Schools and Libraries Universal Service Support Mechanism, a National Broadband Plan for Our Future, 33705-33709 [2014-13658]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 79, Number 113 (Thursday, June 12, 2014)]
[Rules and Regulations]
[Pages 33705-33709]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-13658]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[CC Docket No. 02-6; GN Docket No. 09-51; DA 14-712]


Schools and Libraries Universal Service Support Mechanism, a 
National Broadband Plan for Our Future

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this Order, the Wireline Competition Bureau revises its 
guidance for the E-rate program with respect to the requirement that 
applicants deduct from their E-rate funding requests the value of 
ineligible services bundled with services eligible for E-rate support, 
a process referred to in the E-rate program as cost allocation. The 
2010 Clarification Order permitted, under limited circumstances, E-rate 
applicants to seek E-rate support for purchases of eligible services 
bundled with ineligible components without providing a cost allocation 
separating out the value of the ineligible components. The Wireline 
Competition Bureau finds that, allowing E-rate applicants to purchase 
bundles of eligible products or services and ineligible components 
without deducting the value of the ineligible components risks having 
the universal service fund (Fund) overpay for services and resulted in 
applicant and service provider confusion. The Wireline Competition 
Bureau determined that E-rate applicants must deduct the value of 
ineligible components bundled with eligible services unless those 
ineligible components qualify as ``ancillary'' to the eligible services 
under the Commission's rules.

DATES: Effective July 14, 2014.

FOR FURTHER INFORMATION CONTACT: Cara Voth, Attorney, Wireline 
Competition Bureau, (202) 418-0025; Bryan Boyle, Attorney, Wireline 
Competition Bureau, (202) 418-7924 or TTY: (202) 418-0484.

SUPPLEMENTARY INFORMATION: This is a summary of the Wireline 
Competition Bureau's Order in CC Docket No. 02-6 and GN Docket No. 09-
51; DA 14-712, released on May 23, 2014. 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/2014/db0523/DA-14-712A1.pdf.

I. Introduction

    1. In this Order, the Wireline Competition Bureau (Bureau) revises 
our guidance for the E-rate program (more formally known as the schools 
and libraries universal service support program) with respect to the 
requirement that applicants deduct from their E-rate funding requests 
the value of ineligible services bundled with services eligible for E-
rate support, a process referred to in the E-rate program as cost 
allocation. The 2010 Clarification Order permitted, under limited 
circumstances, E-rate applicants to seek E-rate support for purchases 
of eligible services bundled with ineligible components without 
providing a cost allocation separating out the value of the ineligible 
components. Beginning in funding year 2015, we once again require E-
rate recipients to cost allocate ineligible components that are bundled 
with eligible products or services, even under the limited 
circumstances allowed for by the 2010 Clarification Order. Based on our 
review of the record, we find that allowing E-rate applicants to 
purchase bundles of eligible products or services and ineligible 
components without deducting the value of the ineligible components 
risks having the federal universal service fund (Fund) overpay for 
services, and resulted in applicant and service provider confusion. We 
therefore determine that E-rate applicants must deduct the value of 
ineligible components bundled with eligible services unless those 
ineligible components qualify as ``ancillary'' to the eligible services 
under the Commission's rules. This revised interpretation of our rules 
shall be effective beginning in funding year 2015.

II. Discussion

    2. Based on our review of the record, we now adopt the proposal 
made in the E-rate Bundled Components Public Notice, 78 FR 23877, April 
23, 2013, and revise our guidance regarding cost allocation for bundles 
of eligible services and ineligible components to more properly align 
with the Commission's cost allocation rules for the E-rate program, the 
best interests of the Fund, and the best interests of applicants for E-
rate support. As a result, beginning with funding year 2015, E-rate 
recipients must cost allocate non-ancillary ineligible components that 
are bundled with eligible products or services, including those 
components that previously would have fallen within the scope of 
components not requiring cost

[[Page 33706]]

allocation as described in the 2010 Clarification Order. Applicants may 
continue to seek E-rate funding for the eligible components of any 
bundled service offering but now must cost allocate non-ancillary 
ineligible components including, but not limited to, end user devices 
such as telephone handsets, VoIP handsets, computers, cell phones, and 
other components that are not eligible for E-rate discounts. We make no 
other changes to the gift guidance in the 2010 Clarification Order. If 
a gift was prohibited prior to today's Order, it remains prohibited by 
our rules.
    3. The record persuades us that the 2010 Clarification Order 
guidance, which was focused on providing a further explanation of the 
Commission's E-rate program gift rules, is not the best reading of the 
Commission's rules because it did not fully consider the interplay 
between the gift rules and cost allocation requirements. As a result, 
the guidance in that order created substantial uncertainty for 
applicants and service providers about which ineligible components were 
required to be cost allocated. Moreover, because the 2010 Clarification 
Order did not impose limitations on what types of equipment or services 
could be bundled, we have become increasingly concerned that it 
unintentionally created risk that bundled offerings could result in 
expenditures for ineligible equipment or services that could drain the 
resources available for eligible equipment or services.
    4. The 2010 Clarification Order guidance has proven to be 
incompatible with the Commission's E-rate rules regarding eligible 
services and cost allocation, which serve to prevent the E-rate program 
from paying for more than just eligible services. Permitting E-rate 
support for bundled ineligible components without requiring cost 
allocation creates the risk that E-rate funds will pay for ineligible 
services, leaving less money for eligible services. The Commission's 
ongoing commitment to strong stewardship of the Fund and to combatting 
waste, fraud and abuse in the E-rate program requires us to strive to 
ensure that E-rate support is not diverted to ineligible services, and 
the interpretation of our rules adopted here helps guard against that 
risk.
    5. In addition, we have found that the 2010 Clarification Order has 
caused confusion over the interplay between that order and the 
Commission's cost allocation rules. The Commission's cost allocation 
rules require that ``[a] request for discounts for a product or service 
that includes both eligible and ineligible components must allocate the 
cost of the contract to eligible and ineligible components.'' By 
exempting some bundled offerings from those general cost allocation 
rules, the cost allocation guidance in the 2010 Clarification Order 
inadvertently created substantial tension between the guidance provided 
by the Bureau and the Commission's rules. Moreover, commenters 
expressed frustration that the 2010 Clarification Order cost allocation 
guidance did not make clear what products or services, other than cell 
phones, did not require cost allocation. Rescinding the cost allocation 
guidance of the 2010 Clarification Order and once again requiring cost 
allocation of all non-ancillary ineligible components of a bundle 
reflects the best reading of Commission rules and will make it easier 
for applicants to determine what must be cost allocated. We agree with 
the commenter who stated that the longstanding cost allocation 
requirement is ``a simple and conceptually sound approach.''
    6. Some commenters recommended that the Bureau reaffirm the cost 
allocation language in the 2010 Clarification Order, but limit its 
reach to bundles of cell phone handsets and service. Having a separate 
cost allocation policy for cell phones might be a practical approach to 
address the difficulties in assessing equipment price, but allowing 
bundling without cost allocation, even in relatively narrow 
circumstances, is in tension with the Commission's rules. Moreover, 
treating bundles of cell phones and cell phone service differently than 
other bundles of eligible services and ineligible components is 
inconsistent with the Commission's general commitment to technological 
neutrality, and risks having the E-rate program funds overpay for cell 
phone service. Requiring cost allocation for all bundled ineligible 
components, including cell phones, comports more fully with Commission 
rules.
    7. Some commenters argue that we should maintain the guidance in 
the 2010 Clarification Order because bundling eligible and ineligible 
services is often the most economical way for E-rate recipients to 
receive services. But under today's decision, E-rate applicants may 
continue to achieve those economies by purchasing bundles containing 
eligible products or services and ineligible components. They are 
merely required to deduct the value of these ineligible components from 
their funding requests when they seek discounts for purchases of 
bundled services. In practical terms, this means that when applicants 
submit requests for funding on an FCC Form 471, they must identify 
which costs in the bundle are eligible and which costs are ineligible.
    8. Several commenters have asked for guidance on the Commission's 
cost allocation requirements. We recognize that, as explained above, 
cost allocation requires some administrative effort, but compliance 
with the requirement is relatively simple. Under the Commission's 
rules, if a product or service contains ineligible components, costs 
should be allocated to the extent that a clear delineation can be made 
between the eligible and ineligible components. The clear delineation 
must have a tangible basis and the price for the eligible portion must 
be the most cost-effective means of receiving the eligible service.
    9. Finally, as explained above, cost allocation is not required for 
ineligible ancillary components as defined by the Commission's rules. 
Although some commenters recommend amending the definition of 
``ancillary'', a substantive change to the Commission's rule on 
ancillary components is beyond the scope of this proceeding. We remind 
applicants that the definition of ancillary requires that the price for 
the otherwise ineligible component cannot be determined separately and 
independently from the price of the eligible components, and that the 
specific service which contains the ineligible ancillary component 
remains the most cost-effective way for the applicant to receive that 
service. USAC reviews requests for E-rate funding to ensure that any 
ineligible components deemed as ancillary to eligible services are 
truly ancillary under the Commission's definition.

III. Procedural Matters

A. Final Regulatory Flexibility Analysis

    10. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), the Wireline Competition Bureau (Bureau) included an 
Initial Regulatory Flexibility Analysis (IRFA) of the possible 
significant economic impact on a substantial number of small entities 
by the policies and rules proposed in the E-rate Bundled Components 
Public Notice in CC Docket No. 02-6 and GN Docket No 09-51. The Bureau 
sought written public comment on the proposals in the E-rate Bundled 
Components Public Notice, including comment on the IRFA. This Final 
Regulatory Flexibility Analysis (FRFA) conforms to the RFA.

[[Page 33707]]

B. Need for, and Objectives of, the Proposed Rule

    11. This Order continues the Bureau's efforts to simplify the E-
rate program and encourage the prudent use of limited E-rate funds. In 
it, we clarify that beginning with applications seeking discounts for 
E-rate funding year 2015, any ineligible components must be cost 
allocated, even if bundled with E-rate eligible services and offered to 
the public or some class of users. The prudent use of limited E-rate 
funding and clarity about E-rate rules are important to the long-term 
efficacy of the federal universal service fund (Fund). This 
clarification will help to achieve the Commission's goal of maintaining 
Fund solvency and providing clear rules for E-rate recipients.

C. Summary of Significant Issues Raised by Public Comments to the IRFA

    12. No comments specifically addressed the IRFA.

D. Description and Estimate of the Number of Small Entities To Which 
the Proposed Rules May Apply

    13. The RFA directs agencies to provide a description of and, where 
feasible, an estimate of the number of small entities that may be 
affected by the proposed rules, if adopted. The RFA generally defines 
the term ``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 that: (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). Nationwide, there are a total of approximately 
28.2 million small businesses, according to the SBA. A ``small 
organization'' is generally ``any not-for-profit enterprise which is 
independently owned and operated and is not dominant in its field.''
    14. Nationwide, as of 2002, there were approximately 1.6 million 
small organizations. The term ``small governmental jurisdiction'' is 
defined generally as ``governments of cities, towns, townships, 
villages, school districts, or special districts, with a population of 
less than fifty thousand.'' Census Bureau data for 2002 indicate that 
there were 87,525 local governmental jurisdictions in the United 
States. We estimate that, of this total, 84,377 entities were ``small 
governmental jurisdictions.'' Thus, we estimate that most governmental 
jurisdictions are small.
    15. Small entities potentially affected by the proposals herein 
include eligible schools and libraries and the eligible service 
providers offering them discounted services.
    16. Schools and Libraries. As noted, ``small entity'' includes non-
profit and small government entities. Under the schools and libraries 
universal service support mechanism, which provides support for 
elementary and secondary schools and libraries, an elementary school is 
generally ``a non-profit institutional day or residential school that 
provides elementary education, as determined under state law.'' A 
secondary school is generally defined as ``a non-profit institutional 
day or residential school that provides secondary education, as 
determined under state law,'' and not offering education beyond grade 
12. For-profit schools and libraries, and schools and libraries with 
endowments in excess of $50,000,000, are not eligible to receive 
discounts under the program, nor are libraries whose budgets are not 
completely separate from any schools. Certain other statutory 
definitions apply as well. The SBA has defined for-profit, elementary 
and secondary schools and libraries having $6 million or less in annual 
receipts as small entities. In funding year 2007, approximately 105,500 
schools and 10,950 libraries received funding under the schools and 
libraries universal service mechanism. Although we are unable to 
estimate with precision the number of these entities that would qualify 
as small entities under SBA's size standard, we estimate that fewer 
than 105,500 schools and 10,950 libraries might be affected annually by 
our action, under current operation of the program.
    17. Telecommunications Service Providers. First, neither the 
Commission nor the SBA has developed a size standard for small 
incumbent local exchange services. The closest size standard under SBA 
rules is for Wired Telecommunications Carriers. Under that size 
standard, such a business is small if it has 1,500 or fewer employees. 
According to Commission data, 1,307 incumbent carriers reported that 
they were engaged in the provision of local exchange services. Of these 
1,307 carriers, an estimated 1,006 have 1,500 or fewer employees and 
301 have more than 1,500 employees. Thus, under this category and 
associated small business size standard, we estimate that the majority 
of entities are small. We have included small incumbent local exchange 
carriers in this RFA analysis. A ``small business'' under the RFA is 
one that, inter alia, meets the pertinent small business size standard 
(e.g., a telephone communications business having 1,500 or fewer 
employees), and ``is not dominant in its field of operation.'' The 
SBA's Office of Advocacy contends that, for RFA purposes, small 
incumbent local exchange carriers are not dominant in their field of 
operation because any such dominance is not ``national'' in scope. We 
have therefore included small incumbent carriers in this RFA analysis, 
although we emphasize that this RFA action has no effect on the 
Commission's analyses and determinations in other, non-RFA contexts.
    18. Second, neither the Commission nor the SBA has developed a 
definition of small entities specifically applicable to providers of 
interexchange services (IXCs). The closest applicable definition under 
the SBA rules is for wired telecommunications carriers. This provides 
that a wired telecommunications carrier is a small entity if it employs 
no more than 1,500 employees. According to the Commission's 2010 Trends 
Report, 359 companies reported that they were engaged in the provision 
of interexchange services. Of these 300 IXCs, an estimated 317 have 
1,500 or few employees and 42 have more than 1,500 employees. 
Consequently, the Commission estimates that most providers of 
interexchange services are small businesses.
    19. Third, neither the Commission nor the SBA has developed a 
definition of small entities specifically applicable to competitive 
access services providers (CAPs). The closest applicable definition 
under the SBA rules is for wired telecommunications carriers. This 
provides that a wired telecommunications carrier is a small entity if 
it employs no more than 1,500 employees. According to the 2010 Trends 
Report, 1,442 CAPs and competitive local exchange carriers (competitive 
LECs) reported that they were engaged in the provision of competitive 
local exchange services. Of these 1,442 CAPs and competitive LECs, an 
estimated 1,256 have 1,500 or fewer employees and 186 have more than 
1,500 employees. Consequently, the Commission estimates that most 
providers of competitive exchange services are small businesses.
    20. Wireless Telecommunications Carriers (except Satellite). Since 
2007, the Census Bureau has placed wireless firms within this new, 
broad, economic census category. Prior to that time, such

[[Page 33708]]

firms were within the now-superseded categories of ``Paging'' and 
``Cellular and Other Wireless Telecommunications.'' Under the present 
and prior categories, the SBA has deemed a wireless business to be 
small if it has 1,500 or fewer employees. Because Census Bureau data 
are not yet available for the new category, we will estimate small 
business prevalence using the prior categories and associated data. For 
the category of Paging, data for 2002 show that there were 807 firms 
that operated for the entire year. Of this total, 804 firms had 
employment of 999 or fewer employees, and three firms had employment of 
1,000 employees or more. For the category of Cellular and Other 
Wireless Telecommunications, data for 2002 show that there were 1,397 
firms that operated for the entire year. Of this total, 1,378 firms had 
employment of 999 or fewer employees, and 19 firms had employment of 
1,000 employees or more. Thus, we estimate that the majority of 
wireless firms are small.
    21. Wireless telephony includes cellular, personal communications 
services, and specialized mobile radio telephony carriers. As noted, 
the SBA has developed a small business size standard for Wireless 
Telecommunications Carriers (except Satellite). Under the SBA small 
business size standard, a business is small if it has 1,500 or fewer 
employees. According to the 2010 Trends Report, 413 carriers reported 
that they were engaged in wireless telephony. Of these, an estimated 
261 have 1,500 or fewer employees and 152 have more than 1,500 
employees. We have estimated that 261 of these are small under the SBA 
small business size standard.
    22. Common Carrier Paging. As noted, since 2007 the Census Bureau 
has placed paging providers within the broad economic census category 
of Wireless Telecommunications Carriers (except Satellite). Prior to 
that time, such firms were within the now-superseded category of 
``Paging.'' Under the present and prior categories, the SBA has deemed 
a wireless business to be small if it has 1,500 or fewer employees. 
Because Census Bureau data are not yet available for the new category, 
we will estimate small business prevalence using the prior category and 
associated data. The data for 2002 show that there were 807 firms that 
operated for the entire year. Of this total, 804 firms had employment 
of 999 or fewer employees, and three firms had employment of 1,000 
employees or more. Thus, we estimate that the majority of paging firms 
are small.
    23. In addition, in the Paging Second Report and Order, the 
Commission adopted a size standard for ``small businesses'' for 
purposes of determining their eligibility for special provisions such 
as bidding credits and installment payments. A small business is an 
entity that, together with its affiliates and controlling principals, 
has average gross revenues not exceeding $15 million for the preceding 
three years. The SBA has approved this definition. An initial auction 
of Metropolitan Economic Area (``MEA'') licenses was conducted in the 
year 2000. Of the 2,499 licenses auctioned, 985 were sold. Fifty-seven 
companies claiming small business status won 440 licenses. A subsequent 
auction of MEA and Economic Area (``EA'') licenses was held in the year 
2001. Of the 15,514 licenses auctioned, 5,323 were sold. One hundred 
thirty-two companies claiming small business status purchased 3,724 
licenses. A third auction, consisting of 8,874 licenses in each of 175 
EAs and 1,328 licenses in all but three of the 51 MEAs, was held in 
2003. Seventy-seven bidders claiming small or very small business 
status won 2,093 licenses.
    24. Currently, there are approximately 74,000 Common Carrier Paging 
licenses. According to the most recent Trends in Telephone Service, 291 
carriers reported that they were engaged in the provision of ``paging 
and messaging'' services. Of these, an estimated 289 have 1,500 or 
fewer employees and two have more than 1,500 employees. We estimate 
that the majority of common carrier paging providers would qualify as 
small entities under the SBA definition.
    25. Internet Service Providers. The 2007 Economic Census places 
these firms, whose services might include voice over Internet protocol 
(VoIP), in either of two categories, depending on whether the service 
is provided over the provider's own telecommunications facilities 
(e.g., cable and DSL ISPs), or over client-supplied telecommunications 
connections (e.g., dial-up ISPs). The former are within the category of 
Wired Telecommunications Carriers, which has an SBA small business size 
standard of 1,500 or fewer employees. The latter are within the 
category of All Other Telecommunications, which has a size standard of 
annual receipts of $25 million or less. The most current Census Bureau 
data for all such firms, however, are the 2002 data for the previous 
census category called Internet Service Providers. That category had a 
small business size standard of $21 million or less in annual receipts, 
which was revised in late 2005 to $23 million. The 2002 data show that 
there were 2,529 such firms that operated for the entire year. Of 
those, 2,437 firms had annual receipts of under $10 million, and an 
additional 47 firms had receipts of between $10 million and 
$24,999,999. Consequently, we estimate that the majority of ISP firms 
are small entities.
    26. Vendors of Internal Connections: Telephone Apparatus 
Manufacturing. The Census Bureau defines this category as follows: 
``This industry comprises establishments primarily engaged in 
manufacturing wire telephone and data communications equipment. These 
products may be standalone or board-level components of a larger 
system. Examples of products made by these establishments are central 
office switching equipment, cordless telephones (except cellular), PBX 
equipment, telephones, telephone answering machines, LAN modems, multi-
user modems, and other data communications equipment, such as bridges, 
routers, and gateways.'' The SBA has developed a small business size 
standard for Telephone Apparatus Manufacturing, which is: all such 
firms having 1,000 or fewer employees. According to Census Bureau data 
for 2002, there were a total of 518 establishments in this category 
that operated for the entire year. Of this total, 511 had employment of 
under 1,000, and an additional seven had employment of 1,000 to 2,499. 
Thus, under this size standard, the majority of firms can be considered 
small.
    27. Vendors of Internal Connections: Radio and Television 
Broadcasting and Wireless Communications Equipment Manufacturing. The 
Census Bureau defines this category as follows: ``This industry 
comprises establishments primarily engaged in manufacturing radio and 
television broadcast and wireless communications equipment. Examples of 
products made by these establishments are: transmitting and receiving 
antennas, cable television equipment, GPS equipment, pagers, cellular 
phones, mobile communications equipment, and radio and television 
studio and broadcasting equipment.'' The SBA has developed a small 
business size standard for firms in this category, which is: all such 
firms having 750 or fewer employees. According to Census Bureau data 
for 2002, there were a total of 1,041 establishments in this category 
that operated for the entire year. Of this total, 1,010 had employment 
of under 500, and an additional 13 had employment of 500 to 999. Thus, 
under this size standard, the majority of firms can be considered 
small.
    28. Vendors of Internal Connections: Other Communications Equipment

[[Page 33709]]

Manufacturing. The Census Bureau defines this category as follows: 
``This industry comprises establishments primarily engaged in 
manufacturing communications equipment (except telephone apparatus, and 
radio and television broadcast, and wireless communications 
equipment).'' The SBA has developed a small business size standard for 
Other Communications Equipment Manufacturing, which is having 750 or 
fewer employees. According to Census Bureau data for 2002, there were a 
total of 503 establishments in this category that operated for the 
entire year. Of this total, 493 had employment of under 500, and an 
additional 7 had employment of 500 to 999. Thus, under this size 
standard, the majority of firms can be considered small.

E. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements for Small Entities

    29. This Order reinstates the requirement that E-rate applicants 
cost allocate all bundled ineligible components other than those that 
fall under the Commission's definition of ``ancillary.'' Cost 
allocation requirements are already part of Sec.  54.504(e) of the 
Commission's rules, which requires a clear delineation of eligible and 
ineligible services that are included on an application requesting E-
rate discounts. The rulemaking results in minimal additional reporting 
requirements.
    30. The result of this rulemaking is that small entities that had 
not been cost allocating certain bundled ineligible components will 
again be required to comply with Sec.  54.504(e) requirements for cost 
allocating these components. Small entities that are service providers 
and vendors in the E-rate program will also be required to reexamine 
offerings in accordance to any changed requirements.

F. Steps Taken to Minimize the Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered

    31. The RFA requires an agency to describe any significant, 
specifically small business, alternatives that it has considered in 
reaching its proposed approach, which may include the following four 
alternatives (among others): ``(1) the establishment of differing 
compliance or reporting requirements or timetables that take into 
account the resources available to small entities; (2) the 
clarification, consolidation, or simplification of compliance and 
reporting requirements under the rule for such small entities; (3) the 
use of performance rather than design standards; and (4) an exemption 
from coverage of the rule, or any part thereof, for such small 
entities.''
    32. This rulemaking could impose minimal additional burdens on 
small entities. The only additional administrative burden the 
rulemaking could impose on small entities, however, would be requiring 
them to cost allocate ineligible components that they may have presumed 
were exempted from the cost allocation requirements by the 2010 
Clarification Order. Cost allocation requires determining the costs of 
eligible and ineligible components and reporting the delineation of 
those costs in a request for E-rate discounts on the FCC Form 471. E-
rate recipients had been required to cost allocate ineligible 
components bundled with eligible services prior to the 2010 
Clarification Order, and are already generally required to cost 
allocate all ineligible components.

G. Report to Congress

    33. The Commission will send a copy of this Order, including this 
FRFA, in a report to be sent to Congress pursuant to the SBREFA. In 
addition, the Commission will send a copy of the Order, including the 
FRFA, to the Chief Counsel for Advocacy of the SBA. A copy of the Order 
and the FRFA (or summaries thereof) will also be published in the 
Federal Register.

H. Paperwork Reduction Act Analysis

    34. This document contains revised 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 of the PRA. We note that 
pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 
107-198, the Commission previously sought specific comment on how it 
might further reduce the information collection burden on small 
business concerns with fewer than 25 employees.
    35. In the present document, we rescind the guidance in the 2010 
Clarification Order regarding cost allocation requirements in the E-
rate program (more formally known as the schools and libraries 
universal service support program). We have determined that it is in 
the best interest of the E-rate program and its participants to require 
E-rate recipients to cost allocate ineligible components that are 
bundled with eligible services and that may have been subject to the 
limited exemption provided by the guidance in the 2010 Clarification 
Order. Any information collected from applicants is limited to 
information explaining the cost allocation.

I. Congressional Review Act

    36. The Bureau will include a copy of this Order in a report to be 
sent to Congress and the Government Accountability Office pursuant to 
the Congressional Review Act.

IV. Ordering Clause

    37. Accordingly, it is ordered, that pursuant to the authority 
contained in sections 1 through 4, 254, and 303(r) of the 
Communications Act of 1934, as amended, 47 U.S.C. 151 through 154, 254, 
and 303(r), and authority delegated in Federal-State Joint Board on 
Universal Service, CC Docket No. 96-45, Third Report and Order, 12 FCC 
Rcd 22485, 22488 through 89, paragraph 6 (1997), this Order is adopted, 
effective July 14, 2014.

Federal Communications Commission.
Julie A. Veach,
Chief, Wireline Competition Bureau.
[FR Doc. 2014-13658 Filed 6-11-14; 8:45 am]
BILLING CODE 6712-01-P