commission may require regarding
parties that have an ownership or other interest in the applicant.
(2) The identities of up to three individuals designated to bid on
behalf of the applicant.
(3) The identities of all real parties in interest to any
agreements relating to the participation of the applicant in the
competitive bidding.
(4) Certification that the application discloses all real parties
in interest to any agreements involving the applicant's participation
in the competitive bidding.
(5) Certification that the applicant, any party capable of
controlling the applicant, and any related party with information
regarding the applicant's planned or actual participation in the
competitive bidding will not communicate any information regarding the
applicant's planned or actual participation in the competitive bidding
to any other party with an interest in any other applicant until after
the post-auction deadline for winning bidders to submit long-form
applications for support, unless the Commission by Public Notice
announces a different deadline.
(6) Certification that the applicant is in compliance with any and
all statutory or regulatory requirements for receiving universal
service support. The Commission may elect to accept as sufficient the
applicant's demonstration in its application that the applicant will be
in compliance at a point in time designated by the Commission.
(7) Such additional information as the Commission may require,
including but not limited to applicants certifying its qualifications
to receive support, providing its eligible telecommunications carrier
designation status and information regarding its authorization to
provide service, and specifying the unserved area applicant seeks to
provide service to.
(c) Demonstration of financial qualification. The Commission may
require as a prerequisite to participating in competitive bidding
pursuant to this subpart that applicants demonstrate their financial
qualifications or commitment to provide required services by depositing
funds, posting performance bonds, or any other means the Commission
considers appropriate.
(d) Application processing. (1) Commission staff shall review any
application submitted during the period for submission and before the
deadline for submission for completeness and compliance with the
Commission's rules. No applications submitted at any other time shall
be reviewed or considered.
(2) The Commission shall not permit any applicant to participate in
competitive bidding pursuant to this subpart to do so if, as of the
deadline for submitting applications, the application does not
adequately identify the applicant or does not include required
certifications.
(3) The Commission shall not permit any applicant to participate in
competitive bidding pursuant to this subpart to do so if, as of the
applicable deadline, the applicant has not provided any required
demonstration of financial qualifications that the Commission has
required.
[[Page 11660]]
(4) The Commission shall not permit applicants to make any major
modifications to their applications after the deadline for submitting
applications. The Commission shall not permit applicants to participate
in the competitive bidding if their applications require major
modifications to be made after deadline for submitting applications.
Major modifications include but are not limited to any changes to the
identity of the applicant or to the certifications required in the
application.
(5) The Commission may permit applicants to make minor
modifications to their applications after the deadline for submitting
applications. The Commission may establish deadlines for making some or
all permissible modifications to applications and may permit some or
all permissible modifications to be made at any time. Minor
modifications include correcting typographical errors in the
application and supplying non-material information that was
inadvertently omitted or was not available at the time the application
was submitted.
(6) After receipt and review of the applications, the Commission
shall by Public Notice identify all applicants that may participate in
an auction conducted pursuant to this subpart.
Sec. 54.1005 Competitive bidding process.
(a) Public notice of competitive bidding procedures. The Commission
shall by public notice establish detailed competitive bidding
procedures any time it conducts competitive bidding pursuant to this
subpart.
(b) Competitive bidding procedures. The Commission may conduct
competitive bidding pursuant to this subpart using any of the
procedures described below.
(1) The Commission may establish procedures for limiting the public
availability of information regarding applicants, applications, and
bids during a period of time covering the competitive bidding process.
The Commission may by Public Notice establish procedures for parties to
report the receipt of non-public information regarding applicants,
applications, and bids during any time the Commission has limited the
public availability of the information during the competitive bidding
process.
(2) The Commission may sequence or group multiple items subject to
bidding, such as multiple or overlapping self-defined geographic areas
eligible for support, and may conduct bidding either sequentially or
simultaneously.
(3) The Commission may establish procedures for bidding on
individual items and/or for combinations or packages of items.
(4) The Commission may establish reserve prices, and/or lowest or
maximum acceptable per-unit bid amounts, either for discrete items or
combinations or packages of items, which may be made public or kept
non-public during a period of time covering the competitive bidding
process.
(5) The Commission may prescribe the form and time for submitting
bids and may require that bids be submitted remotely, by telephonic or
electronic transmission, or in person.
(6) The Commission may prescribe the number of rounds during which
bids may be submitted, whether one or more, and may establish
procedures for determining when no more bids will be accepted.
(7) The Commission may require a minimum level of bidding activity.
(8) The Commission may establish acceptable bid amounts at the
opening of and over the course of bidding.
(9) The Commission may establish procedures for ranking and
comparing bids and specific performance requirements, if any, and
comparing and determining the winning bidders that may become
recipients of universal service support and the amount(s) of support
that they may receive, subject to post-auction procedures established
by the Commission.
(10) The Commission may identify winning bidder(s) for any
remaining amounts of support by considering bids in order of per-unit
bid amount. The Commission may skip bids that would require more
support than is available, or at its discretion, not identify winning
bidder(s) for the remaining funds and instead offer such funds in a
subsequent auction.
(11) The Commission may permit bidders the limited opportunity to
withdraw bids and, if so, establish procedures for doing so.
(12) The Commission may delay, suspend or cancel bidding before or
after bidding begins for any reason that affects the fair and efficient
conduct of the bidding, including natural disasters, technical
failures, administrative necessity or any other reason.
(c) Apportioning package bids. If the Commission elects to accept
bids for combinations or packages of items, the Commission may provide
a methodology for apportioning such bids to discrete items within the
combination or package when a discrete bid on an item is required to
implement any Commission rule.
(d) Public notice of competitive bidding results. After the
conclusion of competitive bidding, the Commission shall by public
notice identify the winning bidders that may become recipients of
universal service support and the amount(s) of support that they may
receive, subject to post-auction procedures established by the
Commission.
Sec. 54.1006 Communications prohibited during the competitive bidding
process.
(a) Prohibited communications. Each applicant, each party capable
of controlling an applicant, and each party related to an applicant
with information regarding an applicant's planned or actual
participation in the competitive bidding is prohibited from
communicating any information regarding the applicant's planned or
actual participation in the competitive bidding to any other party with
an interest in any other applicant to participate in the competitive
bidding from the deadline for submitting applications to participate in
the competitive bidding until after the post-auction deadline for
winning bidders to submit long-form applications for support, unless
the Commission by Public Notice announces a different deadline.
(b) Duty to report potentially prohibited communications. Any
applicant or related party receiving communications that may be
prohibited under this rule shall report the receipt of such
communications to the Commission.
(c) Procedures for reporting potentially prohibited communications.
The Commission may by Public Notice establish procedures for parties to
report the receipt of communications that may be prohibited under this
rule.
Sec. 54.1007 Long-form application process for winning bidders.
(a) Application deadline. Unless otherwise provided by public
notice, winning bidders for support must file a long-form application
for support within 10 business days of the public notice identifying
them as eligible to apply.
(b) Application contents. (1) Identification of the party seeking
the support.
(2) Information the Commission may require to demonstrate that the
applicant is legally, technically and financially qualified to receive
support, including but not limited to proof of its designation as an
Eligible Telecommunications Carrier for an area that includes the area
with respect to which support is requested.
(3) Disclosure of all parties with a controlling interest in the
applicant and any party with a greater than ten percent
[[Page 11661]]
ownership interest in the applicant, whether held directly or
indirectly.
(4) A detailed project description that identifies the unserved
area applicant seeks to serve, describes how the applicant will meet
public interest obligations and performance requirements, describes the
anticipated network, identifies the proposed technology or
technologies, demonstrates that the project is technically feasible,
and describes each specific development phase of the project, e.g.,
network design phase, construction period, deployment and maintenance
period.
(5) A detailed project schedule that identifies the following
project milestones: start and end date for network design; start and
end date for drafting and posting requests for proposal; start and end
date for selecting vendors and negotiating contracts; start date for
commencing construction; end date for completing construction; and
dates by which it will meet applicable requirements to receive the
installments of support for which it subsequently qualifies.
(6) Certifications that the applicant has available funds for all
project costs that exceed the amount of support to be received and that
the applicant will comply with all program requirements.
(7) Any guarantee of performance that the Commission may require by
Public Notice or other proceedings, including but not limited to,
letters of credit, performance bonds, or demonstration of financial
resources.
(c) Application processing. (1) No application will be considered
unless it has been submitted during the period specified by Public
Notice. No applications submitted or demonstrations made at any other
time shall be accepted or considered.
(2) The Commission shall deny any application that, as of the
submission deadline, either does not adequately identify the party
seeking support or does not include required certifications.
(3) After reviewing applications submitted, the Commission may
afford an opportunity for parties to make minor modifications to amend
applications or correct defects noted by the applicant, the Commission,
or other parties. Minor modifications include changing the individuals
authorized to bid for the applicant, correcting typographical errors in
the application, and supplying non-material information that was
inadvertently omitted or was not available at the time the application
was submitted.
(4) The Commission shall deny all applications to which major
modifications are made after the deadline for submitting applications.
Major modifications include any changes to the identity of the
applicant or to the certifications required in the application.
(5) After receipt and review of the applications, the Commission
shall release a Public Notice identifying all applications that have
been granted and the parties that are eligible to receive support.
Sec. 54.1008 Default.
Winning bidders that fail to substantially comply with the
requirements for filing the post-auction long-form application by the
applicable deadline shall be in default on their bids and subject to
such measures as the Commission may provide, including but not limited
to disqualification from future competitive bidding pursuant to this
subpart.
Sec. 54.1009 Public interest obligations.
(a) Applicants receiving support under this section must perform
the following under their public interest obligations:
(1) Speed. Applicants must provide broadband speeds of 4 Mbps
downstream (actual) and 1 Mbps upstream (actual), subject to specified
exceptions.
(2) Coverage requirement. Applicants must comply with the coverage
requirement established by the Commission and must comply with all
reasonable requests for service from end users in its coverage area.
(3) Deployment and duration of obligation. Applicants must complete
deployment within three years after receiving support and must fulfill
provider obligations under this section for five years upon completion
of deployment.
Sec. 54.1010 Disbursements.
(a) Support shall be disbursed to recipients in three stages, as
follows:
(1) One-half of the total possible support, if coverage were to be
extended to 100 percent of the units in the portion of the geographic
area deemed unserved, when a recipient's long-form application for
support with respect to a specific area is deemed granted.
(2) One-quarter of the total possible support with respect to a
specific geographic area when a recipient files a report demonstrating
coverage of 50 percent of the units in the portion of that area
previously deemed unserved.
(3) The remainder of the total possible support when a recipient
files a report demonstrating coverage of 100 percent of the units in
the portion of that area previously deemed unserved.
(b) If the Commission concludes for any reason that coverage of 100
percent of the units in the portion of a specific geographic area
previously deemed unserved will not be achieved, the Commission instead
may provide support based on the final total units covered in that
area. In such circumstances, the final disbursement will be the
difference between the total amount of support based on the final units
covered in that area and any support previously received with respect
to that area. Parties accepting a final disbursement for a specific
geographic area based on coverage of less than 100 percent of the units
in the portions of that area previously deemed uncovered waive any
claim for the remainder of support for which they previously were
eligible with respect to that area.
Sec. 54.1011 Oversight.
(a) Parties receiving support are subject to random compliance
audits and other investigations to ensure compliance with program rules
and orders.
(b) Parties receiving support shall submit to the Commission annual
reports for eight years after they qualify for support. The annual
reports shall include:
(1) Electronic coverage maps illustrating the area reached by new
services at a minimum scale of 1:240,000;
(2) A list of relevant census blocks previously deemed unserved,
with total resident population and resident population residing in
areas reached by new services (based on 2010 Census Bureau data and
estimates);
(3) A report regarding the services advertised to the population in
those areas; and
(4) Data received or used from speed tests analyzing network
performance for new broadband services in the area for which support
was received.
(c) No later than two months after providing service or two years
after receiving support, parties receiving support shall submit to the
Commission data from broadband speed tests for areas in which support
was received demonstrating broadband performance data to and from the
network meeting or exceeding the 4 Mbps downstream (actual) and 1 Mbps
upstream (actual).
(d) Parties receiving support and their agents are required to
retain any documentation prepared for or in connection with the
recipient's support for a period of not less than eight years. All such
documents shall be made available upon request to the Commission's
Office of Managing
[[Page 11662]]
Director, Wireless Telecommunications Bureau, Wireline Competition
Bureau, Office of Inspector General, and the Universal Service Fund
Administrator, and their auditors.
PART 61--TARIFFS
14. The authority citation for part 61 continues to read as
follows:
Authority: Secs. 1, 4(i), 4(j), 201-205 and 403 of the
Communications Act of 1934, as amended; 47 U.S.C. 151, 154(i),
154(j), 201-205 and 403, unless otherwise noted.
15. Amend Sec. 61.3 by adding paragraph (aaa) to read as follows:
Sec. 61.3 Definitions.
* * * * *
(aaa) Access revenue sharing. Access revenue sharing occurs when a
rate-of-return ILEC or a CLEC enters into an access revenue sharing
agreement that will result in a net payment to the other party
(including affiliates) to the access revenue sharing agreement, over
the course of the agreement. A rate-of-return ILEC or a CLEC meeting
this trigger is subject to revised interstate switched access charge
rules.
16. Amend Sec. 61.26 by revising paragraphs (b), (d) and (e) and
adding paragraph (g) to read as follows:
Sec. 61.26 Tariffing of competitive interstate switched exchange
access services.
* * * * *
(b) Except as provided in paragraphs (c), (e), and (g) of this
section, a CLEC shall not file a tariff for its interstate switched
exchange access services that prices those services above the higher
of:
(1) The rate charged for such services by the competing ILEC or
(2) The lower of:
(i) The benchmark rate described in paragraph (c) of this section
or
(ii) The lowest rate that the CLEC has tariffed for its interstate
exchange access services, within the six months preceding June 20,
2001.
* * * * *
(d) Except as provided in paragraph (g) of this section, and
notwithstanding paragraphs (b) and (c) of this section, in the event
that, after June 20, 2001, a CLEC begins serving end users in a
metropolitan statistical area (MSA) where it has not previously served
end users, the CLEC shall not file a tariff for its interstate exchange
access services in that MSA that prices those services above the rate
charged for such services by the competing ILEC.
(e) Rural exemption. Except as provided in paragraph (g) of this
section, and notwithstanding paragraphs (b) through (d) of this
section, a rural CLEC competing with a non-rural ILEC shall not file a
tariff for its interstate exchange access services that prices those
services above the rate prescribed in the NECA access tariff, assuming
the highest rate band for local switching. In addition to that NECA
rate, the rural CLEC may assess a presubscribed interexchange carrier
charge if, and only to the extent that, the competing ILEC assesses
this charge.
* * * * *
(g) Notwithstanding paragraphs (b) through (e) of this section, a
CLEC engaged in access revenue sharing, as that term is defined in
Sec. 61.3(aaa) shall not file a tariff for its interstate exchange
access services that prices those services above the rate prescribed in
the access tariff of the RBOC in the state, or, if there is no RBOC in
the state, the incumbent LEC with the largest number of access lines in
the state.
(1) A CLEC engaging in access revenue sharing, as that term is
defined in Sec. 61.3(aaa) shall file revised interstate switched
access tariffs within forty-five (45) days of commencing access revenue
sharing as that term is defined in Sec. 61.3(aaa) or within forty-five
(45) days of [the effective date of the Order] if the CLEC on that date
is engaged in access revenue sharing, as that term is defined in Sec.
61.3(aaa).
(2) A CLEC shall file the revised interstate access tariffs
required by paragraph (g)(1) of this section on at least sixteen (16)
days' notice.
17. Amend Sec. 61.39 by revising paragraph (a) and adding
paragraph (g) to read as follows:
Sec. 61.39 Optional supporting information to be submitted with
letters of transmittal for Access Tariff filings effective on or after
April 1, 1989, by local exchange carriers serving 50,000 or fewer
access lines in a given study area that are described as subset 3
carriers in Sec. 69.602.
(a) Scope. Except as provided in paragraph (g) of this section,
this section provides for an optional method of filing for any local
exchange carrier that is described as a subset 3 carrier in Sec.
69.602 of this chapter, which elects to issue its own Access Tariff for
a period commencing on or after April 1, 1989, and which serves 50,000
or fewer access lines in a study area as determined under Sec.
36.611(a)(8) of this chapter. However, the Commission may require any
carrier to submit such information as may be necessary for review of a
tariff filing. This section (other than the preceding sentence of this
paragraph) shall not apply to tariff filings of local exchange carriers
subject to price cap regulation.
* * * * *
(g) A local exchange carrier otherwise eligible to file a tariff
pursuant to this section may not do so if it is engaged in access
revenue sharing, as that term is defined in Sec. 61.3(aaa). A carrier
so engaged must file interstate access tariffs in accordance with Sec.
61.38 and Sec. 69.3(e)(12)(1) of this chapter.
18. Amend Sec. 61.58 by revising paragraph (a)(2)(i) and adding
paragraph (a)(2)(iv) to read as follows:
Sec. 61.58 Notice requirements.
(a)* * *
(2)(i) Except as provided in paragraph (a)(2)(iv) of this section,
local exchange carriers may file tariffs pursuant to the streamlined
tariff filing provisions of section 204(a)(3) of the Communications
Act. Such a tariff may be filed on 7 days' notice if it proposes only
rate decreases. Any other tariff filed pursuant to section 204(a)(3) of
the Communications Act, including those that propose a rate increase or
any change in terms and conditions, shall be filed on 15 days' notice.
Any tariff filing made pursuant to section 204(a)(3) of the
Communications Act must comply with the applicable cost support
requirements specified in this part.
* * * * *
(iv) A local exchange carrier engaging in access revenue sharing,
as that term is defined in Sec. 61.3(aaa), that is filing pursuant to
the provisions of Sec. 69.3(e)(12)(i) of this chapter shall file
revised tariffs on at least 16 days' notice.
* * * * *
PART 64--MISCELLANEOUS RULES RELATING TO COMMON CARRIERS
19. The authority citation for part 64 continues to read as
follows:
Authority: 47 U.S.C. 154, 254(k); secs. 403(b)(2)(B), (c), Pub.
L. 104-104, 110 Stat. 56. Interpret or apply 47 U.S.C. 201, 218,
222, 225, 226, 228, and 254(k) unless otherwise noted.
20. Amend Sec. 64.1601 by revising paragraph (a) to read as
follows:
Sec. 64.1601 Delivery requirements and privacy restrictions.
(a) Delivery. Except as provided in paragraphs (d) and (e) of this
section:
(1) Telecommunications providers and entities providing
interconnected voice over Internet protocol services who originate
interstate or intrastate traffic on the public switched telephone
network, or originate interstate or intrastate traffic that is destined
for the public switched telephone network, are required to transmit the
telephone number received from, or assigned to or otherwise associated
with the calling party to the next provider in the path
[[Page 11663]]
from the originating provider to the terminating provider, where such
transmission is feasible with network technology deployed at the time a
call is originated. The scope of this provision includes, but is not
limited to, circuit-switched and packetized transmission, such as
Internet protocol and any successor technologies. Entities subject to
this provision who use Signaling System 7 are required to transmit the
calling party number (CPN) associated with every interstate or
intrastate call in the SS7 CPN field to interconnecting providers, and
are required to transmit the calling party's charge number (CN) in the
SS7 CN field to interconnecting providers for any call where CN differs
from CPN. Entities subject to this provision who are not capable of
using SS7 but who use multifrequency (MF) signaling are required to
transmit CPN, or CN if it differs from CPN, associated with every
interstate or intrastate call, in the MF signaling automatic numbering
information (ANI) field.
(2) Telecommunications providers and entities providing
interconnected voice over Internet protocol services who are
intermediate providers in an interstate or intrastate call path must
pass, unaltered, to subsequent carriers in the call path, all signaling
information identifying the telephone number of the calling party, and,
if different, of the financially responsible party that is received
with a call, unless published industry standards permit or require
altering signaling information. This requirement applies to all SS7
information including, but not limited to CPN and CN, and also applies
to MF signaling information or other signaling information intermediate
providers receive with a call. This requirement also applies to
Internet protocol signaling messages, such as calling party identifiers
contained in Session Initiation Protocol (SIP) header fields, and to
equivalent identifying information as used in successor technologies.
* * * * *
PART 69--ACCESS CHARGES
21. The authority citation for part 69 continues to read as
follows:
Authority: 47 U.S.C. 154, 201, 202, 203, 205, 218, 220, 254,
403.
22. Section 69.3 is amended by revising paragraphs (e)(6) and
(e)(9) and adding paragraph (e)(12) to read as follows:
Sec. 69.3 Filing of access service tariffs.
* * * * *
(e) * * *
(6) Except as provided in paragraph (e)(12) of this section, a
telephone company or companies that elect to file such a tariff shall
notify the association not later than March 1 of the year the tariff
becomes effective, if such company or companies did not file such a
tariff in the preceding biennial period or cross-reference association
charges in such preceding period that will be cross-referenced in the
new tariff. A telephone company or companies that elect to file such a
tariff not in the biennial period shall file its tariff to become
effective July 1 for a period of one year. Thereafter, such telephone
company or companies must file its tariff pursuant to paragraphs (f)(1)
or (f)(2) of this section.
* * * * *
(9) Except as provided in paragraph (e)(12) of this section, a
telephone company or group of affiliated telephone companies that
elects to file its own Carrier Common Line tariff pursuant to paragraph
(a) of this section shall notify the association not later than March 1
of the year the tariff becomes effective that it will no longer
participate in the association tariff. A telephone company or group of
affiliated telephone companies that elects to file its own Carrier
Common Line tariff for one of its study areas shall file its own
Carrier Common Line tariff(s) for all of its study areas.
* * * * *
(12)(i) A local exchange carrier, or a group of affiliated carriers
in which at least one carrier, is engaging in access revenue sharing,
as that term is defined in Sec. 61.3(aaa) of this chapter, shall file
its own access tariffs within forty-five (45) days of commencing access
revenue sharing, as that term is defined in Sec. 61.3(aaa) of this
chapter, or within forty-five (45) days of [the effective date of the
Order] if the local exchange carrier on that date is engaged in access
revenue sharing, as that term is defined in Sec. 61.3(aaa) of this
chapter.
(ii) Notwithstanding paragraphs (e)(6) and (9) of this section, a
local exchange carrier, or a group of affiliated carriers in which at
least one carrier, is engaging in access revenue sharing, as that term
is defined in Sec. 61.3(aaa) of this chapter, must withdraw from all
interstate access tariffs issued by the association within forty-five
(45) days of commencing access revenue sharing, as that term is defined
in Sec. 61.3(aaa) of this chapter, or within forty-five (45) days of
[the effective date of the Order] if the local exchange carrier on that
date is engaged in access revenue sharing, as that term is defined in
Sec. 61.3(aaa) of this chapter.
(iii) Any such carrier(s) shall notify the association when it
begins access revenue sharing, or on [the effective date of the order]
if it is engaged in access revenue sharing, as that term is defined in
Sec. 61.3(aaa) of this chapter, on that date, of its intent to leave
the association tariffs within forty-five (45) days.
* * * * *
[FR Doc. 2011-4399 Filed 3-1-11; 8:45 am]
BILLING CODE 6712-01-P