Connect America Fund, 8619-8624 [2019-04261]

Download as PDF Federal Register / Vol. 84, No. 47 / Monday, March 11, 2019 / Rules and Regulations (b) The complainant shall remit separately the correct fee electronically, in accordance with part 1, subpart G (see § 1.1106 of this chapter) and shall file an original copy of the complaint using the Commission’s Electronic Comment Filing System. If a complaint is addressed against multiple defendants, the complainant shall pay a separate fee for each additional defendant. * * * * * ■ 3. Revise § 1.1106 to read as follows: § 1.1106 Schedule of charges for applications for enforcement services. Remit payment for these services electronically using the Commission’s electronic payment system in accordance with the procedures set forth on the Commission’s website, www.fcc.gov/licensing-databases/fees. [FR Doc. 2019–04257 Filed 3–8–19; 8:45 am] BILLING CODE 6712–01–P FEDERAL COMMUNICATIONS COMMISSION 47 CFR Part 54 [WC Docket No. 10–90; FCC 19–8] Connect America Fund Federal Communications Commission. ACTION: Final rule. AGENCY: In this document, the Federal Communications Commission (Commission) takes a small but important step towards closing the digital divide and making broadband available for all Americans, by phasing down legacy support for voice services to make greater funding available for voice and broadband services. Specifically, the Commission adopts a transition framework to phase down Connect America Fund (CAF) Phase I frozen support in areas where support is now awarded pursuant to the CAF Phase II auction. DATES: Effective April 10, 2019, except for the addition of § 54.313(m), which contains information collection requirements that have not been approved by OMB. The FCC will publish a document in the Federal Register announcing the effective date of the § 54.313 amendment awaiting OMB approval. FOR FURTHER INFORMATION CONTACT: Alexander Minard, Wireline Competition Bureau, (202) 418–7400 or TTY: (202) 418–0484. SUPPLEMENTARY INFORMATION: This is a summary of the Commission’s Report amozie on DSK9F9SC42PROD with RULES SUMMARY: VerDate Sep<11>2014 17:17 Mar 08, 2019 Jkt 247001 and Order in WC Docket No. 10–90; FCC 19–8, adopted on February 14, 2019 and released on February 15, 2019. 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-19-8A1.pdf. I. Introduction 1. In this Report and Order, the Commission takes a small but important step towards closing the digital divide and making broadband available for all Americans, by phasing down legacy support for voice services to make greater funding available for voice and broadband services. Specifically, the Commission adopts a transition framework to phase down Connect America Fund (CAF) Phase I frozen support in areas where support is now awarded pursuant to the CAF Phase II auction. Winning bidders were awarded $1.488 billion in support over 10 years to deploy broadband in 45 states to 713,176 locations. Approximately 73% of the locations available in the CAF Phase II auction were covered by winning bids, significantly narrowing the areas where price cap carriers will maintain voice-only obligations under the legacy regime. The transition plan the Commission adopts in this document provides certainty and stability in those areas by establishing a reasonable support glide path as the Commission transitions from one support mechanism to another. II. Discussion 2. As the Commission has noted, ‘‘the CAF is not created on a blank slate, but rather against the backdrop of a decades-old regulatory system.’’ Thus, a smooth transition must account for the several support mechanisms currently in effect as well as the auction outcomes in different areas. To comprehensively resolve these phase-down issues prior to authorizing CAF Phase II auction support, the Commission addresses the transition of both price cap carriers’ and competitive eligible telecommunications carriers (ETCs) offering service to fixed locations (fixed competitive ETCs’) legacy support together. 3. Pursuant to the April 2014 Connect America Further Notice, 79 FR 39196, July 9, 2014, the Commission adopts a methodology for disaggregating support by employing the Connect America Cost Model (CAM) to account for the relative costs of providing service among areas in states where price cap carriers PO 00000 Frm 00031 Fmt 4700 Sfmt 4700 8619 declined model-based CAF Phase II support. These price cap carriers currently receive an amount of frozen support for each carrier’s designated service area within a particular state. Within that state, the Commission uses the CAM to allocate a portion of each carrier’s existing frozen support to each auction-eligible census block based on the relative costs of providing service across all auction-eligible census blocks within the same state. Consistent with the cap for reserve prices exceeding the extremely high-cost threshold in the CAF Phase II auction, the Commission limits the allocated monthly support for any census block to $146.10 per location. 4. The Commission concludes that the interim methodology it adopts is a reasonable approach for allocating support among a price cap carrier’s census blocks because it targets support based on the relative costs of providing service based on the CAM. Phase I frozen support was based largely on inherently inefficient legacy support mechanisms that did not reflect the costs of serving high-cost and extremely high-cost areas; the Commission’s interim methodology now ties disaggregated support amounts to the costs of serving each affected census block for the transitional period. The Commission also concludes that the methodology it adopts is preferable to the proposal in the April 2014 Connect America Further Notice because it better calibrates the available support with the cost to serve the defined areas. The Commission’s 2014 proposal would have distributed the legacy support that carriers received in each state based on the average cost to serve all high-cost and extremely high-cost areas in that state. As a result, it would have allocated the same amount of support regardless of the relative mix of highcost and extremely high-cost areas that carriers are required to serve after the auction until a replacement ETC is in place. 5. The Commission adopts the schedule in the following for the transition of price cap carriers’ and fixed competitive ETCs’ legacy support. This transition schedule will fund new service obligations undertaken by Phase II auction winners, protect customers of current support recipients from a potential loss of service, and minimize the disruption to recipients of frozen legacy support from a loss of funding. It balances the need for responsible stewardship of finite universal service funds against the need to distribute funding for voice and broadband services consistent with the results of the Commission’s CAF Phase II auction E:\FR\FM\11MRR1.SGM 11MRR1 8620 Federal Register / Vol. 84, No. 47 / Monday, March 11, 2019 / Rules and Regulations while providing a reasonable termination of legacy support for voice services. The schedule the Commission adopts maintains the Commission’s prior decision that a price cap carrier declining model-based Phase II support will continue to receive support in an amount equal to its Phase I frozen support amount only until the winner of any competitive bidding process receives support under Phase II. Accordingly, in the Commission’s implementation of Phase II auction support, the Commission now establishes a path toward eliminating legacy support, except to maintain service on an interim basis in auctioneligible, high-cost areas where there was no winning bidder in the CAF Phase II auction, pending further Commission action. 6. For auction-eligible census blocks where price cap carriers receive CAF Phase I frozen support, starting the first day of the month following the authorization of Phase II auction support in a price cap carrier’s designated service area within a state, the price cap carrier’s legacy support will be (1) converted to Phase II support (for a winning price cap carrier bidder); (2) maintained for an interim period (for the price cap carrier in areas without a winning bidder); or (3) eliminated (for price cap carriers in areas won by another carrier). 7. Although the CAF Phase II auction saw significant interest, some eligible areas did not receive a qualifying winning bid. By including these areas in the auction, the Commission has already determined that these areas require continued high-cost support. Thus, in those auction-eligible areas where there was no winning bidder in the Phase II auction, the price cap carrier will continue to receive disaggregated legacy support until further Commission action. That is, interim support will be determined for each census block consistent with the legacy support disaggregation methodology the Commission adopts. Maintaining such support is necessary on an interim basis to preserve service to consumers in these areas, pending further Commission action. At the same time, using the Commission’s disaggregation methodology will ensure interim support is distributed more efficiently. 8. For areas where the winning bidder is the price cap carrier receiving legacy support, Phase II support will commence on the first day of the month after the support is authorized by the Wireline Competition Bureau in that area. To ensure a smooth transition to Phase II support, a winning bidder will receive support payments at the current, disaggregated legacy support level until that time. Continuing disaggregated legacy support until Phase II support has been authorized for each census block will minimize disruptions and ensure continuity of services for consumers. And, as with areas without any winning bidder, using disaggregated legacy support amounts until Phase II support is authorized will better target legacy support during the interim period than the inherently inefficient legacy support mechanisms used on which Phase I frozen support are based. 9. In areas won at auction by a carrier other than the price cap carrier, beginning on the first day of the month immediately following authorization to receive Phase II support, the winning bidder ETC will begin receiving support and bear an obligation to serve those areas. Accordingly, the price cap carrier will not receive legacy support for those census blocks beginning on the first day of the month after Phase II support is authorized for those census blocks. At that point, continued legacy support would become duplicative. 10. Auction-Ineligible Blocks. In all census blocks determined to be ineligible for the CAF Phase II auction, price cap carriers that declined statewide model-based support will no longer receive legacy support starting the first day of the month following the first authorization of any Phase II auction support nationwide. By excluding certain areas from the auction, the Commission has already determined not to offer ongoing highcost support for those areas. Thus, this approach implements the Commission’s earlier decision not to distribute Phase I frozen support after Phase II auction support has begun. 11. Fixed competitive ETCs’ legacy support will be subject to a two-year phase down, beginning on the first day of the month immediately following the first authorization of any Phase II auction support. Fixed competitive ETCs will receive phase-down support equal to two-thirds of their total legacy support for the first 12 months. For the following 12 months, fixed competitive ETCs will receive one-third of their total legacy support. All legacy support will end thereafter. 12. Unlike the phase down for price cap carriers’ legacy support in auctioneligible areas, the timing of the phase down for fixed competitive ETCs’ legacy support will not differ by census block. For fixed competitive ETCs, the Commission concludes that a straightforward phase-down of support is more appropriate; fixed competitive ETCs receive a comparatively small amount of legacy support, and few expressed interest in continuing to provide service by participating in the CAF Phase II auction. The two-year phase-down schedule resumes the phase-down schedule adopted in the USF/ICC Transformation Order, 76 FR 73830, November 29, 2011, for competitive ETCs. The two-year phasedown schedule thus eliminates support that is no longer necessary while providing an appropriate adjustment period for affected carriers. 13. In sum, Tables 1 and 2 in the following illustrate the transition schedule the Commission adopts. amozie on DSK9F9SC42PROD with RULES TABLE 1—TRANSITION OF PRICE CAP CARRIERS’ LEGACY SUPPORT Before the first day of the month following authorization of any Phase II support nationwide Transition schedule Price cap carrier receives legacy support in an eligible census block won by that carrier in the Phase II auction. Beginning the first day of the month following authorization of Phase II support in an auction-eligible census block, legacy support is converted to Phase II support. Legacy support is maintained until further Commission action. Price cap carrier receives legacy support in an eligible census block with no winning bidder in the Phase II auction. Price cap carrier receives legacy support in a census block won by another carrier in the Phase II auction. Price cap carrier receives legacy support in an auction-ineligible census block. VerDate Sep<11>2014 17:17 Mar 08, 2019 Jkt 247001 PO 00000 Frm 00032 Fmt 4700 Beginning the first day of the month following authorization of Phase II support in an auction-eligible census block, legacy support is eliminated. Beginning the first day of the month following authorization of any Phase II support nationwide, legacy support is eliminated. Sfmt 4700 E:\FR\FM\11MRR1.SGM 11MRR1 Federal Register / Vol. 84, No. 47 / Monday, March 11, 2019 / Rules and Regulations 8621 amozie on DSK9F9SC42PROD with RULES TABLE 2—TRANSITION OF FIXED COMPETITIVE ETCS’ LEGACY SUPPORT Before the first day of the month following the first authorization of any Phase II support nationwide Beginning the first day of the month following the first authorization of any Phase II support nationwide Beginning 12 months after the first day of the month following the first authorization of any Phase II support nationwide Fixed competitive ETC receives legacy support. Legacy support is reduced to twothirds of support. Legacy support is reduced to onethird of support. 14. In establishing this schedule, the Commission declines to adopt, within the context of the high-cost universal service program, a different definition of ‘‘unsubsidized competitor,’’ i.e., by including areas with mobile or nonterrestrial voice service. The existence of other voice service options within a particular census block does not guarantee that consumers there will continue to have access to voice service in the absence of an ETC being required to serve those consumers. The Commission therefore remains unpersuaded that it needs not continue providing support to ETCs simply based on the fact that there are multiple nonETCs serving that census block. 15. The Commission also declines to adopt USTelecom’s most recent proposal to (1) distribute $105 million in ‘‘new voice support’’ across all highcost and extremely high-cost census blocks for which, after the CAF Phase II auction, price cap carriers will continue to have an ETC obligation to provide voice service; (2) distribute an additional $35 million in transitional support to carriers receiving less ‘‘new voice support’’ in a state than the carrier’s ‘‘residual frozen support’’ amount for that state; and (3) phase down the additional transitional support over a two-year period. The Commission finds this proposal inconsistent with the overarching objective of transitioning away from the current Phase I frozen support funding mechanism. Instead, USTelecom seeks to expand the areas for which price cap carriers receive support—through a new funding mechanism, ‘‘new voice support’’—to include areas where they do not currently receive legacy support. The Commission declines to do so. Through the interim framework the Commission adopts, it establishes a reasonable process for transitioning Phase I frozen support and fixed competitive ETCs’ legacy support after the authorization of Phase II auction support. Price cap carriers currently receive Phase I frozen support for use within particular service areas, and the Commission now allocates that support across the census blocks for which the support is provided, i.e., within the VerDate Sep<11>2014 17:17 Mar 08, 2019 Jkt 247001 same service areas, to be phased down, converted, or maintained. 16. Even if the Commission were to adopt a transition mechanism more like USTelecom’s proposal, modified to only include areas for which carriers receive legacy support, the proposed annual budget of $105 million for ‘‘new voice support’’ and first-year budget of $35 million in additional transitional support would far exceed a reasonable amount of legacy support for carriers to continue serving only those areas not won at auction. USTelecom explains that $105 million ‘‘equals the $95 million of frozen support currently distributed to price cap carriers and $10 million of additional support to account for ACS’s participation in the program.’’ Under USTelecom’s proposal, as with the transition mechanism the Commission adopts, carriers would not receive legacy support in either areas ineligible for the auction or areas won at auction. But USTelecom’s proposal would require distributing a fixed amount of $105 million—more than the total frozen support price cap carriers currently receive—across the remaining areas and up to $35 million in additional support for some of those same areas. In contrast, the Commission’s method efficiently targets support by using the CAM to allocate the support a price cap carrier currently receives to serve its entire service area according to the relative costs of serving each census block and then removing only the support associated with census blocks for which the price cap no longer has a federal high-cost voice obligation. The approach the Commission adopts today therefore more rationally ties the current legacy support a price cap carrier receives in a designated service area within a state to the phase-down support it will continue to receive until further Commission action. The Commission does not believe increasing support to maintain existing voice service in these areas—even on an interim basis—is a good use of the Commission’s limited funds. 17. The Commission recognizes, nonetheless, that drawing on the results of legacy support mechanisms may produce results undesirable to certain carriers. Under those legacy PO 00000 Frm 00033 Fmt 4700 Sfmt 4700 Beginning 24 months after the first day of the month following the first authorization of any Phase II support nationwide Legacy support is eliminated. mechanisms, some price cap carriers did not receive legacy support in certain states containing high-cost and extremely high-cost areas. The Commission has likewise explained that the identical support rule for competitive ETCs ‘‘fail[ed] to efficiently target support where it is needed.’’ Accordingly, the Commission emphasizes that the phase-down support maintained under its transition mechanism is not intended to provide a long-term solution. Instead, until the Commission is able to implement a new program, it maintains a targeted portion of carriers’ existing legacy support to preserve affordable consumer access to telecommunications in high-cost areas. In adopting this interim framework, the Commission thus balances its statutory duties to ensure affordable access to quality services, promote in ‘‘rural, insular, and high cost areas . . . access to telecommunications and information services . . . that are reasonably comparable to those services provided in urban areas and that are available at rates that are reasonably comparable to rates charged for similar services in urban areas,’’ and establish ‘‘specific, predictable and sufficient . . . mechanisms to preserve and advance universal service.’’ 18. The Commission also provides price cap carriers and fixed competitive ETCs the option to decline phase-down support on a state-by-state basis. It is possible that, despite their mandatory voice obligations, some carriers may conclude that they do not wish to continue receiving legacy support in every state. The Commission therefore directs the Wireline Competition Bureau to calculate and publish, for each price cap carrier’s designated service area within each affected state, the amount of support available in every census block after the authorization of Phase II auction support within the same service area. Within 30 days after the release of public notice of such support amounts, price cap carriers and fixed competitive ETCs electing not to receive phase-down support in any states must provide notice of such election in the manner specified by the Wireline Competition Bureau. E:\FR\FM\11MRR1.SGM 11MRR1 8622 Federal Register / Vol. 84, No. 47 / Monday, March 11, 2019 / Rules and Regulations 19. Regardless of the carrier’s election, however, the federal ETC high-cost obligation to provide voice service is mandatory and independent of whether a carrier accepts phase-down support. To the extent a price cap carrier or fixed competitive ETC no longer wishes to maintain its ETC designation in the relevant areas, it may petition the relevant state to relinquish its ETC designation for those areas where another ETC is providing service, and it may choose to go through the section 214 discontinuance process. For those price cap carriers and fixed competitive ETCs that receive phase-down support, the Commission will require that they certify annually that they have and will use the support they continue to receive in the relevant high-cost and extremely high-cost areas to provide voice telephony service throughout the relevant census blocks at rates that are reasonably comparable to comparable offerings in urban areas. 20. To the extent that any carrier believes it needs additional support to provide voice service at reasonably comparable rates throughout the remaining census blocks within its service area, it may request a waiver pursuant to Section 1.3 of the Commission’s rules. In evaluating requests for a waiver, the Commission will consider any relevant facts presented by the carrier that demonstrate it is necessary and in the public interest for the price cap carrier to receive that additional funding to maintain reasonably priced voice service. Examples of such facts would include not only all revenues derived from network facilities that are supported by universal service but also revenues derived from unregulated and unsupported services. The Commission does not, however, expect to grant these requests routinely, and caution petitioners that it generally intends to subject such requests to a rigorous, thorough and searching review comparable to a total company earnings review. amozie on DSK9F9SC42PROD with RULES III. Procedural Matters A. Paperwork Reduction Analysis 21. The Report and Order adopted herein contains new or modified 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 will be invited to comment on the new or modified information collection requirements VerDate Sep<11>2014 17:17 Mar 08, 2019 Jkt 247001 support upon the authorization of CAF Phase II auction support. The Commission also adopts a schedule for transitioning fixed competitive ETCs’ legacy support over a two-year period. The Commission provides an option for price cap carriers and fixed competitive ETCs to decline phase-down support on a state-by-state basis, and the Commission adopts a modified annual certification requirement for carriers that elect phase-down support. 26. 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 B. Congressional Review Act jurisdiction.’’ In addition, the term 22. The Commission will send a copy ‘‘small business’’ has the same meaning of this Report and Order to Congress as the term ‘‘small-business concern’’ and the Government Accountability under the Small Business Act. A smallOffice pursuant to the Congressional business concern’’ is one which: (1) Is Review Act, see 5 U.S.C. 801(a)(1)(A). independently owned and operated; (2) 23. As required by the Regulatory is not dominant in its field of operation; Flexibility Act of 1980 (RFA), as and (3) satisfies any additional criteria amended, an Initial Regulatory established by the Small Business Flexibility Analysis (IRFAs) was Administration (SBA). incorporated in the Further Notice of 27. Small Businesses, Small Proposed Rulemaking adopted in April Organizations, Small Governmental 2014 (April 2014 Connect America Jurisdictions. The Commission’s actions, Further Notice). The Commission sought over time, may affect small entities that written public comment on the are not easily categorized at present. proposals in April 2014 Connect The Commission therefore describes America Further Notice, including here, at the outset, three broad groups of comment on the IRFA. The Commission small entities that could be directly did not receive any relevant comments affected herein. First, while there are in response to this IRFA. This Final industry specific size standards for Regulatory Flexibility Analysis (FRFA) small businesses that are used in the conforms to the RFA. regulatory flexibility analysis, according 24. The Report and Order addresses to data from the SBA’s Office of outstanding issues regarding the Advocacy, in general a small business is transition of legacy universal service an independent business having fewer support—i.e., price cap carriers’ than 500 employees. These types of Connect America Fund (CAF) Phase I small businesses represent 99.9 percent frozen support and the frozen identical of all businesses in the United States support of competitive eligible which translates to 28.8 million telecommunications carriers (ETCs) businesses. 28. Next, the type of small entity offering service to fixed locations (fixed described as a ‘‘small organization’’ is competitive ETCs)—after the authorization of support pursuant to the generally ‘‘any not-for-profit enterprise which is independently owned and CAF Phase II auction. The transition operated and is not dominant in its plan provides certainty and stability in field.’’ Nationwide, as of Aug 2016, areas covered by winning bids in the there were approximately 356,494 small CAF Phase II auction by establishing a organizations based on registration and reasonable support glide path as the tax data filed by nonprofits with the Commission transitions from one Internal Revenue Service (IRS). support mechanism to another. 29. Finally, the small entity described 25. Specifically, in the Report and as a ‘‘small governmental jurisdiction’’ Order, the Commission adopts a is defined generally as ‘‘governments of methodology to disaggregate price cap cities, counties, towns, townships, carriers’ existing CAF Phase I frozen villages, school districts, or special support among areas based on the relative costs of serving different census districts, with a population of less than fifty thousand.’’ U.S. Census Bureau blocks, and the Commission adopts a data from the 2012 Census of schedule for transitioning this legacy contained in this proceeding. In addition, the Commission notes that pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107–198, see 44 U.S.C. 3506(c)(4), it previously sought specific comment on how the Commission might further reduce the information collection burden for small business concerns with fewer than 25 employees. In this present document, the Commission has assessed the effects of the new and modified rules that might impose information collection burdens on small business concerns, and find that they either will not have a significant economic impact on a substantial number of small entities or will have a minimal economic impact on a substantial number of small entities. PO 00000 Frm 00034 Fmt 4700 Sfmt 4700 E:\FR\FM\11MRR1.SGM 11MRR1 amozie on DSK9F9SC42PROD with RULES Federal Register / Vol. 84, No. 47 / Monday, March 11, 2019 / Rules and Regulations 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.’’ 30. In the Report and Order, the Commission requires that price cap carriers and fixed competitive ETCs that receive phase-down support certify annually that they have and will use the support they continue to receive in the relevant high-cost and extremely highcost areas to provide voice telephony service throughout the relevant census blocks at rates that are reasonably comparable to comparable offerings in urban areas. Price cap carriers and fixed competitive ETCs may elect, however, not to receive phase-down support. 31. 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 has considered all these factors subsequent to receiving substantive comments from the public and potentially affected entities. The Commission has also considered the economic impact on small entities, as identified in comments filed in response to the April 2014 Connect America Further Notice and IRFA, in reaching its final conclusions and taking action in this proceeding. 32. In the Report and Order, the Commission adopts a transition schedule providing a gradual two-year phase-down for fixed competitive ETCs’ legacy support. Among those carriers, of which many are small entities, few VerDate Sep<11>2014 17:17 Mar 08, 2019 Jkt 247001 expressed interest in continuing to provide service in areas where they receive legacy support by participating in the CAF Phase II auction. The twoyear phase-down schedule resumes the schedule adopted in the USF/ICC Transformation Order for competitive ETCs, and thus eliminates support that is no longer necessary while providing an appropriate adjustment period for affected carriers. 33. As an alternative to this straightforward transition schedule, the Commission has considered implementing a schedule more similar to price cap carriers’ transition—i.e., fixed competitive ETCs could continue receiving legacy support in certain auction-eligible areas and quickly stop receiving legacy support associated with auction-ineligible areas. However, this would add complexity to the process with no benefit to fixed competitive ETCs. 34. The Commission also provides an option for price cap carriers and fixed competitive ETCs to elect not to receive phase-down support and be subject to the associated obligations. In doing so, the Commission minimizes any impact economic impact to small entities and other carriers. Carriers opting to continue receiving legacy support subject to the phase-down schedule must continue to file a modified annual certification regarding their use of support, but those carriers are not subject to any additional requirements. IV. Ordering Clauses 35. Accordingly, it is ordered, pursuant to the authority contained in sections 4(i), 214, and 254 of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 214, and 254, that this Report and Order is adopted, effective thirty (30) days after publication of the text or summary thereof in the Federal Register, except that modifications to Paperwork Reduction Act burdens shall become effective immediately upon announcement in the Federal Register of OMB approval. 36. It is further ordered that Part 54 of the Commission’s rules, 47 CFR part 54 is amended as set forth in the following, and such rule amendments shall be effective thirty (30) days after publication of the rules amendments in the Federal Register, except to the extent they contain information collections subject to PRA review. The rules that contain information collections subject to PRA review shall become effective immediately upon announcement in the Federal Register of OMB approval. PO 00000 Frm 00035 Fmt 4700 Sfmt 4700 8623 List of Subjects in 47 CFR Part 54 Communications common carriers, Health facilities, Infants and children, internet, Libraries, Reporting and recordkeeping requirements, Schools, Telecommunications, Telephone. Federal Communications Commission. Cecilia Sigmund, Federal Register Liaison Officer. Final Rules For the reasons discussed in the preamble, the Federal Communications Commission amends 47 CFR part 54 as follows: PART 54—UNIVERSAL SERVICE 1. The authority citation for part 54 continues to read as follows: ■ Authority: 47 U.S.C. 151, 154(i), 155, 201, 205, 214, 219, 220, 254, 303(r), 403, and 1302 unless otherwise noted. 2. Section 54.307 is amended by adding paragraph (e)(8) to read as follows: ■ § 54.307 Support to a competitive eligible telecommunications carrier. * * * * * (e) * * * (8) Eligibility for support after Connect America Phase II auction. Starting the first day of the month following the first authorization of Connect America Phase II auction support nationwide, fixed competitive eligible telecommunications carriers shall have the option of receiving support pursuant to paragraph (e)(2)(iii) of this section as described in the following paragraphs (e)(8)(i) through (iv): (i) For 12 months following the first authorization of Connect America Phase II auction support nationwide, each fixed competitive eligible telecommunications carrier shall receive two-thirds (2⁄3) of the carrier’s total support pursuant to paragraph (e)(2)(iii) of this section. (ii) For 12 months starting the month following the period described in paragraph (e)(8)(i) of this section, each fixed competitive eligible telecommunications carrier shall receive one-third (1⁄3) of the carrier’s total support pursuant to paragraph (e)(2)(iii) of this section. (iii) Following the period described in paragraph (e)(8)(ii) of this section, no fixed competitive eligible telecommunications carrier shall receive any support pursuant to paragraph (e)(2)(iii) of this section. (iv) Notwithstanding the foregoing schedule, the phase-down of support below the level described in paragraph E:\FR\FM\11MRR1.SGM 11MRR1 8624 Federal Register / Vol. 84, No. 47 / Monday, March 11, 2019 / Rules and Regulations (e)(2)(iii) of this section shall be subject to the restrictions in Consolidated Appropriations Act, 2016, Public Law 114–113, Div. E, Title VI, section 631, 129 Stat. 2242, 2470 (2015), unless and until such restrictions are no longer in effect. ■ 3. Section 54.312 is amended by adding paragraph (d) to read as follows: § 54.312 Connect America Fund for Price Cap Territories—Phase I. amozie on DSK9F9SC42PROD with RULES * * * * * (d) Eligibility for support after Connect America Phase II auction. (1) A price cap carrier that receives monthly baseline support pursuant to this section and is a winning bidder in the Connect America Phase II auction shall receive support at the same level as described in paragraph (a) of this section for such area until the Wireline Competition Bureau determines whether to authorize the carrier to receive Connect America Phase II auction support for the same area. Upon the Wireline Competition Bureau’s release of a public notice approving a price cap carrier’s application submitted pursuant to § 54.315(b) and authorizing the carrier to receive Connect America Fund Phase II auction support, the carrier shall no longer receive support at the level of monthly baseline support pursuant to this section for such area. Thereafter, the carrier shall receive monthly support in the amount of its Connect America Phase II winning bid. (2) Starting the first day of the month following the first authorization of Connect America Phase II auction support nationwide, no price cap carrier that receives monthly baseline support pursuant to this section shall receive such monthly baseline support for areas that are ineligible for Connect America Phase II auction support. (3) To the extent Connect America Phase II auction support is not awarded at auction for an eligible area, as determined by the Wireline Competition Bureau, the price cap carrier shall have the option of continuing to receive support at the level described in paragraph (a) of this section until further Commission action. (4) Starting the first day of the month following the authorization of Connect America Phase II auction support to a winning bidder other than the price cap carrier that receives monthly baseline support pursuant to this section for such area, the price cap carrier shall no longer receive monthly baseline support pursuant to this section. (5) Notwithstanding the foregoing schedule, the phase-down of support below the level described in paragraph (a) of this section shall be subject to the VerDate Sep<11>2014 17:17 Mar 08, 2019 Jkt 247001 restrictions in Consolidated Appropriations Act, 2016, Public Law 114–113, Div. E, Title VI, section 631, 129 Stat. 2242, 2470 (2015), unless and until such restrictions are no longer in effect. ■ 4. Section 54.313 is amended by adding paragraph (m) to read as follows: § 54.313 Annual reporting requirements for high-cost recipients. * * * * * (m) Any price cap carrier or fixed competitive eligible telecommunications carrier that elects to continue receiving support pursuant to § 54.312(d) or § 54.307(e)(2)(iii) shall provide certifications, starting July 1, 2020 and for each subsequent year they receive such support, that all such support the company received in the previous year was used to provide voice service throughout the high-cost and extremely high-cost census blocks where they continue to have the federal high-cost eligible telecommunications carrier obligation to provide voice service pursuant to § 54.201(d) at rates that are reasonably comparable to comparable offerings in urban areas. Any price cap carrier or fixed competitive eligible telecommunications carrier that solely receives support pursuant to § 54.312(d) or § 54.307(e)(2)(iii) in its designated service area shall not be subject to reporting requirements in any other paragraphs in this section for such support. [FR Doc. 2019–04261 Filed 3–6–19; 4:15 pm] BILLING CODE 6712–01–P DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration 50 CFR Part 300 [Docket No. 180809745–8745–01] RIN 0648–BI40 International Affairs; Antarctic Marine Living Resources Convention Act; Correction National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce. ACTION: Final rule; technical amendment. AGENCY: NMFS is hereby making a technical amendment to our regulations without altering the substance of the regulations. This change will correct a paragraph mis-numbering. SUMMARY: PO 00000 Frm 00036 Fmt 4700 Sfmt 4700 This final rule is effective March 11, 2019. FOR FURTHER INFORMATION CONTACT: Mi Ae Kim, Office of International Affairs and Seafood Inspection, NMFS (phone 301–427–8365, or email mi.ae.kim@ noaa.gov). DATES: SUPPLEMENTARY INFORMATION: Background NMFS previously published a final rule to implement revisions and updates to NMFS’ Antarctic Marine Living Resources Convention Act (AMRLCA) regulations under 50 CFR part 300, subpart G, to streamline the regulations, reflect current measures adopted by the Commission for the Conservation of Antarctic Marine Living Resources (CCAMLR or Commission), and make other adjustments. The final rule published in the Federal Register on January 19, 2017 (82 FR 6221). NMFS has identified that 50 CFR 300.105(h) includes two paragraphs numbered as (h)(3). This rule solely corrects that misnumbering by numbering the second paragraph as (h)(4) and does not make any substantive changes to the regulations. Classification This final rule has been determined to be not significant for the purposes of Executive Order 12866. The Assistant Administrator for Fisheries, NOAA (AA), finds that the need to immediately implement this regulatory correction constitutes good cause to waive the requirements to provide prior notice and opportunity for public comment pursuant to the authority set forth in 5 U.S.C. 553(b)(B) of the Administrative Procedure Act (APA), because prior notice and opportunity for public comment on this final rule is unnecessary and contrary to the public interest. Such procedures are unnecessary and contrary to the public interest, because the rules implementing revisions and updates to NMFS’ Antarctic Marine Living Resources Convention Act (AMRLCA) regulations have already been subject to notice and comment and not correcting the regulatory text would result in confusion and uncertainty for the affected entities. For the aforementioned reasons, the AA also finds good cause to waive the 30-day delay in the effectiveness of this action under 5 U.S.C. 553(d)(3). These measures are thus exempt from the procedures of the Regulatory Flexibility Act because prior notice and comment are not required under the APA. E:\FR\FM\11MRR1.SGM 11MRR1

Agencies

[Federal Register Volume 84, Number 47 (Monday, March 11, 2019)]
[Rules and Regulations]
[Pages 8619-8624]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-04261]


-----------------------------------------------------------------------

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[WC Docket No. 10-90; FCC 19-8]


Connect America Fund

AGENCY: Federal Communications Commission.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: In this document, the Federal Communications Commission 
(Commission) takes a small but important step towards closing the 
digital divide and making broadband available for all Americans, by 
phasing down legacy support for voice services to make greater funding 
available for voice and broadband services. Specifically, the 
Commission adopts a transition framework to phase down Connect America 
Fund (CAF) Phase I frozen support in areas where support is now awarded 
pursuant to the CAF Phase II auction.

DATES: Effective April 10, 2019, except for the addition of Sec.  
54.313(m), which contains information collection requirements that have 
not been approved by OMB. The FCC will publish a document in the 
Federal Register announcing the effective date of the Sec.  54.313 
amendment awaiting OMB approval.

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

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Report 
and Order in WC Docket No. 10-90; FCC 19-8, adopted on February 14, 
2019 and released on February 15, 2019. 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-19-8A1.pdf.

I. Introduction

    1. In this Report and Order, the Commission takes a small but 
important step towards closing the digital divide and making broadband 
available for all Americans, by phasing down legacy support for voice 
services to make greater funding available for voice and broadband 
services. Specifically, the Commission adopts a transition framework to 
phase down Connect America Fund (CAF) Phase I frozen support in areas 
where support is now awarded pursuant to the CAF Phase II auction. 
Winning bidders were awarded $1.488 billion in support over 10 years to 
deploy broadband in 45 states to 713,176 locations. Approximately 73% 
of the locations available in the CAF Phase II auction were covered by 
winning bids, significantly narrowing the areas where price cap 
carriers will maintain voice-only obligations under the legacy regime. 
The transition plan the Commission adopts in this document provides 
certainty and stability in those areas by establishing a reasonable 
support glide path as the Commission transitions from one support 
mechanism to another.

II. Discussion

    2. As the Commission has noted, ``the CAF is not created on a blank 
slate, but rather against the backdrop of a decades-old regulatory 
system.'' Thus, a smooth transition must account for the several 
support mechanisms currently in effect as well as the auction outcomes 
in different areas. To comprehensively resolve these phase-down issues 
prior to authorizing CAF Phase II auction support, the Commission 
addresses the transition of both price cap carriers' and competitive 
eligible telecommunications carriers (ETCs) offering service to fixed 
locations (fixed competitive ETCs') legacy support together.
    3. Pursuant to the April 2014 Connect America Further Notice, 79 FR 
39196, July 9, 2014, the Commission adopts a methodology for 
disaggregating support by employing the Connect America Cost Model 
(CAM) to account for the relative costs of providing service among 
areas in states where price cap carriers declined model-based CAF Phase 
II support. These price cap carriers currently receive an amount of 
frozen support for each carrier's designated service area within a 
particular state. Within that state, the Commission uses the CAM to 
allocate a portion of each carrier's existing frozen support to each 
auction-eligible census block based on the relative costs of providing 
service across all auction-eligible census blocks within the same 
state. Consistent with the cap for reserve prices exceeding the 
extremely high-cost threshold in the CAF Phase II auction, the 
Commission limits the allocated monthly support for any census block to 
$146.10 per location.
    4. The Commission concludes that the interim methodology it adopts 
is a reasonable approach for allocating support among a price cap 
carrier's census blocks because it targets support based on the 
relative costs of providing service based on the CAM. Phase I frozen 
support was based largely on inherently inefficient legacy support 
mechanisms that did not reflect the costs of serving high-cost and 
extremely high-cost areas; the Commission's interim methodology now 
ties disaggregated support amounts to the costs of serving each 
affected census block for the transitional period. The Commission also 
concludes that the methodology it adopts is preferable to the proposal 
in the April 2014 Connect America Further Notice because it better 
calibrates the available support with the cost to serve the defined 
areas. The Commission's 2014 proposal would have distributed the legacy 
support that carriers received in each state based on the average cost 
to serve all high-cost and extremely high-cost areas in that state. As 
a result, it would have allocated the same amount of support regardless 
of the relative mix of high-cost and extremely high-cost areas that 
carriers are required to serve after the auction until a replacement 
ETC is in place.
    5. The Commission adopts the schedule in the following for the 
transition of price cap carriers' and fixed competitive ETCs' legacy 
support. This transition schedule will fund new service obligations 
undertaken by Phase II auction winners, protect customers of current 
support recipients from a potential loss of service, and minimize the 
disruption to recipients of frozen legacy support from a loss of 
funding. It balances the need for responsible stewardship of finite 
universal service funds against the need to distribute funding for 
voice and broadband services consistent with the results of the 
Commission's CAF Phase II auction

[[Page 8620]]

while providing a reasonable termination of legacy support for voice 
services. The schedule the Commission adopts maintains the Commission's 
prior decision that a price cap carrier declining model-based Phase II 
support will continue to receive support in an amount equal to its 
Phase I frozen support amount only until the winner of any competitive 
bidding process receives support under Phase II. Accordingly, in the 
Commission's implementation of Phase II auction support, the Commission 
now establishes a path toward eliminating legacy support, except to 
maintain service on an interim basis in auction-eligible, high-cost 
areas where there was no winning bidder in the CAF Phase II auction, 
pending further Commission action.
    6. For auction-eligible census blocks where price cap carriers 
receive CAF Phase I frozen support, starting the first day of the month 
following the authorization of Phase II auction support in a price cap 
carrier's designated service area within a state, the price cap 
carrier's legacy support will be (1) converted to Phase II support (for 
a winning price cap carrier bidder); (2) maintained for an interim 
period (for the price cap carrier in areas without a winning bidder); 
or (3) eliminated (for price cap carriers in areas won by another 
carrier).
    7. Although the CAF Phase II auction saw significant interest, some 
eligible areas did not receive a qualifying winning bid. By including 
these areas in the auction, the Commission has already determined that 
these areas require continued high-cost support. Thus, in those 
auction-eligible areas where there was no winning bidder in the Phase 
II auction, the price cap carrier will continue to receive 
disaggregated legacy support until further Commission action. That is, 
interim support will be determined for each census block consistent 
with the legacy support disaggregation methodology the Commission 
adopts. Maintaining such support is necessary on an interim basis to 
preserve service to consumers in these areas, pending further 
Commission action. At the same time, using the Commission's 
disaggregation methodology will ensure interim support is distributed 
more efficiently.
    8. For areas where the winning bidder is the price cap carrier 
receiving legacy support, Phase II support will commence on the first 
day of the month after the support is authorized by the Wireline 
Competition Bureau in that area. To ensure a smooth transition to Phase 
II support, a winning bidder will receive support payments at the 
current, disaggregated legacy support level until that time. Continuing 
disaggregated legacy support until Phase II support has been authorized 
for each census block will minimize disruptions and ensure continuity 
of services for consumers. And, as with areas without any winning 
bidder, using disaggregated legacy support amounts until Phase II 
support is authorized will better target legacy support during the 
interim period than the inherently inefficient legacy support 
mechanisms used on which Phase I frozen support are based.
    9. In areas won at auction by a carrier other than the price cap 
carrier, beginning on the first day of the month immediately following 
authorization to receive Phase II support, the winning bidder ETC will 
begin receiving support and bear an obligation to serve those areas. 
Accordingly, the price cap carrier will not receive legacy support for 
those census blocks beginning on the first day of the month after Phase 
II support is authorized for those census blocks. At that point, 
continued legacy support would become duplicative.
    10. Auction-Ineligible Blocks. In all census blocks determined to 
be ineligible for the CAF Phase II auction, price cap carriers that 
declined statewide model-based support will no longer receive legacy 
support starting the first day of the month following the first 
authorization of any Phase II auction support nationwide. By excluding 
certain areas from the auction, the Commission has already determined 
not to offer ongoing high-cost support for those areas. Thus, this 
approach implements the Commission's earlier decision not to distribute 
Phase I frozen support after Phase II auction support has begun.
    11. Fixed competitive ETCs' legacy support will be subject to a 
two-year phase down, beginning on the first day of the month 
immediately following the first authorization of any Phase II auction 
support. Fixed competitive ETCs will receive phase-down support equal 
to two-thirds of their total legacy support for the first 12 months. 
For the following 12 months, fixed competitive ETCs will receive one-
third of their total legacy support. All legacy support will end 
thereafter.
    12. Unlike the phase down for price cap carriers' legacy support in 
auction-eligible areas, the timing of the phase down for fixed 
competitive ETCs' legacy support will not differ by census block. For 
fixed competitive ETCs, the Commission concludes that a straightforward 
phase-down of support is more appropriate; fixed competitive ETCs 
receive a comparatively small amount of legacy support, and few 
expressed interest in continuing to provide service by participating in 
the CAF Phase II auction. The two-year phase-down schedule resumes the 
phase-down schedule adopted in the USF/ICC Transformation Order, 76 FR 
73830, November 29, 2011, for competitive ETCs. The two-year phase-down 
schedule thus eliminates support that is no longer necessary while 
providing an appropriate adjustment period for affected carriers.
    13. In sum, Tables 1 and 2 in the following illustrate the 
transition schedule the Commission adopts.

        Table 1--Transition of Price Cap Carriers' Legacy Support
------------------------------------------------------------------------
   Before the first day of the month
following authorization of any Phase II        Transition schedule
           support nationwide
------------------------------------------------------------------------
Price cap carrier receives legacy        Beginning the first day of the
 support in an eligible census block      month following authorization
 won by that carrier in the Phase II      of Phase II support in an
 auction.                                 auction-eligible census block,
                                          legacy support is converted to
                                          Phase II support.
Price cap carrier receives legacy        Legacy support is maintained
 support in an eligible census block      until further Commission
 with no winning bidder in the Phase II   action.
 auction.
Price cap carrier receives legacy        Beginning the first day of the
 support in a census block won by         month following authorization
 another carrier in the Phase II          of Phase II support in an
 auction.                                 auction-eligible census block,
                                          legacy support is eliminated.
Price cap carrier receives legacy        Beginning the first day of the
 support in an auction-ineligible         month following authorization
 census block.                            of any Phase II support
                                          nationwide, legacy support is
                                          eliminated.
------------------------------------------------------------------------


[[Page 8621]]


                          Table 2--Transition of Fixed Competitive ETCs' Legacy Support
----------------------------------------------------------------------------------------------------------------
                                                                  Beginning 12 months      Beginning 24 months
                                       Beginning the first day   after the first day of   after the first day of
  Before the first day of the month     of the month following  the month following the  the month following the
 following the first authorization of  the first authorization   first authorization of   first authorization of
   any Phase II support nationwide     of any Phase II support    any Phase II support     any Phase II support
                                              nationwide               nationwide               nationwide
----------------------------------------------------------------------------------------------------------------
Fixed competitive ETC receives legacy  Legacy support is        Legacy support is        Legacy support is
 support.                               reduced to two-thirds    reduced to one-third     eliminated.
                                        of support.              of support.
----------------------------------------------------------------------------------------------------------------

    14. In establishing this schedule, the Commission declines to 
adopt, within the context of the high-cost universal service program, a 
different definition of ``unsubsidized competitor,'' i.e., by including 
areas with mobile or non-terrestrial voice service. The existence of 
other voice service options within a particular census block does not 
guarantee that consumers there will continue to have access to voice 
service in the absence of an ETC being required to serve those 
consumers. The Commission therefore remains unpersuaded that it needs 
not continue providing support to ETCs simply based on the fact that 
there are multiple non-ETCs serving that census block.
    15. The Commission also declines to adopt USTelecom's most recent 
proposal to (1) distribute $105 million in ``new voice support'' across 
all high-cost and extremely high-cost census blocks for which, after 
the CAF Phase II auction, price cap carriers will continue to have an 
ETC obligation to provide voice service; (2) distribute an additional 
$35 million in transitional support to carriers receiving less ``new 
voice support'' in a state than the carrier's ``residual frozen 
support'' amount for that state; and (3) phase down the additional 
transitional support over a two-year period. The Commission finds this 
proposal inconsistent with the overarching objective of transitioning 
away from the current Phase I frozen support funding mechanism. 
Instead, USTelecom seeks to expand the areas for which price cap 
carriers receive support--through a new funding mechanism, ``new voice 
support''--to include areas where they do not currently receive legacy 
support. The Commission declines to do so. Through the interim 
framework the Commission adopts, it establishes a reasonable process 
for transitioning Phase I frozen support and fixed competitive ETCs' 
legacy support after the authorization of Phase II auction support. 
Price cap carriers currently receive Phase I frozen support for use 
within particular service areas, and the Commission now allocates that 
support across the census blocks for which the support is provided, 
i.e., within the same service areas, to be phased down, converted, or 
maintained.
    16. Even if the Commission were to adopt a transition mechanism 
more like USTelecom's proposal, modified to only include areas for 
which carriers receive legacy support, the proposed annual budget of 
$105 million for ``new voice support'' and first-year budget of $35 
million in additional transitional support would far exceed a 
reasonable amount of legacy support for carriers to continue serving 
only those areas not won at auction. USTelecom explains that $105 
million ``equals the $95 million of frozen support currently 
distributed to price cap carriers and $10 million of additional support 
to account for ACS's participation in the program.'' Under USTelecom's 
proposal, as with the transition mechanism the Commission adopts, 
carriers would not receive legacy support in either areas ineligible 
for the auction or areas won at auction. But USTelecom's proposal would 
require distributing a fixed amount of $105 million--more than the 
total frozen support price cap carriers currently receive--across the 
remaining areas and up to $35 million in additional support for some of 
those same areas. In contrast, the Commission's method efficiently 
targets support by using the CAM to allocate the support a price cap 
carrier currently receives to serve its entire service area according 
to the relative costs of serving each census block and then removing 
only the support associated with census blocks for which the price cap 
no longer has a federal high-cost voice obligation. The approach the 
Commission adopts today therefore more rationally ties the current 
legacy support a price cap carrier receives in a designated service 
area within a state to the phase-down support it will continue to 
receive until further Commission action. The Commission does not 
believe increasing support to maintain existing voice service in these 
areas--even on an interim basis--is a good use of the Commission's 
limited funds.
    17. The Commission recognizes, nonetheless, that drawing on the 
results of legacy support mechanisms may produce results undesirable to 
certain carriers. Under those legacy mechanisms, some price cap 
carriers did not receive legacy support in certain states containing 
high-cost and extremely high-cost areas. The Commission has likewise 
explained that the identical support rule for competitive ETCs 
``fail[ed] to efficiently target support where it is needed.'' 
Accordingly, the Commission emphasizes that the phase-down support 
maintained under its transition mechanism is not intended to provide a 
long-term solution. Instead, until the Commission is able to implement 
a new program, it maintains a targeted portion of carriers' existing 
legacy support to preserve affordable consumer access to 
telecommunications in high-cost areas. In adopting this interim 
framework, the Commission thus balances its statutory duties to ensure 
affordable access to quality services, promote in ``rural, insular, and 
high cost areas . . . access to telecommunications and information 
services . . . that are reasonably comparable to those services 
provided in urban areas and that are available at rates that are 
reasonably comparable to rates charged for similar services in urban 
areas,'' and establish ``specific, predictable and sufficient . . . 
mechanisms to preserve and advance universal service.''
    18. The Commission also provides price cap carriers and fixed 
competitive ETCs the option to decline phase-down support on a state-
by-state basis. It is possible that, despite their mandatory voice 
obligations, some carriers may conclude that they do not wish to 
continue receiving legacy support in every state. The Commission 
therefore directs the Wireline Competition Bureau to calculate and 
publish, for each price cap carrier's designated service area within 
each affected state, the amount of support available in every census 
block after the authorization of Phase II auction support within the 
same service area. Within 30 days after the release of public notice of 
such support amounts, price cap carriers and fixed competitive ETCs 
electing not to receive phase-down support in any states must provide 
notice of such election in the manner specified by the Wireline 
Competition Bureau.

[[Page 8622]]

    19. Regardless of the carrier's election, however, the federal ETC 
high-cost obligation to provide voice service is mandatory and 
independent of whether a carrier accepts phase-down support. To the 
extent a price cap carrier or fixed competitive ETC no longer wishes to 
maintain its ETC designation in the relevant areas, it may petition the 
relevant state to relinquish its ETC designation for those areas where 
another ETC is providing service, and it may choose to go through the 
section 214 discontinuance process. For those price cap carriers and 
fixed competitive ETCs that receive phase-down support, the Commission 
will require that they certify annually that they have and will use the 
support they continue to receive in the relevant high-cost and 
extremely high-cost areas to provide voice telephony service throughout 
the relevant census blocks at rates that are reasonably comparable to 
comparable offerings in urban areas.
    20. To the extent that any carrier believes it needs additional 
support to provide voice service at reasonably comparable rates 
throughout the remaining census blocks within its service area, it may 
request a waiver pursuant to Section 1.3 of the Commission's rules. In 
evaluating requests for a waiver, the Commission will consider any 
relevant facts presented by the carrier that demonstrate it is 
necessary and in the public interest for the price cap carrier to 
receive that additional funding to maintain reasonably priced voice 
service. Examples of such facts would include not only all revenues 
derived from network facilities that are supported by universal service 
but also revenues derived from unregulated and unsupported services. 
The Commission does not, however, expect to grant these requests 
routinely, and caution petitioners that it generally intends to subject 
such requests to a rigorous, thorough and searching review comparable 
to a total company earnings review.

III. Procedural Matters

A. Paperwork Reduction Analysis

    21. The Report and Order adopted herein contains new or modified 
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 will be 
invited to comment on the new or modified information collection 
requirements contained in this proceeding. In addition, the Commission 
notes that pursuant to the Small Business Paperwork Relief Act of 2002, 
Public Law 107-198, see 44 U.S.C. 3506(c)(4), it previously sought 
specific comment on how the Commission might further reduce the 
information collection burden for small business concerns with fewer 
than 25 employees. In this present document, the Commission has 
assessed the effects of the new and modified rules that might impose 
information collection burdens on small business concerns, and find 
that they either will not have a significant economic impact on a 
substantial number of small entities or will have a minimal economic 
impact on a substantial number of small entities.

B. Congressional Review Act

    22. The Commission will send a copy of this Report and Order to 
Congress and the Government Accountability Office pursuant to the 
Congressional Review Act, see 5 U.S.C. 801(a)(1)(A).
    23. As required by the Regulatory Flexibility Act of 1980 (RFA), as 
amended, an Initial Regulatory Flexibility Analysis (IRFAs) was 
incorporated in the Further Notice of Proposed Rulemaking adopted in 
April 2014 (April 2014 Connect America Further Notice). The Commission 
sought written public comment on the proposals in April 2014 Connect 
America Further Notice, including comment on the IRFA. The Commission 
did not receive any relevant comments in response to this IRFA. This 
Final Regulatory Flexibility Analysis (FRFA) conforms to the RFA.
    24. The Report and Order addresses outstanding issues regarding the 
transition of legacy universal service support--i.e., price cap 
carriers' Connect America Fund (CAF) Phase I frozen support and the 
frozen identical support of competitive eligible telecommunications 
carriers (ETCs) offering service to fixed locations (fixed competitive 
ETCs)--after the authorization of support pursuant to the CAF Phase II 
auction. The transition plan provides certainty and stability in areas 
covered by winning bids in the CAF Phase II auction by establishing a 
reasonable support glide path as the Commission transitions from one 
support mechanism to another.
    25. Specifically, in the Report and Order, the Commission adopts a 
methodology to disaggregate price cap carriers' existing CAF Phase I 
frozen support among areas based on the relative costs of serving 
different census blocks, and the Commission adopts a schedule for 
transitioning this legacy support upon the authorization of CAF Phase 
II auction support. The Commission also adopts a schedule for 
transitioning fixed competitive ETCs' legacy support over a two-year 
period. The Commission provides an option for price cap carriers and 
fixed competitive ETCs to decline phase-down support on a state-by-
state basis, and the Commission adopts a modified annual certification 
requirement for carriers that elect phase-down support.
    26. 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 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).
    27. 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.
    28. 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).
    29. 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

[[Page 8623]]

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.''
    30. In the Report and Order, the Commission requires that price cap 
carriers and fixed competitive ETCs that receive phase-down support 
certify annually that they have and will use the support they continue 
to receive in the relevant high-cost and extremely high-cost areas to 
provide voice telephony service throughout the relevant census blocks 
at rates that are reasonably comparable to comparable offerings in 
urban areas. Price cap carriers and fixed competitive ETCs may elect, 
however, not to receive phase-down support.
    31. 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 has considered all these factors subsequent to 
receiving substantive comments from the public and potentially affected 
entities. The Commission has also considered the economic impact on 
small entities, as identified in comments filed in response to the 
April 2014 Connect America Further Notice and IRFA, in reaching its 
final conclusions and taking action in this proceeding.
    32. In the Report and Order, the Commission adopts a transition 
schedule providing a gradual two-year phase-down for fixed competitive 
ETCs' legacy support. Among those carriers, of which many are small 
entities, few expressed interest in continuing to provide service in 
areas where they receive legacy support by participating in the CAF 
Phase II auction. The two-year phase-down schedule resumes the schedule 
adopted in the USF/ICC Transformation Order for competitive ETCs, and 
thus eliminates support that is no longer necessary while providing an 
appropriate adjustment period for affected carriers.
    33. As an alternative to this straightforward transition schedule, 
the Commission has considered implementing a schedule more similar to 
price cap carriers' transition--i.e., fixed competitive ETCs could 
continue receiving legacy support in certain auction-eligible areas and 
quickly stop receiving legacy support associated with auction-
ineligible areas. However, this would add complexity to the process 
with no benefit to fixed competitive ETCs.
    34. The Commission also provides an option for price cap carriers 
and fixed competitive ETCs to elect not to receive phase-down support 
and be subject to the associated obligations. In doing so, the 
Commission minimizes any impact economic impact to small entities and 
other carriers. Carriers opting to continue receiving legacy support 
subject to the phase-down schedule must continue to file a modified 
annual certification regarding their use of support, but those carriers 
are not subject to any additional requirements.

IV. Ordering Clauses

    35. Accordingly, it is ordered, pursuant to the authority contained 
in sections 4(i), 214, and 254 of the Communications Act of 1934, as 
amended, 47 U.S.C. 154(i), 214, and 254, that this Report and Order is 
adopted, effective thirty (30) days after publication of the text or 
summary thereof in the Federal Register, except that modifications to 
Paperwork Reduction Act burdens shall become effective immediately upon 
announcement in the Federal Register of OMB approval.
    36. It is further ordered that Part 54 of the Commission's rules, 
47 CFR part 54 is amended as set forth in the following, and such rule 
amendments shall be effective thirty (30) days after publication of the 
rules amendments in the Federal Register, except to the extent they 
contain information collections subject to PRA review. The rules that 
contain information collections subject to PRA review shall become 
effective immediately upon announcement in the Federal Register of OMB 
approval.

List of Subjects in 47 CFR Part 54

    Communications common carriers, Health facilities, Infants and 
children, internet, Libraries, Reporting and recordkeeping 
requirements, Schools, Telecommunications, Telephone.


Federal Communications Commission.
Cecilia Sigmund,
Federal Register Liaison Officer.

Final Rules

    For the reasons discussed in the preamble, the Federal 
Communications Commission amends 47 CFR part 54 as follows:

PART 54--UNIVERSAL SERVICE

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

    Authority: 47 U.S.C. 151, 154(i), 155, 201, 205, 214, 219, 220, 
254, 303(r), 403, and 1302 unless otherwise noted.


0
2. Section 54.307 is amended by adding paragraph (e)(8) to read as 
follows:


Sec.  54.307  Support to a competitive eligible telecommunications 
carrier.

* * * * *
    (e) * * *
    (8) Eligibility for support after Connect America Phase II auction. 
Starting the first day of the month following the first authorization 
of Connect America Phase II auction support nationwide, fixed 
competitive eligible telecommunications carriers shall have the option 
of receiving support pursuant to paragraph (e)(2)(iii) of this section 
as described in the following paragraphs (e)(8)(i) through (iv):
    (i) For 12 months following the first authorization of Connect 
America Phase II auction support nationwide, each fixed competitive 
eligible telecommunications carrier shall receive two-thirds (\2/3\) of 
the carrier's total support pursuant to paragraph (e)(2)(iii) of this 
section.
    (ii) For 12 months starting the month following the period 
described in paragraph (e)(8)(i) of this section, each fixed 
competitive eligible telecommunications carrier shall receive one-third 
(\1/3\) of the carrier's total support pursuant to paragraph 
(e)(2)(iii) of this section.
    (iii) Following the period described in paragraph (e)(8)(ii) of 
this section, no fixed competitive eligible telecommunications carrier 
shall receive any support pursuant to paragraph (e)(2)(iii) of this 
section.
    (iv) Notwithstanding the foregoing schedule, the phase-down of 
support below the level described in paragraph

[[Page 8624]]

(e)(2)(iii) of this section shall be subject to the restrictions in 
Consolidated Appropriations Act, 2016, Public Law 114-113, Div. E, 
Title VI, section 631, 129 Stat. 2242, 2470 (2015), unless and until 
such restrictions are no longer in effect.

0
3. Section 54.312 is amended by adding paragraph (d) to read as 
follows:


Sec.  54.312  Connect America Fund for Price Cap Territories--Phase I.

* * * * *
    (d) Eligibility for support after Connect America Phase II auction. 
(1) A price cap carrier that receives monthly baseline support pursuant 
to this section and is a winning bidder in the Connect America Phase II 
auction shall receive support at the same level as described in 
paragraph (a) of this section for such area until the Wireline 
Competition Bureau determines whether to authorize the carrier to 
receive Connect America Phase II auction support for the same area. 
Upon the Wireline Competition Bureau's release of a public notice 
approving a price cap carrier's application submitted pursuant to Sec.  
54.315(b) and authorizing the carrier to receive Connect America Fund 
Phase II auction support, the carrier shall no longer receive support 
at the level of monthly baseline support pursuant to this section for 
such area. Thereafter, the carrier shall receive monthly support in the 
amount of its Connect America Phase II winning bid.
    (2) Starting the first day of the month following the first 
authorization of Connect America Phase II auction support nationwide, 
no price cap carrier that receives monthly baseline support pursuant to 
this section shall receive such monthly baseline support for areas that 
are ineligible for Connect America Phase II auction support.
    (3) To the extent Connect America Phase II auction support is not 
awarded at auction for an eligible area, as determined by the Wireline 
Competition Bureau, the price cap carrier shall have the option of 
continuing to receive support at the level described in paragraph (a) 
of this section until further Commission action.
    (4) Starting the first day of the month following the authorization 
of Connect America Phase II auction support to a winning bidder other 
than the price cap carrier that receives monthly baseline support 
pursuant to this section for such area, the price cap carrier shall no 
longer receive monthly baseline support pursuant to this section.
    (5) Notwithstanding the foregoing schedule, the phase-down of 
support below the level described in paragraph (a) of this section 
shall be subject to the restrictions in Consolidated Appropriations 
Act, 2016, Public Law 114-113, Div. E, Title VI, section 631, 129 Stat. 
2242, 2470 (2015), unless and until such restrictions are no longer in 
effect.

0
4. Section 54.313 is amended by adding paragraph (m) to read as 
follows:


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

* * * * *
    (m) Any price cap carrier or fixed competitive eligible 
telecommunications carrier that elects to continue receiving support 
pursuant to Sec.  54.312(d) or Sec.  54.307(e)(2)(iii) shall provide 
certifications, starting July 1, 2020 and for each subsequent year they 
receive such support, that all such support the company received in the 
previous year was used to provide voice service throughout the high-
cost and extremely high-cost census blocks where they continue to have 
the federal high-cost eligible telecommunications carrier obligation to 
provide voice service pursuant to Sec.  54.201(d) at rates that are 
reasonably comparable to comparable offerings in urban areas. Any price 
cap carrier or fixed competitive eligible telecommunications carrier 
that solely receives support pursuant to Sec.  54.312(d) or Sec.  
54.307(e)(2)(iii) in its designated service area shall not be subject 
to reporting requirements in any other paragraphs in this section for 
such support.

[FR Doc. 2019-04261 Filed 3-6-19; 4:15 pm]
 BILLING CODE 6712-01-P
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.