High-Cost Universal Service Support, Jurisdictional Separations, and Coalition for Equity in Switching Support Petition for Reconsideration, 17872-17874 [2010-8010]
Download as PDF
17872
Federal Register / Vol. 75, No. 67 / Thursday, April 8, 2010 / Rules and Regulations
[FR Doc. 2010–7868 Filed 4–7–10; 8:45 am]
BILLING CODE 6560–50–P
FEDERAL COMMUNICATIONS
COMMISSION
47 CFR Parts 36 and 54
[WC Docket No. 05–337, CC Docket No. 80–
286; FCC 10–44]
High-Cost Universal Service Support,
Jurisdictional Separations, and
Coalition for Equity in Switching
Support Petition for Reconsideration
AGENCY: Federal Communications
Commission.
ACTION: Final rule.
SUMMARY: In this document, the
Commission addresses an inequitable
asymmetry in its current rules governing
the receipt of universal service high-cost
local switching support (LSS) by small
incumbent local exchange carriers
(LECs). Since the adoption of the
current rules, incumbent LEC lines have
begun to decrease, and, as a result of the
one-way rule, many small LECs that
have lost lines receive less support than
other LECs with a similar number of
lines that face nearly identical
circumstances. By modifying the
Commission’s rules to permit
incumbent LECs that lose lines to
receive additional LSS when they cross
a threshold, the Commission will
provide LSS to all small LECs on the
same basis. The Commission also
dismisses the petition for
reconsideration filed by the Coalition
for Equity in Switching Support in the
jurisdictional separations freeze
proceeding.
DATES:
Effective April 8, 2010.
sroberts on DSKD5P82C1PROD with RULES
FOR FURTHER INFORMATION CONTACT:
Theodore Burmeister, Wireline
Competition Bureau,
Telecommunications Access Policy
Division, (202) 418–7400 or TTY: (202)
418–0484.
SUPPLEMENTARY INFORMATION: This is a
synopsis of the Commission’s Order in
WC Docket No. 05–337 and CC Docket
No. 80–286, FCC 10–44, adopted March
17, 2010, and released March 18, 2010.
The complete text of this document is
available for inspection and copying
during normal business hours in the
FCC Reference Information Center,
Portals II, 445 12th Street, SW., Room
CY–A257, Washington, DC 20554. The
document may also be purchased from
the Commission’s duplicating
contractor, Best Copy and Printing, Inc.,
445 12th Street, SW., Room CY–B402,
Washington, DC 20554, telephone (800)
VerDate Nov<24>2008
15:46 Apr 07, 2010
Jkt 220001
378–3160 or (202) 863–2893, facsimile
(202) 863–2898, or via the Internet at
https://www.bcpiweb.com. It is also
available on the Commission’s Web site
at https://www.fcc.gov.
People with Disabilities: To request
materials in accessible formats for
people with disabilities (braille, large
print, electronic files, audio format),
send an e-mail to fcc504@fcc.gov or call
the Consumer & Governmental Affairs
Bureau at 202–418–0530 (voice), 202–
418–0432 (tty).
I. Introduction
1. In the Report and Order, we
address an inequitable asymmetry in the
Commission’s current rules governing
the receipt of universal service high-cost
local switching support (LSS) by small
incumbent local exchange carriers
(LECs). Under the current rules, which
were adopted by the Commission at a
time when incumbent LEC lines had
largely only increased over time, the
amount of LSS that an incumbent LEC
may receive decreases when its line
counts increase above a particular
threshold, but does not increase when
its line counts decrease below that same
threshold. Since the adoption of these
rules, incumbent LEC lines have begun
to decrease, and, as a result of the oneway rule, many small LECs that have
lost lines receive less support than other
LECs with a similar number of lines that
face nearly identical circumstances. By
modifying our rules to permit
incumbent LECs that lose lines to
receive additional LSS when they cross
a threshold, we will provide LSS to all
small LECs on the same basis. We
emphasize that nothing in the Report
and Order is intended to address the
long-term role of LSS in the
Commission’s high-cost universal
service policies, which we are
considering as part of comprehensive
universal service reform. We also
dismiss the petition for reconsideration
filed by the Coalition for Equity in
Switching Support in the jurisdictional
separations freeze proceeding. The
issues raised in that petition are
essentially the same as those raised in
its petition for clarification. This
decision and the Coalition Petition
Order and LSS NPRM wholly address
those issues, and therefore we dismiss
the petition for reconsideration as moot.
II. Discussion
2. We conclude that our rules should
be modified to permit an incumbent
LEC’s DEM weighting factor to increase
as well as decrease when its line counts
cross one of the thresholds provided in
our rules. As described, we find that
amending the rules will ensure that
PO 00000
Frm 00024
Fmt 4700
Sfmt 4700
similarly situated incumbent LECs will
be treated similarly under our rules.
Although this will increase the total
amount of high-cost universal service
support disbursed, we find that the
increase will not have a significant
effect on the overall size of the universal
service fund. We emphasize that this
relatively minor change to existing rules
is not intended to reflect or prejudge our
consideration of LSS as part of any
comprehensive universal service reform.
3. Based on the record in this
proceeding, we find no basis for
continuing to provide different amounts
of LSS to otherwise similarly situated
incumbent LECs solely because one
incumbent LEC had previously
exceeded a threshold in our rules but
the other had not. The LSS mechanism’s
existence and design are based on the
relative inability of small incumbent
LECs to achieve economies of scale in
switching costs. A small incumbent LEC
that has lost a significant number of
lines, causing it to cross a DEM
weighting threshold, suffers the same
lack of economies of scale. We find that
such a carrier should, by the logic
underpinning the LSS mechanism,
receive support in the same manner as
a small incumbent LEC with a line
count that never crossed a threshold.
There is no evidence that the
Commission, at the time it adopted the
LSS rules, considered the possibility
that small incumbent LECs would lose
lines and the effect of line loss on LSS.
Indeed, as the Coalition has noted, at
that time incumbent LEC lines had
grown, almost without exception, for
more than 50 years.
4. The Coalition has provided
evidence that failing to provide the
higher level of LSS has caused or
threatens to cause small incumbent LEC
some hardship. Many affected carriers
reportedly crossed above an access line
threshold initially because their
subscribers took second lines to access
dial-up Internet service, and decreased
below the threshold as the carriers
deployed, and those same customers
adopted, advanced services. We find
that our current rules that reduce a
carrier’s LSS when line counts increase
without a corresponding increase in LSS
when line counts decrease have caused
hardship for some small incumbent LEC
and may affect the provision or
affordability of service to customers.
5. We also find that amending our
rules as proposed would not create
undue growth in universal service
support that would threaten the fund.
The National Exchange Carrier
Association (NECA), which collects cost
and line count data for many of the
carriers that could be affected by the
E:\FR\FM\08APR1.SGM
08APR1
sroberts on DSKD5P82C1PROD with RULES
Federal Register / Vol. 75, No. 67 / Thursday, April 8, 2010 / Rules and Regulations
DEM weighting one-way rule, estimates
that changing the one-way rule would
increase LSS by approximately $27
million per year. The Coalition
estimates that the increase would be
only $19 million, based on support
estimates for 2009. Using NECA’s larger
estimate would create an increase of
approximately 0.3 percent to the total
universal service fund, and about 0.6
percent to the high-cost portion of the
fund. Although we do not take lightly
any increase to the amount of universal
service support disbursed, we find that
this change will not have a significant
impact on the overall size of the fund.
6. CTIA argues that the Commission
should not adopt these rule changes
because modern switching technology is
less expensive and more scalable than
traditional circuit switches. We do not
take any position on the substance of
these arguments, but note that, to the
extent they apply, they apply broadly to
the entire LSS mechanism and not
merely to the rule changes we adopt
here. For that reason, we find that
CTIA’s arguments would be better
raised and addressed in a
comprehensive universal service reform
proceeding. CTIA also argues that the
current record fails to address how the
proposed change to LSS addresses the
principle of affordability in section 254
of the Act. As discussed above,
commenters have provided evidence
that the rule changes will have minimal
effect on the overall size of the universal
service fund. Moreover, as stated above,
there is record evidence indicating that
the current rule has caused some
carriers hardship and may impact the
provision or affordability of service to
customers. In addition, absent these rule
changes, similarly situated incumbent
LECs will continue to receive disparate
amounts of LSS. Therefore, we find that
adoption of the rule changes comports
with the requirements of the Act that
consumers in high-cost areas have
access to reasonably comparable
services at reasonably comparable rates
to those available to consumers in other
areas of the country.
7. We conclude that the rule changes
we adopt in this report and order should
be implemented for the full 2010 LSS
funding year. Several parties ask that we
make the rule changes effective for 2008
and 2009 because true-ups for those
years have yet to occur. We decline to
do so. Generally, rules adopted by
administrative agencies may be applied
prospectively only. The 2008 and 2009
funding years have ended. While it is
true that 2008 and 2009 LSS true-ups
have yet to be performed, that does not
change the fact that the funding periods
have passed, and thus, application of
VerDate Nov<24>2008
15:46 Apr 07, 2010
Jkt 220001
the new methodology to those years
would be improper retroactive
rulemaking. The Coalition’s argument
that the Commission has made similar
changes to future support based on data
from earlier periods in the high-cost
loop support mechanism is inapplicable
in the LSS context. Under the high-cost
loop support mechanism, support
payments are made based on historical
data. For example, 2010 high-cost loop
support is calculated based on 2008 cost
and loop data. Thus, a similar type of
rule change to the high-cost loop
support mechanism would necessarily
incorporate past year data due to the
different calculation and data method
used. That is not the case with LSS,
which uses projected data for the
current funding period. Accordingly, we
decline to apply these rule changes to
prior LSS funding years. Consistent
with comments made by CTIA,
however, we modify our proposed rules
to make the implementation period
explicit in the text of the rules.
Additionally, to ensure that ETCs
receive disbursements for the current
support year as soon as possible under
the new rules, we find good cause for
the Report and Order to be effective
April 8, 2010. Similarly, we grant
incumbent LECs that are affected by
these rule changes a waiver of the
October 1, 2009 deadline by which
incumbent LECs must file their 2010
projected data with USAC pursuant to
section 54.301(b) of the Commission’s
rules, and by which states must certify
that affected ETCs’ support will be used
only for the provision, maintenance and
upgrading of facilities and services for
which the support is intended, if the
certifications were not previously filed.
Such incumbent LECs and states must
file their projected data and
certifications with USAC within 60 days
of the effective date of this report and
order.
8. Finally, we dismiss the Coalition’s
petition for reconsideration of the 2009
Separations Freeze Extension Order as
moot. Specifically, the Coalition asked
the Commission to reconsider its
decision not to modify the one-way rule
when it extended the separations freeze
to June 30, 2010. We find that the issues
raised in the Coalition’s separations
reconsideration petition are essentially
the same as those raised in its petition
for clarification and are wholly
addressed in the Coalition Petition
Order and LSS NPRM and in this report
and order.
PO 00000
Frm 00025
Fmt 4700
Sfmt 4700
17873
III. Procedural Matters
A. Paperwork Reduction Analysis
9. This document does not contain
proposed information collection(s)
subject to the Paperwork Reduction Act
of 1995, 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).
B. Final Regulatory Flexibility Act
Certification
10. The Regulatory Flexibility Act of
1980, as amended (RFA) requires that a
regulatory flexibility analysis be
prepared for rulemaking proceedings,
unless the agency certifies that ‘‘the rule
will not have a significant economic
impact on a substantial number of small
entities.’’ The RFA generally defines
‘‘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
Small Business Administration (SBA).
11. In this document, the Commission
modifies its LSS rules. Pursuant to the
‘‘one-way rule,’’ a small incumbent LEC
receives less LSS when the number of
access lines it served increased above
certain thresholds, but does not receive
more LSS when the number of access
lines it served decreased below the same
thresholds. In this document, the
Commission changes its rules to provide
LSS based on the incumbent LEC’s
current period line counts without
regard for whether the LEC’s lines had
ever exceeded a line-count threshold.
This rule change can only provide an
incumbent LEC with more universal
service support and the administrative
burdens associated with complying with
the Commission’s rules will not change.
Therefore, we certify that the
requirements of this report and order
will not have a significant economic
impact on a substantial number of small
entities. The Commission will send a
copy of the report and order, including
a copy of this final certification, in a
report to Congress pursuant to the Small
Business Regulatory Enforcement
Fairness Act of 1996. In addition, this
document and this certification will be
sent to the Chief Counsel for Advocacy
E:\FR\FM\08APR1.SGM
08APR1
17874
Federal Register / Vol. 75, No. 67 / Thursday, April 8, 2010 / Rules and Regulations
of the Small Business Administration,
and will be published in the Federal
Register.
C. Congressional Review Act
12. The Commission will send a copy
of the Report and Order in a report to
be sent to Congress and the Government
Accountability Office pursuant to the
Congressional Review Act.
List of Subjects
Rule Changes
For the reasons discussed in the
preamble, the Federal Communications
Commission amends 47 CFR parts 36
and 54 as follows:
■
PART 36—JURISDICTIONAL
SEPARATIONS PROCEDURES;
STANDARD PROCEDURES FOR
SEPARATING
TELECOMMUNICATIONS PROPERTY
COSTS, REVENUES, EXPENSES,
TAXES AND RESERVES FOR
TELECOMMUNICATIONS COMPANIES
1. The authority citation continues to
read as follows:
■
Authority: 47 U.S.C. 151, 154(i), 154(j),
205, 221(c), 254, 403, and 410 unless
otherwise noted.
2. Section 36.125 is amended by
revising paragraph (j) to read as follows:
§ 36.125 Local switching equipment—
Category 3.
sroberts on DSKD5P82C1PROD with RULES
Local switching support.
(a) * * *
(2) * * *
(ii) If the number of a study area’s
access lines increases such that, under
§ 36.125(f) of this chapter, the weighted
interstate DEM factor for 1997 or any
successive year would be reduced, that
lowered weighted interstate DEM factor
shall be applied to the study area’s 1996
unweighted interstate DEM factor to
derive a new local switching support
factor. If the number of a study area’s
access lines decreases or has decreased
such that, under § 36.125(f) of this
chapter, the weighted interstate DEM
factor for 2010 or any successive year
would be raised, that higher weighted
interstate DEM factor shall be applied to
the study area’s 1996 unweighted
interstate DEM factor to derive a new
local switching support factor.
*
*
*
*
*
[FR Doc. 2010–8010 Filed 4–7–10; 8:45 am]
BILLING CODE 6712–01–P
FEDERAL COMMUNICATIONS
COMMISSION
47 CFR Part 73
■
*
*
*
*
(j) If the number of a study area’s
access lines increases such that, under
§ 36.125(f), the weighted interstate DEM
factor for 1997 or any successive year
would be reduced, that lowered
weighted interstate DEM factor shall be
applied to the study area’s 1996
unweighted interstate DEM factor to
derive a new local switching support
factor. If the number of a study area’s
access lines decreases or has decreased
such that, under § 36.125(f), the
weighted interstate DEM factor for 2010
or any successive year would be raised,
that higher weighted interstate DEM
Jkt 220001
Authority: 47 U.S.C. 151, 154(i), 201, 205,
214, and 254 unless otherwise noted.
§ 54.301
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
15:46 Apr 07, 2010
3. The authority citation continues to
read as follows:
■
4. Section 54.301 is amended by
revising paragraph (a)(2)(ii) to read as
follows:
47 CFR Part 54
Communications common carriers,
Health facilities, Infants and children,
Libraries, Reporting and recordkeeping
requirements, Schools,
Telecommunications, Telephone.
VerDate Nov<24>2008
PART 54—UNIVERSAL SERVICE
■
47 CFR Part 36
Reporting and recordkeeping
requirements, Telecommunications,
Telephone.
*
factor shall be applied to the study
area’s 1996 unweighted interstate DEM
factor to derive a new local switching
support factor.
[MM Docket No. 99–325; DA 10–208]
Digital Audio Broadcasting Systems
and Their Impact on the Terrestrial
Radio Broadcast Service
AGENCY: Federal Communications
Commission.
ACTION: Final rule.
SUMMARY: The Media Bureau adopts
changes in the digital audio
broadcasting (DAB) rules to permit FM
radio stations to voluntarily increase FM
hybrid digital effective radiated power
(ERP), and implements interference
mitigation and remediation procedures
to resolve promptly allegations of digital
interference to authorized full-service
FM analog stations resulting from an FM
digital ERP increase undertaken
pursuant to the procedures adopted.
PO 00000
Frm 00026
Fmt 4700
Sfmt 4700
The increase in FM hybrid digital ERP
will allow an FM station’s digital
coverage area to more closely replicate
its licensed analog coverage area, and
the interference mitigation and
remediation procedures will make
certain that permissible increases in FM
digital ERP do not adversely affect
existing FM analog operations. These
rule changes balance the immediate
need for improved FM digital coverage
with the continued need to limit
interference from digital FM facilities to
FM analog stations.
DATES: Effective May 10, 2010.
FOR FURTHER INFORMATION CONTACT:
Peter H. Doyle or Susan N. Crawford,
Media Bureau, Federal Communications
Commission, 202–418–2700.
SUPPLEMENTARY INFORMATION: This is a
summary of the Media Bureau’s Order
in MM Docket No. 99–325, adopted
January 27, 2010, and released January
29, 2010.
Background and Related Documents
In the First Report and Order in MM
Docket No. 99–325 (See 67 FR 78193,
December 12, 2002), the Commission
adopted rules permitting terrestrial
radio stations to begin hybrid digital
operations, i.e. the simultaneous
transmission of analog and digital
signals, using the in band-on channel
(IBOC) DAB system developed by
iBiquity Digital Corporation (iBiquity).
As adopted, the IBOC DAB system
permitted an FM station to operate with
digital effective radiated power (ERP)
equal to one percent (1%) of its analog
ERP.
In 2007, after over four years of realworld hybrid digital operation by over
1,100 FM stations, it was apparent to
both FM station licensees and the IBOC
system developer that the coverage from
an FM station’s hybrid digital facilities
was significantly less than the coverage
from its analog facilities, and that this
digital coverage shortfall was a direct
result of the very low FM digital ERP
permitted. Several FM station licensees
and the IBOC system developer
undertook an experimental field test
program to determine the FM digital
ERP required for hybrid digital coverage
to replicate analog coverage. Based on
their results, in June 2008, a group of
FM stations licensees and FM
transmission equipment manufacturers
(Joint Parties) submitted a technical
report of these studies prepared by
iBiquity, and asked the Commission to
increase maximum permissible FM
digital ERP to ten percent (10%) of
analog ERP for nearly all FM stations.
The Joint Parties also requested that the
Commission establish procedures to
E:\FR\FM\08APR1.SGM
08APR1
Agencies
[Federal Register Volume 75, Number 67 (Thursday, April 8, 2010)]
[Rules and Regulations]
[Pages 17872-17874]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-8010]
=======================================================================
-----------------------------------------------------------------------
FEDERAL COMMUNICATIONS COMMISSION
47 CFR Parts 36 and 54
[WC Docket No. 05-337, CC Docket No. 80-286; FCC 10-44]
High-Cost Universal Service Support, Jurisdictional Separations,
and Coalition for Equity in Switching Support Petition for
Reconsideration
AGENCY: Federal Communications Commission.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: In this document, the Commission addresses an inequitable
asymmetry in its current rules governing the receipt of universal
service high-cost local switching support (LSS) by small incumbent
local exchange carriers (LECs). Since the adoption of the current
rules, incumbent LEC lines have begun to decrease, and, as a result of
the one-way rule, many small LECs that have lost lines receive less
support than other LECs with a similar number of lines that face nearly
identical circumstances. By modifying the Commission's rules to permit
incumbent LECs that lose lines to receive additional LSS when they
cross a threshold, the Commission will provide LSS to all small LECs on
the same basis. The Commission also dismisses the petition for
reconsideration filed by the Coalition for Equity in Switching Support
in the jurisdictional separations freeze proceeding.
DATES: Effective April 8, 2010.
FOR FURTHER INFORMATION CONTACT: Theodore Burmeister, Wireline
Competition Bureau, Telecommunications Access Policy Division, (202)
418-7400 or TTY: (202) 418-0484.
SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's Order
in WC Docket No. 05-337 and CC Docket No. 80-286, FCC 10-44, adopted
March 17, 2010, and released March 18, 2010. The complete text of this
document is available for inspection and copying during normal business
hours in the FCC Reference Information Center, Portals II, 445 12th
Street, SW., Room CY-A257, Washington, DC 20554. The document may also
be purchased from the Commission's duplicating contractor, Best Copy
and Printing, Inc., 445 12th Street, SW., Room CY-B402, Washington, DC
20554, telephone (800) 378-3160 or (202) 863-2893, facsimile (202) 863-
2898, or via the Internet at https://www.bcpiweb.com. It is also
available on the Commission's Web site at https://www.fcc.gov.
People with Disabilities: To request materials in accessible
formats for people with disabilities (braille, large print, electronic
files, audio format), send an e-mail to fcc504@fcc.gov or call the
Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-
418-0432 (tty).
I. Introduction
1. In the Report and Order, we address an inequitable asymmetry in
the Commission's current rules governing the receipt of universal
service high-cost local switching support (LSS) by small incumbent
local exchange carriers (LECs). Under the current rules, which were
adopted by the Commission at a time when incumbent LEC lines had
largely only increased over time, the amount of LSS that an incumbent
LEC may receive decreases when its line counts increase above a
particular threshold, but does not increase when its line counts
decrease below that same threshold. Since the adoption of these rules,
incumbent LEC lines have begun to decrease, and, as a result of the
one-way rule, many small LECs that have lost lines receive less support
than other LECs with a similar number of lines that face nearly
identical circumstances. By modifying our rules to permit incumbent
LECs that lose lines to receive additional LSS when they cross a
threshold, we will provide LSS to all small LECs on the same basis. We
emphasize that nothing in the Report and Order is intended to address
the long-term role of LSS in the Commission's high-cost universal
service policies, which we are considering as part of comprehensive
universal service reform. We also dismiss the petition for
reconsideration filed by the Coalition for Equity in Switching Support
in the jurisdictional separations freeze proceeding. The issues raised
in that petition are essentially the same as those raised in its
petition for clarification. This decision and the Coalition Petition
Order and LSS NPRM wholly address those issues, and therefore we
dismiss the petition for reconsideration as moot.
II. Discussion
2. We conclude that our rules should be modified to permit an
incumbent LEC's DEM weighting factor to increase as well as decrease
when its line counts cross one of the thresholds provided in our rules.
As described, we find that amending the rules will ensure that
similarly situated incumbent LECs will be treated similarly under our
rules. Although this will increase the total amount of high-cost
universal service support disbursed, we find that the increase will not
have a significant effect on the overall size of the universal service
fund. We emphasize that this relatively minor change to existing rules
is not intended to reflect or prejudge our consideration of LSS as part
of any comprehensive universal service reform.
3. Based on the record in this proceeding, we find no basis for
continuing to provide different amounts of LSS to otherwise similarly
situated incumbent LECs solely because one incumbent LEC had previously
exceeded a threshold in our rules but the other had not. The LSS
mechanism's existence and design are based on the relative inability of
small incumbent LECs to achieve economies of scale in switching costs.
A small incumbent LEC that has lost a significant number of lines,
causing it to cross a DEM weighting threshold, suffers the same lack of
economies of scale. We find that such a carrier should, by the logic
underpinning the LSS mechanism, receive support in the same manner as a
small incumbent LEC with a line count that never crossed a threshold.
There is no evidence that the Commission, at the time it adopted the
LSS rules, considered the possibility that small incumbent LECs would
lose lines and the effect of line loss on LSS. Indeed, as the Coalition
has noted, at that time incumbent LEC lines had grown, almost without
exception, for more than 50 years.
4. The Coalition has provided evidence that failing to provide the
higher level of LSS has caused or threatens to cause small incumbent
LEC some hardship. Many affected carriers reportedly crossed above an
access line threshold initially because their subscribers took second
lines to access dial-up Internet service, and decreased below the
threshold as the carriers deployed, and those same customers adopted,
advanced services. We find that our current rules that reduce a
carrier's LSS when line counts increase without a corresponding
increase in LSS when line counts decrease have caused hardship for some
small incumbent LEC and may affect the provision or affordability of
service to customers.
5. We also find that amending our rules as proposed would not
create undue growth in universal service support that would threaten
the fund. The National Exchange Carrier Association (NECA), which
collects cost and line count data for many of the carriers that could
be affected by the
[[Page 17873]]
DEM weighting one-way rule, estimates that changing the one-way rule
would increase LSS by approximately $27 million per year. The Coalition
estimates that the increase would be only $19 million, based on support
estimates for 2009. Using NECA's larger estimate would create an
increase of approximately 0.3 percent to the total universal service
fund, and about 0.6 percent to the high-cost portion of the fund.
Although we do not take lightly any increase to the amount of universal
service support disbursed, we find that this change will not have a
significant impact on the overall size of the fund.
6. CTIA argues that the Commission should not adopt these rule
changes because modern switching technology is less expensive and more
scalable than traditional circuit switches. We do not take any position
on the substance of these arguments, but note that, to the extent they
apply, they apply broadly to the entire LSS mechanism and not merely to
the rule changes we adopt here. For that reason, we find that CTIA's
arguments would be better raised and addressed in a comprehensive
universal service reform proceeding. CTIA also argues that the current
record fails to address how the proposed change to LSS addresses the
principle of affordability in section 254 of the Act. As discussed
above, commenters have provided evidence that the rule changes will
have minimal effect on the overall size of the universal service fund.
Moreover, as stated above, there is record evidence indicating that the
current rule has caused some carriers hardship and may impact the
provision or affordability of service to customers. In addition, absent
these rule changes, similarly situated incumbent LECs will continue to
receive disparate amounts of LSS. Therefore, we find that adoption of
the rule changes comports with the requirements of the Act that
consumers in high-cost areas have access to reasonably comparable
services at reasonably comparable rates to those available to consumers
in other areas of the country.
7. We conclude that the rule changes we adopt in this report and
order should be implemented for the full 2010 LSS funding year. Several
parties ask that we make the rule changes effective for 2008 and 2009
because true-ups for those years have yet to occur. We decline to do
so. Generally, rules adopted by administrative agencies may be applied
prospectively only. The 2008 and 2009 funding years have ended. While
it is true that 2008 and 2009 LSS true-ups have yet to be performed,
that does not change the fact that the funding periods have passed, and
thus, application of the new methodology to those years would be
improper retroactive rulemaking. The Coalition's argument that the
Commission has made similar changes to future support based on data
from earlier periods in the high-cost loop support mechanism is
inapplicable in the LSS context. Under the high-cost loop support
mechanism, support payments are made based on historical data. For
example, 2010 high-cost loop support is calculated based on 2008 cost
and loop data. Thus, a similar type of rule change to the high-cost
loop support mechanism would necessarily incorporate past year data due
to the different calculation and data method used. That is not the case
with LSS, which uses projected data for the current funding period.
Accordingly, we decline to apply these rule changes to prior LSS
funding years. Consistent with comments made by CTIA, however, we
modify our proposed rules to make the implementation period explicit in
the text of the rules. Additionally, to ensure that ETCs receive
disbursements for the current support year as soon as possible under
the new rules, we find good cause for the Report and Order to be
effective April 8, 2010. Similarly, we grant incumbent LECs that are
affected by these rule changes a waiver of the October 1, 2009 deadline
by which incumbent LECs must file their 2010 projected data with USAC
pursuant to section 54.301(b) of the Commission's rules, and by which
states must certify that affected ETCs' support will be used only for
the provision, maintenance and upgrading of facilities and services for
which the support is intended, if the certifications were not
previously filed. Such incumbent LECs and states must file their
projected data and certifications with USAC within 60 days of the
effective date of this report and order.
8. Finally, we dismiss the Coalition's petition for reconsideration
of the 2009 Separations Freeze Extension Order as moot. Specifically,
the Coalition asked the Commission to reconsider its decision not to
modify the one-way rule when it extended the separations freeze to June
30, 2010. We find that the issues raised in the Coalition's separations
reconsideration petition are essentially the same as those raised in
its petition for clarification and are wholly addressed in the
Coalition Petition Order and LSS NPRM and in this report and order.
III. Procedural Matters
A. Paperwork Reduction Analysis
9. This document does not contain proposed information
collection(s) subject to the Paperwork Reduction Act of 1995, 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).
B. Final Regulatory Flexibility Act Certification
10. The Regulatory Flexibility Act of 1980, as amended (RFA)
requires that a regulatory flexibility analysis be prepared for
rulemaking proceedings, unless the agency certifies that ``the rule
will not have a significant economic impact on a substantial number of
small entities.'' The RFA generally defines ``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 Small Business Administration
(SBA).
11. In this document, the Commission modifies its LSS rules.
Pursuant to the ``one-way rule,'' a small incumbent LEC receives less
LSS when the number of access lines it served increased above certain
thresholds, but does not receive more LSS when the number of access
lines it served decreased below the same thresholds. In this document,
the Commission changes its rules to provide LSS based on the incumbent
LEC's current period line counts without regard for whether the LEC's
lines had ever exceeded a line-count threshold. This rule change can
only provide an incumbent LEC with more universal service support and
the administrative burdens associated with complying with the
Commission's rules will not change. Therefore, we certify that the
requirements of this report and order will not have a significant
economic impact on a substantial number of small entities. The
Commission will send a copy of the report and order, including a copy
of this final certification, in a report to Congress pursuant to the
Small Business Regulatory Enforcement Fairness Act of 1996. In
addition, this document and this certification will be sent to the
Chief Counsel for Advocacy
[[Page 17874]]
of the Small Business Administration, and will be published in the
Federal Register.
C. Congressional Review Act
12. The Commission will send a copy of the Report and Order in a
report to be sent to Congress and the Government Accountability Office
pursuant to the Congressional Review Act.
List of Subjects
47 CFR Part 36
Reporting and recordkeeping requirements, Telecommunications,
Telephone.
47 CFR Part 54
Communications common carriers, Health facilities, Infants and
children, Libraries, Reporting and recordkeeping requirements, Schools,
Telecommunications, Telephone.
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
Rule Changes
0
For the reasons discussed in the preamble, the Federal Communications
Commission amends 47 CFR parts 36 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 continues to read as follows:
Authority: 47 U.S.C. 151, 154(i), 154(j), 205, 221(c), 254, 403,
and 410 unless otherwise noted.
0
2. Section 36.125 is amended by revising paragraph (j) to read as
follows:
Sec. 36.125 Local switching equipment--Category 3.
* * * * *
(j) If the number of a study area's access lines increases such
that, under Sec. 36.125(f), the weighted interstate DEM factor for
1997 or any successive year would be reduced, that lowered weighted
interstate DEM factor shall be applied to the study area's 1996
unweighted interstate DEM factor to derive a new local switching
support factor. If the number of a study area's access lines decreases
or has decreased such that, under Sec. 36.125(f), the weighted
interstate DEM factor for 2010 or any successive year would be raised,
that higher weighted interstate DEM factor shall be applied to the
study area's 1996 unweighted interstate DEM factor to derive a new
local switching support factor.
PART 54--UNIVERSAL SERVICE
0
3. The authority citation continues to read as follows:
Authority: 47 U.S.C. 151, 154(i), 201, 205, 214, and 254 unless
otherwise noted.
0
4. Section 54.301 is amended by revising paragraph (a)(2)(ii) to read
as follows:
Sec. 54.301 Local switching support.
(a) * * *
(2) * * *
(ii) If the number of a study area's access lines increases such
that, under Sec. 36.125(f) of this chapter, the weighted interstate
DEM factor for 1997 or any successive year would be reduced, that
lowered weighted interstate DEM factor shall be applied to the study
area's 1996 unweighted interstate DEM factor to derive a new local
switching support factor. If the number of a study area's access lines
decreases or has decreased such that, under Sec. 36.125(f) of this
chapter, the weighted interstate DEM factor for 2010 or any successive
year would be raised, that higher weighted interstate DEM factor shall
be applied to the study area's 1996 unweighted interstate DEM factor to
derive a new local switching support factor.
* * * * *
[FR Doc. 2010-8010 Filed 4-7-10; 8:45 am]
BILLING CODE 6712-01-P