Proposed Rule2024-14145
Connect America Fund, Connect America Fund Phase II Auction, The Uniendo a Puerto Rico Fund and the Connect USVI Fund, Rural Digital Opportunity Fund, Rural Digital Opportunity Fund Auction, Establishing a 5G Fund for Rural America, Letters of Credit for Recipients of High-Cost Competitive Bidding Support
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
July 5, 2024
Issuing agencies
Federal Communications Commission
Abstract
In this document, the Federal Communications Commission (Commission) seeks comment on changes to its rules regarding letters of credit for recipients of high-cost support awarded through competitive bidding. Specifically, the Commission seeks comment on changing the rules governing which United States banks are eligible to issue such letters. It also seeks comment on modifying the letter of credit rules for Connect America Fund Phase II (CAF II) support recipients that have met all of their deployment and reporting obligations, along with allowing certain Rural Digital Opportunity Fund (RDOF) support recipients to lower the value of their letters of credit.
Full Text
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<title>Federal Register, Volume 89 Issue 129 (Friday, July 5, 2024)</title>
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[Federal Register Volume 89, Number 129 (Friday, July 5, 2024)]
[Proposed Rules]
[Pages 55542-55547]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-14145]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 54
[WC Docket Nos. 10-90, 18-143, 19-126, 24-144; AU Docket Nos. 17-182,
20-34; GN Docket No. 20-32; FCC 24-64; FR ID 226925]
Connect America Fund, Connect America Fund Phase II Auction, The
Uniendo a Puerto Rico Fund and the Connect USVI Fund, Rural Digital
Opportunity Fund, Rural Digital Opportunity Fund Auction, Establishing
a 5G Fund for Rural America, Letters of Credit for Recipients of High-
Cost Competitive Bidding Support
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
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SUMMARY: In this document, the Federal Communications Commission
(Commission) seeks comment on changes to its rules regarding letters of
credit for recipients of high-cost support awarded through competitive
bidding. Specifically, the Commission seeks comment on changing the
rules governing which United States banks are eligible to issue such
letters. It also seeks comment on modifying the letter of credit rules
for Connect America Fund Phase II (CAF II) support recipients that have
met all of their deployment and reporting obligations, along with
allowing certain Rural Digital Opportunity Fund (RDOF) support
recipients to lower the value of their letters of credit.
DATES: Comments are due on or before August 5, 2024 and reply comments
are due on or before August 19, 2024. If you anticipate that you will
be submitting comments but find it difficult to do so within the period
of time allowed by this document, you should advise the contact listed
below as soon as possible.
ADDRESSES: Pursuant to Sec. Sec. 1.415 and 1.419 of the Commission's
rules, 47 CFR 1.415, 1.419, interested parties may file comments and
reply comments on or before the dates indicated on the first page of
this document. Comments may be filed using the Commission's Electronic
Comment Filing System (ECFS). You may submit comments, identified by WC
Docket Nos. 10-90, 18-143, 19-126, 24-144; AU Docket Nos. 17-182, 20-
34; GN Docket No. 20-32, by any of the following methods:
<bullet> Electronic Filers: Comments may be filed electronically
using the internet by accessing the ECFS: <a href="https://www.fcc.gov/ecfs/">https://www.fcc.gov/ecfs/</a>.
[[Page 55543]]
<bullet> Paper Filers: Parties who choose to file by paper must
file an original and one copy of each filing.
<bullet> Filings can be sent by hand or messenger delivery, by
commercial courier, or by the U.S. Postal Service. All filings must be
addressed to the Secretary, Federal Communications Commission.
<bullet> Hand-delivered or messenger-delivered paper filings for
the Commission's Secretary are accepted between 8 a.m. and 4 p.m. by
the FCC's mailing contractor at 9050 Junction Drive, Annapolis
Junction, MD 20701. All hand deliveries must be held together with
rubber bands or fasteners. Any envelopes and boxes must be disposed of
before entering the building.
<bullet> Commercial courier deliveries (any deliveries not by the
U.S. Postal Service) must be sent to 9050 Junction Drive, Annapolis
Junction, MD 20701. Filings sent by U.S. Postal Service First-Class
Mail, Priority Mail, and Priority Mail Express must be sent to 45 L
Street NE, Washington, DC 20554.
<bullet> People with Disabilities: To request materials in
accessible formats for people with disabilities (braille, large print,
electronic files, audio format), send an email to <a href="/cdn-cgi/l/email-protection#65030606505551250306064b020a13"><span class="__cf_email__" data-cfemail="f2949191c7c2c6b2949191dc959d84">[email protected]</span></a> or
call the Consumer & Governmental Affairs Bureau at 202-418-0530.
FOR FURTHER INFORMATION CONTACT: Nathan Eagan at <a href="/cdn-cgi/l/email-protection#a2ccc3d6cac3cc8cc7c3c5c3cce2c4c1c18cc5cdd4"><span class="__cf_email__" data-cfemail="cfa1aebba7aea1e1aaaea8aea18fa9acace1a8a0b9">[email protected]</span></a>,
Wireline Competition Bureau, 202-418-7400.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's notice
of proposed rulemaking (NPRM) in WC Docket Nos. 10-90, 18-143, 19-126,
24-144; AU Docket Nos. 17-182, 20-34; GN Docket No. 20-32; FCC 24-64,
adopted June 6, 2024 and released June 7, 2024. The full text of this
document is available for public inspection during regular business
hours at Commission's headquarters 45 L Street NE, Washington, DC 20554
or at the following internet address: <a href="https://docs.fcc.gov/public/attachments/FCC-24-64A1.pdf">https://docs.fcc.gov/public/attachments/FCC-24-64A1.pdf</a>.
Synopsis
I. Introduction
1. In the NPRM, the Commission seeks comment on modifying Letter of
Credit (LOC) rules for Universal Service Fund High-Cost support
authorized through a competitive process. The Commission also seeks
comment on modifying the required value of a letter of credit for
recipients of the RDOF support. Finally, it seeks comments on making
the waiver of certain aspects of the LOC rules permanent for recipients
of CAF II support to align with the RDOF LOC requirements. The
Commission is seeking comment in these areas to explore potential ways
to facilitate providers' compliance with program requirements while
facilitating broadband deployment in unserved and underserved areas,
and helping providers to meet their deployment milestones.
2. Currently, the Commission's rules require that entities
authorized to receive High-Cost support authorized through a
competitive process have an LOC from a United States bank with a Weiss
bank safety rating of B- or better. When the Commission first adopted
this rule, approximately 3,600 banks qualified to issue letters of
credit. In the last 2 years, however, nearly half of those banks have
lost their eligibility to issue LOCs as they have seen their Weiss
rating fall below a B-. Therefore, many carriers authorized to receive
CAFF II Auction or RDOF support face the possibility of having their
support withheld until they obtain a new LOC from a qualifying bank,
and these carriers must incur increased costs and administrative
burdens associated with obtaining a new LOC from a qualifying bank.
Accordingly, the Commission seeks comment on whether the Commission
should modify the current requirement of a B- or better Weiss safety
rating.
3. In addition, RDOF support recipients are required to maintain
LOCs that increase in value on an annual basis. Banks issuing LOCs
generally require RDOF support recipients to maintain sufficient cash
reserves to support the LOC, which impacts the financial resources
available for the provider's operations, including deployment. As part
of RDOF's rules, support recipients that meet their optional or
required deployment milestone are allowed to reduce the value of their
required LOCs to one year of their total support once Universal Service
Administrative Company (USAC) has verified deployment. This flexibility
was intended to balance our responsibility to protect program funds
while simultaneously reducing the financial burdens on RDOF support
recipients to participate in the program as they met their deployment
milestones. In the NPRM, the Commission seeks comment on providing
additional flexibility by allowing an RDOF support recipient to lower
the value of its LOC to one year of support if it has deployed service
to 10 percent of its locations by the end of its second year of
support, instead of 20 percent, and the Commission seeks comment on
whether such a waiver would apply to recipients whose two-year optional
milestone has already occurred.
4. Finally, the Commission seeks comment on making our waiver of
certain aspects of the CAF II LOC rules permanent, and thereby
continuing to allow CAF II support recipients that have met their
deployment and reporting obligations to follow the RDOF's LOC rules,
and maintain LOCs at lower values.
II. Discussion
5. Weiss Bank Safety Rating. In the NPRM, the Commission seeks
targeted comment on whether and how to change the sections of the
letter of credit rules requiring a minimum safety rating for issuing
financial institutions. Currently, Auction 903 and 904 support
recipients are required to obtain a letter of credit from United States
banks maintaining a Weiss bank safety rating of B- or better. In light
of the developments in the banking industry, the Commission seeks
comment on this requirement. The Commission also seeks comment on
whether to change the rule requiring United States banks to maintain a
Weiss bank safety rating of B- or better for future recipients of
support from the 5G Fund. If the Commission decides to alter those
rules, the Commission seeks comment on what requirements to adopt for
banks issuing letters of credit to support recipients, to further the
dual goals of securing the financial commitments made through Auctions
903 and 904, and any auction of 5G Fund support, while maintaining a
sufficiently expansive pool of issuing banks to enable broad
participation in the programs by providers, and especially small
providers. The Commission seeks comment on whether there are
alternative, reliable ratings to use for assessing a bank's suitability
for issuing an LOC to support recipients; or whether the Commission
should continue to utilize only Weiss ratings, but accept a lower grade
for bank eligibility. In making any changes to the issuing bank
eligibility rules, how can the Commission minimize any potential public
interest harms and continue to responsibly steward the funds disbursed
through CAF II Auction and RDOF programs as well as the 5G Fund? The
Commission anticipates that any changes to the bank eligibility rules
could also apply to other FCC programs that currently have the same
Weiss bank safety rating requirement. The Commission seeks comment on
this.
6. When the Commission adopted its requirement that banks maintain
a Weiss bank safety rating of B- or better, it reasoned that Weiss
offered ``an
[[Page 55544]]
independent and objective perspective of the safety of the banks it
rates based on capitalization, asset quality, profitability, liquidity,
and stability indexes.'' The Commission also determined that using the
Weiss ratings would significantly increase the number of banks that
could issue LOCs to support recipients, compared to a previous program
that had more restrictive bank eligibility requirements, and that this
change would encourage small entities to participate in Auction 903.
However, while approximately 3,600 banks were eligible to issue LOCs at
the time of the Commission's previous order in 2016, that number has
decreased by nearly half in the past two years. The Commission seeks
comments on any potential reasons for the significant number of decline
in banks meeting this rating standard, and whether the conditions
relating to that decline relate to the factors the Commission cared
about when creating the initial LOC requirement. The Commission also
seeks comments on whether these ratings changes have burdened entities,
in particular small entities, that receive Auction 903 or 904 support.
The Commission seeks specific examples demonstrating how the
requirement burdens carriers and affects their ability to serve
consumers. The record and the petitions certain carriers have filed
seeking relief from the Weiss rating requirement indicate this is an
issue worth exploring. If the Commission ultimately concludes it is in
the public interest to change the eligibility requirement for U.S.
banks permitted to issue LOCs to support recipients, the Commission
seeks comment on how to best adopt changes that are still consistent
with the Commission's rationale in adopting the original Weiss rating
requirement.
7. First, the Commission seeks comment on any alternatives to using
the Weiss bank safety rating. The Commission notes that the objective
is to protect the Universal Service Fund and expenditures, by ensuring
that carriers have an LOC that can be relied upon, while simultaneously
permitting carriers to choose from a reasonably wide range of banks
that can issue LOCs for purposes of complying with program rules. The
Commission seeks comment on alternative approaches that would balance
these objectives.
8. The Commission seeks specific comment on Bank of America's (BOA)
proposed alternative method of determining a bank's eligibility. BOA
proposed that a U.S. bank could be eligible to issue LOCs to auction
support recipients if the bank had either: (1) a Weiss bank safety
rating of B- or better; or (2) a long-term unsecured credit rating
issued by a widely-recognized credit rating agency that is equivalent
to a BBB- or better rating by Standard & Poor's, which is the
requirement for non-U.S banks. How would the Commission apply this
proposed standard? Is the term ``widely-recognized'' credit rating
agency a bright-line rule that Commission staff could easily apply?
What constitutes a widely-recognized agency? Would Commission staff or
the Administrator be able to quickly and easily determine a bank's
long-term unsecured credit rating? Are these ratings publicly available
and free to access? If these ratings are not publicly available and
free to access, how would Commission staff or the Administrator verify
a bank's rating? As noted, Commission staff or the Administrator should
not be required to make any discretionary judgments about a bank's
eligibility. Would this proposal provide additional alternatives to
small businesses that have won support in Auction 903 or 904 or that
may win support in a 5G Fund auction? The Commission also seeks comment
more generally on alternative rating systems and alternative approaches
to rating systems that could be used to evaluate the fitness of a U.S.
bank, including any alternatives adopted by other agencies. What are
the advantages or disadvantages of those rating systems and other
approaches?
9. As another alternative, the Bank Policy Institute proposes that
the ``FCC reconsider its use of Weiss Ratings'' and accept ``letters of
credit from any federally-supervised bank with an investment grade-
rating for banks of $100 billion or more in total assets or with a
certificate that the bank is ``well capitalized'' for banks with assets
below $100 billion.'' The Commission seeks comment on this proposal.
The Bank Policy Institute also argues that if the Commission wishes to
use a credit-rating organization, it should use one of the ten
nationally recognized credit rating statistical organizations which,
unlike Weiss, are subject to SEC regulation. The Commission also seeks
comment on the Bank Policy Institute's contention that using ratings
from credit-rating organizations would be inconsistent with section
939A of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
10. Second, the Commission seeks comment on whether continuing to
use only the Weiss ratings, but instead allowing issuing banks to have
a lower bank safety rating, would provide a solution. Weiss currently
rates 4,526 banks, and 3,923 of them have a bank safety rating of C- or
better. According to Weiss, a C rating means ``This is a cautionary or
yellow flag. In the event of a recession or major financial crisis, the
Commission feels this company may encounter difficulties in maintaining
its financial stability.'' Would using that threshold address the
issues that have been raised and still protect the Fund? The Commission
notes that the LOC plays a vital role in ensuring ability to recoup
funds in the event that an auction support recipient fails to complete
its deployment obligations, and the Commission needs to be certain that
the banks issuing the LOCs will be able to honor them. Weiss's ratings
are publicly available and free to use, which allows for bright-line
determinations about a bank's eligibility. Are there other advantages
or disadvantages with using Weiss ratings but changing the requirement
from B- or higher to C- or higher? Would changing the requirement from
a minimum of a B- to C+ or C strike a better balance? The Commission
notes that an interested party has suggested that any Weiss-rated bank
with ``certain of the five Weiss indices'' ``at a certain level''
should be eligible to issue LOCs to participants in the programs that
award high-cost support through competitive bidding. The Commission
seeks comment on that proposal, and on how such a proposal could work.
Are there any issues the Commission should consider with regard to
administering and implementing a change in the rules regarding bank
eligibility? If so, the Commission seeks comment on those issues, along
with any potential solutions.
11. RDOF Letter of Credit Reduction. The Commission seeks comment
on potential changes to the rules requiring an increase in the value of
an LOC for RDOF support recipients. An RDOF recipient has raised the
concern of ``the economic pressures being brought to bear on current
RDOF recipients in light of the astronomical increase in broadband
deployment costs,'' and says those pressures can be addressed by relief
from the rules regarding an LOC's value. This recipient pointed out
that because ``banks generally require these LOCs to be cash
collateralized, RDOF recipients must tie up significant portions of
their free cash to serve as collateral for the LOC, which, in turn,
means that these funds cannot be used for build out of RDOF networks.''
This recipient specifically asks that all RDOF support recipients be
allowed to reduce their LOCs to one year of their total authorized
support.
12. The Commission seeks comment on the burdens of maintaining the
LOC values currently required by the rules,
[[Page 55545]]
and what could provide relief related to the value of the LOC to
address this concern. Have the rules requiring LOCs to increase in
value on an annual basis impacted RDOF support recipients' ability to
meet their deployment obligations? One specific option the Commission
seeks comment on is allowing RDOF support recipients who have deployed
service to at least 10%, rather than 20%, of their locations by the end
of their second year of support to lower the value of their LOCs to one
year of their total support upon verification by USAC. Does 10%
``demonstrate concrete progress in building its network'' as the
Commission reasoned when it adopted a 20% optional milestone?
Generally, what are the public interest harms and public interest
benefits of a 10% two-year optional milestone? How should the
Commission account for the fact that the two-year optional milestone
has already passed for those RDOF carriers authorized in 2021? What, if
any, form of additional LOC relief would be in the public interest for
those carriers since they must meet the required 40% milestone by
December 31, 2024?
13. The Commission emphasizes that any such change would be limited
to the optional milestone and would not impact the requirement that all
RDOF support recipients must deploy service to 40% of eligible
locations by the end of their third year of support. In the event that
an RDOF support recipient then failed to timely meet its 40% deployment
obligation, the value of its LOC would need to increase to reflect the
amount required under the current rules.
14. CAF II Auction Letter of Credit Waiver. The Commission
separately seeks comment on a proposal made in the record to amend the
relevant CAF II Auction rules to mirror the RDOF LOC rules. With a rule
change, CAF II support recipients that have met all of their deployment
and reporting obligations would be able to continue to follow the RDOF
LOC rules through the end of CAF-II. The Bureau previously granted
waivers allowing CAF II providers to follow the RDOF LOC rules because
of the continued hardship posed by the COVID-19 pandemic. Are those
conditions that justified multiple waivers still present? If those
conditions have improved, would the public interest otherwise be served
by providing this relief permanently? The Commission seeks specific
examples showing why such relief remains necessary. Alternatively,
would it be in the public interest to extend the waiver another year
rather than making permanent rule changes?
15. Digital Equity and Inclusion. Finally, the Commission, as part
of its continuing effort to advance digital equity for all, including
people of color, persons with disabilities, persons who live in rural
or Tribal areas, and others who are or have been historically
underserved, marginalized, or adversely affected by persistent poverty
or inequality, invites comment on any equity-related considerations and
benefits (if any) that may be associated with the proposals and issues
discussed herein. Specifically, the Commission seeks comments on how
the proposals in the NPRM may promote or inhibit advances in diversity,
equity, inclusion, and accessibility, as well the scope of the
Commission's relevant legal authority.
III. Procedural Matters
16. Paperwork Reduction Act Analysis. This document does not
contain proposed information collection requirements subject to the
Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. In addition,
therefore, it does not contain any new or modified information
collection burden for small business concerns with fewer than 25
employees, pursuant to the Small Business Paperwork Relief Act of 2002,
Public Law 107-198, see 44 U.S.C. 3506(c)(4).
17. Regulatory Flexibility Act. The Regulatory Flexibility Act of
1980, as amended (RFA), requires that an agency prepare a regulatory
flexibility analysis for notice and comment rulemakings, unless the
agency certifies that ``the rule will not, if promulgated, have a
significant economic impact on a substantial number of small
entities.'' Accordingly, the Commission has prepared an Initial
Regulatory Flexibility Analysis (IRFA) concerning the possible impact
of potential rule and/or policy changes contained in the NPRM on small
entities. The Commission invites the general public, in particular
small businesses, to comment on the IRFA. Comments must be filed by the
deadlines for comments on the NPRM and must have a separate and
distinct heading designating them as responses to the IRFA.
18. Ex Parte Presentations. This proceeding shall be treated as a
``permit-but-disclose'' proceeding in accordance with the Commission's
ex parte rules. Persons making ex parte presentations must file a copy
of any written presentation or a memorandum summarizing any oral
presentation within two business days after the presentation (unless a
different deadline applicable to the Sunshine period applies). Persons
making oral ex parte presentations are reminded that memoranda
summarizing the presentation must: (1) list all persons attending or
otherwise participating in the meeting at which the ex parte
presentation was made, and (2) summarize all data presented and
arguments made during the presentation. If the presentation consisted
in whole or in part of the presentation of data or arguments already
reflected in the presenter's written comments, memoranda or other
filings in the proceeding, the presenter may provide citations to such
data or arguments in his or her prior comments, memoranda, or other
filings (specifying the relevant page and/or paragraph numbers where
such data or arguments can be found) in lieu of summarizing them in the
memorandum. Documents shown or given to Commission staff during ex
parte meetings are deemed to be written ex parte presentations and must
be filed consistent with rule Sec. 1.1206(b) of the Commission's
rules, In proceedings governed by the Commission's rule Sec. 1.49(f)
or for which the Commission has made available a method of electronic
filing, written ex parte presentations and memoranda summarizing oral
ex parte presentations, and all attachments thereto, must be filed
through the electronic comment filing system available for that
proceeding, and must be filed in their native format (e.g., .doc, .xml,
.ppt, searchable .pdf). Participants in this proceeding should
familiarize themselves with the Commission's ex parte rules.
19. Providing Accountability Through Transparency Act: Consistent
with the Providing Accountability Through Transparency Act, Public Law
118-9, a summary of this document will be available on <a href="https://www.fcc.gov/proposed-rulemakings">https://www.fcc.gov/proposed-rulemakings</a>.
IV. Initial Regulatory Flexibility Analysis
20. As required by the Regulatory Flexibility Analysis (RFA), the
Commission has prepared this Initial Regulatory Flexibility Analysis
(IRFA) of the possible significant economic impact on a substantial
number of small entities by the policies and rules proposed in the
NPRM. Written public comments are requested on this IRFA. Comments must
be identified as responses to the IRFA and must be filed by the
deadlines for comments. In addition, the NPRM and IRFA (or summaries
thereof) will be published in the Federal Register.
[[Page 55546]]
A. Need for, and Objectives of, the Proposed Rules
21. In the NPRM, the Commission seeks comment regarding the rules
determining a bank's eligibility to issue LOCs for winners of Auction
903 and 904 support, along with winners of 5G Fund support and Phase II
fixed support from the Puerto Rico/USVI Fund. The Commission's rules
currently require recipients for support to maintain a letter of credit
from a United States bank with a Weiss bank safety rating of B- or
better. More than 1,600 U.S. banks that had previously been eligible to
issue LOCs to support recipients have seen their Weiss bank safety
ratings fall below a B- in the past two years and, correspondingly,
lost their eligibility to supply support recipients with LOCs. The
Commission recognizes that the current rules may burden those support
recipients who wish to maintain their existing relationship with a bank
that previously issued them an LOC. The Commission seeks comments on
using a different Weiss letter grade as the threshold for bank
eligibility. The Commission alternatively seeks comments on using a
different rating system to evaluate a bank's health. The Commission
also seeks comments on allowing Auction 904 support recipients who have
deployed service to at least 10% of their required locations by the end
of their second year of support to lower the value of their LOCs to one
year of support. Finally, the Commission seeks comments on allowing
Auction 903 support recipients that have met their deployment and
reporting obligations to continue to maintain their LOCs under the
Auction 904 rules.
B. Description and Estimate of the Number of Small Entities to Which
the Proposed Rules Will Apply
22. The RFA directs agencies to provide a description of and, where
feasible, an estimate of the number of small entities that may be
affected by the proposed rules, if adopted. The RFA generally defines
the term ``small entity'' as having the same meaning as the terms
``small business,'' ``small organization,'' and ``small governmental
jurisdiction.'' In addition, the term ``small business'' has the same
meaning as the term ``small business concern'' under the Small Business
Act.'' A ``small business concern'' is one which: (1) is independently
owned and operated; (2) is not dominant in its field of operation; and
(3) satisfies any additional criteria established by the SBA.
23. Small Businesses, Small Organizations, and Small Governmental
Jurisdictions. The Commission's actions, over time, may affect small
entities that are not easily categorized at present. Therefore, 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 Small Business
Administration's (SBA) 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.
24. 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 2022, there were
approximately 530,109 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.
25. 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 2022 Census of Governments indicate there were
90,837 local governmental jurisdictions consisting of general purpose
governments and special purpose governments in the United States. Of
this number, there were 36,845 general purpose governments (county,
municipal, and town or township) with populations of less than 50,000
and 11,879 special purpose governments (independent school districts)
with enrollment populations of less than 50,000. Accordingly, based on
the 2022 U.S. Census of Governments data, the Commission estimates that
at least 48,724 entities fall into the category of ``small governmental
jurisdictions.''
26. The small entities that may be affected are Wireline Providers,
Wireless Carriers and Service Providers, and internet Service
Providers.
27. All Other Information Services. This industry comprises
establishments primarily engaged in providing other information
services (except news syndicates, libraries, archives, internet
publishing and broadcasting, and Web search portals). The SBA small
business size standard for this industry classifies firms with annual
receipts of $30 million or less as small. U.S. Census Bureau data for
2017 show that there were 704 firms in this industry that operated for
the entire year. Of those firms, 556 had revenue of less than $25
million. Consequently, we estimate that the majority of firms in this
industry are small entities.
C. Description of Projected Reporting, Recordkeeping and Other
Compliance Requirements for Small Entities
28. In the NPRM, the Commission seeks comment on alternative
methods of evaluating a bank's ability to provide a LOC to winners of
Auction 903 and 904 support, along with winners of 5G Fund auctions.
The NPRM specifically seeks comment on modifying the rules to allow
more banks to become or remain eligible to issue LOCs to Auctions 903
and 904 support recipients and to 5G Fund support recipients, which may
alter reporting, recordkeeping, and compliance obligations for small
entities that receive support. The NPRM also seeks comments on allowing
more Auction 904 support recipients to lower the value of their LOCs.
29. The potential changes in the NPRM are intended to reduce the
administrative burden on recipients of Auctions 903 and 904 support and
5G Fund support. The potential changes the Commission seeks comment on
would allow support recipients, including small entities, to minimize
their expenses by maintaining their existing LOC with the bank that
issued it. As a result, if there is an economic impact on small
entities as a result of these proposals, however, the Commission
expects the impact to be a positive one. Any potential changes the
Commission seeks comment on would not add any additional compliance
requirements for small entities, or additional costs for professional
skills, because support recipients are already required to maintain a
LOC under the current rules. The proposed changes would allow support
recipients to maintain their existing LOCs instead of obtaining new
ones. The Commission also seeks comments on allowing Auction 904
support recipients who have deployed service to at least 10% of their
required locations by the end of their second year of support to lower
the value of their LOCs. Finally, the Commission seeks comment on
allowing Auction 903 support recipients that have met their deployment
and reporting obligations to
[[Page 55547]]
maintain LOCs in accordance with Auction 904's rules.
D. Steps Taken To Minimize the Significant Economic Impact on Small
Entities and Significant Alternatives Considered
30. The RFA requires an agency to describe any significant
alternatives that could minimize impacts to small entities that it has
considered in reaching its proposed approach, which may include the
following four alternatives (among others): ``(1) the establishment of
differing compliance or reporting requirements or timetables that take
into account the resources available to small entities; (2) the
clarification, consolidation, or simplification of compliance and
reporting requirements under the rule for such small entities; (3) the
use of performance rather than design standards; and (4) an exemption
from coverage of the rule, or any part thereof, for such small
entities.''
31. In the NPRM, the Commission takes steps to minimize the
economic impact on small entities and considers significant
alternatives by proposing and seeking input on alternative proposals
designed to balance our goal of allowing providers to obtain an LOC
from a number of different banks while also ensuring these banks are
able to fulfill those LOCs in the event that the LOCs need to be drawn
upon. With these goals in mind, in the NPRM, the Commission sought
comment on whether a different standard for evaluating banks would
allow providers to obtain LOCs from a wider range of banks while
simultaneously protecting our investment and the Universal Service
Fund.
32. The Commission also considered alternatives to the existing
rules, by seeking comment on alternative standards that could be used
to evaluate the health and suitability of a bank. For example, Bank of
America proposed on alternative method of determining a bank's
eligibility that includes the current Weiss rating of B- or better or a
long-term unsecured credit rating issued by a widely-recognized credit
rating agency that is equivalent to a BBB- or better rating by Standard
& Poor's, which is the requirement for non-U.S banks. In light of the
economic burdens that auction support recipients could face by being
required to obtain new LOCs from different banks, the Commission sought
comments on the most effective ways of allowing those support
recipients to maintain their LOCs with the banks that originally issued
them, as long as the Commission is confident that the bank's economic
health is sufficient.
33. The matters discussed in the NPRM are designed to ensure the
Commission has a better understanding of both the benefits and the
potential burdens associated with the different actions and methods
before adopting its final rules. To assist in the Commission's
evaluation of the economic impact on small entities, as a result of
actions the Commission has proposed in the NPRM, and to better explore
options and alternatives, the Commission has sought comment from the
parties. In particular, the Commission seeks comment on whether any of
the economic burdens associated the filing, recordkeeping and reporting
requirements described can be minimized for small businesses. Through
comments received in response to the NPRM and the IRFA, including costs
and benefits information and any alternative proposals, the Commission
expects to more fully consider ways to minimize the economic impact on
small entities. The Commission's evaluation of the comments filed in
this proceeding will shape the final alternatives it considers, the
final conclusions it reaches, and the actions it ultimately takes in
this proceeding to minimize any significant economic impact that may
occur on small entities as a result of any final rules that are
adopted.
E. Federal Rules That May Duplicate, Overlap, or Conflict With the
Proposed Rules
34. None.
V. Ordering Clauses
35. Accordingly, it is ordered, pursuant to the authority contained
in sections 4(i), 214, 254, 303(r), and 403 of the Communications Act
of 1934, as amended, 47 U.S.C. 154(i), 214, 254, 303(r), and 403, and
Sec. Sec. 1.1 and 1.421 of the Commission's rules, 47 CFR 1.1 and
1.421, that the notice of proposed rulemaking is adopted.
36. It is further ordered that, pursuant to the authority contained
in sections 4(i), 214, 254, 303(r), and 403 of the Communications Act
of 1934, as amended, 47 U.S.C. 154(i), 214, 254, 303(r), and 403, and
Sec. Sec. 1.1 and 1.421 of the Commission's rules, 47 CFR 1.1 and
1.421, notice is hereby given of the proposals described in the notice
of proposed rulemaking.
37. It is further ordered that pursuant to applicable procedures
set forth in Sec. Sec. 1.415 and 1.419 of the Commission's rules, 47
CFR 1.415, 1.419, interested parties may file comments on the notice of
proposed rulemaking on or before August 5, 2024, and reply comments on
or before August 19, 2024.
Federal Communications Commission.
Marlene Dortch,
Secretary.
[FR Doc. 2024-14145 Filed 7-3-24; 8:45 am]
BILLING CODE 6712-01-P
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