Connect America Fund; A National Broadband Plan for Our Future; Establishing Just and Reasonable Rates for Local Exchange Carriers; High-Cost Universal Service Support, 81562-81664 [2011-32411]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 76, Number 249 (Wednesday, December 28, 2011)]
[Rules and Regulations]
[Pages 81562-81664]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-32411]



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Vol. 76

Wednesday,

No. 249

December 28, 2011

Part II





Federal Communications Commission





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47 CFR Parts 0, 1, 20, et al.





Connect America Fund; A National Broadband Plan for Our Future; 
Establishing Just and Reasonable Rates for Local Exchange Carriers; 
High-Cost Universal Service Support; Final Rule

Federal Register / Vol. 76 , No. 249 / Wednesday, December 28, 2011 / 
Rules and Regulations

[[Page 81562]]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 0, 1, 20, 36, 51, 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; WT Docket No. 10-208; FCC 11-161]


Connect America Fund; A National Broadband Plan for Our Future; 
Establishing Just and Reasonable Rates for Local Exchange Carriers; 
High-Cost Universal Service Support

AGENCY: Federal Communications Commission.

ACTION: Final rule; policy statement.

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SUMMARY: In a rule published November 29, 2011, the Federal 
Communications Commission (Commission) comprehensively reformed and 
modernized the universal service and intercarrier compensation systems 
to ensure that robust, affordable voice and broadband service, both 
fixed and mobile, are available to Americans throughout the nation. The 
Commission adopted fiscally responsible, accountable, incentive-based 
policies to transition these outdated systems to the Connect America 
Fund, ensuring fairness for consumers and addressing the communications 
infrastructure challenges of today and tomorrow. The Commission uses 
measured but firm glide paths to provide industry with certainty and 
sufficient time to adapt to a changed regulatory landscape, and 
establish a framework to distribute universal service funding in the 
most efficient and technologically neutral manner possible, through 
market-based mechanisms such as competitive bidding. This document 
provides additional information to the final rule document published on 
November 29, 2011.

DATES: Effective December 29, 2011.

FOR FURTHER INFORMATION CONTACT: Amy Bender, Wireline Competition 
Bureau, (202) 418-1469, Victoria Goldberg, Wireline Competition Bureau, 
(202) 418-7353, and Margaret Wiener, Wireless Telecommunications 
Bureau, (202) 418-2176 or TTY: (202) 418-0484.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Report 
and Order (R&O) in WC Docket Nos. 10-90, 07-135, 05-337, 03-109; GN 
Docket No. 09-51; CC Docket Nos. 01-92, 96-45; WT Docket No. 10-208; 
FCC 11-161, released on November 18, 2011. The executive summary of the 
R&O, and the final rules adopted by the R&O were published in the 
Federal Register on November 29, 2011, 76 FR 73830. The full text of 
this document is available for public inspection during regular 
business hours in the FCC Reference Center, Room CY-A257, 445 12th 
Street SW., Washington, DC 20554. Or at the following Internet address: 
https://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-11-161A1.pdf.

I. Adoption of a New Principle for Universal Service

    1. In November 2010, the Federal-State Joint Board on Universal 
Service (Joint Board) recommended that the Commission ``specifically 
find that universal service support should be directed where possible 
to networks that provide advanced services, as well as voice 
services,'' and adopt such a principle pursuant to its 47 U.S.C. 
254(b)(7) authority. The Joint Board believes that this principle is 
consistent with 47 U.S.C. 254(b)(3) and would serve the public 
interest. The Commission agrees. 47 U.S.C. 254(b)(3) provides that 
consumers in rural, insular and high-cost areas should have access to 
``advanced telecommunications and information services * * * that are 
reasonably comparable to those services provided in urban areas.'' 47 
U.S.C. 254(b)(2) likewise provides that ``Access to advanced 
telecommunications and information services should be provided in all 
regions of the Nation.'' Providing support for broadband networks will 
further all of these goals.
    2. Accordingly, the Commission adopts ``support for advanced 
services'' as an additional principle upon which the Commission will 
base policies for the preservation and advancement of universal 
service, and thereby act on one of the Joint Board's 2010 
recommendations. For the reasons discussed above, the Commission finds, 
per 47 U.S.C. 254(b)(7), that this new principle is ``necessary and 
appropriate.'' Consistent with the Joint Board's recommendation, the 
Commission defines this principle as: ``Support for Advanced Services--
Universal service support should be directed where possible to networks 
that provide advanced services, as well as voice services.''

II. Goals

    3. Discussion. The Commission adopts five performance goals to 
preserve and advance service in high cost, rural, and insular areas 
through the Connect America Fund and existing support mechanisms. The 
Commission also adopts performance measures for the first, second, and 
fifth of these goals, and direct the Wireline Competition Bureau and 
the Wireless Telecommunications Bureau (Bureaus) to further develop 
other measures. The Commission delegates authority to the Bureaus to 
finalize performance measures as appropriate consistent with these 
goals.
    4. Preserve and Advance Voice Service. The first performance goal 
is to preserve and advance universal availability of voice service. In 
doing so, the Commission reaffirms its commitment to ensuring that all 
Americans have access to voice service while recognizing that, over 
time, voice service will increasingly be provided over broadband 
networks.
    5. As a performance measure for this goal, the Commission will use 
the telephone penetration rate, which measures subscription to 
telephone service. The telephone penetration rate has historically been 
used by the Commission as a proxy for network deployment and, as a 
result, will be a consistent measure of the universal service program's 
effects. The Commission will also continue to use the Census Bureau's 
Current Population Survey (CPS) to collect data regarding telephone 
penetration. Although CPS data does not specifically break out 
wireless, VoIP, or over-the-top voice options available to consumers, a 
better data set is not currently available. In recognition of the 
limitations of existing data, the Commission is considering revising 
the types of data it collects, and the Commission anticipates further 
Commission action in this proceeding, which may provide more complete 
information that can be used to evaluate this performance goal.
    6. Ensure Universal Availability of Voice and Broadband to Homes, 
Businesses, and Community Anchor Institutions. The second performance 
goal is to ensure the universal availability of modern networks capable 
of delivering broadband and voice service to homes, businesses, and 
community anchor institutions as now defined in 47 CFR 54.5. All 
Americans in all parts of the nation, including those in rural, 
insular, and high-cost areas, should have access to affordable modern 
communications networks capable of supporting the necessary 
applications that empower them to learn, work, create, and innovate. 
The Commission uses the term ``modern networks'' because supported 
equipment and services are expected to change over time to keep up with 
technological advancements.
    7. As an outcome measure for this goal, the Commission will use the 
number of residential, business, and community anchor institution 
locations

[[Page 81563]]

that newly gain access to broadband service. As an efficiency measure, 
the Commission will use the change in the number of homes, businesses, 
and community anchor institutions passed or covered per million USF 
dollars spent. To collect data, the Commission will use the National 
Broadband Map and/or Form 477. The Commission will also require CAF 
recipients to report on the number of community anchor institutions 
that newly gain access to fixed broadband service as a result of CAF 
support. Although these measures are imperfect, the Commission believes 
that they are the best available. Other options, such as the Mercatus 
Centers' suggestion of using an assessment of what might have occurred 
without the programs, are not administratively feasible at this time. 
But the Bureaus are directed to revisit these measures at a later 
point, and to consider refinements and alternatives.
    8. Ensure Universal Availability of Mobile Voice and Broadband 
Where Americans Live, Work, or Travel. The third performance goal is to 
ensure the universal availability of modern networks capable of 
delivering mobile broadband and voice service in areas where Americans 
live, work, or travel. Like the preceding parallel goal, the third 
performance goal is designed to help ensure that all Americans in all 
parts of the nation, including those in rural, insular, and high-cost 
areas, have access to affordable technologies that will empower them to 
learn, work, create, and innovate. But the Commission believes that 
ensuring universal advanced mobile coverage is an important goal on its 
own, and that the Commission will be better able track program 
performance if the Commission measures it separately.
    9. The Commission declines to adopt performance measures for this 
goal at this time but direct the Wireless Telecommunications Bureau to 
develop one or more appropriate measures for this goal.
    10. Ensure Reasonably Comparable Rates for Broadband and Voice 
Services. The fourth performance goal is to ensure that rates are 
reasonably comparable for voice as well as broadband service, between 
urban and rural, insular, and high cost areas. Rates must be reasonably 
comparable so that consumers in rural, insular, and high cost areas 
have meaningful access to these services.
    11. The Commission also declines to adopt measures for this goal at 
this time. Although the Commission proposed one outcome measure and 
asked about others in the USF/ICC Transformation NPRM, 75 FR 26906, May 
13, 2010, the Commission received only limited input on that proposal. 
The Mercatus Center agrees that ``[t]he ratio of prices to income is an 
intuitively sensible way of defining `reasonably comparable''' but 
cautions that, again, the real challenge is crafting measures that 
distinguish how the programs affect rates apart from other factors. The 
Bureaus may seek to further develop the record on the performance and 
efficiency measures suggested by the Mercatus Center, the Commission's 
original proposals, and any other measures commenters think would be 
appropriate. In undertaking this analysis, the Commission directs the 
Bureau to develop separate measures for (1) broadband services for 
homes, businesses, and community anchor institutions; and (2) mobile 
services.
    12. Minimize Universal Service Contribution Burden on Consumers and 
Businesses. The fifth performance goal is to minimize the overall 
burden of universal service contributions on American consumers and 
businesses. With this performance goal, the Commission seeks to balance 
the various objectives of 47 U.S.C. 254(b) of the Act, including the 
objective of providing support that is sufficient but not excessive so 
as to not impose an excessive burden on consumers and businesses who 
ultimately pay to support the Fund. As the Commission has previously 
recognized, ``if the universal service fund grows too large, it will 
jeopardize other statutory mandates, such as ensuring affordable rates 
in all parts of the country, and ensuring that contributions from 
carriers are fair and equitable.''
    13. As a performance measure for this goal, the Commission will 
divide the total inflation-adjusted expenditures of the existing high-
cost program and CAF (including the Mobility Fund) each year by the 
number of American households and express the measure as a monthly 
dollar figure. This calculation will be relatively straightforward and 
rely on publicly available data. As such, the measure will be 
transparent and easily verifiable. By adjusting for inflation and 
looking at the universal service burden, the Commission will be able to 
determine whether the overall burden of universal service contribution 
costs is increasing or decreasing for the typical American household. 
As an efficiency measure, the Mercatus Center suggests comparing the 
estimate of economic deadweight loss associated with the contribution 
mechanism to the deadweight loss associated with taxation. The 
Commission anticipates that the Bureaus may seek further input on this 
option and any others commenters believe would be appropriate.
    14. Program Review. Using the adopted goals and measures, the 
Commission will, as required by GPRA, monitor the performance of the 
universal service program as the Commission modernizes the current 
high-cost program and transition to the CAF. If the programs are not 
meeting these performance goals, the Commission will consider 
corrective actions. Likewise, to the extent that the adopted measures 
do not help us assess program performance, the Commission will revisit 
them as well.

III. Legal Authority

    15. 47 U.S.C. 254. The principle that all Americans should have 
access to communications services has been at the core of the 
Commission's mandate since its founding. Congress created this 
Commission in 1934 for the purpose of making ``available * * * to all 
the people of the United States * * * a rapid, efficient, Nation-wide, 
and world-wide wire and radio communication service with adequate 
facilities at reasonable charges.'' In the 1996 Act, Congress built 
upon that longstanding principle by enacting 47 U.S.C. 254. Section 254 
of the Act sets forth six principles upon which the Commission must 
``base policies for the preservation and advancement of universal 
service.'' Among these principles are that ``[q]uality services should 
be available at just, reasonable, and affordable rates,'' that 
``[a]ccess to advanced telecommunications and information services 
should be provided in all regions of the Nation,'' and that 
``[c]onsumers in all regions of the Nation * * * should have access to 
telecommunications and information services, including * * * advanced 
telecommunications and information services, that are reasonably 
comparable to those services provided in urban areas'' and at 
reasonably comparable rates.
    16. Under 47 U.S.C. 254, the Commission has express statutory 
authority to support telecommunications services that the Commission 
has designated as eligible for universal service support. Section 
254(c)(1) of the Act defines ``[u]niveral service'' as ``an evolving 
level of telecommunications services that the Commission shall 
establish periodically under this section, taking into account advances 
in telecommunications and information technologies and services.'' As 
discussed more fully below, in this R&O, the Commission adopts the 
proposal to simplify how the Commission describes the various

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supported services that the Commission historically has defined in 
functional terms (e.g., voice grade access to the PSTN, access to 
emergency services) into a single supported service designated as 
``voice telephony service.'' To the extent carriers offer traditional 
voice telephony services as telecommunications services over 
traditional circuit-switched networks, the authority to provide support 
for such services is well established.
    17. Increasingly, however, consumers are obtaining voice services 
not through traditional means but instead through interconnected VoIP 
providers offering service over broadband networks. As AT&T notes, 
``[c]ircuit-switched networks deployed primarily for voice service are 
rapidly yielding to packet-switched networks,'' which offer voice as 
well as other types of services.'' The data bear this out. As the 
Commission observed in the USF/ICC Transformation NPRM, ``[f]rom 2008 
to 2009, interconnected VoIP subscriptions increased by 22 percent, 
while switched access lines decreased by 10 percent.'' Interconnected 
VoIP services, among other things, allow customers to make real-time 
voice calls to, and receive calls from, the PSTN, and increasingly 
appear to be viewed by consumers as substitutes for traditional voice 
telephone services. Our authority to promote universal service in this 
context does not depend on whether interconnected VoIP services are 
telecommunications services or information services under the 
Communications Act.
    18. Section 254 grants the Commission the authority to support not 
only voice telephony service but also the facilities over which it is 
offered. Section 254(e) makes clear that ``[a] carrier that receives 
such [universal service] support shall use that support only for the 
provision, maintenance, and upgrading of facilities and services for 
which the support is intended.'' By referring to ``facilities'' and 
``services'' as distinct items for which federal universal service 
funds may be used, the Commission believes Congress granted the 
Commission the flexibility not only to designate the types of 
telecommunications services for which support would be provided, but 
also to encourage the deployment of the types of facilities that will 
best achieve the principles set forth in 47 U.S.C. 254(b) and any other 
universal service principle that the Commission may adopt under 47 
U.S.C. 254(b)(7). For instance, under the longstanding ``no barriers'' 
policy, the Commission allows carriers receiving high-cost support ``to 
invest in infrastructure capable of providing access to advanced 
services'' as well as supported voice services. That policy furthers 
the policy Congress set forth in 47 U.S.C. 254(b) of ``ensuring access 
to advanced telecommunications and information services throughout the 
nation.'' While this policy was enunciated in an Order adopting rule 
changes for rural incumbent carriers, by its terms it is not limited to 
such carriers. The ``no-barriers'' policy has applied, and will 
continue to apply, to all eligible telecommunications carriers (ETCs), 
and the Commission codifies it in the rules. Section 254(e) thus 
contemplates that carriers may receive federal support to enable the 
deployment of broadband facilities used to provide supported 
telecommunications services as well as other services.
    19. The Commission further concludes that the authority under 47 
U.S.C. 254 allows the Commission to go beyond the ``no barriers'' 
policy and require carriers receiving federal universal service support 
to invest in modern broadband-capable networks. Nothing in 47 U.S.C. 
254 requires the Commission simply to provide federal funds to carriers 
and hope that they will use such support to deploy broadband 
facilities. To the contrary, the Commission has a ``mandatory duty'' to 
adopt universal service policies that advance the principles outlined 
in 47 U.S.C. 254(b), and the Commission has the authority to ``create 
some inducement'' to ensure that those principles are achieved. 
Congress made clear in 47 U.S.C. 254 that the deployment of, and access 
to, information services--including ``advanced'' information services--
are important components of a robust and successful federal universal 
service program. Furthermore, the Commission adopts the recommendation 
of the Federal-State Joint Board on Universal Service to establish a 
new universal service principle pursuant to 47 U.S.C. 254(b)(7) that 
universal service support should be directed where possible to networks 
that provide advanced services, as well as voice services.'' In today's 
communications environment, achievement of these principles requires, 
at a minimum, that carriers receiving universal service support invest 
in and deploy networks capable of providing consumers with access to 
modern broadband capabilities, as well as voice telephony services. 
Accordingly, as explained in greater detail below, the Commission will 
exercise the authority under 47 U.S.C. 254 to require that carriers 
receiving support--both CAF support, including Mobility Fund support, 
and support under the existing high-cost support mechanisms--offer 
broadband capabilities to consumers. The Commission concludes that this 
approach is sufficient to ensure access to voice and broadband services 
and, therefore, the Commission does not, at this time, add broadband to 
the list of supported services, as some have urged.
    20. 47 U.S.C. 1302. The Commission also has independent authority 
under 47 U.S.C. 1302 of the Telecommunications Act of 1996 to fund the 
deployment of broadband networks. In 47 U.S.C. 1302, Congress 
recognized the importance of ubiquitous broadband deployment to 
Americans' civic, cultural, and economic lives and, thus, instructed 
the Commission to ``encourage the deployment on a reasonable and timely 
basis of advanced telecommunications capability to all Americans.'' Of 
particular importance, Congress adopted a definition of ``advanced 
telecommunications capability'' that is not confined to a particular 
technology or regulatory classification. Rather, ```advanced 
telecommunications capability' is defined, without regard to any 
transmission media or technology, as high-speed, switched, broadband 
telecommunications capability that enables users to originate and 
receive high-quality voice, data, graphics, and video communications 
using any technology.'' Section 1302 of the Act further requires the 
Commission to ``determine whether advanced telecommunications 
capability is being deployed to all Americans in a reasonable and 
timely fashion'' and, if the Commission concludes that it is not, to 
``take immediate action to accelerate deployment of such capability by 
removing barriers to infrastructure investment and by promoting 
competition in the telecommunications market.'' The Commission has 
found that broadband deployment to all Americans has not been 
reasonable and timely and observed in its most recent broadband 
deployment report that ``too many Americans remain unable to fully 
participate in our economy and society because they lack broadband.'' 
This finding triggers the duty under 47 U.S.C. 1302(b) to ``remov[e] 
barriers to infrastructure investment'' and ``promot[e] competition in 
the telecommunications market'' in order to accelerate broadband 
deployment throughout the Nation.
    21. Providing support for broadband networks helps achieve 47 
U.S.C. 1302(b)'s objectives. First, the Commission has recognized that 
one of the most significant barriers to investment in broadband 
infrastructure

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is the lack of a ``business case for operating a broadband network'' in 
high-cost areas ``[i]n the absence of programs that provide additional 
support.'' Extending federal support to carriers deploying broadband 
networks in high-cost areas will thus eliminate a significant barrier 
to infrastructure investment and accelerate broadband deployment to 
unserved and underserved areas of the Nation. The deployment of 
broadband infrastructure to all Americans will in turn make services 
such as interconnected VoIP service accessible to more Americans.
    22. Second, supporting broadband networks helps ``promot[e] 
competition in the telecommunications market,'' particularly with 
respect to voice services. As the Commission has long recognized, 
``interconnected VoIP service `is increasingly used to replace analog 
voice service.''' Thus, the Commission previously explained that 
requiring interconnected VoIP providers to contribute to federal 
universal service support mechanisms promoted competitive neutrality 
because it ``reduces the possibility that carriers with universal 
service obligations will compete directly with providers without such 
obligations.'' Just as ``we do not want contribution obligations to 
shape decisions regarding the technology that interconnected VoIP 
providers use to offer voice services to customers or to create 
opportunities for regulatory arbitrage,'' the Commission does not want 
to create regulatory distinctions that serve no universal service 
purpose or that unduly influence the decisions providers will make with 
respect to how best to offer voice services to consumers. The 
``telecommunications market''--which includes interconnected VoIP and 
by statutory definition is broader than just telecommunications 
services--will be more competitive, and thus will provide greater 
benefits to consumers, as a result of the decision to support broadband 
networks, regardless of regulatory classification.
    23. By exercising the authority under 47 U.S.C. 1302 in this 
manner, the Commission furthers Congress's objective of 
``accelerat[ing] deployment'' of advanced telecommunications capability 
``to all Americans.'' Under the approach, federal support will not turn 
on whether interconnected VoIP services or the underlying broadband 
service falls within traditional regulatory classifications under the 
Communications Act. Rather, the approach focuses on accelerating 
broadband deployment to unserved and underserved areas, and allows 
providers to make their own judgments as to how best to structure their 
service offerings in order to make such deployment a reality.
    24. The Commission disagrees with commenters who assert that the 
Commission lacks authority under 47 U.S.C. 1302(b) to support broadband 
networks. While 47 U.S.C. 1302(a) imposes a general duty on the 
Commission to encourage broadband deployment through the use of ``price 
cap regulation, regulatory forbearance, measures that promote 
competition in the local telecommunications market, or other regulating 
methods that remove barriers to infrastructure investment,'' 47 U.S.C. 
1302(b) is triggered by a specific finding that broadband capability is 
not being ``deployed to all Americans in a reasonable and timely 
fashion.'' Upon making that finding (which the Commission has done), 47 
U.S.C. 1302(b) requires the Commission to ``take immediate action to 
accelerate'' broadband deployment. Given the statutory structure, the 
Commission reads 47 U.S.C. 1302(b) as conferring on the Commission the 
additional authority, beyond what the Commission possesses under 47 
U.S.C. 1302(a) or elsewhere in the Act, to take steps necessary to 
fulfill Congress's broadband deployment objectives. Indeed, it is hard 
to see what additional work 47 U.S.C. 1302(b) does if it is not an 
independent source of statutory authority.
    25. The Commission also rejects the view that providing support for 
broadband networks under 47 U.S.C. 1302(b) conflicts with 47 U.S.C. 
254, which defines universal service in terms of telecommunications 
services. Information services are not excluded from 47 U.S.C. 254 
because of any policy judgment made by Congress. To the contrary, 
Congress contemplated that the federal universal service program would 
promote consumer access to both advanced telecommunications and 
advanced information services ``in all regions of the Nation.'' When 
Congress enacted the 1996 Act, most consumers accessed the Internet 
through dial-up connections over the PSTN, and broadband capabilities 
were provided over tariffed common carrier facilities. Interconnected 
VoIP services had only a nominal presence in the marketplace in 1996. 
It was not until 2002 that the Commission first determined that one 
form of broadband--cable modem service--was a single offering of an 
information service rather than separate offerings of 
telecommunications and information services, and only in 2005 did the 
Commission conclude that wireline broadband service should be governed 
by the same regulatory classification. Thus, marketplace and 
technological developments and the Commission's determinations that 
broadband services may be offered as information services have had the 
effect of removing such services from the scope of the explicit 
reference to ``universal service'' in 47 U.S.C. 254(c). Likewise, 
Congress did not exclude interconnected VoIP services from the federal 
universal service program; indeed, there is no reason to believe it 
specifically anticipated the development and growth of such services in 
the years following the enactment of the 1996 Act.
    26. The principles upon which the Commission ``shall base policies 
for the preservation and advancement of universal service'' make clear 
that supporting networks used to offer services that are or may be 
information services for purposes of regulatory classification is 
consistent with Congress's overarching policy objectives. For example, 
47 U.S.C. 254(b)(2)'s principle that ``[a]ccess to advanced 
telecommunications and information services should be provided in all 
regions of the Nation'' dovetails comfortably with 47 U.S.C. 1302(b)'s 
policy that ``advanced telecommunications capability [be] deployed to 
all Americans in a reasonable and timely fashion.'' Our decision to 
exercise authority under 47 U.S.C. 1302 does not undermine 47 U.S.C. 
254's universal service principles, but rather ensures their 
fulfillment. By contrast, limiting federal support based on the 
regulatory classification of the services offered over broadband 
networks as telecommunications services would exclude from the 
universal service program providers who would otherwise be able to 
deploy broadband infrastructure to consumers. The Commission sees no 
basis in the statute, the legislative history of the 1996 Act, or the 
record of this proceeding for concluding that such a constricted 
outcome would promote the Congressional policy objectives underlying 47 
U.S.C. 254 and 1302.
    27. Finally, the Commission notes the limited extent to which the 
Commission is relying on 47 U.S.C. 706(b) in this proceeding. 
Consistent with the longstanding policy of minimizing regulatory 
distinctions that serve no universal service purpose, the Commission is 
not adopting a separate universal service framework under 47 U.S.C. 
1302(b). Instead, the Commission is relying on 47 U.S.C. 1302(b) as an 
alternative basis to 47 U.S.C. 254 to the extent necessary to ensure 
that the

[[Page 81566]]

federal universal service program covers services and networks that 
could be used to offer information services as well as 
telecommunications services. Carriers seeking federal support must 
still comply with the same universal service rules and obligations set 
forth in 47 U.S.C. 254 and 214, including the requirement that such 
providers be designated as eligible to receive support, either from 
state commissions or, if the provider is beyond the jurisdiction of the 
state commission, from this Commission. In this way, the Commission 
ensures that exercise of 47 U.S.C. 1302(b) authority will advance, 
rather than detract from, the universal service principles established 
under 47 U.S.C. 254 of the Act.

IV. Public Interest Obligations

A. Voice Service

    28. Discussion. The Commission determines that it is appropriate to 
describe the core functionalities of the supported services as ``voice 
telephony service.'' Some commenters support redefining the voice 
functionalities as voice telephony services, while others oppose the 
change, arguing that the current list of functionalities remains 
important today, the term ``voice telephony'' is too vague, and such a 
modification may result in a lower standard of voice service. Given 
that consumers are increasingly obtaining voice services over broadband 
networks as well as over traditional circuit switched telephone 
networks, the Commission agrees with commenters that urge the 
Commission to focus on the functionality offered, not the specific 
technology used to provide the supported service.
    29. The decision to classify the supported services as voice 
telephony should not result in a lower standard of voice service: Many 
of the enumerated services are universal today, and the Commission 
requires eligible providers to continue to offer those particular 
functionalities as part of voice telephony. Rather, the modified 
definition simply shifts to a technologically neutral approach, 
allowing companies to provision voice service over any platform, 
including the PSTN and IP networks. This modification will benefit both 
providers (as they may invest in new infrastructure and services) and 
consumers (who reap the benefits of the new technology and service 
offerings). Accordingly, to promote technological neutrality while 
ensuring that the new approach does not result in lower quality 
offerings, the Commission amends 47 CFR 54.101 of the Commission rules 
to specify that the functionalities of eligible voice telephony 
services include voice grade access to the public switched network or 
its functional equivalent; minutes of use for local service provided at 
no additional charge to end users; toll limitation to qualifying low-
income consumers; and access to the emergency services 911 and enhanced 
911 services to the extent the local government in an eligible 
carrier's service area has implemented 911 or enhanced 911 systems. The 
Commission finds that changes in the marketplace allow for the 
elimination of the requirements to provide single-party service, 
operator services, and directory assistance.
    30. Today, all ETCs, whether designated by a state commission or 
this Commission, are required to offer the supported service--voice 
telephony service--throughout their designated service area. ETCs also 
must provide Lifeline service throughout their designated service area. 
In the USF/ICC Transformation FNPRM, the Commission seeks comment on 
modifying incumbent ETCs' obligations to provide voice service in 
situations where the incumbent's high-cost universal service funding is 
eliminated, for example as a result of a competitive bidding process in 
which another ETC wins universal support for an area and is subject to 
accompanying voice and broadband service obligations. (Throughout this 
R&O, unless otherwise specified, the term ``ETC'' does not include ETCs 
that are designated only for the purposes of the low income program.)
    31. As a condition of receiving support, the Commission requires 
ETCs to offer voice telephony as a standalone service throughout their 
designated service area, meaning that consumers must not be required to 
purchase any other services (e.g., broadband) in order to purchase 
voice service. As indicated above, ETCs may use any technology in the 
provision of voice telephony service.
    32. Additionally, consistent with the 47 U.S.C. 254(b) principle 
that ``[c]onsumers in all regions of the Nation * * * should have 
access to telecommunications and information services * * * that are 
available at rates that are reasonably comparable to rates charged for 
similar services in urban areas,'' ETCs must offer voice telephony 
service, including voice telephony service offered on a standalone 
basis, at rates that are reasonably comparable to urban rates. The 
Commission finds that these requirements are appropriate to help ensure 
that consumers have access to voice telephony service that best fits 
their particular needs.
    33. The Commission declines to preempt state obligations regarding 
voice service, including COLR obligations, at this time. Proponents of 
such preemption have failed to support their assertion that state 
service obligations are inconsistent with federal rules and burden the 
federal universal service mechanisms, nor have they identified any 
specific legacy service obligations that represent an unfunded mandate 
that make it infeasible for carriers to deploy broadband in high-cost 
areas. Carriers must therefore continue to satisfy state voice service 
requirements.
    34. That said, the Commission encourages states to review their 
respective regulations and policies in light of these changes and 
revisit the appropriateness of maintaining those obligations for 
entities that no longer receive federal high-cost universal service 
funding, just as the Commission intends to explore the necessity of 
maintaining ETC obligations when ETCs no longer are receiving funding. 
For example, states could consider providing state support directly to 
the incumbent LEC to continue providing voice service in areas where 
the incumbent is no longer receiving federal high-cost universal 
service support or, alternatively, could shift COLR obligations from 
the existing incumbent to another provider who is receiving federal or 
state universal service support in the future.
    35. Voice Rates. The Commission will consider rural rates for voice 
service to be ``reasonably comparable'' to urban voice rates under 47 
U.S.C. 254(b)(3) if rural rates fall within a reasonable range of urban 
rates for reasonably comparable voice service. Consistent with the 
existing precedent, the Commission will presume that a voice rate is 
within a reasonable range if it falls within two standard deviations 
above the national average.
    36. Because the data used to calculate the national average price 
for voice service is out of date, the Commission directs the Wireline 
Competition Bureau and the Wireless Telecommunications Bureau to 
develop and conduct an annual survey of voice rates in order to compare 
urban voice rates to the rural voice rates that ETCs will be reporting 
to us. The results of this survey will be published annually. For 
purposes of conducting the survey, the Bureaus should develop a 
methodology to survey a representative sample of facilities-based fixed 
voice service providers taking into account the relative categories of 
fixed voice providers as determined in the most recent FCC Form 477 
data collection. In the USF/

[[Page 81567]]

ICC Transformation FNPRM, the Commission seeks comment on whether to 
collect separate data on fixed and mobile voice rates and whether fixed 
and mobile voice services should have different benchmarks for purposes 
of determining reasonable comparability.

B. Broadband Service

    37. As a condition of receiving federal high-cost universal service 
support, all ETCs, whether designated by a state commission or the 
Commission, will be required to offer broadband service in their 
supported area that meets certain basic performance requirements and to 
report regularly on associated performance measures. Although the 
Commission does not at this time require it, the Commission expects 
that ETCs that offer standalone broadband service in any portion of 
their service territory will also offer such service in all areas that 
receive CAF support. By standalone service, the Commission means that 
consumers are not required to purchase any other service (e.g., voice 
or video) in order to purchase broadband service. ETCs must make this 
broadband service available at rates that are reasonably comparable to 
offerings of comparable broadband services in urban areas.
    38. In developing these performance requirements, the Commission 
seeks to ensure that the performance of broadband available in rural 
and high cost areas is ``reasonably comparable'' to that available in 
urban areas. All Americans should have access to broadband that is 
capable of enabling the kinds of key applications that drive efforts to 
achieve universal broadband, including education (e.g., distance/online 
learning), health care (e.g., remote health monitoring), and person-to-
person communications (e.g., VoIP or online video chat with loved ones 
serving overseas).
1. Broadband Performance Metrics
    39. Broadband services in the market today vary along several 
important dimensions. As discussed more fully below, the Commission 
focuses on speed, latency, and capacity as three core characteristics 
that affect what consumers can do with their broadband service, and the 
Commission therefore includes requirements related to these three 
characteristics in defining ETCs' broadband service obligations.
    40. For each of these characteristics, the Commission requires that 
funding recipients offer service that is reasonably comparable to 
comparable services offered in urban areas. By limiting reasonable 
comparability to ``comparable services,'' the Commission is intending 
to ensure that fixed broadband services in rural areas are compared to 
fixed broadband services in urban areas and mobile broadband services 
in rural areas are compared to mobile broadband services in rural 
areas. The actual download and upload speeds, latency, and usage limits 
(if any) for providers' broadband must be reasonably comparable to the 
typical speeds, latency, and usage limits (if any) of comparable 
broadband services in urban areas. Funding recipients may use any 
wireline, wireless, terrestrial, or satellite technology, or 
combination of technologies, to deliver service that satisfies this 
requirement.
    41. Speed. Users and providers commonly refer to the bandwidth of a 
broadband connection as its ``speed.'' The bandwidth (speed) of a 
connection indicates the rate at which information can be transmitted 
by that connection, typically measured in bits, kilobits (kbps), or 
megabits per second (Mbps). The speed of consumers' broadband 
connections affects their ability to access and utilize Internet 
applications and content. To ensure that consumers are getting the full 
benefit of broadband, the Commission requires funding recipients to 
provide broadband that meets performance metrics for actual speeds, 
measured as described below, rather than ``advertised'' or ``up to'' 
metrics.
    42. In the past two Broadband Progress Reports, the Commission 
found that the availability of residential broadband connections that 
actually enable an end user to download content from the Internet at 4 
Mbps and to upload such content at 1 Mbps over the broadband provider's 
network was a reasonable benchmark for the availability of ``advanced 
telecommunications capability,'' defined by the statute as ``high-
speed, switched, broadband telecommunications capability that enables 
users to originate and receive high-quality voice, data, graphics, and 
video telecommunications using any technology.'' This conclusion was 
based on the Commission's examination of overall Internet traffic 
patterns, which revealed that consumers increasingly are using their 
broadband connections to view high-quality video, and want to be able 
to do so while still using basic functions such as email and web 
browsing. The evidence shows that streaming standard definition video 
in near real-time consumes anywhere from 1-5 Mbps, depending on a 
variety of factors. This conclusion also was drawn from the National 
Broadband Plan, which, based on an analysis of user behavior, demands 
this usage places on the network, and recent experience in network 
evolution, recommended as a national broadband availability target that 
every household in America have access to affordable broadband service 
offering actual download speeds of at least 4 Mbps and actual upload 
speeds of at least 1 Mbps.
    43. Given the foregoing, other than for the Phase I Mobility Fund, 
the Commission adopts an initial minimum broadband speed benchmark for 
CAF recipients of 4 Mbps downstream and 1 Mbps upstream. Broadband 
connections that meet this speed threshold will provide subscribers in 
rural and high cost areas with the ability to use critical broadband 
applications in a manner reasonably comparable to broadband subscribers 
in urban areas. Requiring 4 Mbps/1 Mbps to be provided to all 
locations, including the more distant locations on a landline network 
and regardless of the served location's position in a wireless network, 
implies that customers located closer to the wireline switch or 
wireless tower will be capable of receiving service in excess of the 
this minimum standard.
    44. Some commenters, including DSL and mobile wireless broadband 
providers, observe that the 1 Mbps upload speed requirement in 
particular could impose costs well in excess of the benefits of 1 Mbps 
versus 768 kilobits per second (kbps) upstream. In general, the 
Commission expects new installations to provide speeds of at least 1 
Mbps upstream. However, to the extent a CAF recipient can demonstrate 
that support is insufficient to enable 1 Mbps upstream for all 
locations, temporary waivers of the upstream requirement for some 
locations will be available. The Commission delegates authority to the 
Wireline Competition Bureau and Wireless Telecommunications Bureau to 
address such waiver requests. The Commission expects that those 
facilities that are not currently capable of providing the minimum 
upstream speed will eventually be upgraded, consistent with the build-
out requirements adopted below, with scalable technology capable of 
meeting future speed increases.
    45. Latency. Latency is a measure of the time it takes for a packet 
of data to travel from one point to another in a network. Because many 
communication protocols depend on an acknowledgement that packets were 
received successfully, or otherwise involve transmission of data 
packets back and forth along a path in the network, latency is often 
measured by round-trip time in milliseconds. Latency affects a 
consumer's ability to use real-time applications, including interactive

[[Page 81568]]

voice or video communication, over the network. The Commission requires 
ETCs to offer sufficiently low latency to enable use of real-time 
applications, such as VoIP. The Commission's broadband measurement test 
results showed that most terrestrial wireline technologies could 
reliably provide latency of less than 100 milliseconds.
    46. Capacity. Capacity is the total volume of data sent and/or 
received by the end user over a period of time. It is often measured in 
gigabytes (GB) per month. Several broadband providers have imposed 
monthly data usage limits, restricting users to a predetermined 
quantity of data, and these limits typically vary between fixed and 
mobile services. The terms of service may include an overage fee if a 
consumer exceeds the monthly limit. Some commenters recommended the 
Commission specifies a minimum usage limit.
    47. Although at this time the Commission declines to adopt specific 
minimum capacity requirements for CAF recipients, the Commission 
emphasizes that any usage limits imposed by an ETC on its USF-supported 
broadband offering must be reasonably comparable to usage limits for 
comparable broadband offerings in urban areas (which could include, for 
instance, use of a wireless data card if it can provide the performance 
characteristics described herein). In particular, ETCs whose support is 
predicated on offering of a fixed broadband service--namely, all ETCs 
other than recipients of the Phase I Mobility Funds--must allow usage 
at levels comparable to residential terrestrial fixed broadband service 
in urban areas. The Commission defines terrestrial fixed broadband 
service as one that serves end users primarily at fixed endpoints using 
stationary equipment, such as the modem that connects an end user's 
home router, computer or other Internet access device to the network. 
This term includes fixed wireless broadband services (including those 
offered over unlicensed spectrum).
    48. In 2009, residential broadband users who subscribed to fixed 
broadband service with speeds between 3 Mbps and 5 Mbps used, on 
average, 10 GB of capacity per month, and annual per-user growth was 
between 30 and 35 percent. AT&T's DSL usage limit is 150 GB and its U-
Verse offering has a 250 GB limit. Since 2008, Comcast has had a 250 GB 
monthly data usage threshold on residential accounts. Without endorsing 
or approving of these or other usage limits, the Commission provides 
guidance by noting that a usage limit significantly below these current 
offerings (e.g., a 10 GB monthly data limit) would not be reasonably 
comparable to residential terrestrial fixed broadband in urban areas. 
(This should not be interpreted to mean that the Commission intends to 
regulate usage limits.) A 250 GB monthly data limit for CAF-funded 
fixed broadband offerings would likely be adequate at this time because 
250 GB appears to be reasonably comparable to major current urban 
broadband offerings. The Commission recognizes, however, that both 
pricing and usage limitations change over time. The Commission 
delegates authority to the Wireline Competition Bureau and Wireless 
Telecommunications Bureau to monitor urban broadband offerings, 
including by conducting an annual survey, in order to specify an 
appropriate minimum for usage allowances, and to adjust such a minimum 
over time.
    49. Similarly, for Mobility Fund Phase I, the Commission declines 
to adopt a specific minimum capacity requirement that supported 
providers must offer mobile broadband users. However, the Commission 
emphasizes that any usage limits imposed by a provider on its mobile 
broadband offerings supported by the Mobility Fund must be reasonably 
comparable to any usage limits for mobile comparable broadband 
offerings in urban areas.
    50. Areas with No Terrestrial Backhaul. Recognizing that satellite 
backhaul may limit the performance of broadband networks as compared to 
terrestrial backhaul, the Commission relaxes the broadband public 
interest obligation for carriers providing fixed broadband that are 
compelled to use satellite backhaul facilities. The Regulatory 
Commission of Alaska reports that ``for many areas of Alaska, satellite 
links may be the only viable option to deploy broadband.'' Carriers 
seeking relaxed public interest obligations because they lack the 
ability to obtain terrestrial backhaul--either fiber, microwave, or 
other technology--and are therefore compelled to rely exclusively on 
satellite backhaul in their study area, must certify annually that no 
terrestrial backhaul options exist, and that they are unable to satisfy 
the broadband public interest obligations adopted above due to the 
limited functionality of the available satellite backhaul facilities. 
Any such funding recipients must offer broadband service speeds of at 
least 1 Mbps downstream and 256 kbps upstream within the supported area 
served by satellite middle-mile facilities. Latency and capacity 
requirements discussed above will not apply to this subset of 
providers. Buildout obligations--which are dependent on the mechanism 
by which a carrier receives funding--remain the same for this class of 
carriers. The Commission will monitor and review the public interest 
obligations for satellite backhaul areas. To the extent that new 
terrestrial backhaul facilities are constructed, or existing facilities 
improve sufficiently to meet the public interest obligations, the 
Commission requires funding recipients to satisfy the relevant 
broadband public interest obligations in full within twelve months of 
the new backhaul facilities becoming commercially available. This 
limited exemption is only available to providers that have no access in 
their study area to any terrestrial backhaul facilities, and does not 
apply to any providers that object to the cost of backhaul facilities. 
Similarly, providers relying on terrestrial backhaul facilities today 
will not be allowed this exemption if they elect to transition to 
satellite backhaul facilities.
    51. Community Anchor Institutions. The Commission expects that ETCs 
will likely offer broadband at greater speeds to community anchor 
institutions in rural and high cost areas, although the Commission does 
not set requirements at this time, as the 4 Mbps/1 Mbps standard will 
be met in the more rural areas of an ETC's service territory, and 
community anchor institutions are typically located in or near small 
towns and more inhabited areas of rural America. There is nothing in 
this R&O that requires a carrier to provide broadband service to a 
community anchor institution at a certain rate, but the Commission 
acknowledges that community anchor institutions generally require more 
bandwidth than a residential customer, and expect that ETCs would 
provide higher bandwidth offerings to community anchor institutions in 
high-cost areas at rates that are reasonably comparable to comparable 
offerings to community anchor institutions in urban areas.
    52. The Commission also expects ETCs to engage with community 
anchor institutions in the network planning stages with respect to the 
deployment of CAF-supported networks. The Commission requires ETCs to 
identify and report on the community anchor institutions that newly 
gain access to fixed broadband service as a result of CAF support. In 
addition, the Wireline Competition Bureau will invite further input on 
the unique needs of community anchor institutions as it develops a 
forward-looking cost model to estimate the cost of serving locations, 
including community anchor locations, in price cap territories.

[[Page 81569]]

    53. Broadband Buildout Obligations. All CAF funding comes with 
obligations to build out broadband within an ETC's service area, 
subject to certain limitations. The timing and extent of these 
obligations varies across the different CAF mechanisms. However, all 
broadband buildout obligations for fixed broadband are conditioned on 
not spending the funds to serve customers in areas already served by an 
``unsubsidized competitor.'' The Commission defines an unsubsidized 
competitor as a facilities-based provider of residential terrestrial 
fixed voice and broadband service. The best data available at this time 
to determine whether broadband is available from an unsubsidized 
competitor at speeds at or above the 4 Mbps/1 Mbps speed threshold will 
likely be data on broadband availability at 3 Mbps downstream and 768 
kbps upstream, which is collected for the National Broadband Map and 
through the Commission's Form 477. Such data may therefore be used as a 
proxy for the availability of 4 Mbps/1 Mbps broadband. Depending on the 
anticipated reform to the Form 477 data collection, the Commission may 
have additional data in the future upon which the Commission may rely.
    54. The Commission limits this definition to fixed, terrestrial 
providers because the Commission thinks these limitations will 
disqualify few, if any, broadband providers that meet CAF speed, 
capacity, or latency minimums for all locations within relevant areas 
of comparison, while significantly easing administration of the 
definition. For example, the record suggests that satellite providers 
are generally unable to provide affordable voice and broadband service 
that meets the minimum capacity requirements without the aid of a 
subsidy: Consumer satellite services have limited capacity allowances 
today, and future satellite services appear unlikely to offer capacity 
reasonably comparable to urban offerings in the absence of universal 
service support. Likewise, while 4G mobile broadband services may meet 
the speed requirements in many locations, meeting minimum speed and 
capacity guarantees is likely to prove challenging over larger areas, 
particularly indoors. And because the performance offered by mobile 
services varies by location, it would be very difficult and costly for 
a CAF recipient or the Commission to evaluate whether such a service 
met the performance requirements at all homes and businesses within a 
study area, census block, or other required area. A wireless provider 
that currently offers mobile service can become an ``unsubsidized 
competitor,'' however, by offering a fixed wireless service that 
guarantees speed, capacity, and latency minimums will be met at all 
locations with the relevant area. Taken together, these considerations 
persuade us that the advantages of limiting the definition of 
unsubsidized providers outweigh any potential concerns that the 
Commission may unduly disqualify service providers that otherwise meet 
the performance requirements. As mobile and satellite services develop 
over time, the Commission will revisit the definition of ``unsubsidized 
competitor'' as warranted. Recognizing the benefits of certainty, 
however, the Commission does not anticipate changing the definition for 
the next few years.
    55. Because most of these funding mechanisms are aimed at 
immediately narrowing broadband deployment gaps, both fixed and mobile, 
their performance benchmarks reflect technical capabilities and user 
needs that are expected at this time to be suitable for today and the 
next few years. However, the Commission must also lay the groundwork 
for longer-term evolution of CAF broadband obligations, as the 
Commission expects technical capabilities and user needs will continue 
to evolve. The Commission therefore commits to monitoring trends in the 
performance of urban broadband offerings through the survey data the 
Commission will collect and rural broadband offerings through the 
reporting data the Commission will collect, and to initiating a 
proceeding no later than the end of 2014 to review the performance 
requirements and ensure that CAF continues to support broadband service 
that is reasonably comparable to broadband service in urban areas.
    56. In advance of that future proceeding, the Commission relies on 
its predictive judgment to provide guidance to CAF recipients on 
metrics that will satisfy the expectation that they invest the public's 
funds in robust, scalable broadband networks. The National Broadband 
Plan estimated that by 2017, average advertised speeds for residential 
broadband would be approximately 5.76 Mbps downstream. Applying growth 
rates measured by Akamai, one finds a projected average actual 
downstream speed by 2017 of 5.2 Mbps, and a projected average actual 
peak downstream speed of 6.86 Mbps.
    57. Based on these projections, the Commission establishes a 
benchmark of 6 Mbps downstream and 1.5 Mbps upstream for broadband 
deployments in later years of CAF Phase II.
2. Measuring and Reporting Broadband
    58. The Commission will require recipients of funding to test their 
broadband networks for compliance with speed and latency metrics and 
certify to and report the results to the Universal Service 
Administrative Company (USAC) on an annual basis. These results will be 
subject to audit. In addition, as part of the federal-state partnership 
for universal service, the Commission expects and encourage states to 
assist us in monitoring and compliance and therefore require funding 
recipients to send a copy of their annual broadband performance report 
to the relevant state or Tribal government.
    59. Commenters generally supported testing and reporting of 
broadband performance. While some preferred only certifications without 
periodic testing, the Commission finds that requiring ETCs to submit 
verifiable test results to USAC and the relevant state commissions will 
strengthen the ability of this Commission and the states to ensure that 
ETCs that receive universal service funding are providing at least the 
minimum broadband speeds, and thereby using support for its intended 
purpose as required by 47 U.S.C. 254(e).
    60. The Commission adopts the proposal in the USF/ICC 
Transformation NPRM that actual speed and latency be measured on each 
ETC's access network from the end-user interface to the nearest 
Internet access point. The end-user interface end-point would be the 
modem, the customer premise equipment typically managed by a broadband 
provider as the last connection point to the managed network, while the 
nearest Internet access point end-point would be the Internet gateway, 
the closest peering point between the broadband provider and the public 
Internet for a given consumer connection. The results of Commission 
testing of wired networks suggest that ``broadband performance that 
falls short of expectations is caused primarily by the segment of an 
ISP's network from the consumer gateway to the ISP's core network.''
    61. In the USF/ICC Transformation FNPRM, the Commission seeks 
further comment on the specific methodology ETCs should use to measure 
the performance of their broadband services subject to these general 
guidelines, and the format in which funding recipients should report 
their results. The Commission directs the Wireline Competition Bureau, 
the Wireless Telecommunications Bureau, and the Office of Engineering 
and Technology to work together to refine the methodology

[[Page 81570]]

for such testing, which the Commission anticipates will be implemented 
in 2013.
3. Reasonably Comparable Rates for Broadband Service
    62. As with voice services, for broadband services the Commission 
will consider rural rates to be ``reasonably comparable'' to urban 
rates under 47 U.S.C. 254(b)(3) if rural rates fall within a reasonable 
range of urban rates for reasonably comparable broadband service. 
However, the Commission has never compared broadband rates for purposes 
of 47 U.S.C. 254(b)(3), and therefore the Commission directs the 
Bureaus to develop a specific methodology for defining that reasonable 
range, taking into account that retail broadband service is not rate 
regulated and that retail offerings may be defined by price, speed, 
usage limits, if any, and other elements. In the USF/ICC Transformation 
FNPRM, the Commission seeks comment on how specifically to define a 
reasonable range.
    63. The Commission also delegates to the Wireline Competition 
Bureau and Wireless Telecommunications Bureau the authority to conduct 
an annual survey of urban broadband rates, if necessary, in order to 
derive a national range of rates for broadband service. The Commission 
does not currently have sufficient data to establish such a range for 
broadband pricing, and are unaware of any adequate third-party sources 
of data for the relevant levels of service to be compared. The 
Commission therefore delegates authority to the Bureaus to determine 
the appropriate components of such a survey. By conducting its own 
survey, the Commission believes it will be able to tailor the data 
specifically to the need to satisfy the statutory obligation. The 
Commission requires recipients of funding to provide information 
regarding their pricing for service offerings, as described more fully 
below. The Commission also encourages input from the states and other 
stakeholders as the Bureaus develop the survey.

V. Establishing the Connect America Fund

A. The Budget

    64. Discussion. For the first time, the Commission now establishes 
a defined budget for the high-cost component of the universal service 
fund. For purposes of this budget, the term ``high-cost'' includes all 
support mechanisms in place as of the date of this order, specifically, 
high-cost loop support, safety net support, safety valve support, local 
switching support, interstate common line support, high cost model 
support, and interstate access support, as well as the new Connect 
America Fund, which includes funding to support and advance networks 
that provide voice and broadband services, both fixed and mobile, and 
funding provided in conjunction with the recovery mechanism adopted as 
part of intercarrier compensation reform.
    65. The Commission believes the establishment of such a budget will 
best ensure that the Commission has in place ``specific, predictable, 
and sufficient'' funding mechanisms to achieve the universal service 
objectives. The Commission is taking important steps to control costs 
and improve accountability in USF, and the estimates of the funding 
necessary for components of the CAF and legacy high-cost mechanisms 
represent its predictive judgment as to how best to allocate limited 
resources at this time. The Commission anticipates that it may revisit 
and adjust accordingly the appropriate size of each of these programs 
by the end of the six-year period the Commission budgets for today, 
based on market developments, efficiencies realized, and further 
evaluation of the effect of these programs in achieving the goals.
    66. Importantly, establishing a CAF budget ensures that individual 
consumers will not pay more in contributions due to these reforms. 
Indeed, were the CAF to significantly raise the end-user cost of 
services, it could undermine the broader policy objectives to promote 
broadband and mobile deployment and adoption.
    67. The Commission therefore establishes an annual funding target, 
set at the same level as the current estimate for the size of the high-
cost program for FY 2011, of no more than $4.5 billion. The $4