Connect America Fund, ETC Annual Reports and Certifications, Establishing Just and Reasonable Rates for Local Exchange Carriers, Developing a Unified Intercarrier Compensation Regime, 2132-2136 [2019-01315]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 84, Number 25 (Wednesday, February 6, 2019)]
[Proposed Rules]
[Pages 2132-2136]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-01315]



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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 32, 54, and 65

[WC Docket Nos. 10-90, 14-58, 07-135, CC Docket No. 01-92; FCC 18-176]


Connect America Fund, ETC Annual Reports and Certifications, 
Establishing Just and Reasonable Rates for Local Exchange Carriers, 
Developing a Unified Intercarrier Compensation Regime

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In this document, the Federal Communications Commission 
(Commission) seeks comment on how to implement an auction mechanism for 
competitive overlapped legacy rate-of-return areas, broadband only line 
conversions, and legacy support in Tribal areas.

DATES: Comments are due on or before March 8, 2019 and reply comments 
are due on or before April 8, 2019. If you anticipate that you will be 
submitting comments, but find it difficult to do so within the period 
of time allowed by this document, you should advise the contact listed 
below as soon as possible.

ADDRESSES: Pursuant to sections 1.415 and 1.419 of the Commission's 
rules, 47 CFR 1.415, 1.419, interested parties may file comments and 
reply comments on or before the dates indicated on the first page of 
this document. Comments and reply comments may be filed using the 
Commission's Electronic Comment Filing System (ECFS). See Electronic 
Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (1998).
    [ssquf] Electronic Filers: Comments may be filed electronically 
using the internet by accessing the ECFS: https://apps.fcc.gov/ecfs/.
    [ssquf] Paper Filers: Parties who choose to file by paper must file 
an original and one copy of each filing. If more than one docket or 
rulemaking number appears in the caption of this proceeding, filers 
must submit two additional copies for each additional docket or 
rulemaking number.
    Filings can be sent by hand or messenger delivery, by commercial 
overnight courier, or by first-class or overnight U.S. Postal Service 
mail. All filings must be addressed to the Commission's Secretary, 
Office of the Secretary, Federal Communications Commission.
    [ssquf] All hand-delivered or messenger-delivered paper filings for 
the Commission's Secretary must be delivered to FCC Headquarters at 445 
12th St. SW, Room TW-A325, Washington, DC 20554. The filing hours are 
8:00 a.m. to 7:00 p.m. All hand deliveries must be held together with 
rubber bands or fasteners. Any envelopes and boxes must be disposed of 
before entering the building.
    [ssquf] Commercial overnight mail (other than U.S. Postal Service 
Express Mail and Priority Mail) must be sent to 9050 Junction Drive, 
Annapolis Junction, MD 20701.
    [ssquf] U.S. Postal Service first-class, Express, and Priority mail 
must be addressed to 445 12th Street SW, Washington DC 20554.
    People with Disabilities: To request materials in accessible 
formats for people with disabilities (braille, large print, electronic 
files, audio format), send an email to fcc504@fcc.gov or call the 
Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-
418-0432 (tty).

FOR FURTHER INFORMATION CONTACT: Suzanne Yelen, Wireline Competition 
Bureau, (202) 418-7400 or TTY: (202) 418-0484.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's 
Further Notice of Proposed Rulemaking (FNPRM) in WC Docket Nos. 10-90, 
14-58, 07-135, CC Docket No. 01-92; FCC 18-176, adopted on December 12, 
2018 and released on December 13, 2018. 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://docs.fcc.gov/public/attachments/FCC-18-176A1.pdf. The Report and Order and Order on 
Reconsideration that was adopted concurrently with the FNPRM is 
published elsewhere in this issue of the Federal Register.

I. Introduction

    1. In the FNPRM, the Commission is seeking comment on how to 
implement an auction mechanism for competitive overlapped legacy rate-
of-return areas, broadband-only line conversions, and legacy support in 
Tribal areas.

II. Further Notice of Proposed Rulemaking

    2. In the FNPRM, the Commission seeks comment on rules for 
implementing its determination that support in areas overlapped or 
almost entirely overlapped by unsubsidized competition should be 
awarded through an auction. In addition, the Commission seeks comment 
on whether it needs to take steps to ensure that the budget for legacy 
carriers is sufficient and to address the different amounts of support 
provided for voice-only or voice/broadband lines as compared to 
broadband-only lines. The Commission also seeks comment on additional 
support for legacy carriers serving Tribal areas.
    3. In the concurrently adopted Report and Order, the Commission 
determines that the use of an auction is a more efficient way to award 
support in areas that are overlapped or almost entirely overlapped by 
unsubsidized competition. Here, the Commission seeks comment on how 
this decision should be implemented, including auction design. In 
general, the Commission proposes that the auction process would operate 
in substantially the same way as the Connect America Fund (CAF) Phase 
II auction, which concluded on August 28, 2018, but seek comment on 
whether changes to account for any differences unique to this overlap 
auction are necessary and appropriate. Further information regarding 
the CAF Phase II auction (Auction 903) is available on the FCC's 
website.
    4. Affected study areas. Initially, the Commission seeks comment on 
what percentage it should use to determine those study areas that are 
almost entirely overlapped according to FCC Form 477. Should support in 
legacy study areas that are less than 100% overlapped by unsubsidized 
competition, e.g., 99% or 95%, also be awarded through competitive 
bidding? Currently, there are eight legacy study areas with 100% 
overlap and seven legacy study areas with at least 95% overlap with 
approximately $12 million in unconstrained projected claims for all 15 
study areas for 2018. Rather than solely rely on FCC Form 477 data, 
should the Commission then also conduct a challenge process to verify 
the affected study areas? Is such a challenge process necessary given 
that the areas will be subject to auction?
    5. Eligible areas. The Commission proposes to break each study area 
into a census geography, such as census block groups, with each unit as 
the minimum geographic bidding area. The Commission previously used 
census block groups but declined to auction units as small as census 
blocks or as large as counties or census tracts for the CAF Phase II 
auction. Given that there are likely to be fewer total eligible areas 
in this auction, should the Commission instead use census blocks as the 
minimum geographic bidding area? The Commission expects to adopt the 
bidding unit in the pre-auction process.
    6. The Commission proposes to establish the reserve price--the

[[Page 2133]]

maximum amount of support available for each bidding unit prior to the 
auction--by proportionally allocating the incumbent's legacy support 
across each eligible study area using the costs for each census block 
as determined by the cost model in order to account for the relative 
costs of providing service among areas. Should the Commission instead 
establish reserve prices based on Alternative Connect America Cost 
Model (A-CAM) costs, or on some percentage of the incumbent's prior 
year's legacy claims? The Commission notes that the CAF Phase II 
auction began with an aggregate reserve price for all eligible areas 
based on the Commission's cost model, but cleared at 78.35% of the 
reserve price. Thus, the CAF Phase II auction reduced the amount of 
support needed for these areas to substantially less than the reserve 
price. How can the Commission create similar competition in auctions 
offering support to overlap areas?
    7. Public interest obligations. The Commission proposes to accept 
bids in technology neutral service tiers with varying speed and usage 
allowances similar to those used in the CAF Phase II auction but 
eliminating speeds below 25/3 Mbps, and for each tier will 
differentiate between bids that would offer either lower or higher 
latency. The following charts summarize the performance tiers and 
latency (including the weights as adopted by the Commission for the CAF 
Phase II auction):

----------------------------------------------------------------------------------------------------------------
            Performance tier                         Speed              Monthly usage allowance       Weight
----------------------------------------------------------------------------------------------------------------
Baseline................................  >= 25/3 Mbps..............  >= 150 GB or U.S. median,               45
                                                                       whichever is higher.
Above Baseline..........................  >= 100/20 Mbps............  >= 2 terabytes (TB).......              15
Gigabit.................................  >= 1 Gbps/500 Mbps........  >= 2 TB...................               0
----------------------------------------------------------------------------------------------------------------


------------------------------------------------------------------------
              Latency                    Requirement          Weight
------------------------------------------------------------------------
Low Latency.......................  <= 100 ms...........               0
High Latency......................  <= 750 ms & MOS >= 4              25
------------------------------------------------------------------------

    8. Are there any reasons to accept different performance tiers or 
different latency metrics? The Commission notes that 99.75% of 
locations awarded through the CAF Phase II auction were at speeds of 
25/3 Mbps or higher.
    9. Winning bidders would be required to serve all locations within 
each census block group, with interim and final deployment milestones 
similar to those of recipients of CAF Phase II auction support. Should 
the Commission make any changes to that framework?
    10. Eligibility to participate. The Commission seeks comment on 
what entities should be eligible to participate. The Commission 
proposes that the auction not be limited only to the incumbent and the 
competitors that report coverage within the study area, but open to any 
eligible provider. The Commission notes that more auction participants 
are more likely to lead to market-based support levels. The Commission 
also recognizes the possibility that limiting eligibility could result 
in only one or two bidders per study area.
    11. The Commission proposes to adopt a two-stage application filing 
process for participants in this auction, similar to that used in other 
Commission universal service auctions. Specifically, in the pre-auction 
``short-form'' application, a potential bidder must establish its 
eligibility to participate, providing, among other things, basic 
ownership information and certifying to its qualifications to receive 
support. After the auction, the Commission would conduct a more 
extensive review of the winning bidders' qualifications to receive 
support through ``long-form'' applications. Such an approach balances 
the need to collect essential information with administrative 
efficiency and will provide the Commission with assurance that 
interested entities are qualified to meet the relevant terms and 
conditions if awarded support.
    12. In the CAF Phase II auction, the Commission required applicants 
to demonstrate that they had provided voice, broadband, and/or electric 
distribution or transmission services for at least two years. The 
Commission also adopted an alternative pathway for entities that could 
not demonstrate service for two years by instead submitting (1) audited 
financial statements for that entity from the three most recent 
consecutive fiscal years, including balance sheets, net income, and 
cash flow, and (2) a letter of interest from a qualified bank with 
terms acceptable to the Commission that the bank would provide a letter 
of credit to the bidder. Should the Commission adopt the same or 
similar requirements for this auction?
    13. Auction design. The Commission also seeks comment on the 
appropriate auction design for offering support in overlap areas. The 
Commission already has competitive bidding rules that allow for the 
subsequent determination of specific final auction procedures based on 
additional public input during the pre-auction process. The Commission 
proposes to use the same auction design as it did in the CAF Phase II 
auction--a multi-round, descending clock auction in which bidders 
selecting different performance levels will compete head-to-head in the 
auction, with weights to take into account the Commission's preference 
for higher speeds over lower speeds, higher usage allowances over lower 
usage allowances, and low latency over high latency. The Commission 
proposes to auction all affected study areas nationwide in the same 
auction. The Commission seeks comment on whether any auction design 
changes should be made to take into account any differences between the 
nature of competition in the CAF Phase II auction and an auction of 
support for overlap areas. If so, the Commission asks that commenters 
identify and describe recommended changes with specificity. Consistent 
with prior practice, the Commission proposes to develop the specific 
details of the auction as part of the pre-auction process.
    14. Transition for incumbent provider. The Commission proposes that 
any incumbent that does not apply to participate in the auction shall 
have its support reduced, regardless of whether other carriers apply or 
bid. The Commission infers that by not applying to participate in the 
auction the incumbent is demonstrating that it does not need any of its 
limited universal service funds to continue providing service to its 
area.
    15. The Commission seeks comment on what should happen to the 
legacy rate-of-return support mechanisms for

[[Page 2134]]

an incumbent local exchange carrier (LEC) when it, but no other 
carrier, bids in the incumbent's area. The Commission also seeks 
comment on whether, if the incumbent LEC is the sole applicant to bid 
in its service area, and no other carriers apply to bid, the incumbent 
should continue to receive support pursuant to the legacy rate-of-
return support mechanisms? Should the Commission infer that by not 
applying to participate in the auction the competitors are 
demonstrating that they are not capable of providing service to the 
entire study area?
    16. If the incumbent LEC does not win at auction, what, if any, 
transitional support should be provided to the incumbent, and how 
should the Commission best ensure customers who are currently served by 
the incumbent do not lose access to voice service or existing broadband 
service prior to the deployment of service to those locations by the 
winning bidder?
    17. Oversight and accountability. The Commission proposes that the 
same oversight and non-compliance framework as used in the CAF Phase II 
auction would apply to auctions offering support to overlap areas. Are 
there any modifications that should be made and, if so, why?
    18. Frequency of auctions. The Commission's previous 100% overlap 
process was conducted every other year. Should the Commission conduct 
these auctions on a similar schedule, based on the most recent FCC Form 
477 data?
    19. As described in the concurrently adopted Report and Order, the 
Commission is concerned that as carriers move from offering voice and 
voice/broadband lines to broadband-only lines, the amount of support 
required from the Fund will increase. To address this concern, the 
Commission has adopted a minimum of a 7% budgetary increase in 2019. 
The Commission anticipates that this 7% increase should exceed any 
increases to the budget due to conversions of lines from voice or 
voice/broadband to broadband-only. The Commission previously recognized 
the importance of giving consumers the flexibility to purchase 
broadband-only lines, which may provide an opportunity to move from 
``plain old telephone service'' (POTS) to new IP-based services. 
Nonetheless, the Commission understands concerns that some carriers may 
be moving consumers onto broadband-only lines for the purpose of 
artificially increasing the support they receive from the Fund. The 
Commission seeks comment on whether other measures are necessary or 
advisable to address this issue.
    20. The Commission seeks comment on whether the Commission should 
adopt limits on the number of converted lines for which a carrier may 
seek broadband-only support. Several parties have informally suggested 
this may be a useful method of limiting increases to the budget. 
Although this approach would allow for a planned and smooth increase to 
the budget, it puts an artificial constraint on conversions. More and 
more customers want broadband-only lines, with interconnected VoIP or 
wireless service for voice. Such limitations could also lead to 
arbitrage opportunities as carriers seek to adjust their line counts. 
The Commission seeks comment on whether the benefits of such a 
limitation would exceed the burdens.
    21. The Commission also seeks comment on other methods of 
addressing the increased funding needs as lines convert to broadband-
only. First, the Commission notes that when a line converts to 
broadband-only, the carrier immediately begins receiving the increased 
Connect America Fund Broadband Loop Support (CAF BLS) but also 
continues to receive High-cost Loop Support (HCLS) for two years even 
though there is no longer intrastate voice service on the line because 
of the manner in which HCLS is calculated. Should carriers immediately 
lose HCLS for any lines converted to broadband? Given that CAF BLS 
support for broadband-only lines is typically greater than total HCLS 
and CAF BLS for voice and voice/broadband lines, eliminating HCLS for 
converted lines would still provide carriers with sufficient support.
    22. Some suggest carriers are switching consumers from traditional 
telephone service to interconnected VoIP service for the sole purpose 
of maximizing overall support amounts. The Commission seeks comment on 
how to encourage the transition to broadband networks while preventing 
carriers from using the transition as a way to artificially inflate 
their support amounts.
    23. Is there a way the Commission can adjust its CAF ICC rules to 
discourage any arbitrage? The Commission created CAF ICC support to aid 
carriers in the transition to bill-and-keep for their traditional voice 
services, and legacy carriers are eligible to receive such support. To 
calculate a carrier's CAF ICC support, a carrier subtracts its Access 
Recovery Charge (ARC) assessed on voice end-users from its ``Eligible 
Recovery''--the total funding a carrier is entitled to receive from any 
source under the Commission's rules for the transition. Importantly, 
the rules generally require carriers to impute an amount on broadband-
only lines equal to the ARCs they would have assessed on voice and 
voice/broadband access lines. Notably, CAF ICC support comes with 
limited deployment obligations and is subject to a fixed annual 
reduction of 5% to reflect decreasing demand due to line loss. 
Meanwhile, CAF BLS comes with particularized deployment obligations and 
increases to reflect additional interstate costs when carriers migrate 
customers onto broadband-only lines. What measures can the Commission 
take to prevent carriers from gaming this apparent mismatch in its 
universal service and intercarrier compensation rules? Specifically, is 
there a way to determine whether a legacy carrier is migrating its 
customers to broadband only lines as part of the desired transition to 
all broadband networks or to benefit from increased high-cost support? 
Are there circumstances under which a legacy carrier that converts a 
line to broadband-only but retains that voice customer with 
interconnected VoIP service should have to impute some portion of those 
revenues against its CAF ICC support? If so, how much should be 
imputed? Are there other measures the Commission should consider to 
address these concerns?
    24. To address the unique challenges of deploying high-speed 
broadband to rural Tribal communities, the Commission incorporates a 
Tribal Broadband Factor into the A-CAM II offer. In recognition that 
many rural, Tribal areas contain a high concentration of low-income 
individuals and few business subscribers--and thus have lower take 
rates and potential average revenues per subscriber than non-Tribal 
areas--the Tribal Broadband Factor reduces the high-cost funding 
threshold by 25% to a benchmark of $39.38 for locations in Indian 
Country. As a result, carriers opting for the A-CAM II offer will 
receive more funding and be required to deploy to more locations than 
they would have without the Tribal Broadband Factor. In recent weeks, 
NTTA and Gila River have proposed applying the Tribal Broadband Factor 
from the A-CAM II offer to legacy carriers. NTTA suggests addressing 
legacy support by reducing the CAF BLS ``$42 per month per line funding 
threshold by 25 percent to $31.50 . . . [and] revising the HCLS 
algorithm using a similar 25 percent factor.''
    25. The Commission seeks comment on this proposal as well as other 
ways to appropriately incorporate a Tribal Broadband Factor into the 
legacy system. First, the Commission seeks comment on whether to 
incorporate a

[[Page 2135]]

Tribal Broadband Factor into the legacy program. How do the differences 
between the A-CAM II offer and legacy support impact the Commission's 
analysis? For example, the A-CAM II offer is based on the estimated 
take rates and potential revenues per subscribers, whereas the legacy 
program is based on actual take rates and imputed revenues per 
subscriber. Does this difference suggest a different means of 
implementing a Tribal Broadband Factor in the legacy program? If so, in 
what way? Also, do the newly increased legacy budget, along with 
elimination of the capital investment allowance and earlier opex 
limitation relief, mitigate to a degree the need for a Tribal Broadband 
Factor for legacy carriers? If so, how much?
    26. Second, if the Commission were to proceed with a Tribal 
Broadband Factor for CAF BLS, how should it be structured? For CAF BLS, 
should the Commission reduce the $42 per line funding threshold to 
$39.38 (the high cost funding threshold for the A-CAM II offer), to 
$31.50 (as suggested by NTTA), or to some other amount? How should the 
structural differences between the CAF BLS program and the A-CAM II 
offer impact the Commission's decision? Should the Commission adopt a 
Tribal Broadband factor that applies to all carriers serving Tribal 
lands (as the Commission has defined that for the purposes of the A-CAM 
II offer), or should the Commission target it based on the level of 
existing deployments, whether by the legacy carrier or its competitors? 
What additional deployment obligations should the Commission apply to 
carriers receiving the benefit of a Tribal Broadband Factor? And what 
other rules, if any, would the Commission need to amend to make a 
Tribal Broadband Factor a reality for CAF BLS?
    27. Third, should the Commission proceed with a Tribal Broadband 
Factor for HCLS? Whereas the A-CAM II offer is designed to support 
broadband-capable networks and requires concrete buildout obligations 
in exchange for support, the HCLS component of the legacy program is 
designed to offset the intrastate costs of voice networks without any 
corresponding buildout obligations. Given that context, would a Tribal 
Broadband Factor make sense applied to HCLS? If so, how could the 
Commission revise the HCLS algorithm to incorporate a Tribal Broadband 
Factor? What would the impact be on other carriers participating in 
these programs given the Commission's decision to maintain the separate 
HCLS funding cap? Should the Commission create new broadband deployment 
obligations tied to any increase in HCLS funding from a Tribal 
Broadband Factor, and if so, how should the Commission do so? And what 
other rules, if any, would the Commission need to amend to make a 
Tribal Broadband Factor a reality for HCLS?
    28. Finally, the Commission seeks comment on whether there are any 
other approaches the Commission should consider in creating a Tribal 
Broadband Factor for legacy rate-of-return carriers. And if so, what 
are those approaches and how should they work?

III. Procedural Matters

A. Paperwork Reduction Act

    29. This document contains proposed information collection 
requirements. The Commission, as part of its continuing effort to 
reduce paperwork burdens, invites the general public and the Office of 
Management and Budget (OMB) to comment on the information collection 
requirements contained in this document, as required by the Paperwork 
Reduction Act of 1995, Public Law 104-13. In addition, pursuant to the 
Small Business Paperwork Relief Act of 2002, Public Law 107-198, we 
seek specific comment on how we might further reduce the information 
collection burden for small business concerns with fewer than 25 
employees.
    30. Ex Parte Presentations. The proceeding shall be treated as a 
``permit-but-disclose'' proceeding in accordance with the Commission's 
ex parte rules. Persons making ex parte presentations must file a copy 
of any written presentation or a memorandum summarizing any oral 
presentation within two business days after the presentation (unless a 
different deadline applicable to the Sunshine period applies). Persons 
making oral ex parte presentations are reminded that memoranda 
summarizing the presentation must (1) list all persons attending or 
otherwise participating in the meeting at which the ex parte 
presentation was made, and (2) summarize all data presented and 
arguments made during the presentation. If the presentation consisted 
in whole or in part of the presentation of data or arguments already 
reflected in the presenter's written comments, memoranda or other 
filings in the proceeding, the presenter may provide citations to such 
data or arguments in his or her prior comments, memoranda, or other 
filings (specifying the relevant page and/or paragraph numbers where 
such data or arguments can be found) in lieu of summarizing them in the 
memorandum. Documents shown or given to Commission staff during ex 
parte meetings are deemed to be written ex parte presentations and must 
be filed consistent with rule 1.1206(b). In proceedings governed by 
rule 1.49(f) or for which the Commission has made available a method of 
electronic filing, written ex parte presentations and memoranda 
summarizing oral ex parte presentations, and all attachments thereto, 
must be filed through the electronic comment filing system available 
for that proceeding, and must be filed in their native format (e.g., 
.doc, .xml, .ppt, searchable .pdf). Participants in this proceeding 
should familiarize themselves with the Commission's ex parte rules.
    31. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), the Commission has prepared this Initial Regulatory 
Flexibility Analysis (IRFA) of the possible significant economic impact 
on a substantial number of small entities from the policies and rules 
proposed in the FNPRM. The Commission requests written public comment 
on this IRFA. Comments must be identified as responses to the IRFA and 
must be filed by the deadlines for comments on the FNPRM. The 
Commission will send a copy of the FNPRM, including this IRFA, to the 
Chief Counsel for Advocacy of the Small Business Administration (SBA).
    32. The proposals in this FNPRM seek to build on efforts to 
modernize the high-cost program by targeting support efficiently and 
providing market-based mechanisms to award support. In the FNPRM, the 
Commission seeks comment on issues related to auction design and 
service requirements stemming from the decision to use competitive 
bidding in study areas that are subject to a certain amount of 
competitive overlap from unsubsidized providers. The Commission also 
seeks comment whether the Commission should adopt limits on the number 
of converted lines for which a carrier may seek broadband-only support. 
Finally, the Commission seeks comment on additional support for legacy 
carriers serving Tribal areas.
    33. 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''

[[Page 2136]]

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).
    34. Small Businesses, Small Organizations, Small Governmental 
Jurisdictions. The Commission's actions, over time, may affect small 
entities that are not easily categorized at present. The Commission 
therefore describes here, at the outset, three broad groups of small 
entities that could be directly affected herein. First, while there are 
industry specific size standards for small businesses that are used in 
the regulatory flexibility analysis, according to data from the SBA's 
Office of Advocacy, in general a small business is an independent 
business having fewer than 500 employees. These types of small 
businesses represent 99.9 percent of all businesses in the United 
States which translates to 28.8 million businesses.
    35. Next, the type of small entity described as a ``small 
organization'' is generally ``any not-for-profit enterprise which is 
independently owned and operated and is not dominant in its field.'' 
Nationwide, as of Aug 2016, there were approximately 356,494 small 
organizations based on registration and tax data filed by nonprofits 
with the Internal Revenue Service (IRS).
    36. Finally, the small entity described as a ``small governmental 
jurisdiction'' is defined generally as ``governments of cities, 
counties, towns, townships, villages, school districts, or special 
districts, with a population of less than fifty thousand.'' U.S. Census 
Bureau data from the 2012 Census of Governments indicates that there 
were 90,056 local governmental jurisdictions consisting of general 
purpose governments and special purpose governments in the United 
States. Of this number there were 37, 132 General purpose governments 
(county, municipal and town or township) with populations of less than 
50,000 and 12,184 Special purpose governments (independent school 
districts and special districts) with populations of less than 50,000. 
The 2012 U.S. Census Bureau data for most types of governments in the 
local government category shows that the majority of these governments 
have populations of less than 50,000. Based on this data the Commission 
estimates that at least 49,316 local government jurisdictions fall in 
the category of ``small governmental jurisdictions.''
    37. In the FNPRM, the Commission seeks comment on what the 
deployment obligations should be for areas subject to competitive 
bidding in terms of what locations should be served and at what minimum 
speeds. The Commission also seeks comment on whether additional 
measures are needed to address the increase in the demand for high-cost 
USF that results from lines converting from voice or voice/broadband to 
broadband-only. The Commission also seeks comment on additional support 
for legacy carriers serving Tribal areas and accompanying obligations.
    38. The RFA requires an agency to describe any significant 
alternatives that it has considered in reaching its proposed approach, 
which may include (among others) the following four alternatives: (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 or reporting requirements under the rule for 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 small 
entities. The Commission expects to consider all of these factors when 
it has received substantive comment from the public and potentially 
affected entities.
    39. In the concurrently adopted Report and Order, the Commission 
adopts changes whereby support in certain legacy areas will be awarded 
through competitive bidding. In the FNPRM, the Commission seeks comment 
on several auction related issues. The questions the Commission asks, 
in part, aim to reduce economic impacts on the incumbent LECs and help 
with the overall efficiency of the competitive bidding process. 
Furthermore, in seeking comment whether the Commission should adopt 
limits on the number of converted lines for which a carrier may seek 
broadband-only support, it asks about ways to minimize the impact on 
carriers. The Commission also seek comment on additional support for 
legacy carriers serving Tribal areas, accompanying obligations, and 
possibly targeting Tribal areas with lower levels of deployment.
    40. More generally, the Commission expects to consider the economic 
impact on small entities, as identified in comments filed in response 
to the FNPRM and this IRFA, in reaching its final conclusions and 
taking action in this proceeding. The proposals and questions laid out 
in the FNPRM were designed to ensure the Commission has a complete 
understanding of the benefits and potential burdens associated with the 
different actions and methods.

IV. Ordering Clauses

    41. Accordingly, it is ordered that, pursuant to the authority 
contained in sections 1-4, 5, 201-206, 214, 218-220, 251, 252, 254, 
256, 303(r), 332, 403, and 405 of the Communications Act of 1934, as 
amended, and section 706 of the Telecommunications Act of 1996, 47 
U.S.C. 151-155, 201-206, 214, 218-220, 251, 252, 254, 256, 303(r), 403, 
405, and 1302, the Further Notice of Proposed Rulemaking is adopted, 
effective thirty (30) days after publication of the text or summary 
thereof in the Federal Register, 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, and the rules adopted pursuant to section III.C.8 of 
this Report and Order shall become effective on January 1, 2020. It is 
the Commission's intention in adopting these rules that if any of the 
rules that the Commission's retains, modifies, or adopts herein, or the 
application thereof to any person or circumstance, are held to be 
unlawful, the remaining portions of the rules not deemed unlawful, and 
the application of such rules to other persons or circumstances, shall 
remain in effect to the fullest extent permitted by law.
    42. It is further ordered that, pursuant to the authority contained 
in sections 1, 2, 4(i), 5, 201-206, 214, 218-220, 251, 252, 254, 256, 
303(r), 332, 403, and 1302 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), 155, 201-206, 214, 218-220, 251, 252, 254, 
256, 303(r), 332, 403, 1302, notice is hereby given of the proposals 
and tentative conclusions described in the Further Notice of Proposed 
Rulemaking.

Federal Communications Commission.
Marlene Dortch,
Secretary.
[FR Doc. 2019-01315 Filed 2-5-19; 8:45 am]
 BILLING CODE 6712-01-P