Connect America Fund; Developing a Unified Intercarrier Compensation, 11632-11663 [2011-4399]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 76, Number 41 (Wednesday, March 2, 2011)]
[Proposed Rules]
[Pages 11632-11663]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-4399]



[[Page 11631]]

Vol. 76

Wednesday,

No. 41

March 2, 2011

Part IV





 Federal Communications Commission





-----------------------------------------------------------------------



47 CFR Parts 36, 54, 61, et al.



Connect America Fund; Developing a Unified Intercarrier Compensation; 
Proposed Rule

Federal Register / Vol. 76 , No. 41 / Wednesday, March 2, 2011 / 
Proposed Rules

[[Page 11632]]


-----------------------------------------------------------------------

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 36, 54, 61, 64, and 69

[WC Docket Nos. 10-90, 07-135, 05-337, 03-109; GN Docket No. 09-51; CC 
Docket Nos. 01-92, 96-45; FCC 11-13]


Connect America Fund; Developing a Unified Intercarrier 
Compensation

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: In this document, the Federal Communications Commission 
(Commission) proposes several specific, near-term steps that will 
accelerate broadband investment in unserved areas and set the Universal 
Service Fund and Intercarrier Compensation system on a path that is 
consistent with the principles the Commission has proposed; the 
Commission then describes alternatives for completing the reform 
process over the longer term. The Commission intends to monitor the 
progress of the near-term reforms and adjust course as necessary as the 
Commission completes the reform process from among the longer-term 
options.

DATES: Comments are due on or before April 18, 2011 and reply comments 
are due on or before May 23, 2011. See Supplementary Information 
section for additional comment dates.

ADDRESSES: You may submit comments, identified by WC Docket Nos. 10-90, 
07-135, 05-337, 03-109; GN Docket No. 09-51; CC Docket Nos. 01-92, 96-
45, by any of the following methods:
     Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.
     Federal Communications Commission's Web Site: https://fjallfoss.fcc.gov/ecfs2/. Follow the instructions for submitting 
comments.
     People with Disabilities: Contact the FCC to request 
reasonable accommodations (accessible format documents, sign language 
interpreters, CART, etc.) by e-mail: FCC504@fcc.gov or phone: (202) 
418-0530 or TTY: (202) 418-0432.
     In addition to filing comments with the Secretary, a copy 
of any comments on the Paperwork Reduction Act information collection 
requirements contained herein should be submitted to the Federal 
Communications Commission via e-mail to PRA@fcc.gov and to 
Cathy.Williams@fcc.gov and to Nicholas A. Fraser, Office of Management 
and Budget, via e-mail to Nicholas_A._Fraser@omb.eop.gov or via fax 
at 202-395-5167.
    For detailed instructions for submitting comments and additional 
information on the rulemaking process, see the SUPPLEMENTARY 
INFORMATION section of this document.

FOR FURTHER INFORMATION CONTACT: Patrick Halley, Wireline Competition 
Bureau, (202) 418-7550 or Jennifer Prime, Wireline Competition Bureau, 
(202) 418-2403 or TTY: (202) 418-0484. For additional information 
concerning the Paperwork Reduction Act information collection 
requirements contained in this document contact Cathy Williams on (202) 
418-2918.

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's 
Notice of Proposed Rulemaking and Further Notice of Proposed Rulemaking 
(NPRM) in WC Docket No. 10-90, GN Docket No. 09-51, WC Docket No. 07-
135, WC Docket No. 05-337, CC Docket No. 01-92, CC Docket No. 96-45, 
and WC Docket No. 03-109, FCC 11-13, adopted February 8, 2011, and 
released February 9, 2011. The complete text of this document is 
available for inspection and copying during normal business hours in 
the FCC Reference Information Center, Portals II, 445 12th Street, SW., 
Room CY-A257, Washington, DC 20554. The document may also be purchased 
from the Commission's duplicating contractor, Best Copy and Printing, 
Inc., 445 12th Street, SW., Room CY-B402, Washington, DC 20554, 
telephone (800) 378-3160 or (202) 863-2893, facsimile (202) 863-2898, 
or via the Internet at https://www.bcpiweb.com. It is also available on 
the Commission's Web site at https://www.fcc.gov.
    Pursuant to Sec. Sec.  1.415 and 1.419 of the Commission's rules, 
interested parties may file comments and reply comments on or before 
the dates indicated on the first page of this document. Comments may be 
filed using: (1) The Commission's Electronic Comment Filing System 
(ECFS); (2) the Federal Government's eRulemaking Portal; or (3) by 
filing paper copies. See Electronic Filing of Documents in Rulemaking 
Proceedings, 63 FR 24121, May 1, 1998.
     Electronic Filers: Comments may be filed electronically 
using the Internet by accessing the ECFS: https://www.fcc.gov/cgb/ecfs/ 
or the Federal eRulemaking Portal: https://www.regulations.gov. Filers 
should follow the instructions provided on the Web site for submitting 
comments.
    [cir] For ECFS filers, if multiple docket or rulemaking numbers 
appear in the caption of this proceeding, filers must transmit one 
electronic copy of the comments for each docket or rulemaking number 
referenced in the caption. In completing the transmittal screen, filers 
should include their full name, U.S. Postal Service mailing address, 
and the applicable docket or rulemaking number. Parties may also submit 
an electronic comment by Internet e-mail. To get filing instructions, 
filers should send an e-mail to ecfs@fcc.gov, and include the following 
words in the body of the message, ``get form.'' A sample form and 
directions will be sent in response.
    [cir] Paper Filers: Parties who choose to file by paper must file 
an original and four copies of each filing. If more than one docket or 
rulemaking number appears in the caption of this proceeding, filers 
must submit two additional copies for each additional docket or 
rulemaking number.
     Filings can be sent by hand or messenger delivery, by 
commercial overnight courier, or by first-class or overnight U.S. 
Postal Service mail (although we continue to experience delays in 
receiving U.S. Postal Service mail). All filings must be addressed to 
the Commission's Secretary, Office of the Secretary, Federal 
Communications Commission.
    [cir] The Commission's contractor will receive hand-delivered or 
messenger-delivered paper filings for the Commission's Secretary at 236 
Massachusetts Avenue, NE., Suite 110, Washington, DC 20002. The filing 
hours at this location are 8 a.m. to 7 p.m. All hand deliveries must be 
held together with rubber bands or fasteners. Any envelopes must be 
disposed of before entering the building.
    [cir] Commercial overnight mail (other than U.S. Postal Service 
Express Mail and Priority Mail) must be sent to 9300 East Hampton 
Drive, Capitol Heights, MD 20743.
    [cir] U.S. Postal Service first-class, Express, and Priority mail 
should be addressed to 445 12th Street, SW., Washington, DC 20554.
    In addition, one copy of each pleading must be sent to the 
Commission's duplicating contractor, Best Copy and Printing, Inc, 445 
12th Street, SW., Room CY-B402, Washington, DC 20554; Web site: https://www.bcpiweb.com; phone: 1-800-378-3160. Furthermore, three copies of 
each pleading must be sent to Charles Tyler, Telecommunications Access 
Policy Division, Wireline Competition Bureau, 445 12th Street, SW., 
Room 5-A452, Washington, DC 20554; e-mail: Charles.Tyler@fcc.gov.
    Filings and comments are also available for public inspection and 
copying during regular business hours at the FCC Reference Information 
Center, Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC 
20554.

[[Page 11633]]

Copies may also be purchased from the Commission's duplicating 
contractor, BCPI, 445 12th Street, SW., Room CY-B402, Washington, D.C. 
20554. Customers may contact BCPI through its Web site: https://www.bcpiweb.com, by e-mail at fcc@bcpiweb.com, by telephone at (202) 
488-5300 or (800) 378-3160 (voice), (202) 488-5562 (tty), or by 
facsimile at (202) 488-5563.
    To request materials in accessible formats for people with 
disabilities (Braille, large print, electronic files, audio format), 
send an e-mail to fcc504@fcc.gov or call the Consumer & Governmental 
Affairs Bureau at (202) 418-0530 (voice) or (202) 418-0432 (TTY). 
Contact the FCC to request reasonable accommodations for filing 
comments (accessible format documents, sign language interpreters, 
CART, etc.) by e-mail: FCC504@fcc.gov; phone: (202) 418-0530 or TTY: 
(202) 418-0432.
    To view or obtain a copy of this information collection request 
(ICR) submitted to OMB: (1) Go to this OMB/GSA web page: https://www.reginfo.gov/public/do/PRAMain, (2) look for the section of the web 
page called ``Currently Under Review,'' (3) click on the downward-
pointing arrow in the ``Select Agency'' box below the ``Currently Under 
Review'' heading, (4) select ``Federal Communications Commission'' from 
the list of agencies presented in the ``Select Agency'' box, (5) click 
the ``Submit'' button to the right of the ``Select Agency'' box, and 
(6) when the list of FCC ICRs currently under review appears, look for 
the OMB control number of this ICR as shown in the Supplementary 
Information section below (or its title if there is no OMB control 
number) and then click on the ICR Reference Number. A copy of the FCC 
submission to OMB will be displayed.
    For further information regarding this proceeding, contact Patrick 
Halley, Attorney Advisor, Wireline Competition Bureau at (202) 418-
7389, Patrick.Halley@fcc.gov, or Jennifer Prime, Attorney Advisor, 
Wireline Competition Bureau at (202) 418-2403, jennifer.prime@fcc.gov.
    Initial Paperwork Reduction Act of 1995 Analysis: This document 
contains proposed information collection requirements. The Commission, 
as part of its continuing effort to reduce paperwork burdens, invites 
the general public and the Office of Management and Budget (OMB) to 
comment on the information collection requirements contained in this 
document, as required by the Paperwork Reduction Act of 1995, Public 
Law 104-13. Public and agency comments are due May 2, 2011.
    Comments on the proposed information collection requirements should 
address: (a) Whether the proposed collection of information is 
necessary for the proper performance of the functions of the 
Commission, including whether the information shall have practical 
utility; (b) the accuracy of the Commission's burden estimates; (c) 
ways to enhance the quality, utility, and clarity of the information 
collected; and (d) ways to minimize the burden of the collection of 
information on the respondents, including the use of automated 
collection techniques or other forms of information technology. In 
addition, pursuant to the Small Business Paperwork Relief Act of 2002, 
Public Law 107-198, see 44 U.S.C. 3506(c)(4), we seek specific comment 
on how we might further reduce the information collection burden for 
small business concerns with fewer than 25 employees.
    OMB Control Number: 3060-0298.
    Title: Part 61, Tariffs (Other than Tariff Review Plan).
    Form Number: N/A.
    Type of Review: Revision of a currently approved collection. 
Respondents: Business or other for profit.
    Number of Respondents and Responses: 630 respondents; 1,210 
responses.
    Estimated Time per Response: 50 hours.
    Obligation to Respond: Required to obtain or retain benefits. The 
statutory authority for this information collection is contained in 
sections 1-5, 201-205, 208, 251-271, 403, 502, and 503 of the 
Communications Act of 1934, as amended, 47 U.S.C. 151-155, 201-205, 
208, 251-271, 403, 502, and 503.
    Frequency of Response: One-time, on occasion and biennial reporting 
requirements.
    Total Annual Burden: 63,000 hours.
    Annual Cost Burden: $986,150.
    Privacy Act Impact Assessment: No impacts.
    Nature and Extent of Confidentiality: The Commission is not 
requesting that the respondents submit confidential information to the 
FCC. Respondents may, however, request confidential treatment for 
information they believe to be confidential under 47 CFR 0.459 of the 
Commission's rules.
    Needs and Uses: Sections 201, 202, 203, 204 and 205 of the 
Communications Act of 1934, (``Act'') as amended, 47 U.S.C. 201, 202, 
203, 204 and 205, require that common carriers establish just and 
reasonable charges, practices and regulations which must be filed with 
the Commission which is required to determine whether such schedules 
are just, reasonable and not unduly discriminatory.
    Part 61 of the Commission's rules, 47 CFR part 61, establishes the 
procedures for filing tariffs which contain the charges, practices and 
regulations of the common carriers, supporting economic data and other 
related documents. The supporting data must also conform to other parts 
of the Commission's rules such as 47 CFR parts 36 and 69. Part 61 
prescribes the framework for the initial establishment of and 
subsequent revisions to tariffs. Tariffs that do not conform to Part 61 
may be required to post their schedules or rates and regulations, 47 
CFR 61.72.
    In this Notice of Proposed Rulemaking and Further Notice of 
Proposed Rulemaking (FCC 11-13), the Commission proposes revised rules 
that would require incumbent rate-of-return and competitive local 
exchange carriers to file revised tariffs if they engage in revenue 
sharing arrangements. We estimate that this could result in a one-time 
increase in the frequency of response of up to 50 carriers because they 
would have to make the necessary tariff filing within 45 days of the 
final rules becoming effective. Any subsequent tariffing requirements 
should be encompassed in the ongoing estimates for this information 
collection.

I. Summary

A. Legal Authority To Support Broadband

1. Additional Section 254(b) Principle
    1. We propose to adopt the principle, as recommended by the 
Federal-State Joint Board on Universal Service in November 2010, ``that 
universal service support should be directed where possible to networks 
that provide advanced services, as well as voice services,'' pursuant 
to section 254(b)(7), and seek comment on that proposal. If we adopt 
the proposed principle, how should we apply it with respect to the 
other criteria in section 254?
2. Commission Authority To Support Broadband
    2. We have express statutory authority to extend universal service 
support to broadband services that providers offer as 
telecommunications services. We believe we also have authority to 
extend universal service support to broadband services offered as 
information services under section 254, section 706 and/or our 
ancillary authority. In any event, we believe we have clear authority 
to condition awards of universal service support on a recipient's 
commitment to offer broadband service. We seek comment on these issues, 
as well as any

[[Page 11634]]

other approaches that would buttress our legal authority.
a. Section 254
    3. We seek comment on whether, read as a whole, section 254 may 
reasonably be interpreted to authorize the Commission to support 
broadband service. Could we provide support to information service 
providers consistent with section 254(e) and 214(e)? If not, under what 
mechanism could we designate and offer support to information service 
providers? What role would the states play in designating eligible 
information service providers? Would disbursement of support to 
information service providers comport with federal appropriations laws? 
We seek comment on these and other pertinent issues.
    4. In the event we interpret section 254 to authorize support of 
broadband, we also seek comment on adding broadband to the supported 
services list. Before modifying the list of supported services, the 
Commission must ``consider the extent to which such telecommunications 
services--(1) are essential to education, public health, or public 
safety; (2) have, through the operation of market choices by customers, 
been subscribed to by a substantial majority of residential customers; 
(3) are being deployed in public telecommunications networks by 
telecommunications carriers; and (4) are consistent with the public 
interest, convenience, and necessity.''
    5. In 2007, the Joint Board also recommended that the Commission 
revise the definition of supported services to include mobility, 
concluding that both broadband and mobility satisfied the four part 
criteria and should be eligible for federal universal service support.
    6. The Commission currently requires ETCs to provide all of the 
supported services. If we were to add broadband and/or mobility to the 
list of supported services, should we create separate designations for 
each supported service (voice, broadband, and mobility) so that a 
provider does not need to offer all of the supported services to be 
eligible for support, as the Joint Board recommended in 2007? We seek 
comment on this proposal. We also ask what would be the impact of such 
an approach on Lifeline providers, who today also are required to offer 
all supported services.
b. Section 706
    7. We seek comment on whether sections 706(a) and (b), alone or in 
concert with sections 254 and 214(e), grant us authority to provide 
universal service support for broadband information services. We 
believe that providing universal service support for broadband would 
``remove barriers to infrastructure investment'' by supplying financial 
incentives to invest in areas where it may otherwise be uneconomic to 
do so. We seek comment on this issue. Would providing support for 
broadband information services under section 706 be inconsistent with 
the definition of universal service in section 254(c) or the limitation 
of support to ETCs in section 254(e)? If we act pursuant to section 706 
alone, would we have authority to collect universal service 
contributions and disburse them to eligible recipients under the 
current universal service mechanisms, or should we develop a separate 
mechanism under our section 706 authority? Would the collection and 
disbursement of funds comport with federal appropriations laws? What 
criteria should we use to determine who is eligible to receive support? 
What role should states play? We seek comment on these and other 
relevant issues.
c. Title I Ancillary Authority
    8. We seek comment on whether the Commission could rely on its 
ancillary authority in Title 1 to support broadband information 
services. Would providing support for broadband be reasonably ancillary 
to the Commission's statutory responsibilities under section 254(b)? 
Similarly, would supporting broadband be reasonably ancillary to 
section 706 as a ``specific delegation of legislative authority'' to 
encourage deployment of advanced telecommunications capability to all 
Americans? We seek comment on whether these provisions or others 
provide a sufficient statutory basis for exercising ancillary 
authority. As with other theories described above, we also seek comment 
on what criteria should be used to designate eligible recipients, and 
on who should perform the designations. We also seek comment on whether 
adopting the competitive bidding process in the first phase of the CAF 
and permanent CAF programs pursuant to our ancillary authority would be 
consistent with federal appropriations laws. We invite comment on these 
and any other relevant issues.
d. Conditional Support
    9. We believe the Commission also has authority to direct high-cost 
or CAF support toward broadband-capable networks by conditioning awards 
of universal service support on a recipient's commitment to offer 
broadband service alongside supported voice services. We see no reason 
why conditioning the receipt of support on offering broadband is not 
permissible under the Commission's general authority to promulgate 
general rules related to universal service. We invite comment on this 
approach.
e. Other Approaches
    10. Forbearance. We seek comment on whether we should exercise our 
section 10 forbearance authority, alone or in combination with any of 
the theories described above, to facilitate use of funding to support 
broadband information services. For example, could we forbear from 
applying section 254(c)(1), which defines universal service as an 
evolving level of telecommunications services? Could we likewise 
forbear from applying sections 254(e) and 214(e), which restrict 
universal service support to ETCs? Are the statutory criteria for 
forbearance from these provisions met? Are there any other provisions 
from which we should forbear? If we grant forbearance, may we adopt 
rules that are broader than the statutory provisions? We seek comment 
on these issues.
    11. Classifying Interconnected VoIP. We also invite comment on 
whether we should consider classifying interconnected voice over 
Internet protocol as a telecommunications service or an information 
service. If the Commission were to classify interconnected VoIP as a 
telecommunications service, this would enable the Commission to support 
networks used to provide interconnected VoIP, including broadband 
networks. We seek comment on this issue. Does interconnected VoIP have 
characteristics that warrant classifying it as a telecommunications 
service or an information service? If the Commission classified 
interconnected VoIP as a telecommunications service, should we forbear 
from applying any provisions in Title II to the service? We request 
comment.
    12. We invite parties to comment on these and any other legal 
theories that they believe will provide a sound legal basis for 
providing universal service support for broadband.

B. Setting American on a Path to Reform

1. National Goals and Priorities for Universal Service
    13. We propose the following four priorities for the federal 
universal service high-cost program: (1) To preserve and advance voice 
service; (2) to ensure universal deployment of modern networks capable 
of supporting necessary broadband applications as

[[Page 11635]]

well as voice service; (3) to ensure that rates for broadband service 
are reasonably comparable in all regions of the nation, and rates for 
voice service are reasonably comparable in all regions of the nation; 
(4) to limit the contribution burden on households.
    14. We ask that commenters consider the reform proposals in light 
of these reform priorities, and ask commenters to suggest additional or 
alternative priorities, and how to prioritize them. We ask whether 
advancing the deployment of mobile networks should be its own 
independent priority. We seek comment on other priorities, including 
competitive neutrality and technology neutrality, and whether our 
proposed reforms are consistent section 254(b)(5) that support ``should 
be specific, predictable, and sufficient.''
2. Encouraging State Action To Advance Universal Service
    15. We seek comment generally on the role of the states in 
preserving and advancing universal service as we transition from the 
current programs to the Connect America Fund. We welcome the input of 
the state members of the Joint Board on these and other important 
questions.
    16. We seek comment on what level of financial commitment should be 
expected from the states and territories to advance broadband, and on 
how to address the different features of states, and the various state 
efforts to preserve and advance universal service. We seek comment on 
how to encourage or require additional commitments to support universal 
service by states in partnership with the federal government.
3. Eligible Telecommunications Carrier Requirements
    17. We seek comment on how the Commission can best interpret 
existing ETC requirements to achieve our goals for reform. We also seek 
comment on whether (and if so how) we should modify the ETC 
requirements. How would we provide incentives for state commissions to 
apply any Commission-adopted requirements to ETCs designated by states? 
Alternatively, we seek comment on whether the Commission could or 
should forbear from requiring that recipients be designated as ETCs at 
all, and if so, in particular whether the Commission could forbear from 
applying section 254(e) to entities that are not telecommunications 
carriers to allow their receipt of universal service support to serve 
rural, insular and high-cost areas under the Act. If we do forbear from 
this requirement, what if any requirements should replace it? How 
should we transition from existing to any new requirements? How should 
existing ETCs be treated during such a transition?
4. Public Interest Obligations of Fund Recipients
    18. We seek comment on what public interest obligations should 
apply to ETCs going forward, as we reform and modernize the existing 
high-cost program to advance broadband. We ask commenters to address 
whether the public interest obligations proposed below should vary, 
depending on whether broadband is a supported service, or 
alternatively, if support is provided to voice recipients conditioned 
on their deployment of broadband-capable facilities. We propose that 
public interest obligations apply generally to all funding recipients. 
We ask commenters to what extent, if any, should the obligations vary 
for recipients under the current high-cost funding programs, recipients 
of funding in the first phase of CAF funding, and Long-Term CAF 
recipients. We ask commenters to consider and explain whether (and if 
so how) each of the obligations discussed below should apply under what 
circumstances, recognizing that it may be appropriate to tailor 
obligations to avoid unfunded mandates. We also ask commenters to 
address specifically whether the duties and responsibilities of ETCs 
should differ depending on whether they are also the state-mandated 
carrier of last resort in a particular area. We seek comment on how 
best to balance the costs and burdens associated with the monitoring 
of, enforcement of, and compliance with the proposed public interest 
obligations with our principles of fiscal responsibility and 
accountability and our goal of rapidly increasing broadband deployment 
in unserved areas.
a. Characteristics of Voice Service
    19. We propose to simplify how we describe core voice service 
functionalities into one term: ``voice telephony service.'' Should we 
preserve the definition of ``voice grade access'' to the public 
switched network in Sec.  54.101 of the Commission's rules? Parties 
that support a different definition should provide analysis and data 
supporting such a definition. Parties should also explain whether such 
a definition would be technology-neutral and if not, the basis for 
adopting a definition that is not technology-neutral.
b. Voice Obligations
    20. We propose that recipients must provide ``voice telephony 
service'' throughout their designated service areas. We propose that 
recipients be permitted to partner with another voice provider to 
provide ``voice telephony service.'' We propose that recipients be 
required to offer voice telephony service as a standalone service. We 
propose that recipients continue to be subject to any applicable 
baseline state or federal requirements for the provision of voice 
service by ETCs. We seek comment on how to create incentives for states 
to re-evaluate and harmonize the requirements they impose on the ETCs 
that they designate to be consistent with any new federal requirements. 
Should there be any additional obligations imposed on recipients 
serving areas in which the telephone penetration rate historically has 
been substantially lower than the national average (e.g., on Tribal 
lands and in Native communities)? Given that we envision a transition 
to an integrated voice-broadband network in the future, how should 
voice universal service public interest obligations change over time? 
In the future, will there be a need for separate voice and broadband 
public interest obligations?
c. Characteristics of Broadband Service
    21. We propose to adopt metrics for broadband using specific 
performance characteristics that would apply to the CAF and also to the 
existing high-cost program, until it is transitioned into the CAF. We 
seek comment on whether there are reasons to adopt technology-specific 
minimum standards that would depend on the technology deployed. We seek 
comment on whether we should characterize broadband by its speed, 
functional attributes, or in some other way. Commenters should discuss 
additional ways of measuring broadband services provided to consumers, 
such as throughput, latency, jitter, or packet loss, for purposes of 
establishing performance requirements for recipients. We seek comment 
on the National Broadband Plan recommendation of 4 Mbps actual 
download/1 Mbps actual upload, or, alternatively, of 3 Mbps of actual 
download speed/768 kbps of actual upload speed, or a different speed 
requirement. We seek comment on whether there are other metrics we 
should consider that are unrelated to speed or service quality, such as 
mobility.
    22. Measuring the Attributes of Broadband. We propose that 
recipients test their broadband networks for compliance with whatever 
metrics

[[Page 11636]]

ultimately are adopted and report the results to USAC on a quarterly 
basis, and that these results be subject to audit. Alternatively, 
should we instead require that recipients provide a specific speed 
(e.g., 4/1 Mbps) at a ``reasonable service quality,'' and rely on 
customer complaints regarding the quality of their broadband as a means 
of enforcing service quality? We propose that the attributes be 
measured on each broadband provider's access network from the end-user 
interface (modem) to the closest peering point between the broadband 
provider and the public Internet.
    23. Evolution. We seek comment on how often we should re-evaluate 
our broadband requirements, and what would be the appropriate 
procedural vehicle (e.g., the Commission's annual section 706 inquiry).
d. Broadband Obligations
    24. We propose that all existing high-cost funding recipients going 
forward and all future CAF recipients must offer broadband service that 
meets or exceeds the minimum metrics prescribed by the Commission, 
assuming they receive funding for that purpose. We propose that all 
recipients should be subject to an annual certification regarding 
compliance with any obligations that we ultimately adopt for the 
provision of USF-supported broadband services.
(i) Service, Coverage, and Deployment
    25. Service Requirement. We seek comment on whether to impose a 
service requirement, which would specify that a recipient must provide 
service upon request within a reasonable period of time, or a service 
requirement and a coverage requirement on recipients. We also seek 
comment on whether to adopt specific requirements to ensure providers 
are meeting a service requirement.
    26. Coverage Requirement. We seek comment on whether to adopt a 
coverage requirement (e.g., recipients must cover 99 percent of all 
housing units in an area) in addition to a service requirement, and 
whether to adopt a specific timeframe or specific milestones for a 
deployment schedule. We propose that recipients be permitted to partner 
with another broadband provider to provide broadband service in areas 
where the recipient has not yet built its network, and seek comment on 
whether we should limit the number of housing units in a given service 
area that can be served by a partnering arrangement with a satellite 
provider in order to most efficiently leverage the capacity of 
satellite throughout the unserved high-cost areas across the nation. 
Alternatively, we seek comment on whether support recipients should be 
allowed to carve out from the coverage requirement a small percentage 
of housing units that may be served by high-speed Internet access 
service that may not meet the minimum performance metrics adopted by 
the Commission. We seek comment on how recipients should demonstrate 
compliance with a coverage requirement.
(ii) Affordable and Reasonably Comparable Rates
    27. We propose that recipients must offer voice and broadband 
(individually and together) at rates that are affordable and reasonably 
comparable to rates in urban areas, whether or not broadband is a 
supported service, and seek comment on how to measure ``affordable'' 
and ``reasonably comparable.'' We seek comment on how the Commission 
should obtain data on voice and broadband pricing to develop possible 
rate benchmarks for supported voice and/or broadband service.
(iii) Additional Considerations
    28. Joint Infrastructure Use. We seek comment on the costs and 
benefits of applying policies to encourage sharing of infrastructure, 
including by residential and anchor institution users.
    29. We also seek comment on how USF can best achieve synergies with 
the connectivity objectives for schools, libraries, and rural health 
care facilities in section 254 of the Act. Where build out is required 
to connect these particular types of community anchor institutions, 
should this construction be supported through the CAF, E-rate, or Rural 
Health Care programs, individually or in combination? Should USF 
recipients have any obligations to serve anchor institutions in the 
communities in which they serve residential customers?
    30. Other Public Interest Obligations. We seek comment on whether 
any additional public interest obligations should apply to USF 
recipients, such as marketing of broadband service or providing 
customers with the option to subscribe to a basic broadband service on 
a stand-alone basis, or prohibiting term commitments or early 
termination penalties. We also seek comment on public interest 
requirements that should apply to carriers providing service on Tribal 
lands, such as requiring recipients to provide broadband to Tribal and 
Native community institutions.
    31. Evolution. We propose that we periodically re-evaluate the 
broadband public interest obligations, and seek comment on whether they 
should be re-evaluated at the same time the Commission re-evaluates its 
broadband metrics, or less frequently. We seek comment on the effect 
that changing the obligations would have on program administration and 
on funding recipients. We propose that the Commission re-examine 
funding levels each time it re-evaluates the public interest 
obligations.
    32. Remedies for Non-Compliance. We seek comment on remedies for 
failure to meet any public interest obligations, including but not 
limited to loss of universal service funding and repayment of funds 
already disbursed. We propose that USAC recover funds through its 
normal processes in instances where an audit or investigation finds 
that a recipient has failed to comply with certain CAF program rules 
and requirements.
    33. Waiver. We propose to allow those carriers that are unable to 
meet an adopted deployment schedule to seek a waiver of the requirement 
from the Commission, and seek comment on what the criteria should be 
for such a waiver.
    34. Role of States and Tribal Governments. We seek comment on the 
role of states and Tribal governments in enforcing these federally 
defined public interest obligations and whether states or Tribal 
governments may impose additional obligations on funded providers.

C. Near-Term Universal Service Reforms

1. Rationalizing Loop Support, Local Switching Support, and Interstate 
Common Line Support
    35. In October 2010, we issued the Mobility Fund NPRM, 75 FR 67060, 
November 1, 2010, which proposed a Mobility Fund intended to spur build 
out of advanced mobile wireless networks in areas not served by 
current-generation mobile networks. We now continue our reform efforts 
in this proceeding by proposing steps to spur broadband build out, 
whether fixed or mobile, in unserved areas, which exist in every state 
as well as the territories. We propose to do this by transitioning 
funds from less efficient uses to more efficient uses, including 
through the creation of the CAF. We also seek comment on other measures 
to reduce inefficiencies, extend broadband, and increase the 
accountability of companies receiving support.
    36. Three components of the high-cost program primarily support 
smaller carriers regulated under ``rate-of-return'' rules: High-cost 
loop support (HCLS), which provided $1 billion for

[[Page 11637]]

incumbents in 2010; local switching support (LSS), which provided $276 
million for incumbents in 2010; and interstate common line support 
(ICLS), which provided $1.1 billion for incumbents in 2010. As 
currently structured, these funding mechanisms provide poor incentives 
for rate-of-return carriers to operate and invest efficiently. While 
individual carriers may act in the best interests of their own 
customers and communities, excessive spending by any one community 
limits opportunities for consumers in other communities and may not be 
in the best interests of the nation as a whole. HCLS, for example, 
creates incentives for companies to outspend their peers in order to 
receive more funding under the current capped formula. For all three 
programs, there are few, if any, benchmarks for determining whether 
network investment is justified or appropriate, allowing a company to 
spend millions of dollars to build a state-of-the art network that may 
serve only a few customers. LSS was originally created to help small 
telephone companies that lack economies of scale to afford large 
switches, but since then the industry has moved to software-based 
routers and switches which can be more easily scaled to a company's 
size and even shared among companies. LSS now provides perverse 
incentives for companies not to realize efficiencies by combining 
service areas. We seek comment on a suite of reforms to these 
components, which will increase accountability and start rate-of-return 
carriers on the path towards market-driven, incentive-based regulation.
    37. Specifically, we seek comment on the following reforms to be 
implemented beginning in 2012:
    38. Modification of HCLS. We propose to reduce the reimbursement 
rates for rural incumbent LECs to 55% and 65%, from 65% and 75%, in 
order to encourage more efficient operations and to facilitate more 
equitable distribution of HCLS under the HCLS cap. We propose to 
eliminate from the rules, HCLS for rural incumbent LECs with more than 
200,000 loops because there are no rural incumbent LECs with more than 
200,000 lines receiving support and such incumbent LECs are well below 
the qualifying threshold. We propose to eliminate the ``safety net 
additive'' because it is not working as intended. Many carriers are 
qualifying because of the loss of lines, not because of significant 
increased investment.
    39. Modification of LSS. We propose to eliminate LSS because LSS 
was designed when small incumbent LECs had to buy expensive mechanical 
switches, however, today's soft switches are more scalable to small 
operations. Alternatively, we propose to combine HCLS and LSS into one 
high-cost mechanism that would flow to areas with above-average costs 
in the same manner as HCLS does now.
    40. Modification or Elimination of Corporate Operations Expense 
Eligibility for Universal Service Support. We propose to reduce or 
eliminate the eligibility of corporate operations (overhead) expenses 
for purposes of universal service support. Currently, corporate 
operations eligibility is limited for HCLS, but no limited for LSS and 
ICLS. We desire to focus finite universal service funds more directly 
to investments in network build-out, maintenance, and upgrades--not 
highly discretionary expenses.
    41. Limits on Reimbursable Capital and Operating Costs. We propose 
to improve incentives for efficient operations by establishing 
benchmarks for reasonable capital and operating costs for universal 
service support purposes. The benchmarks would be based on a simplified 
model taking into account key drivers of cost (such as population 
density, topography, soil type, etc.). Capital or operating costs above 
the benchmarks would not be eligible for reimbursement through high-
cost universal service mechanisms. We also seek comment regarding 
whether above-benchmark costs should be reimbursable based on a showing 
that such costs are justifiable and alternative means of recovering 
above-benchmark costs from other revenue sources.
    42. Limits on Total per Line High-Cost Support. We propose to cap 
total annual support per line for all companies operating within the 
continental United States, e.g., $3,000 per line annually. Eighteen 
companies currently receive more than $3,000 per line annually, five 
receive more than $10,000 per line annually, and one receives $20,000 
per line annually. We seek comment whether companies receiving more 
than the cap should be able to make a showing that additional support 
is in the public interest.
2. Reducing Barriers to Operating Efficiencies
    43. Study area waiver process. We propose to streamline the study 
area waiver process that would deem the waiver granted 60 days after 
the end of the comment cycle, absent any further action by the Bureau. 
We propose to eliminate the one-percent standard in evaluating study 
area waivers and focus evaluation on the number of lines at issue, 
projected USF support per line, and whether such a grant would result 
in consolidation of study areas that facilitates reductions in cost by 
taking advantage of economies of scale.
    44. Revising the ``Parent Trap'' Rule, Sec.  54.305 of the 
Commission's rules. We propose to eliminate the parent trap rule five 
years after grant of the relevant study area waiver and if a certain 
minimum percentage of the acquired lines, e.g., 30% are unserved by 768 
kbps broadband. Section 54.305(b) of the Commission's rules provides 
that a carrier acquiring exchanges from an unaffiliated carrier shall 
receive the same per-line levels of high-cost universal service support 
for which the acquired exchanges were eligible prior to their transfer. 
This proposal is to encourage carriers subject to Sec.  54.305 of the 
Commission's rules to invest in modern communications networks in 
unserved areas. We seek comment on revising Sec.  54.305 of the 
Commission's rules so that rural incumbent LECs, subject to Sec.  
54.305 of the Commission's rules, would receive either the lesser of 
the support pursuant to Sec.  54.305 of the Commission's rules or the 
support based on their own actual costs. Some rural incumbent LECs 
currently receive support pursuant to Sec.  54.305 of the Commission's 
rules, that would not receive any support or would receive lesser 
support based upon their own costs.
3. Transitioning Interstate Access Support (IAS) to the CAF
    45. We propose to phase out IAS for both incumbent price cap 
carriers and competitive eligible telecommunications carriers (ETCs) 
over a period of a few years. In 2010, IAS totaled $545 million. 
Originally created in 2000 as part of a five-year transitional reform 
plan, IAS has long outlived its intended lifespan. The comments 
received in response to the USF Reform NOI/NPRM, 75 FR 26906, May 13, 
2010, suggest that this fund is not critical to ensuring rural voice 
service, and we believe the funds could be more productively used to 
support the deployment of broadband to unserved areas. We seek comment 
on transitioning IAS to the CAF and the consequences of doing so.
4. Rationalizing Competitive ETC Support Through Elimination of the 
Identical Support Rule
    46. We propose to eliminate the ``identical support'' rule and to 
transition available competitive ETC support to the CAF over a several-
year period. Under the Commission's identical support rule, competitive 
ETCs (mostly wireless carriers) receive, subject to an interim cap, the 
same per-

[[Page 11638]]

line high-cost support as incumbent carriers serving the same area 
regardless of actual costs or needs. As a result, the funding is poorly 
targeted--in some areas, as many as four or more providers are 
receiving redundant ETC funding, while other areas lack even a single 
provider of broadband or mobile voice. Two of the largest ETCs have 
voluntarily agreed to relinquish their ETC support in the context of 
transactions, and the USF Reform NOI/NPRM record supports the 
conclusion that current levels of competitive ETC support are 
unnecessary to ensure fixed or mobile voice service in many areas of 
the country that receive support today. At the same time, we recognize 
the importance of mobile voice and mobile broadband coverage in all 
areas of the country and seek comment on how to balance the desire for 
universal mobile coverage with other USF priorities. Our proposal in 
the Mobility Fund proceeding was intended to provide a one-time 
infusion to expand mobile coverage. We seek comment here on how best to 
factor the need for mobility into the reforms proposed in this 
proceeding to achieve our universal service objectives. Specifically, 
we seek comment on transitioning available competitive ETC support to 
the CAF, over what schedule such transition should occur, and whether 
waivers or exceptions should be made, such as for competitive ETCs 
serving Tribal lands or when immediate transition of support to the CAF 
would disrupt the availability of wireless service in area.
    47. Taken together, the proposed changes to the high-cost program 
will enable significant funds to be used to support fixed and mobile 
broadband, as discussed below, and potentially a recovery mechanism 
associated with ICC reform, where necessary, as summarized below.
5. First Phase of the Connect America Fund
    48. In the first phase of the CAF, we propose to award, through a 
reverse auction process, non-recurring support for broadband areas 
identified in unserved areas, as determined by the forthcoming National 
Broadband Map and/or our Form 477 data collection (i.e., areas without 
broadband advertised as providing download speeds of at least 768 
kbps). That targeted funding will supplement, not replace, other 
support provided through the high-cost program in its current form or 
as modified as part of the reforms proposed above.
(i) Basic Framework for the Connect America Fund Phase I
    49. We seek comment on our authority to establish a program under 
which non-recurring support would be provided, based on a competitive 
bidding system, to a single entity to deploy and provide broadband 
service.
    50. We propose to design the first phase of the CAF to use funds 
efficiently to expand broadband to as many unserved housing units--that 
would be unlikely to be served soon or at all without public 
investment--as possible. We propose to fund the first phase of the CAF 
with savings realized from certain carriers' voluntary relinquishment 
of USF support along with savings realized from other proposed reforms 
to existing high-cost mechanisms.
    51. We propose to use auctions to determine the entities that will 
receive support under the first phase of the CAF and the amount of 
support they will receive. We propose to award a fixed amount of 
support, paid out in installments, based on the lowest bid amounts 
submitted in a reverse auction. We seek comment generally on how to 
design a competitive process to determine recipients and support 
amounts in light of our goals.
    52. We propose to fund no more than one auction winner per unserved 
area. We propose to exclude satellite providers from bidding in the 
auction but to permit them to partner with a terrestrial (wireless or 
wireline) provider. We propose to compare bids across the country, 
rather than comparing them within certain subsets of otherwise eligible 
areas.
(ii) Identifying Unserved Areas Eligible for Support
    53. We propose to use the National Broadband Map to determine what 
areas are unserved, and seek comment on how to use the Map for this 
purpose; alternatively, should we rely on information from an updated 
Form 477. We propose to identify unserved areas on a census-block 
basis, but seek comment on whether another unit of geographic area 
would better serve our goals.
    54. We propose to evaluate bids on an ``amount per unserved unit'' 
basis. We propose to use unserved housing units to establish a baseline 
number of unserved units per census block. We seek comment on whether 
the number of unserved units should be adjusted to reflect community 
anchor institutions and the like, and, if so, how we would obtain the 
necessary data to be able to determine with a sufficient level of 
accuracy the number of businesses and other institutions in a given 
area.
    55. We seek comment on whether we should limit support--or provide 
bidding credits--to bidders in states that have taken or are taking 
measures to reduce intrastate switched access rates. We seek comment on 
whether we should prioritize support for states that have created state 
high-cost USF programs. We seek comment on whether we should take into 
account states' actions relating to municipal broadband--e.g., whether 
there should be bidding credits for projects in states where municipal 
broadband is permitted.
    56. We seek comment on whether we should reserve funds for Tribal 
areas, or provide bidding credits for bidders, including Tribally owned 
bidders, who wish to deploy on Tribal lands. We further seek comment on 
whether any funds reserved for Tribal lands that remain unawarded 
should be treated any differently from unreserved funds that remain 
unawarded after the auction. We further seek comment on how to design 
the first phase of the CAF to include Tribal governments to ensure 
efficient operation on Tribal lands. In addition, we seek comment on 
whether we should reserve funds for insular areas, or provide bidding 
credits for those who wish to deploy in insular areas.
(iii) Pre-Existing Deployment Plans
    57. We seek comment on how to structure the program to avoid 
outcomes that would be inconsistent with the goal of increasing 
broadband deployment in unserved rural and high-cost areas, not funding 
existing facilities or deployment to which a carrier has already 
committed to federal or state regulators.
(iv) Public Interest Obligations
    58. We propose to have a Commission-defined coverage requirement. 
In the alternative, we could use bidder-defined coverage requirements. 
We seek comment on both.
    59. We propose that recipients build networks of at least 4 Mbps 
(downstream) and 1 Mbps (upstream). We seek comment on this proposal 
and whether the speed requirement should evolve.
    60. We propose that recipients deploy within 3 years of funding. We 
propose that obligations last for a specified period of years, such as 
5, after completion of buildout. We seek comment on whether to require 
support recipients to meet interim deployment milestones.

[[Page 11639]]

    61. Given the ongoing nature of our reform efforts, we seek comment 
on whether, upon the completion of comprehensive universal service 
reform, recipients that ultimately receive support should be relieved 
of their obligations under the first phase of the CAF, with those 
obligations being replaced by any public interest obligations imposed 
on ultimate CAF recipients. We seek comment on what should happen to a 
recipient's obligations in the first phase of the CAF once someone in 
the area (either the recipient of support in the first phase of the CAF 
or another carrier) receives long-term CAF support.
(v) Eligibility Requirements for the First Phase of the CAF
    62. We propose that recipients in the first phase of the CAF be 
designated (or have applied for designation) ETCs by a state (or the 
FCC, as appropriate), as required by the Act; alternatively, we seek 
comment on whether to forbear from that requirement.
    63. We seek comment on permitting carriers to apply for ETC 
designation on a conditional basis, so that they are not required to 
satisfy ETC obligations where they don't get any funding.
    64. We propose that an applicant must be a terrestrial wireline or 
wireless service provider and hold, or have access to, any required 
authorization to provide the required services.
    65. We propose to limit participation in the auction to those 
applicants able to certify that they have submitted all requested 
broadband deployment data as part of the State Broadband Data and 
Deployment program. Parties that have not been requested to provide 
such data would be permitted to certify that they have provided all 
data requested. We seek comment on this proposal generally, and on 
whether such a limitation should apply to Tribal areas.
(vi) Auction Process
    66. We propose rules for and seek comment on certain elements of 
the auction process, including the application and bidding process.
    67. We propose a two-stage application process similar to the one 
we use in spectrum license auctions. Based on the eligibility 
requirements for support in the first phase of the CAF, we would 
require a pre-auction ``short-form'' application to establish 
eligibility to participate in the auction, relying primarily on 
disclosures as to identity and ownership and applicant certifications, 
and perform a more extensive, post-auction review of the winning 
bidders' qualifications based on required ``long-form'' applications.
    68. Short Form Application. We propose generally that the short 
form application will include basic ownership information about the 
carrier and information about any partnerships the carrier has entered 
for the first phase of the CAF; identification of areas where the 
carrier might possibly bid; and certification that the bidder is 
qualified to participate in the auction.
    69. Auction Design and Bidding Process. We seek comment on the best 
auction design to maximize the deployment of broadband to housing units 
where there is no broadband now. We also seek comment on alternative 
methods of establishing coverage requirements in areas for which 
support is received. We seek comment on how to encourage bidders to go 
beyond their Commission- or bidder-defined coverage requirement.
    70. We propose to select winning bidders and award support based on 
bids that state a price at which the bidder would meet our minimum 
performance requirements for the number of housing (or other) units 
covered by the bid, ranking bids by price per unit covered. We seek 
comment on whether we should use weighted criteria or bidding credits 
to adjust the bids to account for commitments to exceed our minimum 
requirements and to account for other benefits, such as higher speed, 
lower latency, mobility, or a better upgrade path. We could also use 
such credits/adjustments to allow tradeoffs, such as allowing a 
provider to bid to provide service that does not meet our speed 
standard but does offer mobility.
    71. We propose that bidders should be able to aggregate census 
blocks together to bid on a package, and seek comment, generally, on 
how we should design the auction to accommodate package bidding.
(vii) Post-Auction Process and Administration for the First Phase of 
the CAF
    72. We propose that, following the auction, identified winning 
bidders submit long form applications within 10 days.
    73. We seek comment on the specific information and showings that 
should be required of winning bidders on the long-form application 
before they can be certified to receive support and before actual 
disbursements in the first phase of the CAF can be made to them. We 
propose that an applicant be required to confirm ownership information 
provided in its pre-auction short-form application or to update that 
information, as appropriate. We further seek comment on whether we 
should require applicants in the first phase of the CAF to provide any 
other ownership information.
    74. We propose that an applicant provide detailed information about 
the network it intends to deploy and seek comment on what else we 
should require.
(viii) Guarantee of Performance
    75. We propose that a winning bidder should post financial 
security, such as a letter of credit, and seek comment on whether there 
is an alternative that would provide adequate protection; we also seek 
comment on whether some carriers should be exempt from this 
requirement.
(ix) Disbursing Support
    76. We propose that payments be made over time as milestones are 
reached; for example, 50 percent paid after winning the bid, then 25 
percent paid after 50 percent deployment, and the final 25 percent paid 
on completion.
    77. We propose to disburse money in a manner consistent with the 
Antideficiency Act, which means that if we auction off support that we 
do not already have on hand, only the first payment would be 
guaranteed, the other payments would be made only on a determination by 
the Commission that payment was appropriate. The Commission's 
compliance with the Antideficiency Act is currently assured under the 
terms of an exemption, scheduled to expire December 31, 2011, which 
permits the Commission to obligate certain universal service funds 
before they are collected. We seek comment, however, on how to assure 
compliance in the event the exemption is permitted to lapse.
(x) Liabilities for Failure To Deploy and Ensuring Compliance
    78. We seek comment on what kinds of penalties are appropriate if a 
carrier fails to deploy as promised. We propose to require carriers to 
agree that support in the first phase of the CAF is contingent upon 
completion (or substantial completion) of the buildout in accordance 
with specified performance requirements. We seek comment on, among 
other things, whether carriers should be subject to additional 
liabilities and/or security requirements (such as letters of credit or 
performance bonds) to provide them with incentives to perform and to 
protect the CAF in case they fail to perform as required.
    79. We seek comment on whether bidders that are found to have 
failed to meet their obligations relating to the CAF should similarly 
be ineligible for

[[Page 11640]]

Commission action until they can demonstrate that they have complied 
with their obligations or obtained a waiver.
    80. We will require recipients of CAF support to comply with audits 
and record retention requirements. We propose to confirm that 
deployment is occurring through inspections in the field, and we seek 
comment on what kinds of verification procedures are appropriate.
(xi) Delegation of Authority
    81. We propose to delegate to the Wireline Competition Bureau and 
the Wireless Telecommunications Bureau the authority to determine, 
subject to existing legal requirements such as the rules of the Office 
of Management and Budget, the method and procedures for applicants and 
recipients to submit appropriate information.
6. Targeting Support
a. Disaggregating Support
    82. We propose to target support more directly to the areas of 
greatest need by requiring rural carriers to disaggregate support 
within existing study areas beginning in 2012, pursuant to Sec.  54.315 
of the Commission's rules, and invite comment on the proposal.
b. Redrawing Study Areas
    83. We seek comment on whether we should begin a process in the 
near term to establish new service areas that would be eligible for 
ongoing support under the CAF in stage two of our comprehensive reform. 
We seek comment on whether we should take steps to encourage states to 
redraw existing study area boundaries to create more narrowly targeted 
service areas for purposes of the CAF by a specified date, and what 
actions we may take if states decline to do so. We seek comment on 
issues related to the geographic scope of ETC obligations and ETC 
designations.
7. Pending Proceedings and Other Issues
    84. We seek comment on proposals in the record and invite parties 
to update their proposals as appropriate.
    85. Broadband Now Plan. We seek comment on whether and how the 
recommendations in the Broadband Now Plan, submitted by a group of mid-
sized carriers in 2009, could be operationalized in the context of the 
reforms proposed in this Notice.
    86. NCTA Petition for Rulemaking. We seek focused comment on how 
the presence of unsubsidized competition should be factored into our 
proposals generally. We seek comment on whether we should eliminate 
universal service in any study area where there is 100% coverage by an 
unsubsidized voice provider, or whether we should create a rebuttable 
presumption that universal service support is unnecessary in those 
study areas where at least 95% of the households can get service from 
an unsubsidized competitor, and on the impact of such a process on the 
incumbent and the consumers in that area. We also seek comment on 
whether and how to rationalize funding in circumstances in which a 
single company operates two or more networks in the same area (e.g., 
telecommunications and cable plant, or wireline and wireless networks).
    87. Non-regulated Revenues. We seek comment on how to ensure that 
universal service is not inappropriately subsidizing non-regulated 
services or excessively subsidizing carriers that have the ability to 
recover additional non-regulated revenues as a result of their 
deployment of subsidized local loops. We seek comment on the proposal 
to include all revenues (including broadband revenues) when evaluating 
the rate of return revenue requirement.
    88. Interstate Common Line Support for Price Cap Converts. We seek 
comment on Verizon's proposal that we should phase down, on the same 
schedule as IAS, the ICLS that has been frozen on a per-line basis for 
the several carriers that converted to price cap regulation since the 
adoption of the CALLS Order.
    89. Freezing ICLS for Rate-of-Return Companies. We seek comment on 
whether, in order to restrain the growth of ICLS in the near term while 
we undertake more comprehensive universal service reform, we should cap 
ICLS either per line or per study area for rate-of-return companies on 
an interim basis (e.g., for two years), to take effect in 2012.
    90. Middle Mile Costs. We seek comment on whether to modify our 
universal service rules to provide additional support for middle mile 
costs, which a number of parties have suggested that middle mile costs 
are a significant component of the costs of serving customers in rural 
areas. If we were to do so, how could we ensure that support is 
provided for middle mile circuits that are offered on rates, terms, and 
conditions that are just and reasonable? What effect would middle mile 
support have on incentives for small carriers to continue to seek 
efficiencies from cooperatively developing regional networks to provide 
lower cost, higher capacity backhaul capability?
    91. Separations. We seek comment on how our proposed reforms may 
affect or be affected by the existing separations process and any 
future separations reform. We also seek comment on whether the 
Commission should treat loops used to provide broadband as exclusively 
interstate.
    92. Accelerated Transition for Rate-of-Return Territories. Under 
what circumstances would it be appropriate to accelerate the transition 
proposed below of rate-of-return territories moving to an incentive 
regulation framework over the longer term, and adopt such measures in 
the near term? We also seek comment on whether to allow carriers to 
opt-in to any of the reforms on an accelerated timeframe. We intend to 
monitor progress in extending broadband under the near-term reforms 
discussed above, and we reserve the right to move more quickly to the 
long-term reforms set forth below.

D. Long-Term Vision for the Connect America Fund

    93. In the second stage of our comprehensive reform package, we 
propose to provide all funding through the Connect American Fund. The 
CAF would provide ongoing support to maintain and a