Connect America Fund; a National Broadband Plan for Our Future; Establishing Just and Reasonable Rates for Local Exchange Carriers; High-Cost Universal Service Support, 14297-14303 [2012-5590]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 77, Number 47 (Friday, March 9, 2012)]
[Rules and Regulations]
[Pages 14297-14303]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-5590]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 51 and 54

[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; DA 12-147]


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.

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SUMMARY: In this document, the Federal Communications Commission 
clarifies certain rules. This document also modifies certain initial 
filing deadlines required to comply with the Paperwork Reduction Act 
requirements, and finds good cause to delete certain rules that are now 
obsolete.

DATES: Effective April 9, 2012, except for Sec. Sec.  54.313(a)(9), 
54.313(f)(2), and 54.1003(b), which contain information collection 
requirements that are not effective until approved by the Office of 
Management and Budget. The Federal Communications Commission will 
publish a document in the Federal Register announcing the effective 
date for those sections.

[[Page 14298]]


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 Wireline 
Competition Bureau and the Wireless Telecommunications Bureau's Order 
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; DA 12-147, released 
on February 3, 2012. 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://transition.fcc.gov/Daily_Releases/Daily_Business/2012/db0203/DA-12-147A1.pdf.

I. Introduction

    1. In the USF/ICC Transformation Order, 76 FR 76623, December 8, 
2011, the Commission delegated to the Wireline Competition Bureau and 
the Wireless Telecommunications Bureau (Bureaus) the authority to 
revise and clarify rules as necessary to ensure that the reforms 
adopted in the Order are properly reflected in the rules. In this 
Order, the Bureaus act pursuant to this delegated authority to revise 
and clarify certain rules, and act pursuant to authority delegated to 
the Bureaus in Sec. Sec.  0.91, 0.131, 0.201(d), 0.291, and 0.331 of 
the Commission's rules to clarify certain rules. This Order also 
modifies certain initial filing deadlines required by Sec.  54.313 of 
the Commission's rules as necessary to comply with the Paperwork 
Reduction Act (PRA) requirements, and finds good cause to delete 
certain rules that are now obsolete.
    2. The Bureaus note that petitions for reconsideration of certain 
aspects of the USF/ICC Transformation Order are pending before the 
Commission and will be addressed by the Commission in due course. 
Nothing in this Order is intended to prejudge Commission action with 
respect to those petitions.

II. Discussion

A. Universal Service

    3. Rate Floor. In the USF/ICC Transformation Order, the Commission 
adopted a rule reducing high-cost support for incumbent carriers 
receiving high-cost support that charged local rates below a nationwide 
rate benchmark. The Order ``reduce[s], on a dollar-for-dollar basis, 
HCLS and CAF phase I support,'' but excludes Interstate Common Line 
Support (ICLS) on the basis that it supports ``interstate rates, not 
intrastate end-user rates.'' The Order does not specify how the offsets 
would apply to frozen high-cost support provided pursuant to CAF Phase 
I, which commingles intrastate and interstate support. For the purposes 
of calculating certain interstate rates, frozen CAF Phase I support 
remains attributable to the interstate jurisdiction to the extent that 
the frozen CAF Phase I support replaced Interstate Access Support. 
Moreover, the codified rule, Sec.  54.318(d), makes clear that this 
rate reduction only applies to HCLS and HCMS. In this Order, the 
Wireline Competition Bureau (Bureau) amends Sec.  54.318(d) to clarify 
that support reductions associated with the rate floor will offset 
frozen CAF Phase I support only to the extent that the recipient's 
frozen CAF Phase I support replaced HCLS and HCMS. The offset does not 
apply to frozen CAF Phase I support to the extent that it replaced IAS 
and ICLS.
    4. Reporting Requirements for High-Cost Recipients. In the USF/ICC 
Transformation Order, the Commission adopted or modified several 
reporting requirements for eligible telecommunications carriers (ETCs) 
that receive high-cost support. In particular, the Commission adopted a 
rule, codified in Sec.  54.313, requiring all ETCs receiving high-cost 
support to file annual reports regarding compliance with the 
Commission's rules and progress toward its universal service goals. 
Several of these requirements had previously applied only to federally 
designated ETCs, under former Sec.  54.209. The Order states that Sec.  
54.313 annual reports will be due annually by April 1, beginning on 
April 1, 2012. As specified in the Order, however, any new reporting 
requirements are not effective until Federal Register publication of 
approval by the Office of Management and Budget of the associated 
information collections under the Paperwork Reduction Act (PRA). The 
Commission delegated authority to the Bureau to modify initial filing 
deadlines required by Sec.  54.313 as necessary to comply with the PRA 
requirements. In this Order, the Bureau clarifies several aspects of 
those reporting requirements and provides guidance regarding the 
associated timing of such requirements.
    5. First, the Commission stated in the USF/ICC Transformation Order 
that all ETCs are required to file a new five-year build-out plan by 
April 1, 2013, to account for the new broadband obligations established 
in the Order. The Bureau hereby amends Sec.  54.313(a)(1) to clarify 
this requirement.
    6. ETCs previously designated by the Commission are still required 
to file a progress report on their existing five-year build-out plans 
currently on file with the Commission but, this year, the progress 
reports will be due April 1 rather than October 1. On April 1, 2013, 
those ETCs are required to file with the Commission a new five-year 
build-out plan that accounts for the new broadband obligations (which 
will replace the five-year build-out plan currently on file with the 
Commission) and to send copies to the relevant state commission, 
relevant authority in a U.S. Territory, or Tribal government, as 
appropriate. And beginning April 1, 2014, those ETCs are required to 
file annual progress reports on their new five-year build-out plans.
    7. ETCs that have been designated by a state commission should 
continue to comply with state requirements, if any, regarding service 
improvement plans. If a state commission previously required an ETC to 
file a service quality improvement plan or annual updates with the 
state commission then the ETC should do so, but that ETC is not 
required to send a copy to the Commission. Similarly, ETCs that are not 
required by a state commission to file a quality improvement plan with 
the state commission are not required to file a plan with the 
Commission this year. However, on April 1, 2013, all state-designated 
ETCs are required to file with the Commission five-year build-out plans 
that account for the new broadband obligations adopted in the USF/ICC 
Transformation Order and to send copies to the relevant state 
commission, relevant authority in a U.S. Territory, or Tribal 
government, as appropriate. And beginning April 1, 2014 all state-
designated ETCs are required to file annual progress reports on their 
five-year build-out plans.
    8. In the Order, the Commission explained that the five-year build-
out plan filed on April 1, 2013 should be consistent with Sec.  
54.202(a)(1)(ii). That is, it should describe with specificity proposed 
improvements or upgrades to the ETC's network throughout its service 
area, including estimating the area and population that will be served 
as a result of improvements. This requirement to file a new five-year 
build-out plan only applies to ETCs that receive high-cost support.
    9. Second, Sec.  54.313(a)(2)-(6) requires ETCs annually to file 
information concerning outages, unfulfilled service requests, and 
complaints, among other things. We clarify that ETCs that have been 
designated by the Commission are

[[Page 14299]]

still required to file that information with respect to their provision 
of voice service during 2011. But this year, it will be due April 1 
rather than October 1. Beginning April 1, 2013, and annually 
thereafter, those ETCs must file such information separately broken out 
for both voice and broadband service.
    10. We recognize that ETCs that have been designated by a state 
commission may not have been required to collect and report this 
information with respect to their provision of voice service during 
2011. If state-designated ETCs did not collect this information during 
2011, then it would be impossible for them to report it to the 
Commission in 2012, and they are not required to do so. If state-
designated ETCs are subject to a state requirement to report some or 
all of this information annually to the state, however, then they 
should file a copy of any relevant information with the Commission in 
2012. The Bureau will provide impacted ETCs sufficient time after PRA 
approval is obtained to file the relevant information. Beginning April 
1, 2013, and annually thereafter, state-designated ETCs must file all 
of the information required by Sec.  54.313(a)(2)-(6), and such 
information must be separately broken out for both voice and broadband 
service.
    11. Third, the USF/ICC Transformation Order requires that high-cost 
support recipients provide information demonstrating that they have 
engaged with Tribal governments in their supported areas, but does not 
specify a date for doing so. The Order also delegated to the Office of 
Native Affairs and Policy (ONAP), in coordination with WCB and WTB, the 
authority to develop processes to guide support recipients in such 
engagements. Because it will take some time to finalize these processes 
and for affected ETCs to comply with those requirements, the Bureau 
clarifies that the initial deadline for reporting information pursuant 
to this requirement is April 1, 2013 and annually thereafter. That is, 
ETCs are required to undertake their Tribal engagement obligations in 
2012 after ONAP provides engagement process guidance, which will be the 
substance of the reporting beginning April 1, 2013 and annually 
thereafter.
    12. Fourth, the USF/ICC Transformation Order requires high-cost 
recipients to annually report ownership information, but does not 
specify a date for doing so. The Bureau will provide affected ETCs 
sufficient time after PRA approval is obtained to file the required 
information. Beginning in 2013, and annually thereafter, the 
information must be filed by April 1.
    13. Fifth, the USF/ICC Transformation Order adopts financial 
reporting requirements for privately held rate-of-return carriers and 
specifies that this information must be reported beginning April 1, 
2012, subject to PRA approval. The Bureau clarifies that the April 1 
reporting date will not be applicable if PRA approval is not received 
prior to April 1 with sufficient time for respondents to comply. The 
Bureau will provide sufficient time once PRA approval is obtained for 
affected ETCs to comply with this requirement.
    14. Sixth, the USF/ICC Transformation Order specified that 
privately held rate-of-return carriers that receive loans from the 
Rural Utilities Service (RUS) could satisfy their financial reporting 
obligation by providing electronic copies of their annual RUS reports 
to the Commission. The Bureau modifies Sec.  54.313(f)(2) to reflect 
the Commission's intent that such companies may file their RUS reports 
in lieu of an audited financial statement.
    15. Application of the Per-Line Cap to Competitive Eligible 
Telecommunications Carrier (ETC) Phase Down. In the USF/ICC 
Transformation Order, the Commission adopted an annual baseline for the 
phase down of competitive ETC support equal to the lesser of the amount 
of support the competitive ETC received in 2011 or $3000 per loop 
(which is $250 per line per month). In this Order, the Bureau clarifies 
that the $3000 per-loop limit is applicable to competitive ETCs at the 
incumbent study area level. For example, if a competitive ETC receives 
an average of $2000 per loop per year serving multiple incumbent study 
areas, but it receives $3500 per loop per year in one of the study 
areas, the cap will constrain the competitive ETC's support in that 
study area. This clarification ensures that, consistent with the 
Commission's stated rationale, the competitive ETCs' baselines are 
commensurate with adjustments to the support provided to incumbents 
serving the same areas.
    16. Elimination of Section 54.315 (Disaggregation). Section 54.315 
of the Commission's rules permits incumbent local exchange carriers to 
target the high-cost universal service support they receive to specific 
areas within their study areas based on the relative costs of serving 
those areas. This disaggregation of support was intended to ensure that 
competitive ETCs receive an appropriate per-line support amount for the 
various areas within the incumbent study area, rather than a single, 
undifferentiated per-line support amount for the entire study area. 
Because the Commission eliminated the identical support rule in the 
USF/ICC Transformation Order and competitive ETCs therefore no longer 
receive support based on incumbent support amounts, the Commission's 
disaggregation rule is now obsolete. Because this rule is obsolete, we 
find good cause to delete it without notice and comment.
    17. Elimination of Quarterly Line Counts in Areas Served by a 
Competitive ETC. In the USF/ICC Transformation Order, the Commission 
eliminated the identical support rule and adopted a process to phase 
down competitive ETC support. The Commission also eliminated the 
requirement that competitive ETCs, except those serving remote areas of 
Alaska, file quarterly line counts. In this Order, the Bureau amends 
Sec.  54.903(a)(2) to eliminate requirements for certain quarterly line 
count filings by incumbent carriers that were necessary only for the 
purpose of calculating support for competitive ETCs pursuant to the 
identical support rule. Carriers filing quarterly line counts pursuant 
to Sec.  54.903(a)(2) solely because of the presence of a competitive 
ETC will no longer be required to file line counts on a quarterly 
basis. Carriers may continue to file voluntary updates of line counts. 
Because the quarterly line filing requirement is obsolete, the Bureau 
finds good cause to change the Commission's rules without notice and 
comment.
    18. Elimination of Average Schedule Formula for Local Switching 
Support. In the USF/ICC Transformation Order, the Commission eliminated 
local switching support (LSS) but did not delete Sec.  54.301, 
governing LSS, from its rules because several elements continue to be 
applicable for the purposes of truing up support for prior years. 
Pursuant to Sec.  54.301(f), the Administrator is required each year to 
file a proposed formula for calculating LSS for average schedule 
companies in the next year. Because LSS calculations will not be 
required on a going forward basis, this requirement is obsolete and the 
Bureau deletes Sec.  54.301(f). Because this rule is obsolete, we find 
good cause to delete it without notice and comment.
    19. Mobility Fund Phase I Eligibility--Access to Spectrum 
Requirement. In the USF/ICC Transformation Order, the Commission 
required that any applicant for a Mobility Fund Phase I auction have 
access to the spectrum necessary to fulfill any obligations related to 
support. The Commission further required that such access through a 
license or leasing

[[Page 14300]]

arrangement be in effect prior to auction. In order to facilitate 
auction participation, the Commission concluded that a party could 
fulfill the spectrum access requirement by acquiring spectrum access 
that is contingent on obtaining support in the auction. The Commission 
further found that ``failing to ensure spectrum access, on at least a 
conditional basis, prior to entering a Mobility Fund auction would be 
inconsistent with the serious undertakings implicit in bidding for 
support.'' This eligibility requirement is codified in Sec.  
54.1003(b). This Order amends the rule to clarify that an applicant 
must have obtained any Commission approvals necessary for the spectrum 
access prior to submitting an application to participate in competitive 
bidding.

B. Intercarrier Compensation

    20. Recovery for Rate-of-Return Carriers. In the USF/ICC 
Transformation Order, the Commission adopted a transitional recovery 
mechanism allowing carriers limited recovery of revenues reduced as a 
result of that Order. The Commission specified a baseline from which a 
rate-of-return incumbent local exchange carrier's Eligible Recovery 
would be calculated, and specified that this baseline will decrease by 
five percent per year. Specifically, the Order correctly stated that a 
rate-of-return carrier's Eligible Recovery would be determined by 
reducing its 2011 Rate-of-Return Baseline by a five percent adjustment 
factor before subtracting its ``ICC recovery opportunity'' for that 
year. Under the rules, however, a rate-of-return carrier's Eligible 
Recovery would be overstated because the five percent adjustment factor 
would not be applied until after subtracting its ICC recovery 
opportunity for that year. Applying the adjustment factor after 
reducing a carrier's baseline by its ICC recovery opportunity would 
increase the carrier's Eligible Recovery, entitling it to increase 
charges on end-users and/or to increase its claim to CAF funding, and 
as a result would reduce the effective adjustment below the amount the 
Commission specified in the Order. As adopted, Sec. Sec.  
51.917(d)(1)(i)(3) and (4) address the respective components of 
eligible recovery (Transitional Intrastate Access Service, interstate 
switched access, and net reciprocal compensation (including both CMRS 
and non-CMRS reciprocal compensation)) in terms of reductions rather 
than recovery opportunity. Accordingly, the rule is corrected and 
revised as set forth in Appendix B to reflect the carrier's 
intercarrier compensation recovery opportunity for the relevant year 
and to apply the Rate-of-Return Carrier Baseline Adjustment Factor 
correctly.
    21. Monitoring Compliance with the Recovery Mechanism Rules. In the 
USF/ICC Transformation Order, the Commission adopted measures to enable 
it to monitor compliance with the recovery mechanism adopted for 
incumbent LECs, requiring such carriers to file certain data on an 
annual basis. The Commission delegated to the Bureau the responsibility 
to develop and implement the data filing process. To minimize burdens, 
the USF/ICC Transformation Order noted that the Commission would 
``ensure that the data filed with USAC [(the Universal Service 
Administrative Company), for the purpose of justifying a carrier's 
ability to impose an ARC] is consistent with our request [for Recovery 
Mechanism compliance monitoring data], so that carriers can use the 
same format for both filings.'' However, because the Commission found 
that data for monitoring compliance may be filed at the holding company 
level, whereas the data needed for USAC will be at the study area 
level, the filings cannot be the same. Thus, we clarify that the data 
filing requirements for Recovery Mechanism compliance monitoring and 
for ARC justification will be as consistent as possible, and will be in 
the same or similar format in order to reduce or eliminate burdens 
associated with filing wherever possible.
    22. Prospective Treatment of VoIP Traffic. In the USF/ICC 
Transformation Order, the Commission addressed the prospective 
treatment of VoIP-PSTN traffic by adopting a transitional compensation 
framework for such traffic. In so doing, the Commission adopted the 
transitional rules specifying the default compensation for VoIP PSTN-
traffic. With regard to ``toll'' traffic (interstate and intrastate 
calls), the Commission adopted rules specifying that the default 
charges for ``toll'' VoIP-PSTN traffic will be equal to interstate 
access rates applicable to non-VoIP traffic, both in terms of the rate 
level and rate structure. We clarify that the prospective VoIP-PSTN 
framework applies to the interstate rate as well as the interstate 
structure, including both per-minute (usage sensitive) and flat-rated 
(dedicated) charges.
    23. To implement the VoIP-PSTN framework, the Commission encouraged 
carriers to negotiate contracts to implement all intercarrier 
compensation obligations. At the same time, the Commission permitted 
carriers to include, in their intrastate tariffs, a default means of 
determining which calls are subject to the VoIP-PSTN framework. In 
particular, to address concerns that carriers could not identify which 
calls originate and/or terminate in IP format, the Commission permitted 
LECs ``to specify in its intrastate tariff that the default percentage 
of traffic subject to the VoIP-PSTN framework is equal to the 
percentage of VoIP subscribers in the state based on the Local 
Competition Report, as released periodically.'' We clarify that this 
default percentage is just one means by which a carrier could identify 
the amount of traffic subject to the VoIP-PSTN framework, and carriers 
are free to utilize traffic studies, or other reasonable and auditable 
metrics to determine the percentage of traffic subject to the VoIP-PSTN 
framework.
    24. Operation of VoIP Rules When Interstate Access Rates Exceed 
Intrastate Access Rates. The Commission adopted a bill-and-keep 
methodology for all traffic and began the implementation process by 
providing a measured transition to reduce the terminating rates for 
most rate elements to bill-and-keep. In so doing, the Commission made 
clear that, ``in cases where a provider's interstate terminating access 
rates are higher than its intrastate terminating access rates, 
intrastate rate reductions shall begin to occur at the stage of the 
transition in which interstate rates come to parity with intrastate 
rate levels.'' Thus, the Commission made clear that it did not intend, 
under any circumstances, for rates to increase by virtue of its 
reforms. Indeed, the Commission also capped most rates as of the 
effective date of the rules, or December 29, 2011, to ensure that no 
rates increased after the date of the Order. However, in instances 
where intrastate rates are lower than interstate rates, the Commission 
did not explain how the prospective VoIP rules would operate--whether 
the interstate rate would apply in the intrastate tariff or whether the 
intrastate rate, which is lower, would apply. Parties have notified us 
that, absent a clarification, intrastate tariffs could have a higher 
rate for VoIP traffic than other intrastate rates. Such an intrastate 
rate disparity was not the Commission's intent and could lead to the 
very arbitrage activities that the USF/ICC Transformation Order 
intended to eliminate. The Commission held, for example, VoIP-PSTN 
traffic ``will pay most of the same rates as all other traffic in the 
second year of reform.'' Given the mechanics of the transition, this 
would not be true if VoIP-PSTN traffic were subject to higher 
intrastate access charges than other traffic, however.

[[Page 14301]]

Thus, we clarify that, in the limited circumstance of implementing the 
new intercarrier compensation for VoIP regime adopted in the USF/ICC 
Transformation Order, when a carrier's intrastate access rate is lower 
than its corresponding interstate access rate, that carrier may not, in 
its intrastate tariff, include a rate for toll VoIP-PSTN traffic that 
is higher than its intrastate access rate.
    25. Access Stimulation and Previous Rulings on End Users. In the 
USF/ICC Transformation Order, the Commission adopted revisions to its 
interstate switched access charge rules to address access stimulation. 
Prior to the USF/ICC Transformation Order, the Commission adopted 
several orders resolving complaints concerning access stimulation under 
preexisting rules and compliance with the Communications Act. We 
clarify that the USF/ICC Transformation Order complements these 
previous decisions, and nothing in the USF/ICC Transformation Order 
should be construed as overturning or superseding these previous 
Commission decisions.
    26. Access Stimulation and Fee Arrangements. In the USF/ICC 
Transformation Order, the Commission adopted rules requiring refiling 
of interstate access tariffs in certain circumstances when a local 
exchange carrier (LEC) is engaged in access stimulation. In particular, 
the Commission adopted a rule defining when such tariffs must be 
refiled. In relevant part, the Commission explained that a LEC must 
have entered into an access revenue sharing agreement ``whether 
express, implied, written or oral, that, over the course of the 
agreement, would directly or indirectly result in a net payment to the 
other party (including affiliates) to the agreement, in which payment 
by the rate-of-return LEC or competitive LEC is based on the billing or 
collection of access charges from interexchange carriers or wireless 
carriers.''
    27. We clarify that any arrangement between a LEC and another 
party, including affiliates, that results in the generation of switched 
access traffic to the LEC and provides for the net payment of 
consideration of any kind, whether fixed fee or otherwise, to the other 
party, including an affiliate, is considered to be ``based upon the 
billing or collection of access charges.''
    28. Rural Transport Rule. In the USF/ICC Transformation Order, the 
Commission adopted an ``interim default rule allocating responsibility 
for transport costs applicable to non-access traffic exchanged between 
CMRS providers and rural, rate-of-return regulated LECs,'' including 
when a CMRS provider selects an interconnection point outside the LEC's 
service area. We clarify that, in adopting the interim default rule, 
the Commission did not intend to affect the existing rules governing 
points of interconnection (POIs) between CMRS providers and price cap 
carriers. Indeed, the Commission sought additional comment on issues 
concerning POI obligations in the Further Notice of Proposed 
Rulemaking, 76 FR 78384, December 16, 2011.

III. Procedural Matters

A. Paperwork Reduction Act

    29. Although this document clarifies several existing information 
collection requirements, it does not contain new or modified 
information collection requirements subject to the Paperwork Reduction 
Act of 1995 (PRA), Public Law 104-13. In addition, therefore, it does 
not contain any new or modified information collection burden for small 
business concerns with fewer than 25 employees, pursuant to the Small 
Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 
U.S.C. 3506(c)(4).

B. Final Regulatory Flexibility Act Certification

    30. Final Regulatory Flexibility Certification. The Regulatory 
Flexibility Act of 1980, as amended (RFA) requires that a regulatory 
flexibility analysis be prepared for rulemaking proceedings, unless the 
agency certifies that ``the rule will not have a significant economic 
impact on a substantial number of small entities.'' The RFA generally 
defines ``small entity'' as having the same meaning as the terms 
``small business,'' ``small organization,'' and ``small governmental 
jurisdiction.'' In addition, the term ``small business'' has the same 
meaning as the term ``small business concern'' under the Small Business 
Act. A small business concern is one which: (1) Is independently owned 
and operated; (2) is not dominant in its field of operation; and (3) 
satisfies any additional criteria established by the Small Business 
Administration (SBA).
    31. This Order clarifies, but does not otherwise modify, the USF/
ICC Transformation Order. These clarifications do not create any 
burdens, benefits, or requirements that were not addressed by the Final 
Regulatory Flexibility Analysis attached to USF/ICC Transformation 
Order. Therefore, we certify that the requirements of this Order will 
not have a significant economic impact on a substantial number of small 
entities. The Commission will send a copy of the Order including a copy 
of this final certification, in a report to Congress pursuant to the 
Small Business Regulatory Enforcement Fairness Act of 1996, see 5 
U.S.C. 801(a)(1)(A). In addition, the Order and this certification will 
be sent to the Chief Counsel for Advocacy of the Small Business 
Administration, and will be published in the Federal Register. See 5 
U.S.C. 605(b).

C. Congressional Review Act

    32. The Commission will send a copy of this Order to Congress and 
the Government Accountability Office pursuant to the Congressional 
Review Act.

IV. Ordering Clauses

    33. Accordingly, it is ordered, that pursuant to the authority 
contained in sections 1, 2, 4(i), 201-206, 214, 218-220, 251, 252, 254, 
256, 303(r), 332, and 403 of the Communications Act of 1934, as 
amended, and section 706 of the Telecommunications Act of 1996, 47 
U.S.C. 151, 152, 154(i), 201-206, 214, 218-220, 251, 252, 254, 256, 
303(r), 332, 403, 1302, and pursuant to Sec. Sec.  0.91, 0.131, 
0.201(d), 0.291, 0.331, 1.3, and 1.427 of the Commission's rules, 47 
CFR 0.91, 0.131, 0.201(d), 0.291, 0.331, 1.3, 1.427 and pursuant to the 
delegations of authority in paragraphs 581 and 1404 of FCC 11-161 (rel. 
Nov. 18, 2011), that this Order is adopted, effective April 9, 2012, 
except for those rules and requirements involving Paperwork Reduction 
Act burdens, which shall become effective immediately upon announcement 
in the Federal Register of OMB approval.
    34. It is further ordered, that Parts 51 and 54 of the Commission's 
rules, 47 CFR Parts 51, 54, are amended as set forth below, and such 
rule amendments shall be effective April 9, 2012, except to the extent 
they contain information collections subject to PRA review. The rules 
that contain information collections subject to PRA review will become 
effective upon announcement in the Federal Register of OMB approval and 
an effective date of the rule(s).
    35. It is further ordered, that the Commission shall send a copy of 
this Order to Congress and the Government Accountability Office 
pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A).
    36. It is further ordered, that the Commission's Consumer and 
Governmental Affairs Bureau, Reference Information Center, shall send a 
copy of this Order, including the Final Regulatory Flexibility 
Certification, to

[[Page 14302]]

the Chief Counsel for Advocacy of the Small Business Administration.

List of Subjects

47 CFR Part 51

    Communications common carriers, Telecommunications.

47 CFR Part 54

    Communications common carriers, Reporting and recordkeeping 
requirements, Telecommunications, Telephone.

Federal Communications Commission.
Sharon E. Gillett,
Chief, Wireline Competition Bureau.

Final Rules

    For the reasons discussed in the preamble, the Federal 
Communications Commission amends 47 CFR parts 51 and 54 to read as 
follows:

PART 51--INTERCONNECTION

0
1. The authority citation for part 51 continues to read as follows:

    Authority: Sections 1-5, 7, 201-05, 207-09, 218, 220, 225-27, 
251-54, 256, 271, 303(r), 332, 706 of the Telecommunication Act of 
1996, 48 Stat. 1070, as amended, 1077; 47 U.S.C. 151-55, 157, 201-
05, 207-09, 218, 220, 225-27, 251-54, 256, 271, 303(r), 332, 1302, 
47 U.S.C. 157 note, unless otherwise noted.


0
2. Amend Sec.  51.917 by revising paragraphs (d)(1)(i) through 
(d)(1)(iii) to read as follows:


Sec.  51.917  Revenue recovery for rate-of-return carriers.

* * * * *
    (d) * * *
    (1) * * *
    (i) Beginning July 1, 2012, a Rate-of-Return Carrier's eligible 
recovery will be equal to the 2011 Rate-of-Return Carrier Base Period 
Revenue multiplied by the Rate-of-Return Carrier Baseline Adjustment 
Factor less:
    (A) The Expected Revenues from Transitional Intrastate Access 
Service for the year beginning July 1, 2012, reflecting forecasted 
demand multiplied by the rates in the rate transition contained in 
Sec.  51.909;
    (B) The Expected Revenues from interstate switched access for the 
year beginning July 1, 2012, reflecting forecasted demand multiplied by 
the rates in the rate transition contained in Sec.  51.909; and
    (C) Expected Net Reciprocal Compensation Revenues for the year 
beginning July 1, 2012 using the target methodology required by Sec.  
51.705.
    (ii) Beginning July 1, 2013, a Rate-of-Return Carrier's eligible 
recovery will be equal to the 2011 Rate-of-Return Carrier Base Period 
Revenue multiplied by the Rate-of-Return Carrier Baseline Adjustment 
Factor less:
    (A) The Expected Revenues from Transitional Intrastate Access 
Service for the year beginning July 1, 2013, reflecting forecasted 
demand multiplied by the rates in the rate transition contained in 
Sec.  51.909;
    (B) The Expected Revenues from interstate switched access for the 
year beginning July 1, 2013, reflecting forecasted demand multiplied by 
the rates in the rate transition contained in Sec.  51.909; and
    (C) Expected Net Reciprocal Compensation Revenues for the year 
beginning July 1, 2013 using the target methodology required by Sec.  
51.705.
    (iii) Beginning July 1, 2014, a Rate-of-Return Carrier's eligible 
recovery will be equal to the 2011 Rate-of-Return Carrier Base Period 
Revenue multiplied by the Rate-of-Return Carrier Baseline Adjustment 
Factor less:
    (A) The Expected Revenues from Transitional Intrastate Access 
Service for the year beginning July 1, 2014, reflecting forecasted 
demand multiplied by the rates in the rate transition contained in 
Sec.  51.909 (including the reduction in intrastate End Office Switched 
Access Service rates), adjusted to reflect the True-Up Adjustment for 
Transitional Intrastate Access Service for the year beginning July 1, 
2012;
    (B) The Expected Revenues from interstate switched access for the 
year beginning July 1, 2014, reflecting forecasted demand multiplied by 
the rates in the rate transition contained in Sec.  51.909, adjusted to 
reflect the True-Up Adjustment for Interstate Switched Access for the 
year beginning July 1, 2012; and
    (C) Expected Net Reciprocal Compensation Revenues for the year 
beginning July 1, 2014 using the target methodology required by Sec.  
51.705, adjusted to reflect the True-Up Adjustment for Reciprocal 
Compensation for the year beginning July 1, 2012.
    (D) An amount equal to True-up Revenues for Access Recovery Charges 
less Expected Revenues for Access Recovery Charges for the year 
beginning July 1, 2012.
* * * * *

PART 54--UNIVERSAL SERVICE

0
3. The authority citation for part 54 continues to read as follows:

    Authority: 47 U.S.C. 151, 154(i), 201, 205, 214, 219, 220, 254, 
303(r), 403, and 1302 unless otherwise noted.


Sec.  54.301  [Amended]

0
4. In Sec.  54.301, remove paragraph (f).

0
5. Amend Sec.  54.307 by revising paragraph (e)(1)(ii) to read as 
follows:


Sec.  54.307  Support to a competitive eligible telecommunications 
carrier.

* * * * *
    (e) * * *
    (1) * * *
    (ii) For the purpose of calculating the $3,000 per line limit, the 
average of lines reported by a competitive eligible telecommunication 
carrier pursuant to line count filings required for December 31, 2010, 
and December 31, 2011 shall be used. The $3,000 per line limit shall be 
applied to support amounts determined for each incumbent study area 
served by the competitive eligible telecommunications carrier.
* * * * *

0
6. Amend Sec.  54.313 by revising paragraphs (a)(9) and (f)(2) to read 
as follows:


Sec.  54.313  Annual reporting requirements for high-cost recipients.

    (a) * * *
    (9) Beginning April 1, 2013. To the extent the recipient serves 
Tribal lands, documents or information demonstrating that the ETC had 
discussions with Tribal governments that, at a minimum, included:
* * * * *
    (f) * * *
    (2) Privately held rate-of-return carriers only. A full and 
complete annual report of the company's financial condition and 
operations as of the end of the preceding fiscal year, which is audited 
and certified by an independent certified public accountant in a form 
satisfactory to the Commission, and accompanied by a report of such 
audit. The annual report shall include balance sheets, income 
statements, and cash flow statements along with necessary notes to 
clarify the financial statements. The income statements shall itemize 
revenue, including non-regulated revenue, by its sources. In lieu of 
filing this annual report, any ETC that files annual financial reports 
with the Rural Utilities Service may instead file a copy of its report 
to the Rural Utilities Service.
* * * * *


Sec.  54.315  [Removed]

0
7. Section 54.315 is removed.

0
8. Amend Sec.  54.318 by revising paragraph (d) to read as follows:


Sec.  54.318  High-cost support; limitations on high-cost support.

* * * * *

[[Page 14303]]

    (d) For purposes of this section, high-cost support is defined as 
the support available pursuant to Sec.  36.631 of this chapter and 
frozen high-cost support provided to price cap carriers to the extent 
it is based on support previously provided pursuant to Sec. Sec.  
36.631 or 54.309 of this chapter.
* * * * *

0
9. Amend Sec.  54.903 by revising paragraph (a)(2) to read as follows:


Sec.  54.903  Obligations of rate-of-return carriers and the 
Administrator.

    (a) * * *
    (2) A rate-of-return carrier may submit the information in 
paragraph (a) of this section in accordance with the schedule in Sec.  
36.612 of this chapter, even if it is not required to do so. If a rate-
of-return carrier makes a filing under this paragraph, it shall 
separately indicate any lines that it has acquired from another carrier 
that it has not previously reported pursuant to paragraph (a) of this 
section, identified by customer class and the carrier from which the 
lines were acquired.
* * * * *

0
10. Amend Sec.  54.1003 by revising paragraph (b) to read as follows:


Sec.  54.1003  Provider eligibility.

* * * * *
    An applicant shall have access to spectrum in an area that enables 
it to satisfy the applicable performance requirements in order to 
receive Mobility Fund Phase I support for that area. The applicant 
shall certify, in a form acceptable to the Commission, that it has 
received any Commission approvals necessary for such access at the time 
it applies to participate in competitive bidding and at the time that 
it applies for support and that it will retain such access for five (5) 
years after the date on which it is authorized to receive support. 
Pending requests for such approvals are not sufficient to satisfy this 
requirement.
* * * * *
[FR Doc. 2012-5590 Filed 3-8-12; 8:45 am]
BILLING CODE 6712-01-P