Rule2024-06292
Connect America Fund, Alaska Connect Fund, ETC Annual Reports and Certifications, Telecommunications Carriers Eligible To Receive Universal Service Support, Universal Service Reform-Mobility Fund
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
April 10, 2024
Effective
May 10, 2024
Issuing agencies
Federal Communications Commission
Abstract
In this document, the Federal Communications Commission (FCC or Commission) adopts a Report and Order (Order) amending existing rules and requirements governing the management and administration of the Commission's Universal Service Fund (USF) high-cost program. The modifications adopted in the Order streamline processes, align timelines, and refine certain rules to more precisely address specific situations experienced by carriers.
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<title>Federal Register, Volume 89 Issue 70 (Wednesday, April 10, 2024)</title>
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[Federal Register Volume 89, Number 70 (Wednesday, April 10, 2024)]
[Rules and Regulations]
[Pages 25147-25163]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-06292]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Parts 36, 51, and 54
[WC Docket Nos. 10-90, 23-328, 14-58, 09-197; WT Docket No. 10-208; FCC
23-87; FR ID 204795]
Connect America Fund, Alaska Connect Fund, ETC Annual Reports and
Certifications, Telecommunications Carriers Eligible To Receive
Universal Service Support, Universal Service Reform--Mobility Fund
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: In this document, the Federal Communications Commission (FCC
or Commission) adopts a Report and Order (Order) amending existing
rules and requirements governing the management and administration of
the
[[Page 25148]]
Commission's Universal Service Fund (USF) high-cost program. The
modifications adopted in the Order streamline processes, align
timelines, and refine certain rules to more precisely address specific
situations experienced by carriers.
DATES: Effective May 10, 2024, except for the amendments to Sec. Sec.
36.4 (amendatory instruction 2), 54.205 (amendatory instruction 7),
54.313 (amendatory instruction 10), 54.314 (amendatory instruction 11),
54.316 (amendatory instruction 13), 54.903 (amendatory instruction 18),
and 54.1306 (amendatory instruction 22), which are delayed
indefinitely. The Commission will publish a document in the Federal
Register announcing the effective date.
FOR FURTHER INFORMATION CONTACT: For further information, please
contact, Nissa Laughner, Attorney Advisor, Telecommunications Access
Policy Division, Wireline Competition Bureau, at <a href="/cdn-cgi/l/email-protection#f2bc9b818193dcbe9387959a9c9780b2949191dc959d84"><span class="__cf_email__" data-cfemail="bef0d7cdcddf90f2dfcbd9d6d0dbccfed8dddd90d9d1c8">[email protected]</span></a>
or 202-418-7400.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Order
in WC Docket Nos. 10-90, 23-328, 14-58, 09-197 and WT Docket No. 10-
208; FCC 23-87, adopted on October 19, 2023, and released on October
20, 2023, with an Erratum issued by the Wireline Competition Bureau on
Feb. 13, 2024. The full text of this document is available at the
following internet address: <a href="https://docs.fcc.gov/public/attachments/FCC-23-87A1.pdf">https://docs.fcc.gov/public/attachments/FCC-23-87A1.pdf</a>.
I. Adopting High-Cost Program Administrative Improvements
1. The Commission adopts its proposal to revise Sec. 54.313(i) of
its rules to streamline the process for submitting annual high-cost
information and certifications by requiring that such filings be made
only with the universal service program administrator, i.e., the
Universal Service Administrative Company (USAC). Currently, this rule
requires high-cost support recipients to file this information with the
Commission, with USAC, and with the relevant state commission or
relevant authority in a U.S. Territory, or Tribal government, as
appropriate, resulting in redundant and unnecessary administrative
burdens on high-cost support recipients. In addition to relieving
recipients of these burdens, this rule change is warranted because the
Commission can take advantage of technological advances to make this
information more readily available to all interested parties by using
the benefits of a centralized, online collection of information and
improving access and records management. Several commenters support
this change, and the Nebraska Public Service Commission asks the
Commission to ensure that states retain full access to the annual
reports. The Commission agrees that states should retain full access to
the annual reports and it directs USAC to continue to provide access to
this information to the States, U.S. Territories, and Tribal
governments electronically via links to the data on USAC's website.
Accordingly, the Commission finds that modifying Sec. 54.313(i) of its
rules to limit submission of the annual high-cost report to USAC is
well warranted.
2. The Commission similarly adopts its proposal to revise Sec.
54.314 of its rules to require states that desire Eligible
Telecommunication Carriers (ETCs) to receive high-cost support and ETCs
not subject to state jurisdiction to file annual reports with USAC
only, rather than both USAC and the Commission's Office of the
Secretary (OSEC). Several commenters support this modification, and
none opposes. The Commission notes that its staff coordinates routinely
with USAC, so this modification should have no impact on its ability to
review and monitor these filings as part of its program oversight. The
Wireless internet Service Providers Association (WISPA) supports this
modification but only if reports are made publicly available so that
funding recipients can ensure that the certification has been received
and can demonstrate this to third parties, such as potential investors.
The Commission finds that WISPA's request is reasonable. The Commission
thus modifies its rules to require the submission of annual
certifications under Sec. 54.314 of the Commission's rules with USAC
only and commit to making this information publicly available.
3. Third, the Commission adopts its proposal to more closely align
support reductions with an ETC's failure to certify by the deadlines
established in its rules. Current rules provide that support reductions
do not occur until January of the year following the year when the ETC
misses a reporting deadline. The revised rules the Commission adopts in
this document will instead reduce support in the month immediately
following the notice of support reduction to the eligible
telecommunications carrier from USAC or as soon as feasible thereafter.
Because support reductions are based on the number of days late, and
payments usually occur mid-month, in situations where a filing is not
received in time for USAC to calculate the requisite support reduction
for the next month's payment, USAC will implement the support reduction
as soon as feasible. No commenter opposes this change and CTIA--The
Wireless Association (CTIA) agrees that requiring USAC to implement
late filing support reductions more promptly by reducing support in the
month immediately following the issuance of a notice of support
reduction or as soon as feasible immediately thereafter avoids
confusion and improves accountability.
4. The Commission modifies the reporting requirements for
performance testing to require all high-cost support recipients serving
fixed locations to report and certify performance testing results on a
quarterly basis, rather than annually. High-cost support recipients
must perform broadband performance testing one week out of each
quarter. All high-cost support recipients, including those that are in
compliance with speed and latency requirements, will be required to
report and certify the results of the performance tests quarterly
rather than annually. This modification will allow the Commission to
better assess whether carriers are on track to meeting the Commission's
performance measures requirements and to determine whether there are
significant problems with a carrier's network that may interfere with
consumer service. The Wireline Competition Bureau (Bureau) will
continue to assess compliance with program requirements based on the
annual testing results (i.e., annual calculations), and carriers found
not compliant will have support withheld until the carrier achieves a
full quarter of compliance. No commenter opposes this modification, and
NTCA--The Rural Broadband Association (NTCA) supports quarterly
certification of performance test results for all high-cost support
recipients, stating that reporting and certifying a carrier's
performance testing results on a quarterly basis so the burden is
minimal while also ensuring access to results enhances the Commission's
oversight.
5. Carriers are required to report and certify locations in the
High Cost Universal Broadband portal (HUBB) by March 1st annually but
some carriers may not have reported locations when scheduled to begin
performance pre-testing or testing. As a result, the Commission
recognizes that certification of HUBB locations on March 1st may impede
the carrier's ability to complete some of its testing. In these
circumstances, the Bureau may exercise discretion when assessing the
scope of a carrier's compliance or when implementing support
withholdings.
[[Page 25149]]
6. Currently, the Commission requires quarterly reporting of
carriers' pre-testing data, reflecting the results of tests conducted
prior to the commencement of the official test period. Those quarterly
testing results must be reported and certified within one week after
the end of the quarter in which the tests are conducted, to provide
insight into carriers' experience with the testing process. The
Commission adopts a similar schedule of quarterly reporting filings for
all high-cost carriers' testing. Once effective, all high-cost carriers
will be required to report and certify their quarterly performance
testing results within two weeks, rather than within one week, after
the end of the quarter in which the tests are conducted. The Commission
provides two weeks to offset the fact that, for administrative ease, it
declines to adopt any grace period: first quarter testing results will
be due April 15th, second quarter results will be due July 15th, third
quarter results will be due October 15th, and fourth quarter results
will be due January 15th. The Commission directs the Bureau to announce
when quarterly reporting and certification will go into effect.
7. The Commission believes that establishing a specific reporting
schedule will provide certainty, promote accountability, and conform
with timelines for other testing protocols to minimize confusion. Given
that carriers will be certifying locations quarterly, support
withholding for non-compliance may be implemented sooner than when
reports were due by July 1st annually. This will ensure that the
withholding is closer in time to the determination of noncompliance and
encourage the non-compliant carrier to improve its performance so that
it can regain the withheld support.
8. Under this new quarterly certification schedule, the Commission
implements support reductions for late performance measures reporting
based on the current framework under Sec. 54.313(j) that reduces
support based on the number of days late, but factoring in that it is
requiring quarterly filing certifications. Support reductions due to
late filings will be assessed at the end of the fourth quarter and will
be based on total number of days late divided by four, then rounded to
the nearest whole number. When that number is between 1 and 7, a
carrier will have its support reduced an amount equivalent to seven
days in support; when that number is 8 or higher, a carrier will have
its support reduced on a pro-rata basis equivalent to the period of
non-compliance (i.e., the number of days), plus the minimum seven-day
reduction.
9. The Commission declines to relieve privately held rate-of-return
carriers that receive Alternative Connect America Model (A-CAM) support
or Alaska Plan support of the requirement to file annually a report of
the company's financial conditions and operations. NTCA had sought this
relief for all privately held rate-of-return carriers that receive A-
CAM support or other fixed support mechanisms, such as the Alaska Plan,
and the Commission sought comment on this issue in the Administrative
Notice of Proposed Rulemaking (NPRM), 87 FR 36283, June 16, 2022.
10. Although NTCA and the Alaska Telecom Association (ATA) support
eliminating this requirement, the Commission is not persuaded by their
arguments. Moreover, the Commission has determined that the public
interest benefits of collecting the information--understanding the
efficacy of the model and helping to ensure that support is sufficient
but not excessive--outweigh any burdens.
11. The Commission concluded in the USF/Intercarrier Compensation
(ICC) Transformation Order, 76 FR 73830, November 29, 2011, that it is
not necessary to require publicly traded companies to submit financial
information because it could obtain such information directly for
Securities and Exchange Commission registrants. At the same time, it
declined to impose such a requirement on privately held price cap
carriers receiving model-based support because the Commission
``expect[ed] that a model developed through a transparent and rigorous
process will produce support levels that are sufficient but not
excessive.''
12. NTCA argues that A-CAM carriers are similarly ``recipients of
fixed support, which the Commission has already recognized leads them
to being `disciplined by market forces' and which should be the
dispositive factor here.'' However, what the Commission actually stated
was that ``support awarded through competitive processes,'' not model-
based support, ``will be disciplined by market forces.'' And while the
Commission concedes that, as NTCA notes, ``it is not true across the
board'' that recipients of Connect America Fund (CAF) Phase II model-
based support were publicly traded companies, the vast majority were,
and as such their financial information was publicly available. Given
these circumstances, it was sound policy not to require this
information in that context. In contrast, there are many more rate-of-
return carriers receiving A-CAM support, and many more of them are
privately held and, thus, their information is not readily available to
the Commission. The availability of support recipients' financial
information enables the Commission to evaluate whether model-based
support is actually sufficient but not excessive. Moreover, all high-
cost support recipients have an obligation to use such support only for
its intended purpose, and financial information helps the Commission
validate compliance with this requirement. Thus, the Commission finds
that the availability of the financial information of A-CAM carriers
will help it evaluate whether A-CAM produces support levels that are
sufficient but not excessive, and as such, it is important for the
Commission to continue to collect such information.
13. ATA argues that Alaska Plan carriers' support is ``parallel to
model-based support in that it is frozen at a set level'' and
``intended to be sufficient to support a carrier's performance
obligations, but is not excessive because the support was frozen at a
historic cost-based level which has in effect declined over time as
costs increased.'' However, just because Alaska Plan support is frozen,
does not ensure that the support is not excessive. The Commission finds
that the continued availability of the financial information of Alaska
carriers enables it to evaluate whether Alaska Plan carriers' support
is sufficient but not excessive.
14. The Commission adopts its proposal to modify its rules to
create a consistent, one-time grace period for all compliance filings
with grace periods. Specifically, the Commission establishes a grace
period that allows filers to submit compliance filings ``within four
business days'' of the relevant due date without risking a finding of
non-compliance for missing the filing deadline. Establishing a uniform
grace period will reduce confusion and is supported by all commenters
who addressed the issue, although WISPA prefers that the grace period
be set at five business days instead of four. The Commission finds that
a four-day grace period is adequate. As the Commission explained in the
Administrative NPRM, it proposed to establish a set grace period to
eliminate confusion. Currently, several Commission rules identify a
specific date, after the due date, by which carriers could file reports
without a support reduction if they had not previously missed a
deadline, while other rules identified the grace period as three or
four days after the filing deadline. The Commission also clarifies that
the due date is day zero, so the day after the due date is day one. For
[[Page 25150]]
example, where a filing is due March 1, recipients must file by the end
of March 5 or be subject to a support reduction. Consistent with the
Commission's Computation of Time rule, if March 5 falls on a weekend or
holiday, the filing must be made by the end of the next business day to
avoid the support reduction. The Commission also clarifies that, by
this rule modification, it is not establishing a new opportunity to
utilize a grace period for carriers that have already taken advantage
of the one-time grace period available to them.
15. The Commission modifies its rules to adopt uniform deployment,
certification, and location reporting deadlines for all CAF Phase II
auction support recipients (including recipients of support allocated
through New York's New NY Broadband program). In doing so, the
Commission codifies and makes permanent the Bureau's decision to waive
recipient-specific reporting deadlines based on the date of
authorization in favor of uniform reporting deadlines for all of these
recipients, finding that this approach alleviates unnecessary
administrative burdens and better facilitates Commission oversight. Two
commenters support this change, and none oppose it. Accordingly, the
Commission modifies its rules to provide that all CAF Phase II auction
support recipients must comply with deployment milestones by deadlines
occurring at the end of the specified calendar year (rather than the
date the Bureau authorized the support recipient to receive support)
and must meet annual certification and location reporting requirements
(annual deployment report) as of March 1st annually, including
reporting necessary to demonstrate compliance with the prior year
milestone. In addition, the Commission modifies Sec. 54.316(b)(7) of
its rules regarding the certification deadlines for the Bringing Puerto
Rico Together Fund stage 2 fixed program and the Connect USVI Fund
stage 2 fixed program to make explicit the annual March 1st deadline,
as specified in the respective authorization public notices, which
aligns those programs' rules with the rules for other high-cost support
mechanisms.
16. The Commission declines to amend Sec. 54.316(a) of its rules
to require ETCs receiving high-cost support and subject to defined
deployment obligations to report the ``maximum speeds actually being
offered, advertised, or delivered to customers.'' The Commission agrees
with WISPA and CTIA, the only commenters to weigh in on this proposal,
that such an amendment would result in collection of information
similar to data the Commission already collects through its performance
testing program and in fulfillment of its Broadband Data Collection
(BDC) responsibilities. Through the performance testing program, the
Commission assesses compliance with public service requirements,
including speed and latency standards, by requiring high-cost support
recipients to perform a minimum of one download test and one upload
test per testing hour at a certain number of randomly chosen testing
locations and to report this information to the Commission. Ultimately,
the Commission will use this information to assess performance
throughout the provider's entire supported service area. In addition,
under the BDC, each facilities-based provider of fixed broadband
internet access service must report maximum advertised download and
upload speeds at the location level (with reference to the Broadband
Serviceable Location Data Fabric). For these reasons, the proposed
modification of Sec. 54.316(a) would result in a largely redundant
reporting requirement, and the Commission declines to adopt it.
17. The Commission adopts its proposal to amend Sec. 54.316(a)(1)
of its rules to more accurately reflect the deployed locations
reporting obligations of support recipients. Currently, this rule
directs ``recipients of high-cost support with defined broadband
deployment obligations'' to ``provide to [USAC] on a recurring basis
information regarding the locations to which the [ETC] is offering
broadband service in satisfaction of its public interest obligations. .
. .'' All filers subject to this requirement have a specific annual
deadline for submitting this information, and the Commission finds that
this section's reference to ``recurring'' filings is superfluous.
Accordingly, the Commission modifies the rule to remove this language.
18. The Commission modifies its voice and broadband rate
certification rules to clarify the reporting period. Specifically, the
Commission makes explicit that carriers submitting the annual FCC Form
481 are certifying compliance with both the annual voice and broadband
pricing benchmarks adopted in the prior calendar year ending the last
day of December. As explained in the Administrative NPRM, when the
Commission moved the annual FCC Form 481 filing deadline to July 1st,
the Commission moved the date for the relevant voice rates to the rates
in place as of June 1st the year the report was filed, as opposed to
the prior year. Maintaining the rule's unique time period for voice
rate certifications creates unnecessary confusion. Prior to the
adoption of the rate floor provision, all certifications in Form 481
applied to the preceding calendar year, a uniformity to which the
Commission returns with the adoption of this rule modification. For
example, the support recipient submitting a Form 481 on July 1, 2024,
will certify compliance during 2023 with voice and broadband benchmarks
set for the 2023 calendar year (as announced in 2022). The Commission
further updates the rule to reflect that the annual public notice
announcing the benchmarks is issued by the Bureau and Office of
Economics and Analytics.
19. Relatedly, in its comments, Teleguam Holdings LLC (GTA) asserts
that the Commission should release its reasonable comparability
benchmark rates earlier in the year (or extend the filing deadline for
this certification) in order to allow support recipients sufficient
time to modify their rates. The Commission agrees with GTA that release
of these benchmark rates too close to the year-end can impose on
support recipients, especially smaller companies, significant
administrative burdens in effectuating rate changes at the start of the
applicable year. Therefore, the Commission will endeavor to release
these rates earlier in the year.
20. The Commission amends Sec. 54.316(a) of its rules to make
clear that it will permit high-cost support recipients to report and
certify locations that should have been reported for a prior reporting
year, even after the reporting deadline for that year, in future annual
deployment reports and to count these locations (hereinafter ``late-
reported locations'') toward their defined deployment obligations. To
ensure that support recipients are motivated to submit complete and
timely annual deployment reports, the Commission adopts a support
reduction mechanism that will apply to all late-reported locations due
to be reported after the effective date of the Order. For the
submission of late-reported locations that should have reported before
the effective date of the Order, the Commission exercises its
discretion to not apply this mechanism.
21. Under Sec. 54.316(a) of the Commission's rules, support
recipients reporting in the HUBB have a duty to report all qualifying
locations to which the support recipient deployed service during the
relevant reporting period (the prior year) by March 1st, including
locations that, if reported, would result in a carrier exceeding an
interim or final milestone. As explained in the
[[Page 25151]]
Administrative NPRM, there is currently no mechanism by which support
recipients can later submit and certify locations toward satisfaction
of defined deployment obligations if the recipient missed the reporting
deadline for those locations. Creating such a mechanism also better
facilitates compliance with support recipients' general duty under
Sec. 1.17 of the Commission's rules to correct or amend information
reported to the Commission and helps ensure that the Commission may
effectively assess these recipients' progress in deploying service.
22. In the Administrative NPRM, the Commission proposed a formula
for a support reduction mechanism for late-reported locations that
would take into account the relative due diligence of support
recipients in identifying and reporting locations. Specifically, the
Commission proposed ``a support reduction mechanism where recipients'
support will be reduced for [late-reported] locations based on the
percentage of a recipient's total locations for the reporting year
being reported after the deadline and the number of days after the
deadline.'' The Commission adopts this formula with certain
modifications to address concerns raised by commenters and to balance
accountability with administrative burden.
23. As an initial matter, the Commission rejects NTCA's argument
that any support reduction is unnecessary because support recipients
are already sufficiently motivated to report and amend their filings to
avoid possible default consequences and to gain the benefits of
demonstrating to the public their deployment efforts. While,
ultimately, support recipients may need to submit late-reported
locations to avoid default, they would have no particular motivation to
do so unless and until default is imminent, absent any consequence for
late reporting. Indeed, acceptance of late-reported locations for the
purpose of counting these locations toward defined deployment
obligations at any time during the deployment period without
consequence would encourage a lackadaisical approach to identifying and
reporting locations on a timely basis and potentially could delay or
disrupt verifications of compliance with milestones. Further, many
support recipients are likely to delay deployment to the most difficult
to serve areas where locations can be more difficult to assess, e.g.,
where newly deployed areas are missing postal addresses. Support
recipients may thus be motivated to delay reporting of certain easily
identifiable locations in other earlier deployed areas in order to
increase the likelihood of passing verification for later milestones,
i.e., by closing the non-compliance gap or increasing the probability
of passing under the statistical measures used in the verification
process. Finally, customers' goodwill toward their service providers is
unlikely to be greatly affected by reporting delays unless the number
of unreported locations is substantial and/or causes a milestone
failure, and therefore, this concern is unlikely to be a significant
factor in motivating support recipients to accurately assess and timely
report or amend their annual deployment reports.
24. In their comments, GCI Communication Corp. (GCI) and NTCA
object to the use of the support reduction mechanism as proposed in the
Administrative NPRM, asserting that it would result in large
variability in support reductions and have a disproportionately
negative impact on those support recipients with fewer locations to
serve and/or slower deployments at the beginning of their deployment
term. While the Commission acknowledges that carriers with fewer
deployed locations in a given year risk a larger support reduction for
submitting late-reported locations for that year, it also notes that
the time and effort associated with identifying and correctly reporting
deployed locations should generally scale based on the number of
locations deployed in a given year. In other words, as the number of
deployed locations reported in a given year increases, so too do the
burdens on carriers assessing locations and the associated likelihood
of omitting a deployed location. Accordingly, this ratio is a
reasonable measure of the relative due diligence by the reporting
carrier warranting its incorporation in the support reduction formula.
25. GCI also asserts that ``[t]he penalties for providers who
timely certified their deployed locations and need to add additional
locations should not be worse than the penalties for failure to deploy
on time,'' i.e., a scaled withholding of support during a set time
frame (cure period) during which time the carrier may recover withheld
support upon demonstration of compliance. The Commission rejects GCI's
attempt to analogize late reporting to delayed deployment. The cure
period serves the Commission's overriding interest in maximizing
deployment benefits by providing noncompliant carriers with the time to
come into compliance by continuing to build the network. Carriers that
seek to report late-reported locations do not need a cure period to
provide them with additional time to file the locations. There may be
circumstances where the support recipient has acted in good faith when
deploying its network and reporting locations, only to learn of
reporting errors during the verification process, such as the reporting
of ineligible locations as eligible locations. In these circumstances,
the support recipients may come into compliance by reporting locations
newly deployed within the cure period (without support reduction) and/
or reporting late-reported locations subject to the support withholding
the Commission adopts here. Accordingly, all carriers reporting late-
reported locations, whether they are in the cure period or not, are
similarly situated in terms of support reduction consequences.
26. The Commission does, however, recognize that in certain
circumstances application of the proposed formula would result in a
significant support reduction that could threaten the ability of the
support recipient to complete deployment, meet performance standards,
and satisfy public interest obligations. The Commission also recognizes
that some limited modification to the withholding formula would produce
greater consistency in the amount of support withheld among support
recipients with similar obligations and receiving similar support
amounts, thus addressing some of GCI's expressed concerns. Accordingly,
the Commission modifies the proposed formula to provide for a maximum
per-day, per-location reduction of seven dollars ($7). The Commission
also caps the duration multiplier at 15 days if the late-reported
locations are filed as of the next reporting deadline after the
locations should have been filed and at 30 days (for each instance of
late reporting) if the late-reported locations are filed at any time
thereafter. Further, the Commission adopts a one-time de minimis
exception from support withholding for late-reported locations deployed
in any single year that are less than five percent of the locations
that were filed in the relevant reporting year. The Commission thus
acknowledges GCI's and NTCA's concerns regarding the likelihood that
carriers will make a minimum number of ``inevitable'' errors in
reporting despite the exercise of due diligence, while also striking an
appropriate balance to ensure that support recipients will make best
efforts to avoid such errors.
27. Finally, and contrary to the Commission's tentative conclusion
in the Administrative NPRM, it adopts a one-time grace period for
amending an
[[Page 25152]]
annual filing with additional locations consistent with the grace
period afforded support recipients that fail to submit their annual
filing in Sec. 54.316(c)(2)(iii) of its rules. The Commission finds
that such one-time grace period, like that granted for late annual
filings, places a minimum burden on the resources dedicated to program
administration and evaluation of location information while
accommodating the potential for a one-time administrative error. This
is a particularly opportune time for the adoption of this grace period
as carriers have been in the process of assessing their deployed
locations for the mandatory BDC filings. The Commission will apply the
support reduction for the filing of late-reported locations in the next
month immediately following the notice of support reduction to the
eligible telecommunications carrier from USAC or as soon as feasible
thereafter.
28. To encourage support recipients to complete annual reviews of
already served areas to identify unreported or misreported locations
and to immediately report those locations even if the support recipient
does not perceive such locations as necessary to meet interim
deployment milestones, the Commission will not apply the support
reduction consequence to any locations that were deployed in years
prior to the effective date of this rule change but reported after the
effective date of this rule. The Commission thus dismisses as moot all
pending petitions for waiver to allow such reporting.
29. In addition, the Commission will not reduce support for late-
reported locations reported after the support recipient has
demonstrated compliance with the final milestone. Reducing support
under these circumstances, where the benefit to carriers of such
reporting is significantly less, would likely result in some support
recipients failing to amend their filings. In addition, after the
conclusion of the deployment period (including any cure period), the
Commission will have a lesser stake in motivating timely reporting of
every deployed location with a support reduction mechanism because such
reporting will not threaten to disrupt verification processes. The
Commission makes clear, however, that its approach to late-reported
locations adopted here is independent of the obligation to amend
filings under Sec. 1.17 of its rules that attaches from the moment of
filing and which could lead to forfeiture consequences, even in the
absence of intentional misreporting and even after the demonstration of
compliance with final deployment requirements. Support recipients have
a continuing obligation to timely amend every annual deployment report
upon discovery of an inaccuracy or omission.
30. In this document the Commission amends its rules to provide a
simpler process for rate-of-return local exchange carriers (LECs)
seeking to merge, consolidate, or acquire one or more rate-of-return
study areas to calculate the new entity's Access Recovery Charge (ARC),
CAF--Intercarrier Compensation (ICC) support, and reciprocal
compensation and switched access rate caps. The Commission finds that
the rule revisions proposed in the Administrative NPRM will
significantly reduce the administrative burdens on rate-of-return LECs
seeking to increase efficiencies and productivity through these
transactions and provide predictability to carriers considering such
transactions, ultimately benefiting consumers. The limited record
received on the rule revisions proposed in the Administrative NPRM
supports the proposed revisions, with one commenter agreeing that the
proposals ``reflect a practical and effective step forward to
streamline the merger and acquisition process. . . .'' No party opposes
these proposed changes. Accordingly, the Commission now adopts those
proposed changes and revises its rules to eliminate the need for a
rate-of-return LEC that is involved in a merger, consolidation, or
acquisition with another rate-of-return carrier to obtain a waiver of
the applicable intercarrier compensation rules when certain conditions
apply. The Commission also adopts a streamlined process that will apply
in those cases where carriers are still required to seek a waiver of
the Commission's rules.
31. In the USF/ICC Transformation Order, the Commission capped
rate-of-return carriers' reciprocal compensation and interstate
switched access rates and most intrastate switched access rates at the
rates in effect on December 29, 2011. At the same time, the Commission
adopted a multi-year transition for reducing most terminating switched
access rates to bill-and-keep. As part of these reforms, the Commission
adopted the ARC, which allows rate-of-return carriers to recover from
end-users a portion of the intercarrier compensation revenues lost due
to the Commission's reforms, up to a defined amount (Eligible Recovery)
for each year of the transition. If the projected ARC revenues are not
sufficient to cover the entire Eligible Recovery amount, rate-of-return
carriers may elect to collect the remainder in CAF ICC support.
32. The calculation of a rate-of-return LEC's Eligible Recovery
begins with its Base Period Revenue. A rate-of-return carrier's Base
Period Revenue is the sum of certain terminating intrastate switched
access revenues and net reciprocal compensation revenues received by
March 31, 2012, for services provided during Fiscal Year (FY) 2011, and
the projected revenue requirement for interstate switched access
services for the 2011-2012 tariff period. A rate-of-return LEC's Base
Period Revenue is calculated only once, but is adjusted during each
step of the intercarrier compensation recovery mechanism calculations
for each year of the transition. Specifically, the Base Period Revenue
for rate-of-return carriers has been reduced by five percent each year,
beginning in 2012, the first year of reform. A rate-of-return carrier's
Eligible Recovery is equal to the adjusted Base Period Revenue for the
year in question, less, for the relevant year of the transition, the
sum of: (1) projected terminating intrastate switched access revenue;
(2) projected interstate switched access revenue; and (3) projected net
reciprocal compensation revenue. Eligible Recovery is also adjusted to
reflect certain demand true-ups.
33. The Commission's existing rules for calculating Eligible
Recovery do not address the adjustments that are necessary when study
areas are merged after one company acquires all or a portion of
another. Because a carrier's Base Period Revenue and interstate revenue
requirement are study-area-specific, as are a carrier's capped switched
access rates, combining two study areas requires a decision about how
best to combine two different Base Period Revenues and interstate
revenue requirements, and--when the study areas do not have the same
capped rates--a waiver of the Commission's rules to establish the
proper rate levels.
34. Since the Eligible Recovery rules have taken effect, several
rate-of-return LECs have partially or fully merged study areas or
acquired new study areas. Because the intercarrier compensation and CAF
ICC rules adopted in the USF/ICC Transformation Order do not
contemplate study area changes, these carriers have had to file
petitions for waiver of portions of Sec. 51.917 of the Commission's
rules to reset the applicable Base Period Revenue associated with the
study areas they have merged or acquired. In this line of waiver
orders, the Bureau has permitted carriers to add together the relevant
interstate revenues from FY 2011 of the merging study areas and the
2011-2012 interstate revenue requirement of the merging study areas.
This calculation then creates a combined Base Period
[[Page 25153]]
Revenue which serves as the baseline for calculating the Eligible
Recovery of the company serving the combined study area going forward.
To facilitate mergers for entities that participate in the National
Exchange Carrier Association (NECA) traffic-sensitive tariff, the
Bureau has granted waivers of Sec. 51.909 of the Commission's rules to
allow NECA to place the consolidated study area in the rate bands that
most closely approximate the merged entities' cost characteristics. The
rate for each rate band then becomes the rate cap for the corresponding
rate element in the merged study area.
35. In the Administrative NPRM, the Commission observed that the
waiver process imposes costs and administrative burdens on rate-of-
return LECs and, in some cases, may delay the closing of transactions.
The Commission determined that rule revisions reflecting the pattern of
outcomes in prior waiver orders would reduce these costs and
administrative burdens by eliminating the need for carriers to obtain
individual waivers when certain conditions apply. No party disputed
these conclusions or identified any issues with the proposed rule
revisions. In fact, the only comments addressing these proposals were
filed by NECA, which agreed that the proposed rule changes would ease
administrative burdens and provide carriers with predictability when
considering mergers and/or acquisitions.
36. The Commission concludes that adopting the proposed rules will
reduce regulatory costs and burdens, avoid potential delay, and allow
carriers to assess the effects of a proposed transaction more
accurately. For these reasons, the Commission adopts the rule revisions
proposed in the Administrative NPRM and amends the intercarrier
compensation rules in Sec. Sec. 51.917 and 51.909 to address study
area changes resulting from transactions involving rate-of-return
carriers.
37. Base Period Revenue calculation. The Commission revises Sec.
51.917 to provide guidance on calculating Base Period Revenues for
rate-of-return study areas affected by a transaction, thereby
permitting rate-of-return carriers to adjust their Base Period Revenues
without the need for a waiver. Specifically, the Commission revises
Sec. 51.917 of its rules to provide that when two or more entire rate-
of-return study areas are merged, the LEC shall combine the Base Period
Revenue and interstate revenue requirements of the merging study areas
for purposes of calculating Eligible Recovery. This approach is
supported by NECA and consistent with the approach the Commission has
taken previously in addressing transactions where study areas have
merged. In the case of a partial study area change, the revised rules
provide that rate-of-return LECs shall allocate the Base Period Revenue
and interstate revenue requirement levels of the partial study area
based on the proportion of access lines acquired compared to the total
access lines in the pre-merger study area of the remaining entity.
38. Setting rate caps. The Commission revises Sec. 51.909 to
establish procedures for setting new rate caps for merging rate-of-
return LECs and adopt a streamlined waiver process if the rates for the
new combined study area would result in the new entity's CAF ICC
support exceeding a certain threshold. Specifically, for carriers that
file their own tariffs, the new rate cap for each rate element shall be
the weighted average of the preexisting rates in each of the affected
study areas. This approach is consistent with precedent and there was
no opposition in the record to this logical and straightforward
approach to establishing new rate caps for merging rate-of-return LECs
that do not participate in NECA tariffs.
39. For merging rate-of-return LECs that participate in the NECA
traffic-sensitive tariff and that have to establish a single switched
access rate for a rate element, the revised rules provide that the new
consolidated rate, as determined by NECA pursuant to the rate bands in
its traffic-sensitive tariff, shall be the new rate cap if the merged
entity's CAF ICC support will not increase as a result of the merger by
more than two percent above the amount received by the merging entities
prior to the transaction, using the demand and rate data for the
preceding calendar year. In prior orders, the Bureau allowed NECA to
place the consolidated study area in the rate bands that most closely
approximated the merged entities' cost characteristics and NECA worked
cooperatively with the Bureau to ensure that the most accurate rate
bands are used for the merged entities. Under this approach, the rate
for each rate band will become the rate cap for the corresponding rate
element in the merged study area. The Commission expects that NECA will
continue to evaluate the circumstances of each transaction, select the
appropriate rate bands, and coordinate with the Bureau as appropriate.
40. The Commission proposed a two-percent threshold based on
recently submitted petitions for waiver, which predicted increases
between zero and two percent to CAF ICC as a result of the waiver. No
party objected to this particular threshold or suggested an alternative
one and increases in CAF ICC support of two percent or less will not
materially impact the CAF ICC fund. Thus, the Commission now adopts the
proposed two-percent threshold for carriers participating in the NECA
traffic-sensitive tariff and eliminates the need for a waiver in
circumstances where the CAF ICC increase is at or below two percent.
41. Streamlined waiver process. The Administrative NPRM also
proposed revised rules that would streamline the waiver process for
NECA tariff participants if the impact of rate banding exceeds the two-
percent threshold. In such circumstances, the revised rules require
carriers to file a petition for waiver specifying the impact of the
merger, acquisition, or consolidation on the new entity's rates and CAF
ICC support. Any petition for waiver should include information such
as: (1) a description of the merging study areas, or portions of study
areas involved; (2) the intrastate and interstate switched access
demand for each rate element; (3) the relevant pre- and post-merger
intrastate and interstate switched access rates for the study areas
involved, as proposed; (4) the relevant pre-and post-merger intrastate
and interstate switched access revenues, including the effects of
interstate switched access revenue pooling, for the study areas
involved; (5) the effect on CAF ICC resulting from the merger; and (6)
a brief statement of the public interest benefits of the merger. The
petition must be submitted for consideration via the Electronic Comment
Filing System and a courtesy copy must be emailed to the Chief, Pricing
Policy Division, Wireline Competition Bureau.
42. Under the new streamlined process, once the petition for waiver
is filed, the Bureau will release a public notice announcing receipt of
the waiver petition and establishing a 30-day comment period with an
additional 15-day period for replies. If there is no opposition to the
petition, the waiver will be deemed granted on the 60th day after the
release of the public notice, unless the Bureau or the Commission acts
to prevent the ``automatic'' grant. If an opposition is filed, the
petition will no longer be eligible for the streamlined grant process
and will instead be subject to the Commission's rules for waiver
petitions generally. Because no party opposes this proposal or
suggested changes to the proposed process or waiver requirements, the
Commission adopts this streamlined process and delegates to the Bureau
the authority to
[[Page 25154]]
review, analyze, and approve these petitions for waiver.
43. For the reasons specified in the Administrative NPRM, the
Commission amends Sec. 54.902 of its rules--which governs the amount
of CAF Broadband Loop Support (BLS) a rate-of-return carrier receives
when it acquires exchanges from another incumbent LEC--to better
reflect the current state of the high-cost program. Currently, Sec.
54.902(a) describes how CAF BLS support is calculated when a rate-of-
return carrier acquires exchanges from another rate-of-return carrier,
while Sec. 54.902(b) specifies that in situations where a rate-of-
return carrier acquires exchanges from a price cap carrier, the
acquired exchanges remain subject to the support amounts and
obligations established for frozen and model-based support. The
Commission modifies Sec. 54.902(a) to provide that only transferred
exchanges that are already eligible for CAF BLS would be eligible for
CAF BLS after their transfers. The Commission further modifies Sec.
54.902(b) to provide that any acquired exchanges subject to Sec.
54.902(b) continue to be subject to the support obligations in place at
the time that the exchange is acquired, including obligations
associated with frozen and auction-based support. As explained in the
Administrative NPRM, these modifications are consistent generally with
the rules as originally adopted, when all rate-of-return carriers were
subject to the Interstate Common Line Support mechanism (which was
renamed CAF BLS when modernized by the Commission in 2016), and
consider changes to the high-cost program after the current rule went
into effect: specifically, the creation of a voluntary pathway for
rate-of-return carriers to select model-based support and the
introduction of auction mechanisms permitting rate-of-return carriers
to acquire exchanges from carriers that are not subject to rate-or-
return or price cap regulation.
44. The Commission modifies the study area boundary process to
require waivers for all study area boundary changes. The Commission
finds that the original purpose of the study area boundary freeze--to
prevent incumbent LECs from establishing separate study areas made up
of only high-cost exchanges to maximize their receipt of high-cost
universal service support--is best served by providing the Wireline
Competition Bureau (WCB) with the opportunity to review such changes.
By requiring waivers for all study area boundary changes, the
Commission eliminates the exceptions adopted in 1996 by the then Common
Carrier Bureau (now the WCB). Requiring all changes in study area
boundaries to be reviewed by the Bureau will ensure that any proposed
changes are not approved until the effects on the Fund are taken into
account.
45. Since the exceptions to the study area boundary waiver
requirement were adopted in 1996, the Commission has substantially
reformed how universal service support is awarded. Incumbent LECs now
receive support in different ways, including model-based support and
auction support, in addition to traditional rate-of-return regulation
(legacy support). Under the Commission's current rules, when a carrier
that owns multiple study areas within a state wants to merge these
commonly-owned study areas, the carrier is not required to petition the
Commission. However, allowing carriers to merge study areas that
receive support under different mechanisms creates opportunities for
carriers to manipulate the Commission's support. For example, if a
carrier seeks to merge two study areas in a state, one of which
receives legacy rate-of-return support and another that receives model-
based support, it would be difficult for the Commission to determine
which lines in the new study area are entitled to rate-of-return
support, which typically increases as the number of lines increases.
Similarly, such a merger could create confusion regarding tracking
carrier mandatory build-out obligations by changing the areas in which
they must deploy broadband. For example, an A-CAM carrier receives a
fixed amount of support in exchange for deploying broadband to a
specific number of locations based on costs as determined by a model.
If the A-CAM carrier merges its study area with a legacy rate-of-return
study area in the same state owned by the same carrier, it would then
be harder to track the deployment obligations under each program.
46. In addition, allowing carriers to add unserved areas to their
study areas, even if those areas are not within an existing study area,
could undermine the Commission's goal of distributing universal service
support in the most efficient manner possible. In furtherance of this
objective, the Commission has encouraged the transition to model-based
support and auction-awarded support over traditional rate-of-return
regulation. If rate-of-return carriers can extend their existing study
area into unserved areas, this could result in the use of legacy
support in additional areas when such areas could be served with
broadband more efficiently using model-based or auction-based support.
47. The Nebraska Public Service Commission, the only party
commenting on this issue, supports a streamlined mechanism for study
area boundary changes, and suggests that any study area changes that
have been previously approved by a state should be eligible for the
streamlined review process. The Commission notes that it already has
adopted a streamlined process to address all study area waiver
petitions in the 2011 USF/ICC Transformation Order, and this
streamlined process would apply to the waiver applications required
here. The process takes into consideration whether the state commission
having regulatory authority over the transferred exchanges does not
object to the transfer, and whether the transfer is in the public
interest. Evaluation of the public interest benefits of a proposed
study area waiver include: (1) the number of lines at issue; (2) the
projected universal service fund cost per line; and (3) whether such a
grant would result in consolidation of study areas that facilitates
reductions in cost by taking advantage of the economies of scale, i.e.,
reduction in cost per line due to the increased number of lines. Under
the streamlined process, once a carrier submits a petition the Bureau
will issue a public notice seeking comment and noting whether the
waiver is appropriate for streamlined treatment. Absent any further
action by the Bureau, if the waiver is subject to streamlined
treatment, it is granted on the 60th day after the reply comment due
date. Alternatively, if the petition requires further analysis and
review, the public notice will state that the petition is not suitable
for streamlined treatment.
48. Requiring waivers for all study area boundary changes will help
to avoid the issues created by merging study areas receiving different
types of support or the expanded use of less efficient support
methodologies. Requiring changes in study area boundaries to be
reviewed by the Bureau will ensure that any proposed changes are not
approved until the effects on the Fund are taken into account. Because
the Commission has already established a streamlined process for such
waivers, those requests that do not present any support or other
concerns can be swiftly granted, thereby minimizing the burden on those
carriers proposing mergers that promote efficiency and are clearly in
the public interest.
49. As proposed in the Administrative NPRM, the Commission
eliminates optional quarterly line count reporting for CAF BLS support
recipients, finding that the mandatory annual line count
[[Page 25155]]
reporting set forth in Sec. Sec. 54.313(h)(5) and 54.903(a)(1) of its
rules suffices for the purposes of setting per line caps. No commenter
filed comments on this proposal or the Commission's alternative
proposal to update the schedule to file optional quarterly line counts
to better align with the deadline for mandatory annual line count
filings.
50. The optional quarterly reporting deadlines, falling on
September 30th, December 31st, and March 31st, pertain to line counts
as of six months prior to the filing deadline. The Commission notes
that the December 31st optional quarterly line count update is due on
the same day as the mandatory annual line count report for the prior
reporting year, making this optional quarterly filing obsolete. All
other quarterly line count reports have a six-month lag time, i.e.,
each quarterly report reports line counts as of six months earlier.
These optional quarterly line count filings also have limited utility.
While USAC uses these quarterly line count updates to administer the
monthly per-line cap on high-cost universal service support each
quarter, only a very limited number of carriers have filed these
updates in recent years, many of which are not subject to the per-line
cap. USAC also uses quarterly line count data to determine preliminary
(CAF BLS) amounts for a carrier that has acquired exchanges from
another CAF BLS support recipient, but those amounts are ultimately
subject to a true-up based on the acquiring carrier's actual cost and
revenue data for their exchange (including the acquired exchange).
Because the Commission can generally rely on the mandatory annual line
counts due on March 31st to monitor line counts with minimum impact on
reporting carriers and with minimum limitation on accuracy, it
concludes that eliminating the optional quarterly line count filings is
a more efficient modification than merely updating the filing schedule
for these filings. Accordingly, the Commission eliminates these
optional quarterly line count filings and modifies all related rules
regarding these quarterly line counts.
51. The Commission revises Sec. 54.205 of its rules to require an
ETC designated by a state authority and seeking to relinquish its ETC
designation to also provide advance notice to the Commission. The
Commission sought comment on this proposal, which was supported by
NTCA. As per this proposal, the Commission will also require the former
ETC to notify it of the state's decision to permit or deny such
relinquishment by submitting the relevant state order or other document
issued by the state within 10 days of such issuance in the Electronic
Comment Filing System, WC Docket No. 09-197. The Commission will
require these filings regardless of whether the ETC is currently
receiving Federal support, consistent with long standing precedent that
states that obligations run with the ETC designation. The Commission's
decision to require notice of relinquishment will help deter waste,
fraud, and abuse by enabling swift discontinuance of support payments
to non-ETCs, and, where applicable, allow the Commission to initiate
default and potentially enforcement proceedings where it becomes clear
that the support recipient has failed to fulfill its obligations. The
Commission notes that these changes are applicable to all ETCs,
including Lifeline-only ETCs. The Commission makes these modifications
pursuant to authority granted under section 254 and as reasonably
ancillary thereto. These changes will apply to all ETCs submitting
requests for relinquishment after the effective date of these rule
changes.
52. The Commission adopts several minor changes to its rules to
correct inaccuracies associated with subsequent rule changes.
Specifically, the Commission makes the following corrections:
<bullet> Section 54.314(d)(2) of the Commission's rules cross
references Sec. 54.313(a)(8). Section 54.313 was revised and
renumbered, and Sec. 54.313(a)(8) became Sec. 54.313(a)(4), while
Sec. 54.313(a)(8) was eliminated. Accordingly, the Commission takes
this opportunity to revise Sec. 54.314(d)(2) to reference Sec.
54.313(a)(4) rather than Sec. 54.313(a)(8).
<bullet> Section 54.315(c)(4) of the Commission's rules currently
indicates that the failure of CAF Phase II auction support recipients
to meet service milestones will trigger reporting obligations and
support withholding consistent with Sec. 54.320(c) of the Commission's
rules. This rule section should instead cross reference Sec.
54.320(d).
<bullet> Similarly, Sec. 54.1508(e)(1) of the Commission's rules
also includes an incorrect cross reference. Specifically, when the
section references milestones, it should cross reference Sec.
54.320(d) instead of Sec. 54.320(c).
<bullet> Subpart K of part 54 of title 47 is titled ``Interstate
Common Line Support Mechanism for Rate-of-Return Carriers.'' In 2016,
the Commission reformed this mechanism to provide support for stand-
alone broadband, now known as CAF BLS. Consistent with this reform, the
Commission retitles subpart K to read ``Connect America Fund Broadband
Loop Support for Rate-of-Return Carriers.''
<bullet> Similarly, Sec. Sec. 54.701(c)(1)(iii) and 54.705(c) of
the Commission's rules describe the high-cost support mechanisms to
include ``interstate access universal service support mechanism for
price cap carriers described in subpart J of this part, and the
interstate common line support mechanism for rate-of-return carriers
described in subpart K of this part.'' The Commission deleted subpart J
of part 54 to reflect its decision in the USF/ICC Transformation Order
to eliminate the Interstate Access Support mechanism as a stand-alone
support mechanism. In 2016, the Commission replaced the interstate
common line support mechanism. In subsequent years, the Commission also
created several new high-cost support mechanisms for rate-of-return and
price-cap carriers. Accordingly, the Commission revises Sec. Sec.
54.701(c)(1)(iii) and 54.705(c) to remove the references to
``interstate access universal service support mechanism for price cap
carriers described in subpart J of this part,'' and ``interstate common
line support mechanism.'' The Commission adds to these sections a
reference to the high-cost support mechanisms described in subparts J,
K, M, and O of the part, and the low-income support mechanisms
described in subpart E of the part.
53. GTA has submitted proposals as part of its comments in this
proceeding to apply the newly adopted Alaska rate benchmarks as
suitable proxy for all insular territories in the United States. This
proposal is not sufficiently related to those proposals raised in the
Administrative NPRM to provide the requisite notice and comment periods
for rulemakings as specified in the Administrative Procedure Act.
Accordingly, the Commission declines to address them as part of the
Order. These issues would need to be raised in a petition for
rulemaking. The Commission does note that in its comments in this
proceeding, GTA did not provide sufficient arguments or evidence for it
to evaluate the reasonableness of the proposal, so the Commission would
expect any such petition to include substantial additional information.
II. Procedural Matters
A. Paperwork Reduction Act
54. The Order contains new and modified information collection
requirements subject to the Paperwork Reduction Act of 1995 (PRA),
Public Law 104-13. It will be submitted to the Office of Management and
Budget
[[Page 25156]]
(OMB) for review under section 3507(d) of the PRA. OMB, the general
public, and other Federal agencies will be invited to comment on the
new and modified information collection requirements contained in this
proceeding. In addition, the Commission notes that, pursuant to the
Small Business Paperwork Relief Act of 2002, it previously sought
specific comment on how the Commission might further reduce the
information collection burden for small business concerns with fewer
than 25 employees. The Commission describes impacts that might affect
small businesses, which includes most businesses with fewer than 25
employees in this document.
55. Congressional Review Act. The Commission has determined, and
the Administrator of the Office of Information and Regulatory Affairs,
OMB, concurs, that this rule is ``non-major'' under the Congressional
Review Act, 5 U.S.C. 804(2). The Commission will send a copy of the
Order to Congress and the Government Accountability Office pursuant to
5 U.S.C. 801(a)(1)(A).
56. As required by the Regulatory Flexibility Act of 1980, as
amended (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was
incorporated in the Administrative NPRM released in May of 2022. The
Commission sought written public comment on the proposals in the
Administrative NPRM, including comment on the IRFA. No comments were
filed addressing the IRFA. This Final Regulatory Flexibility Analysis
conforms to the RFA.
57. In the Order, the Commission adopts several changes to its
rules that will improve the administration of the high-cost program to
enhance its efficiency and efficacy, better safeguard USF, and
streamline annual reporting and certification requirements for high-
cost support recipients. First, the Commission adopts its proposal to
streamline the process for submitting annual high-cost information and
certifications by requiring that such filings be made only with the
USAC, rather than with both USAC and the Commission's OSEC. Second, the
Commission similarly adopts its proposal to require states that desire
ETCs to receive high-cost support and ETCs not subject to state
jurisdiction to file annual reports with USAC only. Third, the
Commission adopts its proposal to more closely align support reductions
with an ETC's failure to certify locations by the deadlines established
in its rules. Fourth, the Commission modifies the reporting
requirements for performance testing to require all high-cost support
recipients serving fixed locations to report and certify performance
testing results on a quarterly basis, rather than annually. Fifth, the
Commission retains annual financial reporting for privately held rate-
of-return carriers that receive A-CAM support or Alaska Plan support.
Sixth, the Commission adopts its proposal to modify its rules to create
a consistent one-time grace period for all compliance filings with
grace periods to ``within four business days.'' Seventh, the Commission
modifies its rules to adopt uniform deployment, certification, and
location reporting deadlines for all CAF Phase II auction support
recipients. Eighth, the Commission declines to amend Sec. 54.316(a) of
its rules to require ETCs receiving high-cost support and subject to
defined deployment obligations to report the maximum speeds offered,
advertised, or delivered to customers. Ninth, the Commission adopts its
proposal to amend Sec. 54.316(a)(1) to more accurately reflect the
deployed locations reporting obligations of support recipients. Tenth,
the Commission modifies its voice and broadband rate certification
rules to clarify the reporting period. The Commission also amends Sec.
54.316(a) to clarify that it will permit high-cost support recipients
to report and certify late-reported locations in future annual
deployment reports and to count these locations toward their defined
deployment obligations.
58. In addition, the Order amends the Commission's rules to provide
a simpler process for rate-of-return LECs seeking to merge,
consolidate, or acquire one or more rate-of-return study areas to
calculate the new entity's ARC, CAFF ICC support, and reciprocal
compensation and switched access rate caps. The Commission amends Sec.
54.902 of its rules to better reflect the current state of the high-
cost program. The Commission modifies the study area boundary process
to require waivers for all study area boundary changes. The Order also
eliminates optional quarterly line count reporting for CAF BLS support
recipients and revises Sec. 54.205 of the Commission's rules to
require an ETC designated by a state authority and seeking to
relinquish its ETC designation to provide advance notice to the
Commission.
59. The RFA directs agencies to provide a description of and, where
feasible, an estimate of the number of small entities that may be
affected by the rules adopted herein. The RFA generally defines the
term ``small entity'' as having the same meaning as the terms ``small
business,'' ``small organization,'' and ``small governmental
jurisdiction.'' In addition, the term ``small business'' has the same
meaning as the term ``small-business concern'' under the Small Business
Act. A ``small-business concern'' is one that: (1) is independently
owned and operated; (2) is not dominant in its field of operation; and
(3) satisfies any additional criteria established by the Small Business
Administration (SBA).
60. Small Businesses, Small Organizations, Small Governmental
Jurisdictions. The Commission's actions, over time, may affect small
entities that are not easily categorized at present. The Commission
therefore describes, at the outset, three broad groups of small
entities that could be directly affected herein. First, while there are
industry specific size standards for small businesses that are used in
the regulatory flexibility analysis, according to data from the SBA's,
Office of Advocacy, in general a small business is an independent
business having fewer than 500 employees. These types of small
businesses represent 99.9% of all businesses in the United States,
which translates to 33.2 million businesses.
61. Next, the type of small entity described as a ``small
organization'' is generally ``any not-for-profit enterprise which is
independently owned and operated and is not dominant in its field.''
The Internal Revenue Service (IRS) uses a revenue benchmark of $50,000
or less to delineate its annual electronic filing requirements for
small exempt organizations. Nationwide, for tax year 2020, there were
approximately 447,689 small exempt organizations in the U.S. reporting
revenues of $50,000 or less according to the registration and tax data
for exempt organizations available from the IRS.
62. Finally, the small entity described as a ``small governmental
jurisdiction'' is defined generally as ``governments of cities,
counties, towns, townships, villages, school districts, or special
districts, with a population of less than fifty thousand.'' U.S. Census
Bureau data from the 2017 Census of Governments indicate there were
90,075 local governmental jurisdictions consisting of general purpose
governments and special purpose governments in the United States. Of
this number, there were 36,931 general purpose governments (county,
municipal, and town or township) with populations of less than 50,000
and 12,040 special purpose governments--independent school districts
with enrollment populations of less than 50,000. Accordingly, based on
the 2017 U.S. Census of Governments data, the Commission estimates that
at least
[[Page 25157]]
48,971 entities fall into the category of ``small governmental
jurisdictions.''
63. Small entities potentially affected by the rules herein include
Wired Telecommunications Carriers, LECs, Incumbent LECs, Competitive
LECs, Interexchange Carriers (IXCs), Local Resellers, Toll Resellers,
Other Toll Carriers, Prepaid Calling Card Providers, Wireless
Telecommunications Carriers (except Satellite), Cable and Other
Subscription Programming, Cable Companies and Systems (Rate
Regulation), Cable System Operators (Telecom Act Standard), All Other
Telecommunications, Wired Broadband Internet Access Service Providers
(Wired ISPs), Wireless Broadband Internet Access Service Providers
(Wireless ISPs or WISPs), Internet Service Providers (Non-Broadband),
All Other Information Services.
64. In the Order, the Commission adopts measures to improve the
management, administration, and oversight of the high-cost program that
may impact small entities, including: streamlining reporting and
certification requirements; improving review of mergers between rate-
of-return local exchange carriers; clarifying support for exchanges
acquired by a CAF BLS recipient; establishing a streamlined process to
merge jointly-owned study areas; improving the process to relinquish
ETC status, and improving the Commission's audit program.
65. The Commission revises Sec. 54.313(i) of its rules to
streamline the process for submitting annual high-cost information and
certifications by requiring that such filings be made only with the
USAC which administers the program, rather than both USAC and the
Commission's OSEC. The Commission similarly revises Sec. 54.314 of its
rules to require that high-cost support recipients file annual reports
with USAC only. Additionally, the Commission more closely aligns
support reductions with an ETC's failure to certify locations by the
deadlines established in the Commission's rules. The Commission also
modifies the reporting requirements for performance testing to apply to
all high-cost support recipients serving fixed locations, not just
those carriers that are not in compliance with speed and latency
requirements. These carriers will be required to report and certify
performance testing results on a quarterly basis instead of annually,
and the Commission will allow for an additional week to file the
report. Further, the Commission modifies its rules to create a
consistent one-time grace period for all compliance filings to ``within
four business days.'' The Commission updates its rules to adopt uniform
deployment, certification, and location reporting deadlines for all CAF
Phase II auction support recipients (including recipients of support
allocated through the New York's New NY Broadband program). Section
54.316(a)(1) of the Commission's rules is amended to more accurately
reflect the reporting obligations of support recipients in reporting
deployed locations. The Commission's voice rate certification rule is
updated to require carriers submitting an annual FCC Form 481 to
certify compliance with the annual voice and broadband benchmarks
adopted for the preceding calendar year ending the last day of December
rather than those benchmarks applicable to the year that the report is
filed. The Commission modifies and amends its rules to permit high-cost
support recipients that have deployed locations in years prior to the
annual reporting year to submit these locations (late-reported
locations) and to count these locations toward their defined deployment
obligations.
66. The Commission amends its rules to provide a simpler process
for rate-of-return LECs seeking to merge, consolidate, or acquire one
or more rate-of-return study areas to calculate the new entity's ARC,
CAF ICC support, and reciprocal compensation and switched access rate
caps. Section 51.917 is modified to provide guidance on calculating
Base Period Revenues for rate-of-return study areas affected by a
transaction, thereby permitting rate-of-return carriers to adjust their
Base Period Revenues without the need for a waiver. Specifically, the
Commission revises Sec. 51.917 of its rules to provide that when two
or more entire rate-of-return study areas are merged, the LEC shall
combine the Base Period Revenue and interstate revenue requirements of
the merging study areas for purposes of calculating Eligible Recovery.
The Commission modifies Sec. 51.909 to establish procedures for
setting new rate caps for merging rate-of-return LECs and adopt a
streamlined waiver process if the rates for the new combined study area
would result in the new entity's CAF ICC support exceeding a certain
threshold. Specifically, for carriers that file their own tariffs, the
new rate cap for each rate element shall be the weighted average of the
preexisting rates in each of the affected study areas. Revising the
waiver process will reduce costs and administrative burdens by
eliminating the need for carriers, including small entities, to obtain
individual waivers when certain conditions apply.
67. The Commission modifies Sec. 54.902(a) to limit eligibility
for CAF BLS support to those transactions where the acquiring carrier
would only be eligible to receive CAF BLS support for exchanges
acquired from existing CAF BLS recipients, and revises Sec. 54.902(b)
to include any model-based, auction-based, or frozen support. The
Commission updates the study area boundary process to require waivers
for all study area boundary changes. The Commission eliminates optional
quarterly line count reporting for CAF BLS support recipients, finding
that the mandatory annual line count reporting set forth in Sec. Sec.
54.313(h)(5) and 54.903(a)(1) of the Commission's rules suffices for
the purposes of setting per line caps. The Commission revises Sec.
54.205 of the Commission's rules to require an ETC designated by a
state authority and seeking to relinquish its ETC designation to also
provide advance notice to the Commission. In addition, the Commission
requires former ETCs designated by a state authority that have
relinquished their designation to provide notice of such relinquishment
within 10 days of the effective date of this rule modification. The
Commission adopts several minor changes to its rules to correct
inaccuracies associated with subsequent rule changes.
68. The Commission modifies Sec. 54.902(a) to limit eligibility
for CAF BLS support to those transactions where the acquiring carrier
would only be eligible to receive CAF BLS support for exchanges
acquired from existing CAF BLS recipients, and revise Sec. 54.902(b)
to include any model-based, auction-based, or frozen support. The
Commission updates the study area boundary process to require waivers
for all study area boundary changes. The Commission eliminates optional
quarterly line count reporting for CAF BLS support recipients, finding
that the mandatory annual line count reporting set forth in Sec. Sec.
54.313(h)(5) and 54.903(a)(1) of its rules suffices for the purposes of
setting per line caps. The Commission revises Sec. 54.205 of its rules
to require an ETC designated by a state authority and seeking to
relinquish its ETC designation to also provide advance notice to the
Commission. In addition, the Commission requires former ETCs designated
by a state authority that have relinquished their designation to
provide notice of such relinquishment within 10 days of the effective
date of this rule modification. The Commission adopts several minor
changes to its rules to correct inaccuracies associated with subsequent
rule changes.
69. The record does not provide sufficient information to allow the
[[Page 25158]]
Commission to determine whether small entities will be required to hire
professionals to comply with its decisions. The Commission anticipates
the approaches it has taken to implement the requirements will have
minimal cost implications because it expects that much of the required
information is already collected to ensure compliance with the terms
and conditions of support. Further, the changes the Commission makes to
streamline waiver processes and eliminate duplicative filing
requirements may reduce administrative costs and compliance
requirements for small entities that may have smaller staff and fewer
resources.
70. The RFA requires an agency to provide, ``a description of the
steps the agency has taken to minimize the significant economic impact
on small entities . . . including a statement of the factual, policy,
and legal reasons for selecting the alternative adopted in the final
rule and why each one of the other significant alternatives to the rule
considered by the agency which affect the impact on small entities was
rejected.''
71. In reaching its final conclusions and through its actions in
this proceeding, the Commission has considered the economic impact of,
and alternatives to, proposals that may affect small entities. The
rules that the Commission adopts in the Order will benefit small and
other entities by improving and streamlining annual reporting and
certification, as well as by eliminating ambiguity and reducing
administrative burdens. Additionally, the Commission adopts consistent
grace periods of four business days which will eliminate confusion for
all entities from grace periods falling on a weekend or holiday. The
Commission also eliminates the need for rate-of-return LECs, most of
which are small entities, that are involved in a merger, consolidation,
or acquisition with another rate-of-return carrier to obtain a waiver
of certain intercarrier compensation rules. For carriers that do not
satisfy the criteria identified for transactions when waiver is not
required, the Commission adopts a streamlined CAF ICC merger approval
process. Specifically, the Commission modifies Sec. 54.314 to require
the submission of annual certifications of its rules with USAC only,
instead of USAC and the Commission. Revisions to Sec. 54.316(a)
clarify high-cost support recipients obligations for late-reported
locations, addressing commenters concerns by modifying the support
reduction and capping the duration multiplier if timely filing is made
by the next deadline. The Commission, however, declines to amend Sec.
54.316(a) to require ETCs receiving high-cost support and subject to
defined deployment obligations to report the maximum speeds offered or
delivered to customers because similar information is collected through
fulfillment of their BDC responsibilities.
72. To the extent the Commission retains certification and
reporting requirements, it finds that the importance of monitoring the
use of the public's funds outweighs the burden of filing the required
information on all entities, including small entities, particularly
because much of the information that the Commission requires they
report is information it expects they will already be collecting to
ensure they comply with the terms and conditions of support and they
will be able to submit their location data on a rolling basis to help
minimize the burden of uploading a large number of locations at once.
For example, the Commission declines proposals to relieve privately
held rate-of-return carriers that receive A-CAM support or Alaska Plan
support of the requirement to file annually a report of the company's
financial conditions and operations, because the public interest
benefits evaluating the efficacy outweigh the burdens. The Commission
considered proposals that sought to apply the newly adopted Alaska rate
benchmarks as suitable proxy for all insular territories in the United
States, but declines to address them in the Order because they are not
sufficiently related to the proposals in the Administrative NPRM, and
recommend that commenters submit a petition for rulemaking to address
this issue.
III. Ordering Clauses
73. Accordingly, it is ordered, pursuant to the authority contained
in sections 4(i), 214, 218-220, 254, 303(r), and 403 of the
Communications Act of 1934, as amended, 47 U.S.C. 154(i), 214, 218-220,
254, 303(r), and 403, and Sec. Sec. 1.1 and 1.425 of the Commission's
rules, 47 CFR 1.1 and 1.425 the Order is adopted. The Order shall be
effective thirty days after publication in the Federal Register, except
for those portions containing information collection requirements in
Sec. Sec. 36.4, 54.205, 54.313(a)(2), (3), and (6), (i), and (j),
54.314(a) through (d), 54.316(a) through (d), 54.903(a)(2), and 54.1306
of the Commission's rules that have not been approved by OMB.
74. It is further ordered that parts 36, 51, and 54 of the
Commission's rules are amended as set forth in this document, and that
any such rule amendments that contain new or modified information
collection requirements that require approval by the OMB under the PRA
shall be effective after announcement in the Federal Register or OMB
approval of the Commission's rules, and on the effective date announced
therein.
List of Subjects
47 CFR Part 36
Communications common carriers, Reporting and recordkeeping
requirements, Telecommunications, Telephone, Uniform System of
Accounts.
47 CFR Part 51
Communications, Communications common carriers, Telecommunications,
Telephone.
47 CFR Part 54
Communications common carriers, Health facilities, Infants and
children, Internet, Libraries, Puerto Rico, Reporting and recordkeeping
requirements, Schools, Telecommunications, Telephone, Virgin Islands.
Federal Communications Commission.
Marlene Dortch,
Secretary.
Final Rules
For the reasons discussed in the preamble, the Federal
Communications Commission amends 47 CFR parts 36, 51, and 54 as
follows:
PART 36--JURISDICTIONAL SEPARATIONS PROCEDURES; STANDARD PROCEDURES
FOR SEPARATING TELECOMMUNICATIONS PROPERTY COSTS, REVENUES,
EXPENSES, TAXES AND RESERVES FOR TELECOMMUNICATIONS COMPANIES
0
1. The authority citation for part 36 continues to read as follows:
Authority: 47 U.S.C. 151, 152, 154(i) and (j), 201, 205, 220,
221(c), 254, 303(r), 403, 410, and 1302 unless otherwise noted.
0
2. Delayed indefinitely, amend Sec. 36.4 by adding paragraph (c) to
read as follows:
Sec. 36.4 Streamlining procedures for processing petitions for waiver
of study area boundaries.
* * * * *
(c) Petitions for waiver required. Effective as of [30 DAYS AFTER
THE EFFECTIVE DATE OF THIS PARAGRAPH (c)], local exchange carriers
seeking a change in study area boundaries must file a study area
petition consistent with the procedures
[[Page 25159]]
set out in paragraphs (a) and (b) of this section notwithstanding any
prior exemption from such waiver requests including, but not limited
to, when a company is combining previously unserved territory with one
of its study areas or a holding company is consolidating existing study
areas within the same state. The Wireline Competition Bureau or the
Office of Economics and Analytics are permitted to accept study area
boundary corrections without a waiver.
PART 51--INTERCONNECTION
0
3. The authority citation for part 51 continues to read as follows:
Authority: 47 U.S.C. 151-55, 201-05, 207-09, 218, 225-27, 251-
52, 271, 332 unless otherwise noted.
0
4. Amend Sec. 51.909 by adding paragraph (a)(7) to read as follows:
Sec. 51.909 Transition of rate-of-return carrier access charges.
(a) * * *
(7) Rate-of-return carriers subject to Sec. 51.917 that merge
with, consolidate with, or acquire, other rate-of-return carriers shall
establish new rate caps as follows:
(i) If the merged entity will file its own access tariff, the new
rate cap for each rate element shall be the average of the preexisting
rates of each study area weighted by the number of access lines in each
study area; or
(ii) If the merged entity participates in the Association traffic-
sensitive tariff and has to establish a single switched access rate for
one or more rate elements, the new consolidated rate reflecting the
cost characteristics of the merged entity, as determined by the
Association, will serve as the new rate cap if the merged entity's
Connect America Fund Intercarrier Compensation (CAF ICC) support will
not be more than two percent higher than the combined amount received
by the entities prior to merger, using rate and demand levels for the
preceding calendar year. A merging entity that does not satisfy the
requirement in this paragraph (a)(7)(ii) may file a streamlined waiver
petition that will be subject to the following procedure:
(A) Public notice and review period. The Wireline Competition
Bureau will issue a public notice seeking comment on a petition for
waiver of the two-percent threshold established by this paragraph
(a)(7)(ii).
(B) Comment cycle. Comments on petitions for waiver may be filed
during the first 30 days following public notice, and reply comments
may be filed during the first 45 days following public notice, unless
the public notice specifies a different pleading cycle. All comments on
petitions for waiver shall be filed electronically, and shall satisfy
such other filing requirements as may be specified in the public
notice.
(C) Effectuating waiver grant. A waiver petition filed pursuant to
this paragraph (a)(7)(ii)(C) will be deemed granted 60 days after the
release of the public notice seeking comment on the petition, unless
opposed or the Commission acts to prevent the waiver from taking
effect. The Association and the petitioner shall coordinate the timing
of any tariff filing necessary to effectuate this change. The revised
rate filed by the Association shall be the rate cap for purposes of
applying paragraph (a) of this section.
* * * * *
0
5. Amend Sec. 51.917 by revising paragraph (c) to read as follows:
Sec. 51.917 Revenue recovery for Rate-of-Return Carriers.
* * * * *
(c) Base Period Revenue--(1) Adjustment for Access Stimulation
activity. 2011 Rate-of-Return Carrier Base Period Revenue shall be
adjusted to reflect the removal of any increases in revenue requirement
or revenues resulting from Access Stimulation activity the Rate-of-
Return Carrier engaged in during the relevant measuring period. A Rate-
of-Return Carrier should make this adjustment for its initial July 1,
2012, tariff filing, but the adjustment may result from a subsequent
Commission or court ruling.
(2) Adjustment for merger, consolidation, or acquisition. Rate-of-
Return Carriers subject to this section that merge with, consolidate
with, or acquire, other Rate-of-Return Carriers shall establish
combined Base Period Revenue and interstate revenue requirement levels
as follows:
(i) If the merger or acquisition is of two or more study areas, the
Base Period Revenue and interstate revenue requirement levels of the
study areas shall be added together to establish a new Base Period
Revenue and interstate revenue requirement for the newly combined
entity; or
(ii) If a portion of a study area is being acquired and merged into
another study area, the Base Period Revenue and interstate revenue
requirement levels of the partial study area shall be based on the
proportion of access lines acquired compared to the total access lines
in the pre-merger study area.
* * * * *
PART 54--UNIVERSAL SERVICE
0
6. The authority citation for part 54 continues to read as follows:
Authority: 47 U.S.C. 151, 154(i), 155, 201, 205, 214, 219, 220,
229, 254, 303(r), 403, 1004, 1302, 1601-1609, and 1752, unless
otherwise noted.
0
7. Delayed indefinitely, amend Sec. 54.205 by revising paragraph (a)
and adding paragraphs (c) and (d) to read as follows:
Sec. 54.205 Relinquishment of universal service.
(a) A state commission shall permit an eligible telecommunications
carrier to relinquish its designation as such a carrier in any area
served by more than one eligible telecommunications carrier. An
eligible telecommunications carrier that seeks to relinquish its
eligible telecommunications carrier designation for an area served by
more than one eligible telecommunications carrier shall give notice to
the state commission and to the Federal Communications Commission of
such intention to relinquish. The notice to the Federal Communications
Commission shall be filed with the Office of the Secretary of the
Commission clearly referencing WC Docket No. 09-197.
* * * * *
(c) Where a state authority permits an eligible telecommunications
carrier to relinquish its designation, the former eligible
telecommunications carrier must submit a copy of the state authority's
order or other document permitting relinquishment to the Commission
within 10 days of the state authority's decision.
(d) All notices to the Commission must be filed regardless of
whether the eligible telecommunications carrier received or is
receiving universal service support at the time of relinquishment.
0
8. Amend Sec. 54.305 by revising paragraph (d) to read as follows:
Sec. 54.305 Sale or transfer of exchanges.
* * * * *
(d) Transferred exchanges in study areas operated by rural
telephone companies that are subject to the limitations on loop-related
universal service support in paragraph (b) of this section may be
eligible for a safety valve loop cost expense adjustment based on the
difference between the rural incumbent local exchange carrier's index
year expense adjustment and subsequent year loop cost expense
adjustments for the acquired exchanges. Safety valve loop cost expense
adjustments shall only be available to
[[Page 25160]]
rural incumbent local exchange carriers that, in the absence of
restrictions on high-cost loop support in paragraph (b) of this
section, would qualify for high-cost loop support for the acquired
exchanges under Sec. 54.1310.
(1) For carriers that buy or acquire telephone exchanges on or
after January 10, 2005, from an unaffiliated carrier, the index year
expense adjustment for the acquiring carrier's first year of operation
shall equal the selling carrier's loop-related expense adjustment for
the transferred exchanges for the 12-month period prior to the transfer
of the exchanges. At the acquiring carrier's option, the first year of
operation for the transferred exchanges, for purposes of calculating
safety valve support, shall commence at the beginning of either the
first calendar year or the next calendar quarter following the transfer
of exchanges. For the first year of operation, a loop cost expense
adjustment, using the costs of the acquired exchanges submitted in
accordance with Sec. 54.1305 shall be calculated pursuant to Sec.
54.1310 and then compared to the index year expense adjustment. Safety
valve support for the first period of operation will then be calculated
pursuant to paragraph (d)(3) of this section. The index year expense
adjustment for years after the first year of operation shall be
determined using cost data for the first year of operation of the
transferred exchanges. Such cost data for the first year of operation
shall be calculated in accordance with Sec. Sec. 54.1305 and 54.1310.
For each year, ending on the same calendar quarter as the first year of
operation, a loop cost expense adjustment, using the loop costs of the
acquired exchanges, shall be submitted and calculated pursuant to
Sec. Sec. 54.1305 and 54.1310 and will be compared to the index year
expense adjustment. Safety valve support for the second year of
operation and thereafter will then be calculated pursuant to paragraph
(d)(3) of this section.
(2) For carriers that bought or acquired exchanges from an
unaffiliated carrier before January 10, 2005, and are not subject to
the exception in paragraph (c) of this section, the index year expense
adjustment for acquired exchange(s) shall be equal to the rural
incumbent local exchange carrier's high-cost loop expense adjustment
for the acquired exchanges calculated for the carrier's first year of
operation of the acquired exchange(s). At the carrier's option, the
first year of operation of the transferred exchanges shall commence at
the beginning of either the first calendar year or the next calendar
quarter following the transfer of exchanges. The index year expense
adjustment shall be determined using cost data for the acquired
exchange(s) submitted in accordance with Sec. 54.1305 and shall be
calculated in accordance with Sec. 54.1310. For each subsequent year,
ending on the same calendar quarter as the index year, a loop cost
expense adjustment, using the costs of the acquired exchanges, will be
calculated pursuant to Sec. 54.1310 and will be compared to the index
year expense adjustment. Safety valve support is calculated pursuant to
paragraph (d)(3) of this section.
* * * * *
0
9. Amend Sec. 54.310 by revising paragraph (c) introductory text to
read as follows:
Sec. 54.310 Connect America Fund for Price Cap Territories--Phase II.
* * * * *
(c) Deployment obligation. Recipients of Connect America Phase II
model-based support must complete deployment to 40 percent of supported
locations by December 31, 2017, to 60 percent of supported locations by
December 31, 2018, to 80 percent of supported locations by December 31,
2019, and to 100 percent of supported locations by December 31, 2020.
Recipients of Connect America Phase II support awarded through a
competitive bidding process, including New York's New NY Broadband
Program, must complete deployment to 40 percent of supported locations
by December 31, 2022, to 60 percent of supported locations December 31,
2023, to 80 percent of supported locations by December 31, 2024, and to
100 percent of supported locations by December 31, 2025. Compliance
shall be determined based on the total number of supported locations in
a state.
* * * * *
0
10. Delayed indefinitely, amend Sec. 54.313 by:
0
a. Revising the section heading and paragraphs (a)(2), (3), and (6);
0
b. Removing the heading from paragraph (g);
0
c. Revising paragraph (i); and
0
d. Revising and republishing paragraph (j);
The revisions read as follows:
Sec. 54.313 Annual reporting requirements and quarterly performance
reporting for high-cost recipients.
(a) * * *
(2) A certification that the pricing of the company's voice
services during the prior calendar year is no more than two standard
deviations above the applicable national average urban rate for voice
service, as specified in the public notice issued by the Wireline
Competition Bureau and the Office of Economics and Analytics;
(3) A certification that the pricing of a service that meets the
Commission's broadband public interest obligations during the prior
calendar year is no more than the applicable benchmark to be announced
annually in a public notice issued by the Wireline Competition Bureau
and the Office of Economics and Analytics, or is no more than the non-
promotional price charged for a comparable fixed wireline service in
urban areas in the states or U.S. Territories where the eligible
telecommunications carrier receives support;
* * * * *
(6) The results of quarterly network performance tests pursuant to
the methodology and in the format determined by the Wireline
Competition Bureau, Wireless Telecommunications Bureau, and Office of
Engineering and Technology must be submitted on the following dates per
year:
(i) By April 15th. Filing and certification for network performance
test results for first quarter testing.
(ii) By July 15th. Filing and certification for network performance
test results for second quarter testing.
(iii) By October 15th. Filing and certification for network
performance test results for third quarter testing.
(iv) By January 15th. Filing and certification for network
performance test results for the previous fourth quarter testing.
* * * * *
(i) All reports pursuant to this section shall be filed with the
Administrator.
(j)(1) Other than for certifications under paragraph (a)(6) of this
section, in order for a recipient of high-cost support to continue to
receive support for the following calendar year, or to retain its
eligible telecommunications carrier designation, it must submit the
annual reporting information required by this section annually by July
1 of each year. Eligible telecommunications carriers that file their
reports after the July 1 deadline shall receive a reduction in support
pursuant to the following schedule:
(i) An eligible telecommunications carrier that files after the
July 1 deadline, but by July 8, will have its support reduced in an
amount equivalent to seven days in support; and
(ii) An eligible telecommunications carrier that files on or after
July 9 will have its support reduced on a pro-rata daily basis
equivalent to the period of non-compliance, plus the minimum seven-day
reduction.
[[Page 25161]]
(2) An eligible telecommunications carrier that submits the annual
reporting information required by this section after July 1 but within
4 business days will not receive a reduction in support if the eligible
telecommunications carrier and its holding company, operating
companies, and affiliates as reported pursuant to paragraph (a)(4) of
this section have not missed the July 1 deadline in any prior year.
(3) For certifications under paragraph (a)(6) of this section, in
order for a recipient of high-cost support to continue to receive
support amount for the following calendar year, or retain its eligible
telecommunications carrier designation, it must submit information
required under paragraph (a)(6) by the required dates set. Reductions
in support for late filings shall be calculated after the deadline
under paragraph (a)(6)(iv) of this section by adding the total days
late for each quarter and dividing that number by four (days late).
Eligible telecommunications carriers that file their reports after the
quarterly filing deadline will not receive a grace period for late
filings, and shall receive a reduction in support pursuant to the
following schedule:
(i) An eligible telecommunications carrier that is one to seven
days late, will have its support reduced in an amount equivalent to
seven days in support; and
(ii) An eligible telecommunications carrier that is 8 days late or
more will have its support reduced on a pro-rata basis equivalent to
the number of days late plus the minimum seven-day reduction.
(4) Any support reductions resulting from a failure to timely make
required filing pursuant to this section shall be applied in the month
following the notice of support reduction to the eligible
telecommunications carrier from the Administrator or as soon as
feasible thereafter.
* * * * *
0
11. Delayed indefinitely, revise and republish Sec. 54.314 to read as
follows:
Sec. 54.314 Certification of support for eligible telecommunications
carriers.
(a) Certification. States that desire eligible telecommunications
carriers to receive support pursuant to the high-cost program must file
an annual certification with the Administrator stating that all federal
high-cost support provided to such carriers within that State was used
in the preceding calendar year and will be used in the coming calendar
year only for the provision, maintenance, and upgrading of facilities
and services for which the support is intended. High-cost support shall
only be provided to the extent that the State has filed the requisite
certification pursuant to this section.
(b) Carriers not subject to State jurisdiction. An eligible
telecommunications carrier not subject to the jurisdiction of a State
that desires to receive support pursuant to the high-cost program must
file an annual certification with the Administrator stating that all
federal high-cost support provided to such carrier was used in the
preceding calendar year and will be used in the coming calendar year
only for the provision, maintenance, and upgrading of facilities and
services for which the support is intended. Support provided pursuant
to the high-cost program shall only be provided to the extent that the
carrier has filed the requisite certification pursuant to this section.
(c) Certification format. (1) A certification pursuant to this
section may be filed in the form of a letter from the appropriate
regulatory authority for the State, and must be filed with the
Administrator of the high-cost universal mechanism, on or before the
deadlines set forth in paragraph (d) of this section. If provided by
the appropriate regulatory authority for the State, the annual
certification must identify which carriers in the State are eligible to
receive Federal support during the applicable 12-month period, and must
certify that those carriers only used support during the preceding
calendar year and will only use support in the coming calendar year for
the provision, maintenance, and upgrading of facilities and services
for which support is intended. A State may file a supplemental
certification for carriers not subject to the State's annual
certification.
(2) An eligible telecommunications carrier not subject to the
jurisdiction of a State shall file a sworn affidavit executed by a
corporate officer attesting that the carrier only used support during
the preceding calendar year and will only use support in the coming
calendar year for the provision, maintenance, and upgrading of
facilities and services for which support is intended. The affidavit
must be filed with the Administrator of the high-cost universal service
support mechanism, on or before the deadlines set forth in paragraph
(d) of this section.
(d) Filing deadlines. (1) In order for an eligible
telecommunications carrier to receive Federal high-cost support, the
State or the eligible telecommunications carrier, if not subject to the
jurisdiction of a State, must file an annual certification, as
described in paragraph (c) of this section, with the Administrator by
October 1 of each year. If a State or eligible telecommunications
carrier files the annual certification after the October 1 deadline,
the carrier subject to the certification shall receive a reduction in
its support pursuant to the following schedule:
(i) An eligible telecommunications carrier subject to
certifications filed after the October 1 deadline, but by October 8,
will have its support reduced in an amount equivalent to seven days in
support.
(ii) An eligible telecommunications carrier subject to
certifications filed on or after October 9 will have its support
reduced on a pro-rata daily basis equivalent to the period of non-
compliance, plus the minimum seven-day reduction.
(iii) Any support reductions resulting from a failure to timely
make required filing pursuant to this section shall be applied in the
month following the notice of support reduction to the eligible
telecommunications carrier from the Administrator or as soon as
feasible thereafter.
(2) If an eligible telecommunications carrier or state submits the
annual certification required by this section after October 1 but
within 4 business days, the eligible telecommunications carrier subject
to the certification will not receive a reduction in support if the
eligible telecommunications carrier and its holding company, operating
companies, and affiliates as reported pursuant to Sec. 54.313(a)(4)
have not missed the October 1 deadline in any prior year.
0
12. Amend Sec. 54.315 by revising the first sentence of paragraph
(c)(4)(i) to read as follows:
Sec. 54.315 Application process for Connect America Fund Phase
Connect America Fund Phase II support distributed through competitive
bidding.
* * * * *
(c) * * *
(4) * * *
(i) Failure by a Phase II auction support recipient to meet its
service milestones as required by Sec. 54.310 will trigger reporting
obligations and the withholding of support as described in Sec.
54.320(d). * * *
* * * * *
0
13. Delayed indefinitely, amend Sec. 54.316 by revising paragraph
(a)(1), the introductory text of paragraph (b), and paragraphs (b)(4)
and (7) and (c) and adding paragraph (d) to read as follows:
[[Page 25162]]
Sec. 54.316 Broadband deployment reporting and certification
requirements for high-cost recipients.
(a) * * *
(1) Recipients of high-cost support with defined broadband
deployment obligations pursuant to Sec. 54.308(a) or (c) or Sec.
54.310(c) shall provide to the Administrator information regarding the
locations to which the eligible telecommunications carrier is offering
broadband service in satisfaction of its public interest obligations,
as defined in either Sec. 54.308 or Sec. 54.309.
* * * * *
(b) Broadband deployment certifications. ETCs that receive support
to serve fixed locations shall have the following broadband deployment
certification obligations:
* * * * *
(4) Recipients of Connect America Phase II auction support,
including recipients of support made available through the New York's
New NY Broadband Program, shall provide, no later than March 1, 2023,
and on March 1 every year thereafter ending March 1, 2026, a
certification that by the end of the prior calendar year, it was
offering broadband meeting the requisite public interest obligations
specified in Sec. 54.309 to the required percentage of its supported
locations in each state as set forth in Sec. 54.310(c).
* * * * *
(7) Recipients of Uniendo a Puerto Rico Fund Stage 2 fixed and
Connect USVI Fund fixed Stage 2 fixed support shall provide: no later
than March 1 following each service milestone in Sec. 54.1506, a
certification that by the end of the prior support year, it was
offering broadband meeting the requisite public interest obligations
specified in Sec. 54.1507 to the required percentage of its supported
locations in Puerto Rico and the U.S. Virgin Islands as set forth in
Sec. 54.1506. The annual certification shall quantify the carrier's
progress toward or, as applicable, completion of deployment in
accordance with the resilience and redundancy commitments in its
application and in accordance with the detailed network plan it
submitted to the Wireline Competition Bureau.
(c) Filing deadlines. In order for a recipient of high-cost support
to continue to receive support for the following calendar year, or
retain its eligible telecommunications carrier designations, it must
submit the annual reporting information by March 1 as described in
paragraphs (a) and (b) of this section. ETCs that file their reports
after the March 1 deadline shall receive a reduction in support
pursuant to the following schedule:
(1) An ETC that certifies after the March 1 deadline, but by March
8, will have its support reduced in an amount equivalent to seven days
in support.
(2) An ETC that certifies on or after March 9 will have its support
reduced on a pro-rata daily basis equivalent to the period of non-
compliance, plus the minimum seven-day reduction.
(3) An ETC that certifies the information required by this section
within 4 business days of March 1 will not receive a reduction in
support if the ETC and its holding company, operating companies, and
affiliates as reported pursuant to Sec. 54.313(a)(4) in their report
due July 1 of the prior year, have not missed the deadline in any prior
year.
(4) Any support reductions resulting from a failure to timely make
required filing pursuant to this section shall be applied in the next
month following the notice of support reduction to the eligible
telecommunications carrier from the Administrator or as soon as
feasible thereafter.
(d) Reporting locations pursuant to paragraph (a)(1) of this
section after the March 1st annual deadline. (1) An ETC that did not
report and certify specific locations by March 1 of the year following
the year in which the locations were deployed (late-reported locations)
may report and certify those locations in a future year for the purpose
of counting those locations toward fulfillment of future defined
deployment obligations and/or for curing any noncompliance with such
obligations in accordance with the terms of Sec. 54.320. To do so, the
ETC must indicate that the late-reported locations are being filed for
this purpose.
(2) An ETC filing late-reported locations will be subject to a
reduction in support calculated by multiplying the following numbers:
(i) The per diem per location support received by the ETC, subject
to a maximum per-day, per-location reduction of seven dollars.
(ii) The number of days between the March 1 deadline for the
reporting year in which the late-reported locations were deployed and
the date that the ETC reported, certified, and indicated that the
location should be counted toward defined deployment obligations,
subject to a 15 day limit if the late-reported locations are filed as
of the next reporting deadline after the locations should have been
filed and at 30 day limit if the late-reported locations are filed at
any time thereafter (for each instance of late reporting).
(iii) The number of late-reported locations as a percentage of the
total number of locations that the ETC filed for the reporting year in
which the untimely filed location should have been reported.
(3) If an ETC has not reported any untimely locations previously,
the ETC is not subject to the reduction in support specified in
paragraph (d)(2) of this section for a number of untimely reported
locations deployed in any single year constituting 5% or less of the
ETC's reported locations for the relevant reporting year.
(4) If an ETC has not reported any late-reported locations
previously and the ETC filed a timely annual report, the ETC may amend
the annual filing to include additional locations within four business
days of the reporting deadline without being subject to the reduction
in support specified in paragraph (d)(2) of this section.
(5) The reduction in support for the filing of the late-reported
locations shall be applied in the next month following the notice of
support reduction to the eligible telecommunications carrier from the
Administrator or as soon as feasible thereafter.
0
14. Amend Sec. 54.701 by revising paragraph (c)(1)(iii) to read as
follows:
Sec. 54.701 Administrator of universal service support mechanisms.
* * * * *
(c) * * *
(1) * * *
(iii) The High Cost and Low Income Division, which shall perform
duties and functions in connection with the high cost support
mechanisms described in subparts J, K, M, and O of this part, and the
low income support mechanisms described in subpart E of this part,
under the direction of the High Cost and Low Income Committee of the
Board, as set forth in Sec. 54.705(c).
* * * * *
0
15. Amend Sec. 54.705 by revising paragraph (c) to read as follows:
Sec. 54.705 Committees of the Administrator's Board of Directors.
* * * * *
(c) High Cost and Low Income Committee--(1) Committee functions.
The High Cost and Low Income Committee shall oversee the administration
of the high cost and low income support mechanisms described in
subparts J, K, M, O, and E of this part. The High Cost and Low Income
Committee shall have the authority to make decisions concerning:
(i) How the Administrator projects demand for the high cost and low
income support mechanisms;
(ii) Development of applications and associated instructions as
needed for the
[[Page 25163]]
high cost and low income, support mechanisms;
(iii) Administration of the application process, including
activities to ensure compliance with Federal Communications Commission
rules and regulations;
(iv) Performance of audits of beneficiaries under the high cost and
low income support mechanisms; and
(v) Development and implementation of other functions unique to the
high cost and low income support mechanisms.
(2) [Reserved]
* * * * *
0
16. Revise the heading for subpart K to read as follows:
Subpart K--Connect America Fund Broadband Loop Support for Rate-of-
Return Carriers
0
17. Amend Sec. 54.902 by revising the introductory text of paragraph
(a) and paragraph (b) to read as follows:
Sec. 54.902 Calculation of CAF BLS Support for transferred exchanges.
(a) In the event that a rate-of-return carrier receiving CAF BLS
acquires exchanges from an entity that also receives CAF BLS, CAF BLS
for the transferred exchanges shall be distributed as follows:
* * * * *
(b) In the event that a rate-of-return carrier receiving CAF BLS
acquires exchanges from an entity receiving frozen support, model-based
support, or auction-based support, absent further action by the
Commission, the exchanges shall receive the same amount of support and
be subject to the same public interest obligations as specified
pursuant to the frozen, model-based, or auction-based program.
* * * * *
Sec. 54.903 [Amended]
0
18. Delayed indefinitely, amend Sec. 54.903 by removing and reserving
paragraph (a)(2).
0
19. Amend Sec. 54.1301 by revising paragraph (b) to read as follows:
Sec. 54.1301 General.
* * * * *
(b) The expense adjustment will be computed on the basis of data
for a preceding calendar year.
0
20. Amend Sec. 54.1302 by revising paragraph (a) to read as follows:
Sec. 54.1302 Calculation of the incumbent local exchange carrier
portion of the nationwide loop cost expense adjustment for rate-of-
return carriers.
(a) Beginning January 1, 2013, and each calendar year thereafter,
the total annual amount of the incumbent local exchange carrier portion
of the nationwide loop cost expense adjustment shall not exceed the
amount for the immediately preceding calendar year, multiplied times
one plus the Rural Growth Factor calculated pursuant to Sec. 54.1303.
Beginning January 1, 2021, and each calendar year thereafter, the base
amount of the nationwide loop cost expense adjustment shall be the
annualized amount of the final six months of the preceding calendar
year. The total amount of the incumbent local exchange carrier portion
of the nationwide loop cost expense adjustment for the first six months
of the calendar year shall be the base amount divided by two and for
the second six months of the calendar year shall be the base amount
divided by two, multiplied times one plus the Rural Growth Factor
calculated pursuant to Sec. 54.1303.
* * * * *
0
21. Amend Sec. 54.1305 by revising paragraph (a) to read as follows:
Sec. 54.1305 Submission of information to the National Exchange
Carrier Association (NECA).
(a) In order to allow determination of the study areas and wire
centers that are entitled to an expense adjustment pursuant to Sec.
54.1310, each incumbent local exchange carrier (LEC) must provide the
National Exchange Carrier Association (NECA) (established pursuant to
part 69 of this chapter) with the information listed for each study
area in which such incumbent LEC operates, with the exception of the
information listed in paragraph (h) of this section, which must be
provided for each study area. This information is to be filed with NECA
by July 31st of each year. Rural telephone companies that acquired
exchanges subsequent to May 7, 1997, and incorporated those acquired
exchanges into existing study areas shall separately provide the
information required by paragraphs (b) through (i) of this section for
both the acquired and existing exchanges.
* * * * *
Sec. 54.1306 [Removed and Reserved]
0
22. Delayed indefinitely, remove and reserve Sec. 54.1306.
0
23. Amend Sec. 54.1309 by revising paragraph (b) to read as follows:
Sec. 54.1309 National and study area average unseparated loop costs.
* * * * *
(b) Study area average unseparated loop cost per working loop. This
is equal to the unseparated loop costs for the study area as calculated
pursuant to Sec. 54.1308(a) divided by the number of working loops
reported in Sec. 54.1305(i) for the study area.
* * * * *
Sec. 54.1310 [Amended]
0
24. Amend Sec. 54.1310 by removing and reserving paragraph (c).
0
25. Amend Sec. 54.1508 by revising the first sentence of paragraph
(e)(1) to read as follows:
Sec. 54.1508 Letter of credit for stage 2 fixed support recipients.
* * * * *
(e) * * *
(1) Failure by a Uniendo a Puerto Rico Fund and the Connect USVI
Fund Stage 2 fixed support recipient to meet its service milestones as
required by Sec. 54.1506 will trigger reporting obligations and the
withholding of support as described in Sec. 54.320(d). * * *
* * * * *
[FR Doc. 2024-06292 Filed 4-9-24; 8:45 am]
BILLING CODE 6712-01-P
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