Connect America Fund, 32991-32995 [2013-12985]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 78, Number 106 (Monday, June 3, 2013)]
[Rules and Regulations]
[Pages 32991-32995]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-12985]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[WC Docket Nos. 10-90; DA 13-1113]


Connect America Fund

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this document, the Federal Communications Commission 
(Commission) adopts a framework for the challenge process that will be 
used to finalize the list of areas that will be eligible for Connect 
America Phase II model-based support and adopts the procedures for a 
price cap carrier to elect to make a state-level commitment to serve 
the eligible areas.

DATES: Effective July 3, 2013, 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.

FOR FURTHER INFORMATION CONTACT: Ryan Yates, Wireline Competition 
Bureau, (202) 418-0886 or TTY: (202) 418-0484.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Report 
and Order in WC Docket No. 10-90; DA 13-1113, adopted on May 16, 2013, 
and released on May 16, 2013. 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/DA-13-1113A1.pdf.

I. Introduction

    1. In the USF/ICC Transformation Order, 76 FR 73830, November 29, 
2011, the Commission comprehensively reformed and modernized the 
universal service and intercarrier compensation systems to maintain 
voice service and extend broadband-capable infrastructure to millions 
of Americans. As part of the reform, the Commission adopted a framework 
for providing support to areas served by price cap carriers known as 
the Connect America Fund through ``a combination of competitive bidding 
and a new forward-looking model of the cost of constructing modern 
multi-purpose networks.'' In particular, the Commission will offer each 
price cap carrier monthly model-based support for a period of five 
years in exchange for a state-level commitment to serve specified areas 
that are not served by an unsubsidized competitor, and if that offer is 
not accepted, will determine support through a competitive process.
    2. In this Report and Order (Order), the Wireline Competition 
Bureau (Bureau) adopts a framework for the challenge process that will 
be used to finalize the list of areas that will be eligible for Connect 
America Phase II model-based support and adopts the procedures for a 
price cap carrier to elect to make a state-level commitment

[[Page 32992]]

to serve the eligible areas. We particularly encourage state public 
utility commissions and broadband mapping authorities to participate in 
the challenge process and provide any information they believe to be 
relevant to our consideration of which census blocks should be eligible 
for the offer of Phase II model-based support.

II. Discussion

A. Phase II Footprint Challenge Process

    3. The Phase II footprint challenge process will allow interested 
parties to provide input on the preliminary list of what areas should 
be deemed unserved by an unsubsidized competitor, and therefore 
eligible for Phase II model-based support. Section 54.5 of the 
Commission's rules defines an unsubsidized competitor as ``a 
facilities-based provider of residential terrestrial fixed voice and 
broadband service that does not receive high-cost support.'' In this 
order, we set forth the basic framework regarding the use of 
presumptions, evidentiary showing, and timing of the challenge process 
for census blocks where Phase II funding will be offered to price cap 
carriers.
    4. Consistent with the framework established in the USF/ICC 
Transformation Order, an unsubsidized competitor in areas where the 
price cap carrier will be offered model-based support must meet the 
speed criteria established by the Commission for fixed broadband 
service (i.e., a provider that offers 4 Mbps downstream/1 Mbps upstream 
service (4 Mbps/1 Mbps)), as well as non-speed broadband criteria 
(i.e., latency, capacity, and price) and provide voice service. In 
order to conduct the challenge process efficiently, we will develop the 
initial list of eligible census blocks based on coverage shown on the 
National Broadband Map, and the reporting of voice subscriptions on FCC 
Form 477, and then will conduct a challenge process that will provide 
an opportunity for parties to challenge that preliminary determination.
    5. Broadband Service. Under the Commission's rules, an unsubsidized 
competitor must offer fixed broadband with speeds of at least 4 Mbps/1 
Mbps. We will presume that the National Broadband Map is accurate with 
regard to the speed of services being offered by broadband providers, 
with that presumption subject to rebuttal. Because the National 
Broadband Map does not contain data specifically for the 4 Mbps/1 Mbps 
benchmark, we will use the National Broadband Map's 3 Mbps downstream 
and 768 kbps upstream (3 Mbps/768 kbps) advertised speed as a proxy for 
4 Mbps/1 Mbps. After consideration of the record, we see no reason to 
depart, for purposes of Phase II implementation, from the 3 Mbps/768 
kbps proxy generally recognized by Commission. Therefore, any 
terrestrial, fixed provider shown on the National Broadband Map as 
offering broadband with speeds of 3 Mbps/768 kbps will be presumed to 
provide broadband service meeting the speed requirement of 4 Mbps/1 
Mbps.
    6. While the National Broadband Map provides valuable information 
regarding the availability of broadband service meeting specified speed 
tiers, it does not address the other criteria that the Commission has 
indicated are relevant to determining whether an entity should be 
deemed an unsubsidized competitor. There is no alternative suitable 
national-level source that we can rely upon to make this determination. 
There is ample evidence in the record, however, that providers that 
meet the speed requirement generally meet our other performance 
criteria. For administrative ease, therefore, we conclude that it is 
reasonable to presume that providers that provide broadband of the 
required speed also meet the non-speed broadband criteria, with that 
presumption subject to rebuttal in particular instances.
    7. It serves the public interest to presume existing providers that 
meet the speed criteria also meet the non-speed criteria for broadband 
service. This presumption places price cap carriers in the position of 
contesting a preliminary decision to not provide funding to a 
particular census block, rather than requiring unsubsidized competitors 
to contest a decision to fund a census block. This is both equitable 
and efficient. First, requiring price cap carriers to file a challenge 
likely will reduce the overall burden on respondents and the Commission 
while placing the burden on the party potentially receiving funds. 
Second, we conclude this presumption is generally accurate in the 
majority of cases. The preliminary classification of a block as served 
will serve to err on the side of not providing funding, while still 
giving the opportunity for the price cap carrier to demonstrate that a 
block should be funded.
    8. Voice Service. Under the Commission's rules, an entity must 
provide ``residential terrestrial fixed voice and broadband service'' 
in order to be deemed an unsubsidized competitor. We conclude that the 
ability of the consumer to obtain voice service from a third party is 
not sufficient for that broadband provider to be deemed an unsubsidized 
competitor for purposes of Phase II implementation because that 
broadband provider would not be offering a voice service. Such an 
interpretation would effectively read the requirement that the 
unsubsidized competitor be a ``provider'' of ``voice'' out of the 
Commission's adopted definition, as all broadband connections offer the 
capability to receive an ``over the top'' voice over Internet protocol 
(VoIP) service from a third party. Therefore, we interpret the 
Commission's definition as requiring the provider itself to provide 
voice service, in addition to broadband, in order to be designated an 
unsubsidized competitor.
    9. We conclude, based on our FCC Form 477 data, that it would be 
unreasonable to presume that all broadband providers shown on the 
National Broadband Map are also providing voice service. We therefore 
will utilize both Form 477 data and the National Broadband Map when 
developing the initial list of blocks that will be eligible for 
funding. A provider will be presumed to be offering voice if it reports 
voice subscribers for the relevant state on its Form 477 filing, with 
that presumption subject to rebuttal. Supplementing the National 
Broadband Map with the FCC's Form 477 data will enable challenges to 
the initial list of census blocks eligible for funding to be more 
narrowly focused, thereby reducing burdens on both interested parties 
and Commission staff.
    10. Given the above presumptions and requirements, a provider will 
initially be presumed an unsubsidized competitor if (1) it is shown on 
the National Broadband Map as offering at least 3 Mbps/768 kbps and (2) 
it is reporting voice subscriptions in the relevant state on Form 477.
    11. Challenges and Evidentiary Showings. Based on the above 
presumptions, the Bureau will publish a list of census blocks that are 
presumptively unserved by an unsubsidized competitor. The challenge 
process will focus on whether an area is served by an unsubsidized 
competitor. Parties may challenge this list in two ways. They may argue 
that the list is underinclusive--that a census block not included on 
the list is not served by an unsubsidized competitor and therefore 
should be on the list of blocks eligible for funding--or they may argue 
that the list is overinclusive--that a census block on the list is in 
fact served by an unsubsidized competitor and therefore should be 
excluded from the list.
    12. We conclude that it is useful, given the number of census 
blocks potentially at issue in Phase II, to provide some advance 
guidance

[[Page 32993]]

regarding what sorts of evidentiary showings will be persuasive, and to 
define standards so that parties, including small businesses, seeking 
to challenge or rebut the eligibility of a census block for funding can 
participate in this process without unnecessary burden or expense. Our 
objective is to implement the Commission's requirement that funding not 
flow to an area where there is an unsubsidized competitor, while at the 
same time ensuring that census blocks are not unnecessarily excluded 
from funding.
    13. To facilitate efficient and swift review of any challenges, 
parties must submit challenges in the format specified by the Bureau. 
Challengers will be required to provide the 15 digit Federal 
Information Processing Standard (FIPS) code and the state of the block 
in question; the name of the entity or entities putatively providing 
disqualifying service to that block according to the National Broadband 
Map, if applicable; the service criteria at issue; the type of 
supporting evidence submitted as an attachment; and a certification 
under penalty of perjury that the challenger has engaged in due 
diligence to verify statements in the challenge and that such 
statements are accurate to the best knowledge of the filer. 
Furthermore, because the Electronic Comment Filing System (ECFS) 
converts all files to .pdf format, in addition to posting on ECFS, we 
will also require parties to submit a copy of any challenge in a native 
format to the Commission, either by email to a designated Commission 
staff member or by delivery of storage media to a designated Commission 
staff member or the Commission Secretary. A proposed form for filing 
challenge is available at https://fjallfoss.fcc.gov/edocs_public/attachmatch/DA-13-1113A1.docx.
    14. We require parties submitting challenges to include specific 
evidence as an attachment to the challenge in support of their claims. 
For each challenged block, parties must provide evidence specifying the 
reason for the challenge. A price cap carrier contending that a 
particular census block is unserved by an unsubsidized competitor need 
only show that any one of the criteria (speed, latency, capacity, 
price, or voice) is not met. Given the difficulty in proving a negative 
(i.e., that service meeting defined criteria does not exist in a 
particular block), we will consider a variety of evidence in 
determining whether the price cap carrier has submitted sufficient 
evidence to warrant placing the challenge on public notice to solicit a 
response from interested parties. For example, a price cap carrier's 
evidence could consist of a signed certification that an employee of 
the company attempted to obtain service in a particular block, but was 
unable to do so, or that following a good faith search of a provider's 
advertising materials, it was unable to find any offering matching the 
Commission's Phase II service requirements. We would also consider a 
signed certification from an officer of the price cap carrier under 
penalty of perjury, that it has not ported a telephone number within 
the last year (or a longer period of time) to the purported 
unsubsidized competitor, as relevant to whether that provider is 
providing voice service. While we recognize that some customers may 
drop their landline service altogether, it would be unusual for a 
competitor offering voice service in the marketplace to have no voice 
customers at all.
    15. In those instances where a potential unsubsidized competitor 
files a challenge contending that it does serve the area, 
notwithstanding evidence establishing a presumption that the block is 
unserved, evidence that it actually is providing voice and broadband 
service to customers in the relevant area is likely to be the most 
persuasive evidence. Thus, certifications relating to the number of 
customers, revenues received from customers, or customer lists (with 
customer identifying information redacted to preserve customer privacy) 
are likely to be more persuasive than propagation maps, advertisements 
of service offerings, or officer certifications, standing alone, that 
service is actually and immediately available--although we will 
consider each of the latter forms of evidence. We recognize that 
producing evidence demonstrating the existence of actual customers may 
be more difficult for potential competitors that have only recently 
begun to serve an area, but also seek some assurance that a provider is 
not merely advertising temporary or hypothetical service as a means of 
precluding Phase II funding for the price cap carrier.
    16. Likewise, parties opposing challenges must provide, for each 
challenged census block they wish to contest, concrete and verifiable 
evidence supporting their claims that the challenge should not be 
granted. A corresponding evidentiary burden applies: respondents 
attempting to show that a block is served must show that all of the 
Commission's criteria are met, while respondents attempting to show 
that a block is unserved need only show that any one of the criteria is 
not met. We will consider an officer certification that a provider 
serves a particular census block with service meeting all of the 
Commission's criteria as some evidence that service exists; however, 
such a certification would be more persuasive if supported by other 
evidence, such as advertising materials, certifications relating to the 
number of customers and/or revenues received from customers, or 
customer lists (with customer identifying information redacted to 
preserve customer privacy). We also require that an officer of the 
company making or opposing a challenge certify to the accuracy of the 
information provided, subject to the penalties for false statements 
imposed under 18 U.S.C. 1001. Challenges and responses that do not meet 
these criteria will not be considered by the Bureau.
    17. We conclude this process will provide the Bureau with an 
adequate evidentiary basis for making a determination that a particular 
census block is or is not served by an unsubsidized competitor, without 
unduly delaying implementation of Phase II. We are not persuaded by 
USTelecom's proposal that state mapping authorities contact all 
broadband providers to determine whether they meet each element of the 
Commission's service obligation. Simply put, that suggestion would 
potentially delay completion of the challenge process, and more 
importantly, would impose an unanticipated, unfunded burden on the 
state mapping authorities.
    18. We will require parties to make a good faith effort to serve 
notice of challenges on interested parties. For a challenge that a 
listed census block is in fact served, the interested party is the 
price cap carrier in whose territory the block falls. For a challenge 
that a block not on the list is unserved, the interested party is any 
and all entities that are shown on the National Broadband Map as 
providing service to that census block. This notice will assist 
challenged parties who may not routinely monitor the Commission's daily 
digest for public notices. However, we recognize that in some 
circumstances it may prove impossible or exceedingly difficult to 
identify and locate the particular person that should be given service 
for a provider; therefore, we stop short of requiring service of actual 
notice. A challenger must include a certification along with its 
challenge that it has made a good faith attempt at providing notice to 
the interested party.
    19. Once the challenges have been filed in ECFS, the Bureau will 
review all submissions to verify that evidence has been submitted to 
make a prima facie case and then issue a Public Notice

[[Page 32994]]

specifying those blocks for which rebuttals may be submitted. This 
Public Notice will be the official notice of all challenges, and will 
specify the date by which responses must be submitted.
    20. Challengers will have 45 days from the date of the public 
notice announcing the initial eligible census blocks to submit their 
challenges. Respondents will have 45 days from the date of the public 
notice announcing the list of census blocks that warrant a response to 
submit replies to the challenges. This time period should give parties 
a sufficient opportunity to formulate their challenges and responses. 
This time period is consistent with that generally requested by 
commenters. After the close of the reply period, the Bureau will 
consider the challenges and responses. Where the Bureau concludes that 
the evidence shows it is more likely than not that the status of a 
census block should be changed, the Bureau will make the appropriate 
adjustment to the list of eligible census blocks, which will be 
published in a subsequent public notice setting forth the finalized 
list of eligible census blocks.
    21. Finally, we conclude that we will not permit challenges below 
the census block level, such as a challenge that a particular location 
or group of homes within a census block is unserved. Any partially 
served census block will be treated as served. There are more than 6 
million census blocks in price cap service territories. Conducting a 
sub-block challenge process on millions of blocks would pose 
significant burdens on both potential unsubsidized competitors as well 
as Bureau staff. We conclude that the administrative burden of 
constructing and carrying out a sub-census block challenge process far 
outweighs any marginal benefit from such a process.

B. Process for Electing To Make a State-level Commitment

    22. We also sought comment in the Phase II Challenge Process Public 
Notice, 78 FR 4100, January 18, 2013, regarding the procedures for a 
carrier to elect to make a state-level commitment in Phase II of 
Connect America. In this Order, we announce the procedures that a 
carrier must follow to make such an election.
    23. After completion of the challenge process described above, the 
Bureau will release a public notice announcing Connect America Cost 
Model-determined support amounts for each incumbent price cap carrier's 
funded census blocks within a given state. After the release of that 
public notice, incumbent price cap carriers will be given 120 days to 
accept or decline that support on a state-by-state basis for each state 
they serve. While some commenters argued that a longer election period 
is necessary, we conclude that 120 days strikes a balance by providing 
sufficient time for consideration and ensuring that transition into 
Phase II is completed within a reasonable timetable.
    24. To elect to accept the support amount for a state, a carrier 
must submit a letter signed by an officer of the company declaring that 
the carrier accepts the support amount and commits to satisfy the 
service obligations for Phase II. In its acceptance letter, a carrier 
accepting funding must also acknowledge that if it fails to meet its 
service obligations, it will be subject to the penalties and/or 
enforcement actions, as specified by the Commission. If a letter of 
credit or some other form of security is required to ensure compliance 
with these obligations, such security must be submitted along with the 
letter accepting Phase II support.
    25. We are persuaded that requiring elections to be publicly 
disclosed, after a brief period of Bureau review to confirm facial 
completeness, will serve the public interest by enabling consumers, 
state regulators, other providers in the area, and other interested 
parties to know that a particular area will be served through Phase II. 
The Bureau will specify in a public notice the specific procedures for 
submitting acceptances to a designated Commission staff member. This 
will give the Bureau an opportunity to review the acceptances before 
elections are publicly announced. Once this review is complete, the 
finalized elections will not be afforded confidentiality.
    26. We sought comment as to what information we should require 
carriers to submit when making their elections. After further 
consideration, we conclude that it would not be productive to require 
carriers to specify at the time the election is made the specific 
locations where they intend to provide 6 Mbps downstream/1.5 Mbps 
upstream service, or where specifically they anticipate meeting their 
third year 85 percent buildout milestones. Deployment plans may change 
over the course of the five-year Phase II buildout period, and 
requiring carriers to declare this information up front would impose a 
significant burden on carriers accepting funding, while providing only 
limited benefit to the Commission and the public. Furthermore, by not 
requiring this additional information, carriers should be better able 
to make their elections within the 120-day window provided.
    27. A carrier may elect to decline funding for a given state by 
submitting a letter signed by an officer of the company noting it does 
not accept Phase II support for that state. Alternatively, if a carrier 
fails to submit any election letter by the close of the 120-day 
election period, it will be deemed to have declined support.
    28. Carriers are bound by their election decisions. After the close 
of the election period, a carrier may not retract its election, nor may 
it return support in exchange for being relieved of its obligations 
under Phase II. Such actions will have no effect. Thus, in the case of 
a carrier that accepted funding, the carrier will still be obligated to 
meet its deployment obligations and will face the same penalties as any 
carrier that fails to satisfy its obligations. This restriction is 
necessary not only to ensure the integrity of the state-level 
commitment process, but also to efficiently conduct the planning and 
implementation of auctions for areas in which carriers declined to make 
state-level commitments.

III. Procedural Matters

A. Paperwork Reduction Act

    29. This document contains new information collection requirements 
subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-
13. It will be submitted to the Office of Management and Budget (OMB) 
for review under section 3507(d) of the PRA. OMB, the general public, 
and other Federal agencies are invited to comment on the new 
information collection requirements contained in this proceeding. In 
addition, we note that pursuant to the Small Business Paperwork Relief 
Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4), we 
previously sought specific comment on how the Commission might further 
reduce the information collection burden for small business concerns 
with fewer than 25 employees.
    30. In this present document, we have assessed the effects of the 
procedures for electing to make a statewide commitment under Phase II 
and find that no businesses with fewer than 25 employees will be 
directly affected. We have structured the challenge process to minimize 
burdens on businesses with fewer than 25 employees. Unsubsidized 
competitors, many of which are small businesses, will face reduced 
burden due to the use of presumptions that a provider meeting the speed 
requirement also meets the other non-speed criteria. Furthermore, 
specifying the format and

[[Page 32995]]

probative evidence for the challenge process in advance will likely 
provide certainty to small businesses in filing any challenges and 
reduce the burden on such parties.

B. Final Regulatory Flexibility Act Certification

    31. 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).
    32. This Order implements the rules adopted by the Commission in 
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 the 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 SBREFA. 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.

C. Congressional Review Act

    33. 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

    Accordingly, it is ordered that, pursuant to sections 1, 4(i), 201-
206, 214, 218-220, 254, 303(r), and 403 of the Communications Act of 
1934, as amended, and section 706 of the Telecommunications Act of 
1996, 47 U.S.C. 151, 154(i), 201-206, 214, 218-220, 254, 303(r), 403, 
1302, sections 0.91 and 0.291 of the Commission's rules, 47 CFR 0.91, 
0.291, and the delegations of authority in paragraphs 103, 170, and 171 
of the USF/ICC Transformation Order, FCC 11-161, this Report and Order 
is adopted, effective July 3, 2013, 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.

Federal Comunications Commission.
Julie Veach,
Chief, Wireline Competition Bureau.
[FR Doc. 2013-12985 Filed 5-31-13; 8:45 am]
BILLING CODE 6712-01-P