The Uniendo a Puerto Rico Fund and the Connect America USVI Fund, Connect America Fund, ETC Annual Reports and Certifications, 59937-59968 [2019-22842]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 84, Number 216 (Thursday, November 7, 2019)]
[Rules and Regulations]
[Pages 59937-59968]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-22842]



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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[WC Docket Nos. 18-143, 10-90, 14-58; FCC 19-95]


The Uniendo a Puerto Rico Fund and the Connect America USVI Fund, 
Connect America Fund, ETC Annual Reports and Certifications

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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

SUMMARY: In this document, the Federal Communications Commission 
(Commission) takes major steps to promote the deployment of advanced, 
hardened networks in the Territories by allocating nearly a billion 
dollars in Federal universal service support in Puerto Rico and the 
U.S. Virgin Islands.

DATES: Effective December 9, 2019, except for Sec. Sec.  54.313, 
54.316, 54.1503, 54.1505, 54.1508, and 54.1513 through 54.1515. The 
Commission will publish a document in the Federal Register announcing 
the effective date of those rules.

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 (Order) and Order on Reconsideration in WC Docket Nos. 18-
143, 10-90, 14-58; FCC 19-95, adopted on September 26, 2019 and 
released on September 30, 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-19-95A1.pdf.

I. Introduction

    1. In the span of a few short weeks in September 2017, Hurricane 
Irma and then Hurricane Maria caused widespread devastation to Puerto 
Rico and the U.S. Virgin Islands (together the Territories). The storms 
produced extensive damage to infrastructure throughout the Territories, 
damaging or destroying communications networks, and leaving residents 
without essential lines of communication during and after these 
dangerous storms. The recovery of communications networks in the 
Territories has been especially challenging due to their remoteness 
from the mainland United States and the higher costs of deployment 
providers face there. The Commission to date has provided carriers with 
approximately $130 million in funding from the Universal Service Fund 
(USF or Fund) to assist with network restoration, bringing the total 
high-cost universal service support invested in the Territories since 
the 2017 hurricanes to more than $382.4 million.
    2. Most carriers now report that service has been completely or 
substantially restored. But the Commission's work is not done; it knows 
that hurricanes will hit Puerto Rico and the U.S. Virgin Islands again. 
So, looking to the future, the Commission must improve and expand 
broadband networks in the Territories. The Commission's long-term goal 
is to facilitate the deployment of fast, resilient, and reliable 
networks to all parts of the islands that will stand the test of time 
and provide digital opportunity to all Americans living in Puerto Rico 
and the U.S. Virgin Islands.
    3. The Commission therefore takes major steps to promote the 
deployment of advanced, hardened networks in the Territories by 
allocating nearly a billion dollars in Federal universal service 
support in Puerto Rico and the U.S. Virgin Islands. For Stage 2 of the 
Uniendo a Puerto Rico Fund, the Commission allocates more than $500 
million over ten years in fixed broadband support and more than $250 
million over three years in mobile broadband support. The Commission 
likewise allocates more than $180 million over ten years and $4 million 
over three years for Stage 2 Connect USVI Fund fixed and mobile 
support, respectively. These funds will facilitate the improvement and 
expansion of existing fixed and mobile networks in the Territories, and 
provide for the deployment of new broadband networks, so that those 
living in Puerto Rico and the U.S. Virgin Islands will have access to 
and benefit from the same high-speed broadband services that residents 
of the mainland United States enjoy. Indeed, some of the funds that the 
Commission authorizes are specifically allocated to facilitate the 
deployment of 5G, the next generation of wireless connectivity, in the 
Territories. In short, the steps the Commission takes in the Order, in 
addition to the private investment made by providers, will help ensure 
that broadband is deployed on a reasonable and timely basis to the 
residents of the Territories and that it remains deployed following 
future storms.

II. Report and Order

    4. To ensure the continued expansion and improvement of fixed voice 
and broadband service in the Territories, the Commission adopts a 
single-round competitive proposal process for Stage 2 fixed support for 
the Uniendo a Puerto Rico Fund and Connect USVI Fund. The Commission 
divides Puerto Rico into 78 geographic areas--one per municipio--and it 
divides the U.S. Virgin Islands into two geographic areas. The 
Commission will consider all valid applications for each geographic 
area and select a winner for each area by applying the same objective 
scoring criteria for price, network performance, and network resilience 
and redundancy to each proposal received. The Commission establishes a 
ten-year support term and make any existing provider of fixed broadband 
in each Territory, as of June 2018 FCC Form 477 data, eligible to 
participate in the support mechanism for the respective Territory they 
serve. Winning applicants will have specific deployment obligations and 
the Commission adopts two processes for reassessing deployment data to 
ensure support is spent efficiently. The Commission directs Stage 2 
fixed support toward providing quality service throughout the 
Territories, rather than simply toward restoration of pre-storm 
networks, to promote efficient deployment of advanced, reliable 
services to all locations. The Commission also establishes thorough 
oversight and accountability measures similar to those the Commission 
has implemented in other recent high-cost proceedings.
    5. Single-Round Competitive Proposal Process. The Commission adopts 
a single-round competitive proposal process in which it will consider 
all applications simultaneously and select applicants based on the 
lowest score for a series of weighted objective criteria. The 
Commission establishes performance tiers that applicants must meet, and 
it gives greater preference to proposals based on how much they exceed 
the minimum thresholds. The Commission finds several clear benefits to 
a competitive proposals approach, and it believes this approach is 
better-suited to Puerto Rico and the U.S. Virgin Islands than 
alternative mechanisms such as an auction, a multi-round competitive 
proposal process, or a negotiated approach. The competitive proposal 
process the Commission adopts is preferable to an auction under the 
circumstances because of the relatively small pool of possible 
applicants. At the same time, the Commission finds the single-round

[[Page 59938]]

proposal process retains many of the competitive benefits of an auction 
but can facilitate more prompt funding and deployment as compared with 
a multi-round proposal or negotiated approach process. Finally, the 
approach the Commission adopts relies on objective criteria that are 
preferable to a more subjective competitive proposal process or 
negotiated approach because it better implements its policy goals of 
promoting efficiency, certainty, transparency, and impartiality, and 
allows the Commission to compare applications using different network 
technologies and offering differing performance. The Commission's 
competitive process is comparable to the Connect America Fund (CAF) II 
auction in that the Commission will award support competitively based 
on application of objective criteria. The Commission adapts the CAF II 
auction framework to the particular circumstances of the Territories by 
adding resiliency and redundancy as criteria to account for the risks 
the Territories face and by employing a single-round proposal process 
rather than a multi-round auction in light of the smaller geographic 
scale and number of participants. Based on the foregoing analysis, the 
Commission declines to adopt the multi-round or negotiated competitive 
proposal processes favored by several commenters. The Commission 
recognizes that it is forgoing the opportunity to negotiate or 
influence supplementary-round proposals. Nevertheless, this approach 
will encourage parties to put forward their best commitments in the 
first instance and promote competition for support. It also will avoid 
significant delay and limit subjectivity.
    6. Selection Criteria. Consistent with the Commission's policy 
goals for Stage 2 fixed support, it will consider applications based on 
both cost and proposed performance capabilities. Evaluating cost is an 
essential part of the Commission's determination. As with all USF 
decisions, the Commission seeks to promote access to quality services 
in the most cost-effective and efficient manner possible. The 
Commission must be responsible stewards of the Fund to fulfill its 
commitment to fiscal responsibility and to ensure that funds are 
targeted efficiently. For example, in the USF/ICC Transformation Order, 
76 FR 73830, November 29, 2011, the Commission proposed to design a 
competitive bidding mechanism for price cap areas where the incumbent 
Eligible Telecommunications Carrier (ETC) declined to make a state-
level commitment, so as to distribute support in a way that ``maximizes 
the extent of robust, scalable broadband service subject to the 
budget.'' This competitive bidding mechanism resulted in important 
efficiency gains. The eligible locations awarded in the resulting CAF 
II auction had an initial reserve price of $5 billion over the next 
decade; the final price tag to cover these locations, however, is now 
only $1.488 billion--saving the Fund over $3.5 billion. While the 
competitive process the Commission adopts in the Order differs from the 
CAF II auction, it expects that allowing multiple providers--including 
those that have not traditionally received high-cost support--to 
compete for funding will increase the efficiencies of bringing advanced 
services to consumers in Puerto Rico and the U.S. Virgin Islands.
    7. Accordingly, the Commission will weigh three factors in 
selecting winning applicants: (1) Price per location; (2) network 
performance, including speed, latency, and usage allowance; and (3) 
network resilience and redundancy. Although commenters differ on how to 
weigh these factors relative to each other and some suggest additional 
factors, several commenters support the inclusion of these three key 
factors. The Commission finds it appropriate to give price per location 
the greatest weight. While the Commission's goal in this process is to 
award funding to the carrier that can provide the highest performing 
and most resilient network possible, the Commission must do so in a 
fiscally responsible manner. As stewards of the Fund, responsible 
spending must be the Commission's primary concern. Although the 
destruction from the hurricanes contributed to the challenge of 
accurately determining location counts, the processes the Commission 
establishes herein provides opportunities to remedy any inaccuracies, 
and the Commission must make every effort to ensure cost-effective 
spending. At the same time, the Commission must carefully account for 
the other important criteria it has identified. Therefore, while the 
Commission allocates price the greatest individual weight, combined 
weights for network performance and resilience/redundancy can outweigh 
price, to encourage applicants to deploy high-performing, storm-
hardened networks. The Commission notes that in contrast to the CAF II 
auction, where it considered speed, usage allowance, and latency but no 
other network-specific factors, here the Commission will award points 
based on resilience and redundancy to account for the unique challenges 
the Territories face due to the risk of disasters and their insularity. 
The Commission gives network performance the second most points because 
performance will always matter to customers, while resilience and 
redundancy benefit users only in the event of a natural disaster or 
other disruption to the network.
    8. Overall Scoring. Consistent with the factors the Commission has 
identified, it adopts a 270-point scale, allocated as follows: 100 
points for price per location, 90 points for network performance, and 
80 points for network resilience and redundancy. For each geographic 
area for which it seeks support, an applicant will be assigned a 
specific point value in each category and the applicant with the lowest 
combined score will win support in that area. This overall scoring 
table shows how the points will total across all categories. The 
Commission also adopts the tables in the following for each 
subcategory, which show how the points will be assigned within each 
subcategory.

                        Table 1--Overall Scoring
------------------------------------------------------------------------
                       Overall scoring                           Points
------------------------------------------------------------------------
Price Per Location...........................................        100
Network Performance..........................................         90
Network Resilience and Redundancy............................         80
                                                              ----------
    Total....................................................        270
------------------------------------------------------------------------

    9. The Commission declines to use deployment timing or status of 
restoration as weighted factors in scoring proposals in this process. 
The Commission agrees with commenters that deployment timing is 
important--indeed all winning providers must complete buildout and 
service obligations within six years, with interim deployment 
milestones after three years. And while faster deployment is in the 
public interest, the Commission concludes that the benefits of 
accelerating deployment schedules by 1 or 2 years--which cannot be 
verified at the time support is awarded--in this case does not warrant 
being awarded a competitive preference in scoring when weighed against 
the importance of ensuring cost-effective, high-quality, and resilient 
networks. In particular, network performance, resilience, and hardening 
provide long-term benefits, in contrast to the shorter-term benefits of 
an accelerated schedule. Further, the Commission expects that all 
carriers are independently motivated to build faster

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as it will mean receiving revenue more quickly. The Commission also 
finds that there is reduced risk of failure in establishing a 
reasonable schedule that all applicants can commit to meet rather than 
providing an up-front benefit for a shorter timeline that would require 
withholding support if the carrier did not adhere to the schedule. The 
Commission specifically rejects Viya's suggestion that it requires a 
minimum baseline of 25/3 Mbps deployment to 95 percent of locations in 
the U.S. Virgin Islands within two years. That timeline deviates 
sharply from the deployment milestones in CAF II, and Viya has not 
identified a reason why the Commission should depart from its 
precedent. Further, that timeline could limit the number of applicants, 
precluding the U.S. Virgin Islands from receiving the benefits of 
potential additional competition.
    10. Likewise, while the Commission agrees that it is important for 
carriers to restore their networks quickly following a natural 
disaster, it finds that assigning preference based on an applicant's 
commitment to restore within a certain period following a future 
disaster--or demonstrated history of swift restoration following a 
disaster--is unhelpful for deciding how to award support in this 
instance. Past restoration performance does not necessarily predict 
future restoration performance, particularly when the nature of a 
provider's network will likely change following this process and given 
that the Commission cannot control for the size and scope of any future 
disaster. Evaluating how fast or completely a carrier restored its 
network would also be extremely challenging and is dependent on factors 
outside of the Commission's control (e.g., the nature and scope of the 
disaster, personnel, availability, access, etc.). Having said that, the 
Commission expects recipients of Stage 2 support, as with all USF 
support, to be diligent and efficient in restoring their networks 
following any future natural disaster or outage. To that end, the 
Commission adopts measures to ensure all applicants have written 
Disaster Preparation and Response Plans in place to establish processes 
that can help ensure effective and timely restoration following a 
disaster.
    11. Price Per Location. The Commission adopts the scoring for price 
per location shown in Table 2 as an incentive for participants to 
achieve the most economical solution possible, without sacrificing 
quality or resilience. The reserve price is the maximum amount that a 
proposal may commit to accept, and a commitment to accept the reserve 
price will receive the most points for price per location. To encourage 
applicants to provide the best price possible, the Commission starts 
with a total of 100 points (for a commitment at the reserve price) and 
subtract one point for each percentage point below the reserve price to 
which an applicant commits. Because the Commission calculates the 
reserve price with reference to the cost to serve the geographic area, 
this weighting system takes into account the relative cost to serve 
different municipios or islands. Although Hughes suggested a cap at 40% 
or greater below reserve, the Commission's allocation method encourages 
applicants to reveal their actual price by rewarding a carrier for each 
point below the reserve price. As such, the Commission does not adopt a 
cap or otherwise limit how far below the reserve price an applicant can 
commit. That being said, in the CAF II auction a significant portion of 
bidders dropped out of the bidding when faced with prices more than 30% 
below the reserve price, and the Commission would expect similar final 
prices here to avoid compromising quality or coverage across the entire 
geographic area.

                   Table 2--Price per Location Scoring
------------------------------------------------------------------------
                   Price                           Assigned points
------------------------------------------------------------------------
Reserve Price.............................  100
1%-100% Below Reserve Price...............  -1 point for each percentage
                                             below reserve.
------------------------------------------------------------------------

    12. Reserve Price. The Commission adopts, with one slight 
modification, the three-step process to determine the reserve price 
that the Commission proposed in the PR-USVI Fund Notice of Proposed 
Rulemaking (PR-USVI Fund NPRM), 83 FR 27528, June 13, 2018, to allocate 
the budget. First, the Commission will employ the Connect America Model 
(CAM) to calculate the average cost per location for all locations in a 
census block. Second, the Commission will apply the full budgets for 
Puerto Rico and for the U.S. Virgin Islands, thereby creating 
territory-specific high-cost thresholds to ensure the full amount of 
the budget available to each territory over the 10-year period is 
available for disbursement. Third, the Commission will establish a 
reserve price for each geographic area in proportion to the support 
amounts calculated for each census block within that area. That is, the 
Commission will use the CAM to allocate a portion of the budget to each 
geographic area based on the relative cost of providing service across 
all eligible areas. Although the Commission proposed using the 
extremely high-cost threshold to establish a per-location, per-month 
cap of $198.60, as it has previously done, it will not apply a cap in 
this context. The total number of locations above the cap is relatively 
small, the reserve price for each geographic area will cover a larger 
geography, and the Commission expects competition to lower overall 
support amounts. The Commission directs the Wireline Competition Bureau 
(Bureau) to apply the modified three-step process it describes and 
release the reserve price for each geographic area and number of 
locations for all eligible areas by Public Notice.
    13. The CAM is the best current objective data the Commission has 
combining cost and locations. The Bureau never formally adopted the CAM 
as it applies to either Puerto Rico or the U.S. Virgin Islands, but 
rather excluded those two territories (and Alaska) prior to calculating 
the offer of CAF II model-based support for price caps based on 
opposition in the record from the price caps serving those areas. 
However, the Commission uses the CAM for Stage 2 not to calculate the 
exact amount of support necessary for each eligible area--the 
applicants will provide this--but rather as an estimate of relative 
cost within each geographic area, to be used as an allocator of the 
budget. In other words, unlike for the offer of model-based support, 
the Commission will not use the CAM to establish specific final support 
amounts but to determine the relative costs of each area within the 
budget and the maximum amount of support available for each eligible 
geographic area. In the CAF II auction, most applicants were awarded 
support at less than 80% of the CAM-established reserve price, 
suggesting that the actual support amounts required to serve were often 
lower than model-calculated support figures, and the Commission 
believes it is likely that the same pattern will emerge through the 
competitive process here.
    14. Because the CAM is the best objective mechanism the Commission 
has available to it and commenters did not suggest a specific 
alternative for setting reserve prices, the Commission declines to 
adopt a different approach based on commenters' arguments that the CAM 
underestimates costs of providing service in Puerto Rico and the U.S. 
Virgin Islands and does not account for the costs of ``storm 
hardening'' a network. Given the limited role that the CAM will play as 
a budget allocator, coupled with the Commission's desire to provide 
support to the Territories as quickly as possible, it would not be 
efficient to initiate a

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process to update the CAM before the competitive application process; 
re-running the model to make adjustments to the locations currently 
within CAM prior to calculating the reserve price would require 
significant time and resources. Liberty suggested that, to accurately 
determine how many locations currently exist, it and other carriers 
undertake a physical walk of the existing locations in a sample of 
census blocks or geographic areas and then use those numbers to 
extrapolate the number of locations in similarly situated or adjacent 
blocks or areas. Reliance on a physical walk, or other new carrier-
submitted data, would introduce substantial delays to implementing 
Stage 2, and invite potentially intractable disputes if carriers 
disagree regarding the number of locations, contrary to the 
Commission's goal of facilitating prompt deployment of resilient 
service throughout the Territories. Further, even a walk of a network 
could be inaccurate or outdated if buildout is happening concurrently, 
or if, as suggested, the walkout is only used as a method of projection 
across similarly situated areas. The Commission finds that its reliance 
on CAM will provide a reasonably accurate baseline by which to allocate 
the budget, and that conducting this process expeditiously outweighs 
any benefits that might result from conducting a time-consuming data 
collection before beginning the competitive application process. 
Moreover, given the benefits of a competitive process in allowing each 
applicant to request support at a level that reflects its understanding 
of the costs of deployment and in potentially lowering support below 
the reserve price, the Commission finds it is not necessary to 
incorporate specific network costs related to storm hardening. The 
Commission believes the additional support it provides during the 10-
year term addresses these concerns and will allow carriers to do the 
work necessary to increase resilience of their networks.
    15. Network Performance. To ensure that the Commission spends USF 
dollars wisely, it must consider both the cost (in terms of price per 
location) and benefits of each proposal. To evaluate the benefits, the 
Commission first assigns points based on proposed network performance 
to ensure that end users will receive quality service. Evaluating 
network performance is consistent with Commission high-cost support 
precedent.
    16. The Commission establishes three tiers for network speed and 
usage allowances, and two tiers for network latency, and allocate 
points for each. The Commission will accept applications at each of the 
different performance tiers, informed by its experience with the CAF II 
auction and prior Commission orders setting performance obligations. 
While the Commission aims to provide funding to all supported locations 
as cost-effectively as possible within its finite budget, the 
Commission also values higher speeds over lower speeds, higher usage 
allowances over lower usage allowances, and lower latency over higher 
latency. Therefore, for example, the Commission will consider proposals 
where the costs to serve are higher, if higher-performance services 
will be available. The Commission sees the value to consumers of having 
access during the 10-year term of support to service that exceeds its 
minimum requirements, and the Commission must take steps to ensure that 
the networks it invests scarce universal service support to build will 
stand the test of time. For a proposal to qualify for any tier, the 
applicant must commit to deploying a network that is fully capable of 
delivering speeds and usage allowances that meet or exceed--and latency 
that meets or falls below--the relevant standards to all locations 
within the geographic area. Applicants must also commit to offer this 
level of service throughout the 10-year term to ensure that all users 
can take advantage of the network services being funded. The Commission 
declines to expand the performance criteria to include scoring for 
customer service as WorldNet suggests. The Commission expects carriers 
will have adequate business incentives to use the high-quality networks 
they deploy with Stage 2 support to provide reliable service, and it 
declines to dictate specific business practices or provisions of 
customer agreements. Moreover, WorldNet failed to articulate how the 
Commission could adjust its scoring to accommodate customer service 
performance, what specific factors it should require, what metric it 
might use to evaluate those factors, or how it could assign a score 
based on a collection of individualized customer agreements.
    17. The Commission requires support recipients to deploy a network 
capable of providing service at 25/3 Mbps as its minimum speed 
requirement. Although the PR-USVI Fund NPRM proposed 10/1 Mbps, fixed 
providers are now generally providing at least 25/3 Mbps and in many 
cases much faster speeds in both Territories as well as elsewhere in 
the United States. Additionally, alternative technologies like 
satellite are increasingly able to offer higher speeds. As commenters 
note, a 25/3 Mbps minimum speed requirement is consistent with recent 
Commission action and helps to ensure that customers and service 
providers in the Territories are not subject to a lesser standard of 
service than other parts of the country. The Commission therefore 
declines the suggestion of AT&T and PRTC that it should adopt 10/1 Mbps 
as the minimum speed requirement. The Commission's recent experience 
with the CAF II Auction, in which winning bidders committed to making 
25 Mbps/3 Mbps or better service to more than 99.7% of the locations in 
the areas won, affirms its conclusion that a higher standard of service 
is achievable, and the Commission does not want Puerto Rico and the 
U.S. Virgin Islands to be left behind. Indeed, the governments of the 
Territories themselves would prefer to see even higher-speed deployment 
to the Territories. While the Commission applauds these goals of the 
Territories, it declines to adopt an even higher speed (e.g., 100 Mbps) 
as its minimum requirement, as Governor Mapp suggested, as the data do 
not yet support this speed for all areas.
    18. Additionally, the Commission adopts a minimum monthly usage 
allowance of 200 gigabytes (GB) or a usage allowance that reflects the 
average usage of a majority of fixed broadband customers, using 
Measuring Broadband America data or a similar data source, whichever is 
higher. In the PR-USVI Fund NPRM, the Commission proposed a 170 GB 
minimum usage requirement. As with the speed requirement, however, 
while some commenters suggested lower usage allowances, the Commission 
believes the current market supports higher usage requirements based on 
recent usage announced in the Bureau's 2019 Urban Rate Survey PN.
    19. The Commission will reward higher combinations of speed and 
usage allowances by allocating them fewer points as shown in Table 3. 
The Commission will assign 50 points to providers that commit to deploy 
the minimum speed requirement of 25/3 Mbps and a minimum usage 
allowance of greater or equal to 200 GB or the U.S. Median, whichever 
is higher. The Commission will assign 25 points to providers that 
commit to deploy networks offering 100/20 Mbps and a minimum usage 
allowance of 2TB per month. The Commission recognizes that Puerto Rico 
has a goal of Gigabit speed throughout 70% of the island by 2020 and 
U.S. Virgin Islands leadership seeks high-speed last-mile connections. 
To facilitate deployment of high-speed service in the Territories, the

[[Page 59941]]

Commission will assign no points for 1 Gbps/500 Mbps with 2TB or 
greater monthly usage allowance. In the CAF II auction, the Commission 
adopted tiers of 100 Mbps/20 Mbps and 1 Gbps/500 Mbps, each with a 2 TB 
usage allowance, and it sees no reason to deviate from that decision. 
In addition, the Commission declines the Fiber Broadband Association's 
proposal to assign 70 points for the deployment of the minimum speed 
requirement tier because such a change would result in the points 
available for network performance, in the aggregate, outweighing price 
per location, contrary to the Commission's determination to prioritize 
price per location first.

       Table 3--Network Performance Scoring (1 of 2)--Speed/Usage
------------------------------------------------------------------------
                                                                Assigned
                Speed                 Monthly usage allowance    points
------------------------------------------------------------------------
>=25/3 Mbps.........................  >=200 GB or U.S.                50
                                       median, whichever is
                                       higher.
>=100/20 Mbps.......................  >=2 TB.................         25
1 Gbps/500 Mbps.....................  >=2 TB.................          0
------------------------------------------------------------------------

    20. Latency. The Commission adopts a maximum roundtrip broadband 
and voice latency of <= 750 milliseconds (ms) or less but give 
preference to applicants with low-latency broadband and voice at or 
below 100 ms as shown in Table 4 below. Accordingly, high-latency 
commitments will be assigned 40 points, and low-latency commitments 
will be assigned no points. While the PR-USVI Fund NPRM proposed a 
roundtrip latency of no greater than 100 ms, the Commission is 
persuaded that the better approach is to allow providers of higher-
latency services to participate, while rewarding providers that commit 
to low-latency services. Providing flexibility will allow for greater 
participation, particularly by satellite providers, which is likely to 
increase competition and lower the cost of serving many geographic 
areas, while also ensuring that as many areas receive as many 
applications as possible. Further, satellite has proven to be an 
important tool in providing service to the Territories, particularly in 
the wake of natural disasters. The Commission concludes that this 
standard will ensure that consumers in rural, insular, and high-cost 
areas will have available an offering that enables them to use their 
broadband connections in ways reasonably comparable to consumers in 
urban or lower-cost areas, where fixed broadband services are widely 
available. The Commission therefore rejects the arguments of several 
fixed service providers and Puerto Rico Telecommunications Regulatory 
Board (PRTRB) that it should adopt a requirement of 100 ms maximum 
latency.

         Table 4--Network Performance Scoring (2 of 2)--Latency
------------------------------------------------------------------------
                                                                Assigned
               Latency                      Requirement          points
------------------------------------------------------------------------
Low.................................  <= 100 ms..............          0
High................................  <= 750 ms..............         40
------------------------------------------------------------------------

    21. Network Resilience and Redundancy. Due to the risks particular 
to Puerto Rico and the U.S. Virgin Islands posed by future natural 
disasters, the Commission believes it is important to explicitly 
consider resilience, network hardening, and disaster preparation in its 
support determinations. Although the Commission has not previously 
evaluated these factors in the context of allocating high-cost support, 
the heightened risk of damage due to disasters, as demonstrated by 
Hurricanes Irma and Maria in the Territories, presents a special case. 
According to a New York Times evaluation of Small Business 
Administration data, nearly every zip code in Puerto Rico and the U.S. 
Virgin Islands sustained over $5 million in losses from major natural 
disasters from 2002-2017. The study did not show similar losses in any 
state; indeed, although Puerto Rico only accounts for less than 1% 
percent of the U.S. population, it alone accounted for 5% percent of 
all losses from natural disasters in the nation during that time 
period. Further, because the Territories are insular, preparation for 
and recovery from disasters is particularly difficult and network 
infrastructure is especially vulnerable due to high shipping costs, 
topography and weather, and distance from the mainland. The Commission 
agrees with Liberty that network resilience is a key component of a 
successful network. Supporting resilient networks is consistent with 
the Commission's obligation to use the Fund to help provide access to 
quality services at reasonable rates in Puerto Rico and the U.S. Virgin 
Islands, in light of the particular risks the Territories face. 
Further, a hardened network can help guard against future restoration 
costs. As PRTC illustrated, the storms devastated the progress made 
with the use of CAF Phase I frozen support. If the Commission is to 
provide Federal funding to support modern networks in Puerto Rico and 
the U.S. Virgin Islands, it finds it prudent and in the public interest 
to account for the heightened possibility of future natural disasters 
in the Territories. The Commission therefore will factor the resilience 
and redundancy of any supported network in its fixed support allocation 
decision.
    22. The Commission recognizes that resilience involves many 
factors, but its evaluation focuses on only a few key, objective 
criteria, consistent with its preference to avoid subjective processes. 
The Commission accounts for the more subjective and situationally 
dependent factors of maintaining a resilient network through its 
disaster preparation and response plan requirement. The Commission 
measures network resilience by the ability of network facilities to 
recover quickly from damage to its components or to any of the external 
systems on which it depends. Resilience-improving measures do not 
absolutely prevent damage; rather, they enable network facilities to 
continue operating despite damage and/or promote a rapid return to 
normal operations when damage does occur. The scoring the Commission 
adopts awards a points preference based on the level of resilience an 
applicant proposes to build into its network and/or the redundancy or 
diversity it proposes to create in its network.
    23. Many service providers reported that burying fiber is their 
preference for creating resilient networks hardened against disasters. 
The Commission agrees that burying fiber is ideal because it provides 
the best protection of the network against the high winds of storms and 
the atmospheric elements in general. Burying fiber all the way to every 
location, however, may not be financially or physically feasible in 
mountainous areas or otherwise challenging topography, or in areas with 
frequent or high likelihood of flooding. Accordingly, the Commission's 
scoring creates a preference for burying as much fiber as possible, but 
also allows for resiliency solutions that rely on a fixed wireless 
connection to the end user location, microwave backhaul, and/or 
satellite, which it finds are all less vulnerable than above-ground 
wireline service because they rely on relatively fewer physical 
facilities that are easier to restore. Satellite can be quite 
resilient, as shown by its performance and usage following the 2017 
hurricanes, though the Commission expects there is a risk on the 
receiver end, as with a fixed wireless solution. While the record only 
identifies that carriers are installing microwave backhaul as a source 
of redundancy, the Commission includes it in its scoring

[[Page 59942]]

framework for the primary transmission path to maximize flexibility and 
ensure that numerous resilient options are available. It is clear 
following the storms that aerial transmission lines are not a storm-
hardened solution that can provide reliable communications to customers 
living in the Territories. By all accounts, aerial transmission lines 
required the most repair and left the network the most vulnerable. The 
Commission agrees, however, with Viya that aerial wireline networks 
using high-wind rated composite poles provide more resiliency over 
traditional poles. Thus, based on the record, the Commission allows 
proposals based on aerial wireline deployment because it recognizes 
that it may be the most cost-effective, or even the only, means of 
providing service to some locations.
    24. Accordingly, the Commission will assign 60 points for a 
solution that relies on aerial wireline deployment. Recognizing that 
new pole technologies, specifically high-wind rated composite poles, 
provide increased resiliency over traditional wooden poles, the 
Commission will assign as few as 40 points for use of high-wind rated 
composite poles over standard aerial wireline deployment. Similarly, 
the Commission will assign as few as 40 points for a resiliency 
solution that relies on fixed wireless connection to the end user, 
microwave backhaul, or satellite (e.g., an all-satellite solution would 
receive 40 points). The Commission will assign as few as zero points 
for a resiliency solution that relies on buried fiber (e.g., an all-
buried fiber solution would receive no points).
    25. The Commission recognizes that applicants are likely to use a 
mix of outside plant types, so it awards point reductions for 
resiliency based on the percentage of the miles an applicant proposes 
to use for a particular solution (e.g., buried fiber or aerial) within 
the geographic area for which it is submitting an application. For 
example, if a provider intends to bury fiber to 70% of the miles of its 
network in a geographic area, use a fixed wireless end user connection 
solution for 20% of the miles of its network in a geographic area, and 
aerial deployment for 10% of its network in geographic area, the 
Commission will assign 6 points for aerial (10% of 60), assign 8 points 
for fixed wireless (20% of 40), and assign no points for buried fiber 
(70% of 0)--for a total of 14 assigned points for resilience. The 
Commission recognizes that network miles is not an apt measurement for 
satellite, so it will award points for a network that uses a mix of 
satellite and terrestrial transmission to the end-user location based 
on the percentage of locations reached via each transmission medium. 
For example, if a carrier proposes to reach 50% of its network 
locations via satellite and 50% via aerial, the Commission will assign 
a resilience score of 50 ((50% of 40) + (50% of 60)). The Commission 
declines Viya's proposal to measure resiliency for all services based 
on end-user connections because network miles is a better measure of 
the resiliency of the entire network. The Commission declines to adopt 
the proposals of Viya and PRTC to weigh core network miles more heavily 
than last mile connections. Applying this weighting would undermine the 
incentive to harden connections to end users, ultimately making 
networks less able to successfully withstand disaster. While Viya and 
PRTC are correct that core network miles serve many more customers than 
last-mile connections, for this same reason applicants need less 
incentive from the Commission's weighting system to harden core network 
miles compared to end-user connections.
    26. Finally, as the Commission also value redundancy as a key 
measure of a storm-hardened network, it will assign up to 20 points 
depending on whether an applicant proposes a redundancy solution that 
includes a backup network or path diversity. Specifically, the 
Commission will assign no points for a proposal that includes either a 
backup network or path redundancy, and it will assign 20 points to a 
proposal that includes neither a backup network or path redundancy. In 
its comments, BBVI explains how both backup network and path diversity 
are important to developing redundancy in the network. Viya agrees that 
path diversity is important in building a resilient network. Network 
diversity means maintaining a separate type of communication network 
that can provide services should the first type fail. For example, a 
diverse network system could be one that normally provides services 
through a fiber network, but which switches over to a satellite network 
in an emergency situation. The Commission also agrees with Viya that a 
diverse network system could include the use of a high-speed mobile 
broadband network in an emergency situation. Path diversity means that 
there is an alternate route to achieving communications within the 
network. For example, a network with path diversity could be one that 
deploys services through fiber, but which maintains a backup fiber ring 
that could re-route traffic in an emergency where the fiber network is 
cut, damaged, or otherwise not working. The Commission believes these 
types of diversity can be achieved regardless of the type of carrier 
and so maintain its technology neutral objectives. The Commission 
clarifies, however, that it will not deduct points for satellite 
providers for redundancy simply based on the availability of a backup 
satellite path. The risk during storms is to the satellite system's 
ground-based earth stations, not space stations. Indeed, the points of 
potential failure for an all-satellite network during a storm may be 
more concentrated compared to terrestrial networks. Although the 
Commission agrees with BBVI that both network and path diversity are 
important, to remain flexible and meet its statutory and policy goals 
with this support, the Commission scoring will equally reward a carrier 
for building in either network or path diversity. Nevertheless, the 
Commission encourages carriers to build both into their network 
wherever possible as a best practice for building a storm-hardened 
network. The Commission declines PRTC's proposal to assign up to 40 
points for redundancy. The scoring already reflects the relationship 
between resiliency and redundancy in building a network and the 
Commission's priorities related to the inherent qualities of each 
technology. Moreover, increasing the redundancy score would result in 
an overall change in priorities of the scoring criteria by allowing the 
same number of points for price per location as for resiliency and 
redundancy, contrary to the Commission's determination to weight price 
per location most heavily. Additionally, the Commission declines Viya's 
proposal that it allow up to a 20 point deduction from the total 
resiliency and redundancy score for a commitment to provide at least 
eight hours of backup power at network components and customer 
locations because backup power, while important, is not a measure of 
network resiliency and because Commission rules already require voice 
providers to make available twenty-four hours of backup power for 
customers. Additionally, the Commission requires winning applicants in 
this process to account for backup power in their Disaster Preparation 
and Recovery Plans.
    27. The Commission adopts the same approach for rewarding 
redundancy as it does for resilience. For instance, if an applicant 
proposes building in network or path diversity for 60% of its network 
miles in a geographic area, the Commission will assign a redundancy

[[Page 59943]]

score of 8 (40% of network miles without path diversity or a backup 
network multiplied by 20). Consistent with the Commission's approach to 
resilience, it recognizes that network miles is not an apt measurement 
for satellite, so it will reward a satellite service provider for 
redundancy based on the percentage of locations that it intends to 
reach with a backup network. For example, if a satellite provider 
proposes to reach 80% of its network locations with a backup network, 
the Commission will assign a redundancy score of 4 (20% of locations 
without a backup network multiplied by 20). The Commission declines to 
adopt Hughes' proposal to award points for hardening if, among other 
things, the diversity that the service provider incorporates into the 
network covers no less than 70% of the service area. The Commission 
prefers the flexibility of a sliding scale to a binary system, and it 
does not see a significant benefit to rewarding coverage of areas 
without potential end-user locations. The Commission also declines 
Hughes' proposal to change the amount of resiliency or redundancy 
points awarded to satellite, as the scoring already accounts for the 
inherent resiliency of satellite networks.

           Table 5--Network Resilience and Redundancy Scoring
------------------------------------------------------------------------
  Network resilience and redundancy
              measures                          Assigned points
------------------------------------------------------------------------
Aerial wireline deployment..........  60.
Satellite; fixed wireless end user    40-60 sliding scale.
 location connection; microwave
 backhaul; aerial wireline
 deployment using high-wind rated
 composite poles.
Underground fiber...................  0-60 sliding scale.
Backup network/path diversity.......  0-20 sliding scale.
------------------------------------------------------------------------

    28. Alternative Distribution Mechanisms. The Commission views 
adopting a competitive process as the best and most efficient method 
for allocating high-cost support for fixed voice and broadband services 
in the Territories to achieve its goals for Stage 2, consistent with 
the Commission's proposals in the PR-USVI Fund NPRM. The Commission 
agrees with Liberty that the superior applications will reveal 
themselves through a competitive process. The Commission therefore 
declines PRTC's and Viya's suggestions that it either grants the 
incumbent Local Exchange Carrier (LEC) a right of first refusal or 
directs Stage 2 support to the incumbent LEC. While PRTC and Viya each 
contend that its ability to provide cost-effective and comprehensive 
service across each respective territory justifies allocating support 
to it without exploring other options, the Commission finds that a fair 
and open competitive process (with safeguards built in to ensure that 
winners as a group are capable of providing quality services throughout 
Puerto Rico and the U.S. Virgin Islands) will ensure that the carrier 
that is able to commit to the best combination of price per location, 
network performance, and network resilience and redundancy wins 
support. PRTC and Viya will each have the opportunity to demonstrate 
that it is the best choice according to an objective process that is 
also open for other carriers to compete for support that has been as 
yet unavailable to them. For these reasons, the Commission finds that 
the benefits of a process open to competition outweigh any added delay 
compared to granting a right of first refusal or a right to funding. 
Further, the Commission does not find Viya's request to deploy a more 
resilient network capable of delivering faster service in exchange for 
guaranteed support persuasive. In the absence of a competitive process, 
the Commission cannot know whether it will obtain a better proposal 
than Viya's, and unlike the Commission's competitive process, Viya's 
proposal would not allow for the possibility of reduced cost to the 
Fund.
    29. The Commission expects allowing multiple providers--including 
those that have not traditionally received high-cost support--to 
compete for funding will increase the efficiencies of bringing advanced 
services to consumers in Puerto Rico and the U.S. Virgin Islands, 
without having to offer another right of first refusal to the 
incumbent. The CAF II auction demonstrated the clear benefits of 
injecting competition into the Commission's high-cost support 
mechanisms. Further, the 2017 hurricane season represents a changed 
circumstance that justifies revisiting the Commission's prior support 
decisions regarding Puerto Rico and the U.S. Virgin Islands to select 
what it now views as the best method of allocating support. Thus, while 
the Commission previously allowed the incumbent ETCs in the Territories 
to elect frozen support over model-based support and granted price cap 
incumbent ETCs the opportunity to receive model-based support in 
exchange for state-level service commitments, the Commission now 
departs from those decisions in this specific context. In the USF/ICC 
Transformation Order, the Commission relied on a series of predictive 
judgments in determining that it would offer a right of first refusal 
to price cap incumbent LECs prior to the CAF II auction, but the 
Commission no longer needs to rely on such predictive judgments as the 
competitive process it adopts will identify the qualified provider best 
positioned to provide cost-effective, quality, hardened service 
according to the criteria the Commission establishes. The Commission 
agrees with commenters like WorldNet, BBVI, VPNet, Momentum Telecom, 
CRG and Hughes that its selection process should strive to be 
technology neutral and allow for diversity in the marketplace; granting 
the incumbent LEC a non-competitive right to support would be contrary 
to that goal.
    30. The competitive process will advance the Commission's goals for 
prompt and complete deployment in Stage 2, and it agrees with BBVI that 
additional steps in the process of allocating Stage 2 fixed support 
will only further delay buildout. Because the Commission views it as 
introducing unnecessary delay, it declines to adopt AT&T's proposal to 
split fixed Stage 2 into a second stage focused on restoration and a 
third stage focused on new construction and network hardening. The 
proposed process is overly complicated and only further delays support 
to rebuild, improve, and expand service with little benefit to either 
the Commission or consumers. The Commission also declines Viya's 
suggestion to bifurcate fixed Stage 2 Connect USVI Fund support into a 
$16.4 million per year ``Broadband Maintenance and Improvement Fund'' 
and a $2.25 million per year ``Broadband Expansion Fund.'' Viya's 
suggestion would direct the vast majority of support to Viya without 
the benefit of a competitive process, contrary to the Commission's 
rejection of that approach, and it would unnecessarily limit the amount 
of

[[Page 59944]]

support available for new, higher-speed, and more storm-hardened 
deployment.
    31. The Commission also declines to subject proposals to public 
comment. Public comment would add unnecessary delay to this process 
without having any impact on the Bureau's application of objective 
scoring criteria. Moreover, placing applications on public notice would 
be inconsistent with the Commission's restrictions on prohibiting 
communications among applicants during the application process or with 
their approach in prior competitive processes for universal service 
support.
    32. Unified Approach. In order to ensure the continued deployment 
of fixed and mobile voice and broadband service in the Territories, the 
Commission adopts similar Stage 2 frameworks for Puerto Rico and the 
U.S. Virgin Islands. Puerto Rico and the U.S. Virgin Islands have many 
similarities--both are insular, suffered greatly from Irma and Maria, 
are at risk of future disasters, and face lower average income and 
higher poverty levels than any state. The Commission agrees with PRTC 
that based on these similarities, it should adopt similar approaches 
for the Territories. While Viya argues that the Commission should adopt 
distinct approaches to the two Territories because of differences 
between Puerto Rico and the U.S. Virgin Islands, it finds that the 
significant similarities between the two Territories outweigh these 
differences. In particular, the Territories' similar insularity and 
risk of future natural disaster justify careful design of a similar 
approach to address these challenges. Both territories face significant 
economic hardship, so distinctions in this regard do not warrant 
different treatment. The Commission accounts for differences in 
population, density, and number of providers through the budget it sets 
for each territory and in establishing different geographic areas for 
Stage 2 fixed support. The Commission also finds that the substantial 
added complexity of designing two distinct programs would delay the 
initiation of Stage 2, to the detriment of the Territories.
    33. Submission of Competitive Proposals Public Notice. Having 
adopted a competitive proposal approach for distributing Stage 2 
support, the Commission directs the Bureau to release an initial Public 
Notice within 90 days from this publication of the Order that further 
details the expected timeline and submission process for competitive 
applications, and that restricts eligible providers from discussing 
their applications or application strategy with each other during the 
application process and until awards are announced. The Commission 
expects that this Public Notice will reiterate the requirements for 
submission of a competitive proposal as adopted in the Order and 
provide additional information regarding the process for submitting an 
application. The Commission directs the Bureau to create any forms 
required for the submission of a competitive proposal and obtain the 
necessary approvals to use the form(s). The Commission expects the 
Public Notice will provide instructions on how to use and submit any 
forms, the certification of ETC status, the Letter of Credit, and the 
Disaster Preparation and Response Plan. Such an information collection 
should include sufficient information in order for the Bureau to score 
each submission for each geographic area within the application, 
consistent with the Commission's scoring system adopted in the Order. 
An applicant must submit only one comprehensive application to the 
Bureau for all geographic areas for which it is seeking support in a 
given territory, but it may include proposals within the application 
for all or only some of the geographic units. The Commission also 
directs the Bureau to include more detailed information regarding the 
timing of selection and awarding of support.
    34. Following the submission of a competitive proposal, the 
Commission will permit an applicant the opportunity to make minor 
modifications to amend its application or correct defects noted by the 
applicant, the Commission, the Administrator, or other parties. Minor 
modifications may include correcting typographical errors in the 
application or supplying non-material information that was 
inadvertently omitted or was not available at the time the proposal was 
submitted. The Commission will not allow major modifications to be made 
after the application deadline. Major modifications may include, but 
are not limited to, any changes in the ownership of the applicant that 
constitute an assignment or change of control, or the identity of the 
applicant, or the certifications required in the proposal.
    35. Reviewing Competitive Proposals. The Commission directs the 
Bureau to evaluate applications and select one winner per geographic 
area consistent with the methodology adopted in the Order. The 
Commission agrees with BBVI that it is in the best position to evaluate 
the competitive proposals and that Bureau review will yield the most 
efficient use of time and funds. The Commission also agrees with Hughes 
that it should avoid a ``beauty contest,'' but the Commission does not 
find it necessary to select a third-party reviewer to do so, as Hughes 
suggests. The Bureau has substantial experience with similar 
competitive processes--for example, the rural broadband experiments and 
the Lifeline Broadband Pilot--and with procurements to obtain numbering 
administration services. To ensure that winning applicants have the 
technical and financial qualifications to successfully complete their 
proposed projects within the required timeframes and in compliance with 
all statutory and regulatory requirements for the universal service 
support they seek, the Commission directs the Bureau to collect from 
each applicant and review and approve a detailed network plan and 
documents evidencing adequate financing for the project. To ensure a 
fair and thorough review of all applications the Commission directs the 
Bureau to score the applications using at least two independent 
reviewers for each application who will not communicate about the 
contents or merits of the applications prior to issuing a final score. 
Each reviewer shall score separately, and the final score for each 
application will be the average of all the reviewer scores. The 
Commission declines to direct the Bureau to provide a public comment 
period on an applicant's proposal prior to scoring, as suggested by 
Viya because a comment period is inconsistent with and unnecessary 
based on the objective scoring system the Commission outlines in the 
Order. Further, even a ``brief'' comment period may introduce months of 
delay if the Bureau is required to issue individualized written orders 
addressing arguments raised in comments to an application. While the 
Commission appreciates the PRTRB's offer to collaborate and encourage 
continued communication and feedback, it finds that a coordinated 
effort with another government agency in the way that the PRTRB 
proposes will not further the goal of efficiency in this process.
    36. Once an applicant's proposal has been approved, including its 
Disaster Preparation and Response Plan, the Bureau will release a 
public notice announcing that the winning applicant is ready to be 
authorized. At that time, the winning applicant will be required to 
submit a letter of credit and any other required information, within a 
specified number of days, as described in the Order. After those 
documents are reviewed and approved, the Bureau will release a public 
notice authorizing the

[[Page 59945]]

winning applicant to begin receiving Stage 2 fixed support.
    37. Package Proposals. The Commission declines to allow package 
proposals. By adopting relatively large geographic areas for allocating 
support--municipios in Puerto Rico and two large areas in the U.S. 
Virgin Islands--as compared to the census blocks used in the CAF II 
Auction, applicants will be able to leverage economies of scale even in 
the absence of package bidding. Allowing package proposals would 
substantially complicate the selection process and undermine the 
Commission's goals of facilitating a swift selection process and prompt 
deployment. The Commission finds that comparatively modest benefits of 
package bidding, in light of the large geographic areas it selects, are 
outweighed by the potential delays and complications in the application 
review process. All providers are welcome to submit a proposal for each 
eligible geographic area, and the Commission will evaluate and score 
each independently.
    38. Unawarded Areas/Areas Without Applications. The Commission 
finds that it is premature to determine the process and amount of 
support for any unawarded areas until after the initial competitive 
proposal support is awarded. The Commission's primary focus is to 
encourage carriers to compete now for all areas of the Territories 
through the competitive proposal process it sets up. PRTC expressed 
concern about unawarded areas, noting a potential conflict between the 
competitive proposal process and the requirement that the incumbent 
serve any unawarded area with frozen support. However, the Commission 
expects that each unit will receive at least one sufficient 
application. The Commission does not want to create a process that 
potentially interferes with the incentives of the competitive proposal 
process. Following the awarding of support, the Commission directs the 
Bureau to develop options and provide to the Commission, within 90 days 
of authorizing all selected applicants, a recommendation and specific 
action plan to determine the provider and amount of support for each of 
the unawarded areas, if any.
    39. Support Term. The Commission adopts a 10-year term of support, 
which it expects to begin in 2020, consistent with its proposal in the 
PR-USVI Fund NPRM. The Commission has used a 10-year support term on 
numerous other occasions. Overwhelmingly, commenters support the 10-
year term. The Commission recognizes that, as BBVI states, deploying a 
fixed network is a time-consuming process. The Commission also agrees 
with PRTC that the unique challenge of having to rebuild from near 
complete devastation necessitates a 10-year term. While Liberty 
generally supports the 10-year term, it suggests frontloading support 
disbursement in the first five years to encourage network hardening due 
to the frequency and likelihood of natural disasters in the 
Territories. To the extent carriers can deploy more quickly while 
meeting their obligations, the Commission encourages them to do so. 
However, the Commission declines to accelerate the disbursements. A 
ten-year term with a six-year buildout obligation is consistent with 
the Commission's approach in CAF II. Given the complexity of deploying 
a hardened network, it is unclear to what degree faster disbursement 
would lead to faster hardened deployment. Accelerating disbursements 
would increase the contribution factor, which is not warranted when 
balanced against the uncertain benefits of accelerated disbursement or 
the Commission's responsibility to manage the Fund. Only Tier 1 opposed 
the 10-year term as ``perpetuating a monopoly,'' but a competitive 
process addresses this concern by opening the opportunity to receive 
support while still providing support recipients the necessary time to 
recover the costs of deploying and maintaining a network.
    40. Eligible Providers. The Commission allows all providers that 
had existing fixed network facilities and made broadband service 
available in Puerto Rico or in the U.S. Virgin Islands, according to 
June 2018 FCC Form 477 data, to be eligible to participate in their 
respective territory's competitive process. The Commission allows 
participation by fixed providers who rely on any technology, including 
satellite, that can meet the program's service requirements. The 
Commission agrees with numerous commenters that allowing inclusion of 
satellite providers is particularly valuable in the context of Puerto 
Rico and the U.S. Virgin Islands due to satellite's resilience and 
availability post-hurricanes. While AeroNet argues that the Commission 
should exclude satellite due to its high latency, it accounts for 
services' varying latency in its scoring, as the Commission previously 
did with weighting performance tiers in the CAF II auction.
    41. The Commission finds adjusting the date to June 2018 introduces 
the possibility of more participation and still allows the Commission 
to conduct the process efficiently, receive proposals from experienced 
providers, and minimize the risk that support recipients will default 
on service obligations. While the PR-USVI Fund NPRM proposed to limit 
participation to those providers that reported service as of June 2017 
FCC Form 477 data, after further consideration, the Commission finds 
June 2018 allows for the inclusion of satellite providers and other 
providers that served the islands immediately post-hurricane, which 
promotes competition, but still focuses on participation by those 
providers with experience operating networks in the Territories. The 
Commission agrees with several commenters that experienced service 
providers are more likely to successfully deploy, given the unique 
challenges of serving the Territories. First, existing facilities-based 
providers possess experience serving the specific needs of the 
Territories, such as dealing with difficult terrain, distance from 
other landmasses, and relatively low subscribership rates, and as such 
are more likely to meet deployment targets. Additionally, the 
Commission agrees with PRTC and Viya that existing facilities-based 
service providers will be better equipped to expand service as quickly 
as possible, and existing providers with established track records 
serving these insular Territories will likely present a smaller risk of 
defaulting on their service obligations. To the extent that some 
providers would only enter those unique markets based on the 
availability of new Federal funding, the Commission is skeptical of 
such entities' ability to serve the specific needs of the Territories; 
ability to deploy quickly; level of financial risk; and commitment to 
provide long-term, high-quality service to consumers going forward. 
Moreover, the Commission finds that the time and resources required to 
pre-qualify for participation any potential new entrants would delay 
its implementation of Stage 2 with little benefit to the Fund or 
consumers. These concerns are all adequately addressed by limiting 
participation to providers that reported service as of June 2018 FCC 
Form 477 data.
    42. The Commission will allow broadband providers that, according 
to June 2018 FCC Form 477 data, serve only business locations to 
participate. The Commission agrees with Neptuno that it ``should cast a 
wide net with respect to eligible providers to allow for greater 
competition and participation'' and that ``[e]xcluding business-only 
providers would be detrimental to the recovery and expansion of 
services.'' The Commission expects broadband providers with experience 
serving business customers are likely to possess

[[Page 59946]]

the requisite capabilities, experience, and commitment to serving the 
Territories to warrant allowing them to participate. And business-only 
service providers are better equipped than those with no presence to 
expand quickly, possess an existing track record that suggests a 
reduced risk of default, and possess experience with at least some of 
the challenges of serving the Territories. The Commission requires any 
provider that receives support to serve all locations within the 
specified geographic area, as detailed in the following.
    43. The Commission disagrees with Viya's suggestion that it limit 
participation to entities that previously provided both broadband and 
voice service. While voice is the supported service, a history of 
providing voice is not a necessary precursor to participation because 
the Commission allows providers to become ETCs after selection. And 
while the Commission agrees with Viya that deploying high-quality, 
legally compliant voice service entails challenges, it expects that an 
experienced provider deploying an advanced broadband network should be 
able to meet those challenges. The Commission therefore finds that the 
benefits of allowing additional participation, which may lead to 
superior proposals at reduced costs to the Fund, outweighs any 
incremental benefit of restricting participation to existing voice 
service providers.
    44. Eligible Areas. After consideration of the record, the 
Commission adopts the proposal that all areas of Puerto Rico and the 
U.S. Virgin Islands will be eligible for support. The Commission agrees 
with PRTC, VPNet, and BBVI that making all areas eligible allows 
support to be used anywhere it is necessary for new service, network 
upgrades, or storm hardening and resilience. Setting a more ambitious 
goal than mere restoration--to facilitate high-quality fixed broadband 
deployment to the full Territories--will enable the Commission to 
promote provision of quality fixed service to more residents on a 
faster timetable and make available more backhaul to facilitate ongoing 
mobile deployment. The Commission recognizes that a consequence of 
making all areas eligible is that it may fund building in areas where 
networks currently exist, which departs from its usual approach. 
However, in the specific context of Puerto Rico and the U.S. Virgin 
Islands, the Commission finds that making the entirety of the 
Territories eligible for support at this time is necessary to ensure 
the deployment of resilient networks that are hardened against future 
disasters in all parts of these insular Territories, rather than only 
in areas that are currently unserved. The Commission has already 
recognized the unique logistical and financial challenges of deploying 
networks in these insular areas, and the record here illustrates how 
these challenges are only exacerbated by the risk of experiencing 
natural disasters. Making all areas eligible allows for a holistic 
approach to building and hardening the network so that cost 
efficiencies can be realized wherever possible. Moreover, the 
Commission expects applicants that already have facilities in an 
eligible area to have a significant competitive advantage relative to 
other applicants, ultimately resulting in more efficient use of the 
budget. By dividing the islands into large geographic areas and 
requiring service by the winning applicants to all locations within 
those geographic areas, as discussed in the following, the Commission 
prevents the ``cream-skimming'' of lower-cost areas that some 
commenters fear. Ultimately, the Commission expects to receive 
competitive applications for areas where carriers already have existing 
network facilities and will rely on the Commission's deployment 
obligations and reporting to ensure widespread, efficient, and improved 
coverage.
    45. Geographic Areas. For Puerto Rico the Commission adopts its 
proposal of a municipio as the geographic area for awarding support. 
The Commission agrees with PRTC and AeroNet that using municipios will 
allow for economies of scale that make serving the historically 
unserved areas of a municipio more economical. Additionally, municipios 
are well-defined and known to local populations and authorities. 
Coordination, planning, and cooperation with municipal authorities is 
likely to be easier on a municipio level, helping to promote efficient 
buildout. Finally, administering the competitive process will be easier 
using larger geographic areas, such as Puerto Rico's 78 municipios, 
versus its more than 900 barrios.
    46. The Commission disagrees with commenters who argue for smaller 
geographic areas, such as census blocks, census block groups, or 
barrios or groups of barrios. First, the Commission finds the 
heightened risk of disaster and insularity of Territories makes them 
different enough from other areas that it should consider the proper 
geographic area freshly, and it declines to adopt census blocks or 
census block groups simply because it mirrors how support has been 
awarded in other proceedings. Second, because the Commission requires 
winning applicants to serve all locations within a municipio, using 
municipios will not allow winning providers to provide service only in 
dense areas where there is already robust service and ignore unserved 
areas, as AT&T claims. Third, the Commission is concerned that using 
more granular geographic areas will create a greater risk of applicants 
applying only for lower cost areas, leaving higher cost areas without 
applications, and thus potentially without service. Puerto Rico has 
55,156 distinct census blocks and 2,551 census block groups, but only 
78 municipios. Liberty argues smaller areas allow providers to better 
target funding based on the very specific needs of a granular area. 
However, the Commission agrees with PRTC that permitting applicants to 
pick and choose among census blocks or census block groups is likely to 
increase the number of areas without applications and may create an 
inefficient patchwork of winners across the island. Additionally, 
adopting the municipios approach provides the efficiencies that package 
bidding of smaller areas would also allow. Liberty asserts that, with 
smaller areas, a provider is likely to align its proposal with its 
intended expansion, which Liberty argues results in more efficient use 
of support. The Commission is concerned, however, that allowing 
providers to customize their proposals to match their preexisting 
expansion plans would not create a sufficient incentive for providers 
to build to new, unserved areas. Moreover, proposals based on census 
blocks or census block groups may require a provider to artificially 
segment its network in each of its applications. Finally, proposals 
based on thousands of census blocks or census block groups would be 
extremely burdensome for Commission staff to review, which would 
frustrate the Commission's goal of conducting an efficient and 
expeditious process.
    47. For the U.S. Virgin Islands, the Commission adopts two 
geographic areas for awarding fixed support--one that is composed of 
St. John and St. Thomas islands together and a second of just St. Croix 
island. Separating the islands into two geographic areas will allow for 
greater competition during the proposal process and potentially result 
in more than one funded carrier in the U.S. Virgin Islands. Viya argues 
that ``the Commission must require participants to bid to serve the 
entire USVI as a single service area'' because ``[t]he economies of 
scale in the USVI are too limited for a provider to carve out a viable 
business serving only a

[[Page 59947]]

portion of the USVI.'' Viya does not support this argument beyond 
pointing to the U.S. Virgin Islands' population and distance from the 
mainland. And elsewhere, Viya identifies the distance between St. Croix 
and St. Thomas/St. John as an impediment to service, suggesting that 
synergies in serving the two areas are limited. In light of this lack 
of clarity, the Commission will err on the side of greater possible 
competition and adopt two geographic areas. The Commission does not 
believe more granular geographic areas in the U.S. Virgin Islands are 
tenable, however, because of the small size and challenging topography 
of the territory, and because of St. John's designation as a national 
forest.
    48. ETC Designation. Consistent with the Act and the Commission's 
rules, a provider must be designated as an ETC before receiving high-
cost support. The Commission allows fixed providers to obtain ETC 
designation after winning support, similar to the approach it followed 
for the CAF II Auction. There was broad support in the record for 
allowing carriers to become an ETC after winning support, but prior to 
receiving funds. Although Viya argues that the Commission should 
require applicants to become ETCs before applying to avoid having the 
failure of a winner to obtain ETC status adversely affect other 
applicants, it finds the benefits of an expeditious competitive process 
and reduced up-front costs for applicants outweigh the risk that Viya 
raises. The Commission's experience with the CAF II Auction showed that 
carriers had little difficulty obtaining ETC designation and that the 
vast majority of applicants were able to obtain ETC designation by the 
deadline.
    49. Accordingly, the Commission adopts a requirement that, as a 
condition of receiving any awarded support through this competitive 
proposal process, a carrier must be an ETC. Any carrier that is not 
already an ETC must certify in its application that it will be 
designated within 60 days after being announced as a winner. Many of 
the likely applicants are already ETCs, and the PRTRB and U.S. Virgin 
Islands Public Services Commission (PSC) were able to designate several 
applicants within 60 days for Stage 1. Any winning applicant that fails 
to notify the Bureau that it has obtained ETC designation within the 
60-day timeframe will be considered in default and will not be eligible 
to receive its support. A waiver of this deadline may be appropriate, 
however, if a winning applicant is able to demonstrate that it has 
engaged in good faith to obtain ETC designation but has not received 
approval within the 60-day timeframe. No selected winner will be 
authorized to receive support prior to receiving its ETC designation.
    50. The Commission also declines Viya's suggestion to ensure that 
applicants are currently compliant with their ETC designations and 
obligations. Conducting such investigations for each applicant could 
become highly time-consuming, which is inconsistent with a prompt 
distribution of support. Further, states and territories are better-
positioned than the Commission is to evaluate compliance with the ETC 
designations they have granted. Finally, the Commission has not imposed 
this requirement previously in any competitive processes for allocating 
universal service support, and Viya has not explained why such a 
requirement is specifically warranted here.
    51. Spectrum. As suggested by Viya, and as the Commission did in 
the CAF II Auction, to ensure that applicants seeking to rely on 
spectrum-based technologies have the capabilities to meet all standards 
the Commission adopts, it conditions participation on a demonstration 
of sufficient access to spectrum. Specifically, the Commission requires 
applicants proposing to use spectrum-based technologies to provide 
written evidence of authorizations or licenses, if applicable, and 
access to operate on the spectrum it intends to use, to reach the fixed 
locations within the areas for which they seek support. Applicants will 
be required to certify in their applications that they will retain 
their access to spectrum for the duration of the support term.
    52. Leases. The Commission declines Viya's suggestion that it 
requires applicants to provide the Commission with up-front ten-year 
commitments for leased access to facilities they do not own. While the 
Commission expects applicants to be able to demonstrate how they will 
fulfill the commitments in their application, it refrains from 
dictating the specific business strategies and decisions of an 
applicant. Further, the Commission is concerned that requiring this 
lengthy commitment up-front could disproportionately advantage 
incumbent carriers.
    53. Deployment Obligation. The Commission requires each winning 
participant to deploy by the specified deadline to all locations within 
the municipio(s)/island(s) for which it is the winning applicant. Many 
commenters supported the Commission's proposal to require a winning 
applicant to deploy to all locations within a geographic area as a 
condition of receiving support for funded locations. Requiring 
deployment to all locations within the geographic area is consistent 
with the Commission's goal of ensuring resilient service to all parts 
of the Territories and its decision to make all locations eligible for 
support.
    54. In establishing the specific deployment obligations for each 
eligible geographic area, the Commission makes three adjustments to 
safeguard against inaccurate data. First, although the Commission uses 
the existing CAM's location counts to determine how to allocate the 
budget to each geographic area, it will use the latest Census Bureau 
data to determine the actual deployment obligation. Second, the 
Commission establishes a one-year location adjustment process described 
in the following. Third, due to the potential of population shifts 
continuing post-hurricane, the Commission will reassess deployment 
obligations by the fifth year of Stage 2 and make adjustments to final 
deployment obligations. The Commission thinks this approach allows for 
the best balance of ensuring buildout to all existing locations, while 
permitting some adjustment of location numbers to reflect the 
possibility of population shifts in the Territories continuing.
    55. The Census Bureau releases annual population data and has 
released several reports regarding population since the 2017 
hurricanes. The Commission agrees with AT&T that the most current 
Census data will help give a better location count at the time of award 
than the locations identified by the CAM, and the Commission therefore 
deviates from its proposal in the PR-USVI Fund NPRM to rely on the CAM 
for the purpose of establishing deployment obligations. Accordingly, 
the Commission directs the Bureau to publish, along with the reserve 
prices for each area, its determination of the number of locations per 
geographic area, based on the most recent publicly available Census 
Bureau data for the Territories.
    56. Deployment Milestones. As proposed in the PR-USVI Fund NPRM and 
as in the CAF II Auction, the Commission requires winning participants 
to deploy to at least 40% of locations after the third year of support, 
at least 60% after the fourth, at least 80% after the fifth, and 100% 
after the sixth year of support. While BBVI proposes a slightly 
accelerated timeline, the Commission adopts the default schedule for 
administrative convenience. Moreover, recipients have other incentives 
to complete their deployment as quickly as possible--faster than the 
default schedule--both to begin earning revenues from the new service 
offerings and to be in a position

[[Page 59948]]

where they are no longer required to maintain a letter of credit.
    57. One-Year Location Adjustment Process. The Commission also 
establishes a one-year location adjustment process similar to the CAF 
II auction location adjustment process, in which winning applicants 
will have the opportunity to resolve location discrepancies. This 
process will begin upon release of the Public Notice announcing the 
winning applicants. The Commission expects this process will, in 
combination with the five-year review, mitigate any remaining issues 
with location accuracy. The Commission believes this process is 
necessary to adequately verify the locations in the Territories post-
hurricanes, and relying on the Commission's existing ``reasonable 
request'' standard for rate-of-return carriers in the way that PRTC 
proposes is insufficient to ensure service to all locations. PRTC 
argues that simply requiring a winning recipient to provide service 
upon a consumer's reasonable request alleviates any need to count 
locations or verify that the obligation to serve all locations is met. 
The Commission disagrees. Determining the number of locations in each 
geographic area is important, not only for this proceeding, but also 
going forward to ensure data accuracy. Creating a process here that 
determines exact location numbers is compelling, as the degree of the 
location problem is unknown--due to the high-level of destruction and 
potential shifts in population, the location numbers could be 
substantially different. The Commission is requiring carriers to serve 
all locations, not just some number of locations, and it has lowered 
the high-cost threshold to allow carriers to do this. The Commission is 
concerned that allowing carriers to simply make up any difference using 
the reasonable request standard would only create an incentive for 
inefficient use of support that it would be unable to audit.
    58. AT&T suggests updating the CAM by giving carriers a year to 
identify and report location discrepancies, and while the Commission 
declines to do so prior to accepting applications as described in the 
Order, it agrees with AT&T's suggestion to give carriers the 
opportunity to adjust location counts. Further, the Commission wants to 
encourage participation in the competitive process, and even with the 
five-year review, applicants may still be reluctant to apply for an 
area due to the high possibility of a discrepancy in locations. 
Accordingly, as the Commission did with the CAF II Auction, it adopts a 
one-year notice period during which it will require Stage 2 fixed 
support recipients to bring to the Commission's attention discrepancies 
between the number of locations announced by the Bureau and the number 
of locations actually on the ground in the eligible areas within their 
winning areas. If a support recipient can sufficiently demonstrate that 
it is unable to identify actual locations totaling the number 
determined by Census Bureau data, its obligation will be reduced to the 
total number of locations it was able to identify in the area and its 
support will also be reduced on a pro rata basis. The Commission makes 
the one-year location adjustment process mandatory for support 
recipients to ensure accuracy and that it is using USF dollars 
efficiently.
    59. Specifically, within one year after release of a public notice 
announcing the winners, a recipient that cannot identify actual 
locations must submit evidence of the total number of locations in the 
eligible areas, including geolocation data (indicating the latitude/
longitude and address of each location), in a format to be specified by 
the Bureau, for all the actual locations it could identify. Relevant 
stakeholders will have the opportunity to review and comment on the 
information, after which the Bureau shall issue an order addressing the 
recipient's showing and any such comments. The evidence submitted by a 
support recipient will also be subject to potential audit. The 
Commission previously directed the Bureau to implement this process for 
the CAF Phase II auction, including establishing procedures and 
specifications for the submission of this information, such as 
collecting the data through the Universal Service Administrative 
Company's (USAC) High Cost Universal Service Broadband (HUBB) online 
location reporting portal, and the Commission directs the Bureau to use 
a similar process here. In cases where the Bureau has determined by a 
preponderance of the evidence that there are no additional locations in 
the relevant eligible areas, the Commission directs the Bureau to 
adjust the support recipient's required total location obligation and 
reduce its support on a pro rata basis. The Commission directs the 
Bureau to issue a public notice or order detailing instructions, 
deadlines, and requirements for filing valid geolocation data and 
evidence for both support recipients and commenters, with any 
adjustments necessary that are unique to the Territories. The 
Commission declines to adopt PRTC's proposal to apply a pro rata 
reduction only where the final number of locations is less than 90% of 
the total locations. The Commission expects an applicant's proposal to 
reflect its due diligence and informed business determinations of the 
costs and support amount required to satisfy its commitments, and as 
such, the Fund should not be accountable for the incorrect assumptions 
in a carrier's proposal. Further, the Commission does not wish to 
provide support for non-existent locations.
    60. Fifth-Year Reassessment. Consistent with the Commission's 
proposal in the PR-USVI Fund NPRM to establish a fifth-year 
reassessment, it establishes a voluntary process to reassess the 
deployment obligations of the applicants awarded fixed support before 
the end of the fifth year of support. Conducting a reassessment helps 
the Commission to ensure that it is spending Fund resources wisely and 
based on up-to-date information. The Commission agrees with VPNet and 
BBVI that there are clear benefits to revisiting deployment obligations 
during the support term to address any intervening events, new data, or 
other changed circumstances that may impact deployment obligations. 
While the Commission inquired about whether to tie the reassessment to 
deployment milestones and trigger the reassessment only if a provider 
falls short, it declines to so limit this process and instead create a 
voluntary opportunity for support recipients to request the Commission 
carefully review its obligations. Specifically, the Commission directs 
the Bureau to establish a process no later than the beginning of the 
fifth year to provide recipients an opportunity to request reassessment 
of their obligations. The Commission expects any request for 
reassessment will be accompanied by specific information, documents, 
evidence and data upon which the agency can make an informed decision. 
This reassessment will allow the Bureau to determine whether to adjust 
any deployment requirements based on newly-available data or changes in 
circumstances, such as future disruptive disasters or altered 
subscribership or revenue due to population shifts. The Commission 
directs the Bureau to seek public comment on any requested 
reassessment, including on the documentation, data, and evidence put 
forward to support the request, and then evaluate the record. If, based 
on the Bureau's review, an adjustment of deployment obligations or 
locations is warranted for any winning applicant, the Commission 
directs the Bureau to

[[Page 59949]]

announce those changes in a public notice.
    61. Support for Fixed Providers in Puerto Rico. The Commission 
allocates a maximum budget of $504.7 million over 10 years for Stage 2 
fixed support for the Uniendo a Puerto Rico Fund. This represents an 
increase of $60.2 million above the $444.5 million budget proposed in 
the PR-USVI Fund NPRM, and an annual increase of about $14.1 million, 
or 39%, over the current annual support amount. The Commission agrees 
with commenters that factors such as Puerto Rico's challenging 
economy--including median household income of only around $20,000--can 
contribute to low subscription rates and low average customer revenue. 
PRTRB also explains that inland areas of the island contain rocky 
terrain that challenge deployment and that those physical challenges 
are exacerbated by mudslides and flooding triggered by tropical storms 
and hurricanes. The Commission is convinced that the proposed budget 
may not adequately account for these challenges in deploying storm-
hardened fixed service to Puerto Rico.
    62. The Commission determines this budget by running the CAM with a 
reduced high-cost funding threshold of $29.00 per location, eliminating 
the extremely high-cost threshold, and without accounting for reported 
competitive coverage. In contrast to the Commission's approach to CAF, 
this method allows for support to relatively lower-cost locations and 
eliminates any limit on support for extremely high-cost locations. 
These changes are appropriate so that the Commission can better account 
for the economic challenges facing providers in Puerto Rico and so it 
can ensure deployment of storm-hardened networks to all locations in 
Puerto Rico in a single stage. The Commission views rapid deployment of 
storm-hardened, quality networks to all locations in Puerto Rico as an 
important priority. The CAM uses the most relevant and reliable cost 
data for the Territories and it is the Commission's best and only 
objective means of projecting cost, even if it does not capture all 
fixed costs of serving the Territories. Because requiring resilience, 
redundancy, and maintenance of a Disaster Preparation and Recovery Plan 
is novel and the Commission does not yet have applicants' proposals, it 
relies on an approximation through modifications to its application of 
the CAM. The Commission believes the adjustments it makes yield a 
budget appropriate to support the additional costs associated with 
building resilient and redundant networks in Puerto Rico, and therefore 
declines to impose a significant delay in awarding support that would 
be necessary to alter the CAM inputs or otherwise develop a different 
mechanism to calculate the budget. The Commission notes that the 
competitive process it establishes will allow each applicant to request 
support at a level that reflects its understanding of the costs of 
deployment, potentially driving actual support below the reserve price 
and reducing the need for the Commission to calculate cost with greater 
precision.
    63. The Commission disagrees with PRTC's suggested Stage 2 fixed 
budget for Puerto Rico of $98 million per year. Its proposed 
adjustments to the CAM assume that it would be necessary for the 
Commission to support new construction in all locations in Puerto Rico, 
which is not a reasonable assumption because most carriers have 
reported complete or near complete restoration, including PRTC. The 
Commission notes that PRTC's proposed supplemental calculations to the 
CAM, which yield the budget it advocates, do not address all of the 
CAM's limitations in terms of tailoring to this proceeding. The 
Commission does not intend to adopt a budget that would cover every 
conceivable cost a carrier may identify. In the Commission's predictive 
judgment, the budget should be sufficient to conduct a robust 
competitive process and it declines to decide at this time that it 
should revisit a larger budget in the near future. Insofar as any 
component of the Stage 2 budget the Commission adopts here unexpectedly 
falls short of achieving its goals, it can revisit it at a future date.
    64. Support for Fixed Providers in the U.S. Virgin Islands. The 
Commission adopts the budget proposed in the PR-USVI Fund NPRM and 
therefore allocate up to $186.5 million over a 10-year term for fixed 
broadband in Stage 2 of the Connect USVI Fund. The record reflects 
support for the Commission's proposal, and it did not receive comments 
advocating a reduction to the U.S. Virgin Islands fixed budget. The 
Commission notes that if it applied the same CAM-based approach to 
calculate the budget for the U.S. Virgin Islands as the Commission does 
for Puerto Rico, it would reduce the ten-year fixed budget by about $38 
million. The Commission finds that the CAM therefore indicates that the 
U.S. Virgin Islands budget is sufficient, and it finds there is no need 
to increase the budget at this time. At the same time, the Commission 
finds it is not prudent to reduce the budget and thereby reduce the 
likelihood of success of the competitive process it adopts. As with 
Puerto Rico, the Commission expects the competitive process it adopts 
to encourage competition to use support in a cost-effective manner, 
potentially leading to actual disbursement falling below the budgeted 
amount.
    65. Other Approaches to Allocation. While some commenters recommend 
basing the Commission's allocation of fixed or mobile support solely on 
a single factor, such as on relative population or cost to serve, the 
Commission finds the approach it adopts in the Order is the most 
appropriate to address the needs of the Territories. AT&T suggests the 
allocation between the Territories should be based on the latest Census 
Bureau figures, but, the Commission does not currently have before it 
reliable post-storm data that would provide it with a basis to rely 
solely on population to allocate funding. The Commission also declines 
the request of [email protected] that it considers the relative financial 
struggle of the carriers in support decisions because the Commission's 
allocating fixed support on a competitive basis and it does not want to 
reward possible inefficiency.
    66. The Commission adopts thorough oversight and accountability 
measures like those that it has implemented in other recent high-cost 
support proceedings. Together, these measures fulfill the Commission's 
obligation to ensure that providers receive support ``only for the 
provision, maintenance, and upgrading of facilities and service for 
which the support is intended'' as required by section 254(e) of the 
Act. The Commission agrees with several commenters that careful 
oversight is necessary for it to ensure that recipients use support 
from the Uniendo a Puerto Rico Fund and Connect VI Fund efficiently and 
for its intended purposes.
    67. Reporting and Certification. The Commission requires fixed 
support recipients to satisfy all reporting and certification 
obligations of providers receiving CAF II auction support, as the 
Commission proposed in the PR-USVI Fund NPRM. Accordingly, each support 
recipient must, among other things, certify that it is able to function 
in emergency situations, and submit information regarding anchor 
institutions served. The Commission aligns annual deployment reporting 
obligations with those adopted in the March 2016 Rate-of-Return Order, 
81 FR 24282, April 25, 2016, as the Commission proposed in the PR-USVI 
Fund NPRM. Accordingly, each support recipient must annually submit a 
certification and data demonstrating locations where it is prepared to 
offer

[[Page 59950]]

voice and broadband service meeting the requisite performance 
standards. Failure to timely file geolocation data and associated 
deployment certifications may result in a reduction in support. The 
Commission also requires awarded providers to measure and report the 
speed and latency performance of their broadband service in accordance 
with the requirements previously adopted, consistent with the proposal 
in the PR-USVI Fund NPRM. The Commission requires fixed support 
recipients to annually certify their progress toward (or, beginning 
after the sixth year, completion of) deployment in accordance with the 
resilience and redundancy commitments in their application and in 
accordance with the detailed network plan they submitted to the Bureau 
thereafter. In the certification, applicants must quantify their 
progress toward the resilience and redundancy targets specified in 
their applications (e.g., number of fiber miles buried and/or deployed 
aerially, miles of fixed wireless last-mile connections and/or 
microwave backhaul, miles with a backup network or path diversity for 
terrestrial networks, locations reached with a backup network or path 
diversity for satellite). If, after the sixth year, the support 
recipient falls short of its resilience or redundancy commitment in a 
manner that would have resulted in a higher point total, such failure 
will result in the withholding of support equal to a day of support for 
every mile by which the applicant fell short (or equal to a day of 
support for every end user location by which the applicant fell short, 
in the case of satellite). This support reduction is appropriate and 
reasonably scaled given the commitment an applicant makes to the 
Commission in its proposal and the opportunities it provides winning 
applicants to adjust those commitments and seek reassessment during the 
deployment process. Collectively, these requirements will ensure that 
the PRTRB, U.S. Virgin Islands PSC, USAC, and the Commission possess 
sufficient information to fulfill its oversight obligations.
    68. The Commission subjects awarded providers to the same 
compliance standards as other high-cost support recipients with defined 
obligations, consistent with the Commission's proposal in the PR-USVI 
Fund NPRM. Pursuant to these standards, a provider that fails to meet 
its milestones may have its support reduced until it can meet its 
obligations or face recovery actions. Several commenters support this 
proposal, and the Commission agrees that adopting clearly-defined 
consequences for non-compliance modeled on other defined obligation 
high-cost support mechanisms is necessary to ensure compliance.
    69. The Commission declines to adopt new recordkeeping requirements 
regarding expenditures. The Commission finds the general recordkeeping 
obligation of ETCs is sufficient to facilitate oversight. The 
Commission's rules already require support recipients to maintain 
documentation for ten years, sufficient to justify deployment and 
spending, and recipients are subject to random audits to defend their 
expenditures. The Commission finds that additional requirements to 
maintain more detailed recordkeeping would be duplicative and overly 
burdensome and are, therefore, unnecessary for this process.
    70. Letters of Credit. The Commission requires winning applicants 
to obtain a letter of credit, consistent with the requirements 
applicable to winning bidders in the CAF II Auction and other 
competitive bidding processes, including the same eligibility criteria 
for the issuing bank. The Commission agrees with Viya that it should 
expressly adopt the same letter of credit requirements that the 
Commission put in place for the CAF II Auction. The Commission finds 
that requiring an irrevocable letter of credit from a reliable 
financial institution is necessary to protect the Fund, and is an 
effective means of securing its financial commitment to provide Connect 
America support. Letters of credit permit the Commission to protect the 
integrity of universal service funds that have been disbursed and to 
reclaim support that has been provided in the event that the recipient 
is not using those funds in accordance with the Commission's rules and 
requirements to further the objectives of universal service. Moreover, 
letters of credit have the added advantage of minimizing the 
possibility that the support becomes property of a recipient's 
bankruptcy estate, thereby preventing the funds from being used 
promptly to accomplish the Commission's goals. Merely requiring a 
performance bond would not provide the same level of protection and 
would require the involvement of a third party to adjudicate any 
disputes that arise, which would complicate the Commission's process 
and unnecessarily limit the authority of the Commission to allocate 
funds. Experience shows that a competitive support program can obtain 
broad participation with a letter of credit requirement in place--the 
CAF II Auction received applications from 220 qualified applicants and 
awarded $1.488 billion in support to 103 winning applicants. The 
Commission therefore rejects arguments that it should allow use of a 
surety or performance bond in lieu of a letter of credit.
    71. As explained in the Order, if an entity fails to meet the terms 
and conditions after it begins receiving support, including the build-
out milestones and performance obligations the Commission adopts in the 
Order, and fails to cure within the requisite time period, the Bureau 
will issue a letter evidencing the failure and declaring a default, 
which letter, when attached by USAC to a letter of credit draw 
certificate, shall be sufficient for a draw on the letter of credit to 
recover all support that has been disbursed to the entity.
    72. Letter of Credit Opinion Letter. Successful applicants must 
also submit with their letter(s) of credit an opinion letter from legal 
counsel. That opinion letter must clearly state, subject only to 
customary assumptions, limitations, and qualifications, that in a 
proceeding under the Bankruptcy Code, the bankruptcy court would not 
treat the letter of credit or proceeds of the letter of credit as 
property of the account party's bankruptcy estate, or the bankruptcy 
estate of any other Stage 2 competitive application process recipient-
related entity requesting issuance of the letter of credit under 
section 541 of the Bankruptcy Code.
    73. Value of Letter of Credit. When a winning applicant first 
obtains a letter of credit, it must be at least equal to the amount of 
the first year of authorized support. Before the winning applicant can 
receive its next year's support, it must modify, renew, or obtain a new 
letter of credit to ensure that it is valued at a minimum at the total 
amount of money that has already been disbursed plus the amount of 
money that is going to be provided in the next year. As in CAF II, the 
Commission concludes that requiring recipients to obtain a letter of 
credit on at least an annual basis will help minimize administrative 
costs for USAC and the recipient rather than having to negotiate a new 
letter of credit for each monthly disbursement.
    74. Recognizing that the risk of a default will lessen as a 
recipient makes progress towards building its network, as in CAF II the 
Commission finds that it is appropriate to modestly reduce the value of 
the letter of credit in an effort to reduce the cost of maintaining a 
letter of credit as the recipient meets certain service milestones. 
Specifically, once an entity meets the 60 percent service milestone 
that entity may obtain a new letter of credit or renew its existing 
letter of credit so that it is valued at 90

[[Page 59951]]

percent of the total support amount already disbursed plus the amount 
that will be disbursed the next year. Once the entity meets the 80 
percent service milestone that entity may obtain a new letter of credit 
valued at 80 percent of the total support amount already disbursed plus 
the amount that will be disbursed the next year. As in CAF II, the 
Commission concludes that the benefit to recipients of potentially 
decreasing the cost of the letter of credit as it becomes less likely 
that a recipient will default outweighs the potential risk that if a 
recipient does default and is unable to cure, the Commission will be 
unable to recover a modest amount of support. The letter of credit must 
remain open until the recipient has certified it has deployed broadband 
and voice service meeting the Commission's requirements to 100% of the 
required number of locations, and USAC has verified that the entity has 
fully deployed.
    75. Defaults. Consistent with the CAF II Auction, the Commission 
concludes that any entity that files an application to participate in 
the Stage 2 competitive process will be subject to a forfeiture in the 
event of a default before it is authorized to begin receiving support. 
The Commission will propose a forfeiture in lieu of a default payment. 
In the CAF II Auction, the Commission adopted a base forfeiture of 
$3,000 per census block group for any entity that failed to meet the 
document submission deadlines or was found ineligible or unqualified to 
receive support by the Bureaus on delegated authority, or otherwise 
defaulted on its bid or was disqualified for any reason prior to the 
authorization. The Commission adopts here the same base forfeiture of 
$3,000 per census block group within the geographic area at issue, 
subject to adjustment based on the criteria set forth in the 
Commission's forfeiture guidelines, for a default by an applicant 
before it is authorized to begin receiving support. Applying the same 
base forfeiture that the Commission adopted in the CAF II Auction is 
warranted here because, in both proceedings, the party's failure risks 
undermining the competitive process that the Commission has 
established.
    76. An entity will be considered in default and will be subject to 
forfeiture if it fails to meet the document submission deadlines for 
competitive proposals or is found ineligible or unqualified to receive 
Stage 2 support by the Bureau on delegated authority, or otherwise 
defaults on its winning proposal or is disqualified for any reason 
prior to the authorization of support. A winning applicant will be 
subject to the base forfeiture for each separate violation of the 
Commission's rules. For purposes of the Stage 2 competitive process, 
the Commission defines a violation as any form of default with respect 
to the geographic area eligible for proposals. In other words, there 
shall be separate violations for each geographic area subject to a 
proposal, with the base forfeiture determined by the number of census 
block groups within the geographic area at issue. That will ensure that 
each violation has a relationship to the number of consumers affected 
by the default and is not unduly punitive. Such an approach will also 
ensure that the total forfeiture for a default is generally 
proportionate to the overall scope of the winning applicant's proposal. 
Consistent with past Commission proceedings, to ensure that the amount 
of the base forfeiture is not disproportionate to the amount of an 
applicant's proposal, the Commission also limits the total base 
forfeiture to five percent of the total support amount contained in the 
applicant's proposal for the term.
    77. The Commission finds that by adopting such a forfeiture, it 
impresses upon recipients the importance of being prepared to meet all 
of the Commission's requirements for the post-selection review process 
and emphasize the requirement that they conduct a due diligence review 
to ensure that they are qualified to participate in the Stage 2 
competitive proposal process and meet its terms and conditions.
    78. The Commission directs the Bureau to establish a process to 
enable the selection of next-in-line applicants for fixed Stage 2 
support in the event any of the provisionally winning applicants 
defaults. Doing so will enable Bureau staff to quickly identify 
otherwise qualified applicants in the event any of the initially 
selected applicants defaults prior to authorization. As the Commission 
does not contemplate a future competitive process for these areas and 
instead require Stage 2 support recipients to deploy to all locations 
in the Territories, expediting selection of a next-in-line applicant is 
especially important in this context. Based on the next-in-line process 
the Commission establishes, along with other safeguards it put in place 
in the Order, the Commission rejects Viya's arguments against a 
competitive approach predicated on the risk that the new awardee may 
fail to perform.
    79. Audits and Oversight. The Commission subjects awarded providers 
to ongoing oversight by them and USAC to ensure program integrity and 
prevent waste, fraud, and abuse. The Commission reminds providers that 
high-cost support recipients ``are subject to random compliance audits 
and other investigations to ensure compliance with program rules and 
orders.'' The Commission directs USAC to review and revise its audit 
procedures to take into account the changes adopted in the Order and to 
initiate audits of Stage 2 fixed disbursements throughout Stage 2 fixed 
support years. The Commission agrees with Liberty that random 
application of this long-standing, continually updated audit program is 
essential to ensuring program integrity. Because the Commission sees no 
reason to vary from its overall approach to auditing high-cost support 
recipients, it declines to adopt Free Press's suggestion that it 
requires USAC to audit every Stage 2 support recipient. To address Free 
Press's concern about possible ``double-dipping'' from insurance and 
USF support, in addition to requiring random audits, the Commission 
directs USAC to audit any Stage 2 support recipient for which it has 
substantial evidence of noncompliance. The Commission finds it 
preferable to allow USAC flexibility to deploy its auditing resources 
for maximum efficiency. Adopting Free Press's suggestion to audit all 
support recipients could lead to wastefully expensive audits relative 
to the amount of support at issue. Moreover, the deployed locations 
that recipients report will also be subject to verification, as USAC 
currently does for all HUBB filers. Recipients must retain sufficient 
evidence to demonstrate that they have built out to all of their 
reported locations and be prepared to produce that evidence to USAC in 
the course of a compliance review.
    80. As with all recipients of Federal high-cost universal service 
support, the Commission may initiate an inquiry on its own motion to 
examine any ETC's records and documentation to ensure that the 
universal service support the ETC receives is being used ``only for the 
provision, maintenance, and upgrading of facilities and services'' in 
the areas in which it is designated as an ETC. ETCs must provide such 
records and documentation to the Commission and USAC upon request. The 
Commission also may assess forfeitures for violations of Commission 
rules and orders.
    81. The Fund currently directs approximately $36.3 million in 
frozen support each year to fixed services in Puerto Rico and $16 
million in frozen support each year to fixed services in the U.S. 
Virgin Islands. None of this support is tied to specific build-out 
targets for which the support recipients must be accountable, however. 
As

[[Page 59952]]

proposed in the PR-USVI Fund NPRM, as the Commission ramps up the 
competitive process it adopts, it will phase down frozen support, which 
will no longer be necessary. For the first 12 months following 
authorization of a winning applicant, the carrier will receive \2/3\ of 
its frozen support; in the second 12-month period, the carriers will 
receive \1/3\ of its frozen support; thereafter, the carrier will only 
receive whatever, if anything, has been awarded through the competitive 
application process. The Commission recognizes that winning applicants 
for different geographic areas may be authorized at different times, so 
for each geographic area for which a winning applicant is authorized, 
the phase-down will begin the month following the authorization of the 
winning applicant for that geographic unit. In order to allocate frozen 
support to each geographic unit across the Territories during the 
phase-down process, the Commission will base phased down support on the 
percentage of fixed Stage 2 support the model allocates to that unit. 
The Commission adopts this method because it ties remaining frozen 
support to an estimate of the relative cost of serving different 
geographic areas. In the event either price cap carrier is awarded 
support in an eligible area in its respective territory, however, the 
new support would completely replace legacy support upon authorization 
with no transition. Given the carrier's explicit endorsement of the 
support amount in its application, the Commission sees no need for 
additional support to ease the transition.
    82. The Commission finds that eliminating frozen support will allow 
for greater competition and transparency and promote more cost-
effective use of the Fund. A phase-down will ensure there is a 
reasonable transition from current support amounts, consistent with 
Commission's overall USF goals and preference to avoid flash cuts in 
support, and will allow PRTC and Viya to plan accordingly. Consistent 
with the Commission's decision not to grant incumbent LECs either a 
right of first refusal or an absolute right to support, it declines 
PRTC's and Viya's requests to maintain frozen support indefinitely. 
Contrary to PRTC's claim, elimination of frozen support is not 
punishment for being hit by a hurricane--rather, the hurricanes present 
changed circumstances that warrant reevaluation of the Commission's 
approach to funding service in Puerto Rico and the U.S. Virgin Islands. 
By shifting to a competitive approach that accounts for cost, quality, 
and resilience, the Commission reduces the likelihood that broadband 
deployment supported by the Fund will be lost due to a future disaster 
compared to simply maintaining frozen support. The Commission also 
expects the competitive process it designs, with defined deadlines 
along with quality and resilience obligations, will lead to faster, 
higher-quality deployment to all parts of the Territories compared to 
maintaining frozen support. Further, the Commission accounts for the 
unique challenges of insular carriers in the Territories in numerous 
ways in Stage 2, including by accounting for disaster preparation, 
resilience, and redundancy; limiting participation to those with 
experience serving the Territories; and increasing available support 
relative to the prior frozen support amount.
    83. The Commission also rejects PRTC's and Viya's argument that 
their claimed reliance interests in frozen support justify maintaining 
such support on an ongoing basis. First, the Commission does not 
believe either company had a reasonable expectation of ongoing frozen 
support. Through its work on the Connect America Fund, the Commission 
has demonstrated a preference for competition and defined obligations. 
While the Commission in 2014 indicated that it would adopt tailored 
service obligations for non-contiguous carriers that elect frozen 
support, it has not done so, which would indicate to a reasonable 
carrier that the Commission does not view as-is frozen support as a 
long-term solution. The 2017 hurricanes represent a changed 
circumstance that, by largely eliminating deployment gains from CAF 
funding in Puerto Rico and leading to extensive destruction of Viya's 
network in the U.S. Virgin Islands, should have put PRTC and Viya on 
notice that the Commission would be likely to revisit its policies. And 
the PR-USVI Fund NPRM proposed to adopt a competitive mechanism to 
replace frozen support. Putting all of this together, PRTC and Viya 
should have been on notice that they were unlikely to be able to rely 
on ongoing frozen support. Second, even if PRTC and Viya had reasonable 
reliance interests, the Commission finds the public policy benefits of 
shifting to a competitive approach outweigh any private reliance 
interests. The Commission has devised Stage 2 fixed support to select 
the carriers able to commit to the best mix of cost-effective, quality, 
and storm hardened service. In contrast, PRTC and Viya do not have any 
defined service obligations in exchange for frozen support, and 
adopting defined obligations for frozen support at this point would be 
superfluous to the Stage 2 fixed obligations the Commission adopts. 
Therefore, maintaining frozen support on top of Stage 2 support, beyond 
a necessary phase-down period, would be wasteful and fail to serve the 
limited purposes for universal service support set forth in section 
254.
    84. Because the Commission has increased the budget for fixed Stage 
2 relative to previous support for the territories and expect to award 
support for all locations in the Territories through the competitive 
process it adopts, the Commission rejects Viya's argument that 
eliminating its frozen support is a threat to universal, affordable 
service in the U.S. Virgin Islands. By its own account, Viya is in a 
strong position to make use of support to efficiently expand and 
improve service, and the Commission draws confidence from these 
assertions that whether the winning applicant in each of the two U.S. 
Virgin Islands geographic areas is Viya or another provider that is 
able to make an even better proposal, the U.S. Virgin Islands will 
receive high-quality service. The Commission notes further that Viya 
remains subject to section 214 discontinuance approval obligations and 
to carrier of last resort requirements, which collectively guard 
against an abrupt loss of service, and it expects Viya to comply with 
its legal obligations and to continue to work to maximize its return 
from its network. Moreover, the support the Commission has already 
provided and the phasedown it adopts should reduce the risk of 
disruption if a new recipient is awarded support. The Commission does 
not find it prudent to assume it is necessary to adopt an extended 
period of overlapping support for the incumbent and the winning 
applicant in response to a hypothetical risk of disruption.
    85. Similarly, while PRTC quotes the conclusion in the PR-USVI Fund 
Order, 83 FR 27515, June 13, 2018, that ``disrupting the existing flow 
of frozen support is likely to harm restoration efforts, especially in 
more rural areas where those receiving historical support are more 
likely to serve,'' circumstances have since changed in two important 
ways, warranting a new approach. First, carriers have made much more 
progress toward successful restoration of fixed networks. Second, the 
Commission has devised a new, long-term Stage 2 that appropriately 
shifts the focus of its support from restoration of the pre-hurricane 
status quo to high-quality,

[[Page 59953]]

resilient deployment to all locations in the Territories.
    86. Commenters presented several other suggestions as potential 
solutions to creating resilient networks in the territories. Although 
the Commission appreciates the forward-thinking and creative 
suggestions, it is limited by its legal authority and by the 
Commission's desire to create a technology neutral competitive process 
for establishing high-cost support to the Territories going forward. 
The Commission also does not want to use conditions on support as a 
vehicle to achieve policy goals beyond those it has set forth for Stage 
2 support. Accordingly, the Commission declines to condition support on 
building out last-mile connections to the federally funded high-speed 
open access middle mile in the U.S. Virgin Islands. Likewise, the 
Commission declines to condition support on adopting a reciprocal 
access requirement for entities outside of the Commission's 
jurisdiction. Indeed, the former Governor of the U.S. Virgin Islands 
opposed this suggestion, noting that imposing such a requirement would 
be outside of the Commission's authority. The Commission does not think 
it would be appropriate to leverage Stage 2 funding for the express 
purpose of reaching beyond its jurisdiction, and it does not believe it 
would have sufficient notice to adopt such a requirement.
    87. The Commission encourages Puerto Rico and the U.S. Virgin 
Islands to consider approving one-time territory-wide permits for Stage 
2 support recipients to bury fiber. The Commission believes such an 
approach may facilitate efficient deployment in the Territories. At the 
same time, the Commission does not want to intrude upon Territory 
decision-making and defer to local authorities on this topic. The 
Commission strongly encourages cooperation between carriers and local 
authorities to facilitate the restoration, improvement, and expansion 
of telecommunication networks for the benefit of all consumers in 
Puerto Rico and the U.S. Virgin Islands.
    88. The Commission declines Tier 1's suggestion that it negotiates 
directly with Tier 1, Level 3/CenturyLink, viNGN and the Bureau of 
Information Technology (BIT) to adopt their combined solution for U.S. 
Virgin Islands. The Commission applauds Tier 1 and its business 
partners for working toward a creative solution together and encourage 
continued open inter-industry communication on how to best provide 
critical and advanced communications service in the U.S. Virgin 
Islands. The competitive process the Commission adopts in the Order 
will give all qualified applicants the opportunity to present their 
solutions to be selected in a more neutral way than negotiating only 
with a few carriers. And these carriers will have the same opportunity 
as all other participants to demonstrate the objective qualifications 
of their proposals.
    89. The Commission declines to adopt the CPR Community anchor model 
because the Act mandates access to telecommunications and information 
services for all consumers in all regions of the United States, not to 
a limited number of facilities, even for altruistic purposes. The 
Commission does not see a ready means to incorporate the CPR Community 
anchor model into an approach that would lead to deployment to all 
locations in the Territories, and CPR did not explain how its proposal 
would lead to such deployment.
    90. The Commission agrees with AT&T that the budget it adopts for 
Stage 2, as well as its prior Stage 1 and advance support, adequately 
address the needs identified in the emergency requests for support that 
the Commission received closely following the hurricanes. The 
Commission finds that many of the requests for relief sought in these 
petitions were adequately addressed by the Commission's quick response 
following the hurricanes to advance support, by its subsequent decision 
not to offset that support against future support, and by the 
disbursement of Stage 1 support. It was reasonable and more efficient 
for the Commission to act comprehensively determine the appropriate 
budget, timing, and scope of support for the Uniendo a Puerto Rico Fund 
and the Connect USVI Fund, rather than acting piecemeal on a range of 
requests. It is the Commission's expectation that the budgets it 
establishes, based on the current state of networks in the Territories, 
are sufficient to promote access to quality telecommunications and 
information services in Puerto Rico and the U.S. Virgin Islands. 
Additionally, the Commission notes that it is now well past the time in 
which granting emergency or immediate short-term post-hurricane relief 
would make sense. Therefore, the Commission declines to adopt any 
additional emergency, advanced, or other short-term support for Puerto 
Rico or the U.S. Virgin Islands, and they dismiss the emergency 
petitions filed by PRTC, Viya, Vitelcom, and PRWireless, which seek 
additional support beyond the adopted overall budget. As to the 
PRWireless Petition, which is framed as a request for a waiver, the 
Commission further concludes that granting a waiver at this point in 
time would not serve the public interest because, two years after the 
hurricanes, it is unlikely that PRWireless faces the same immediate 
post-storm challenges that it set forth as the basis for granting a 
waiver in its petition, which it filed only weeks after the storms.
    91. Last, the Commission rejects various arguments from Tri-County 
Telephone Association (TCT) that the Commission lacks the authority to 
create, and should not create, the Uniendo a Puerto Rico Fund and the 
Connect USVI Fund. Stage 2 support addresses the principle that 
``[a]ccess to advanced telecommunications and information services 
should be provided in all regions of the Nation.'' Further, the 
principle in section 254(b)(1) requiring the Commission to develop 
policies that make available ``quality'' services permits it to support 
hardening of facilities in storm prone areas. Stage 2 support will 
``advance[]'' universal service in the Territories by ensuring that 
more Americans have access to quality services that are reasonably 
comparable to services provided in urban areas, for instance with 
respect to network reliability. And the Commission's obligation to 
``preserv[e]'' universal service permits it to fund network hardening, 
as well as any remaining restoration in the context of Stage 2 mobile 
support.
    92. While TCT argues that the introduction of the RESTORED Act 
shows that Congress thinks the Commission currently lacks authority to 
fund service restoration, that bill only had one sponsor and never 
proceeded past introduction and reference to the relevant House 
committee and subcommittee, so the Commission cannot infer from this 
bill a sense of Congress's view as a whole. The Commission finds the 
more reasonable view is that it possesses the requisite authority to 
adopt Stage 2 support as set forth herein, and it rejects TCT's 
argument that the bill's introduction weighs against that conclusion.
    93. The Commission also disagrees with TCT's contention that 
because ``the high-cost program is based upon Sec.  254(b)(3),'' the 
Commission must offer ``evidence that consumers in Puerto Rico and the 
USVI have experienced higher rates for service than other parts of the 
country as a result of Hurricanes Maria and Irma'' to act. This 
argument would incorrectly lead the Commission to ignore all of section 
254 other than the ``reasonably comparable rates'' clause of section 
254(b)(3), contrary to the Commission's duty to account for all 
statutory direction and contrary to

[[Page 59954]]

longstanding Commission precedent. In the USF/ICC Transformation Order, 
the Commission ``address[ed] [its] statutory authority to implement 
Congress's goal of promoting ubiquitous deployment of, and consumer 
access to, both traditional voice calling capabilities and modern 
broadband services over fixed and mobile networks,'' and in doing so 
specifically cited and relied on sections 254(b), (c), and (e). As set 
forth in the Order, the Commission has ample authority under section 
254 to adopt Stage 2, and it rejects TCT's unduly constricted view.
    94. The Commission also rejects TCT's various policy-based 
objections to Stage 2. TCT's argument that ``[w]ere the Commission to 
dip into USF programs each time communications networks were damaged by 
a natural disaster, it would cripple the USF'' relies on speculation 
about unknown future events, and is belied by the Commission's 
consistent efforts to manage the Fund responsibly, including its 
efforts to prioritize cost effectiveness in the Order. While TCT 
contends that other sources of funding (such as the Department of 
Homeland Security, Federal Emergency Management Agency (FEMA) or 
philanthropy) would be more apt for recovery efforts than USF, the Fund 
is directed specifically at deployment of communications networks, and 
the Commission is the expert agency on communications and have been 
charged by Congress with ``mak[ing] available, so far as possible, to 
all the people of the United States . . . a rapid, efficient, Nation-
wide, and world-wide wire and radio communication service with adequate 
facilities at reasonable charges.'' The Commission welcomes and 
encourages other support efforts, but it has a role to play here 
consistent with its expertise and statutory responsibilities. Finally, 
the Commission rejects TCT's argument that it should not proceed 
because ``the Commission's willingness to act as an effective insurer 
of last resort sends a strong signal to carriers . . . that they can 
skimp on private insurance coverage.'' The impact of Hurricane Maria 
and Irma on the Territories have presented extraordinary circumstances, 
and carriers should not assume that the Commission would provide 
support under different circumstances--the Commission is not and will 
not be an insurer of last resort.
    95. The Commission is committed to ensuring that Americans in 
Puerto Rico and the U.S. Virgin Islands have access to advanced mobile 
telecommunications networks that provide the same high-speed broadband 
services that residents of the mainland United States enjoy, including 
high-speed 4G LTE and, increasingly, next generation wireless services 
known as 5G. The Commission recognizes that carriers seeking to deploy 
advanced mobile services in Puerto Rico and the U.S. Virgin Islands 
face similar Territory-specific challenges as fixed service providers 
from economic conditions, insularity, and risk of natural disaster. To 
facilitate the deployment of modern, high-speed, and storm-hardened 
advanced telecommunications mobile networks, the Commission adopts a 
three-year funding period for Stage 2 mobile support that allows 
facilities-based mobile providers a one-time election of support based 
on their number of subscribers.
    96. For that three-year term, the Commission allocates budgets of 
$254.4 million to the Uniendo a Puerto Rico Fund and $4.4 million to 
the Connect USVI Fund. More specifically, providers will make 
concurrent elections for two parts of the budgeted support. First, 
providers may elect receive up to 75% of the support for which they are 
eligible in exchange for a commitment to restore, harden, and expand 
networks using 4G LTE or better technology capable of providing 
services at speeds of at least 10/1 Mbps. Second, given the power of 5G 
network capabilities to unleash a new wave of entrepreneurship, 
innovation, and economic opportunity for communities across the 
country, providers may also elect to receive up to 25% of the support 
for which they are eligible in exchange for a commitment to 
specifically deploy 5G mobile network technology, capable of delivering 
speeds of at least 35/3 Mbps. By the conclusion of Stage 2, the 
Commission expects to establish and adopt a competitive funding 
mechanism for the long-term expansion of advanced telecommunications 
access and next generation wireless services for the Territories that 
builds on its experience from its provision of Stage 2 mobile support, 
the competitive mechanism the Commission adopts here for fixed service, 
and other competitive mechanisms adopted by them.
    97. The Commission adopts its proposal in the PR-USVI Fund NPRM to 
make available and allocate Stage 2 mobile support to facilities-based 
mobile providers that provided services in Puerto Rico or the U.S. 
Virgin Islands prior to the hurricanes. For eligible mobile providers 
that elect to participate in Stage 2, the Commission will allocate 
Stage 2 mobile support in each territory based on the number of mobile 
subscribers according to their June 2017 FCC Form 477 data, consistent 
with its approach to Stage 1.
    98. Any eligible facilities-based mobile provider may elect to 
participate in this opportunity for support over the three-year period 
the Commission adopts for Stage 2. Providers that are eligible for 
Stage 2 mobile support under either the Uniendo a Puerto Rico Fund or 
the Connect USVI Fund will have a one-time opportunity to elect to 
participate in Stage 2 support. Each provider will make two 
simultaneous elections. First, it may elect to receive up to 75% of the 
support for which it is eligible in exchange for a commitment to 
restore, harden, and expand networks capable of providing 4G LTE or 
better services. Second, it may elect to receive 25% or more of the 
support for which it is eligible in exchange for a commitment to 
specifically spend that support toward deployment of networks capable 
of providing 5G mobile network technology based-services.
    99. Eligible mobile providers may elect to receive Stage 2 support 
from their respective fund through an election process similar to that 
used in Stage 1. To participate, a facilities-based mobile provider 
must, within 30 days of the publication of the Order in the Federal 
Register, either (1) renew the certification it provided to the 
Commission as part of Stage 1 of the Uniendo a Puerto Rico Fund and the 
Connect USVI Fund specifying the number of subscribers (voice or 
broadband internet access service) it served in the Territory as of 
June 30, 2017 (before the hurricanes); or (2) for any mobile provider 
that did not submit an election to receive Stage 1 support, submit to 
the Commission a certification specifying the number of subscribers 
(voice or broadband internet access service) it served in the Territory 
as of June 30, 2017 (before the hurricanes), along with accompanying 
evidence. Providers also must file a copy of the certification and 
accompanying evidence (if applicable) through the Commission's 
Electronic Comment Filing System (ECFS) as well as email a copy to 
[email protected]. The Commission will then verify eligibility 
using various data sources, including FCC Form 477 data. The Commission 
directs the Bureau to then allocate these amounts among qualifying 
providers of each territory according to the number of subscribers 
(voice or broadband internet access service) each served as of June 30, 
2017. The Bureau shall make public these allocations via a Public 
Notice as soon as practicable.
    100. Nearly all commenters support Stage 2 support for facilities-
based mobile providers that provided service to Puerto Rico and the 
U.S. Virgin Islands prior to the hurricanes based on

[[Page 59955]]

their June 2017 FCC Form 477 subscriber data. The Commission agrees 
with commenters that the allocation of Stage 2 mobile support for the 
restoration, hardening, and expansion of mobile network infrastructure 
will be best accomplished by relying on subscriber data on the 2017 FCC 
Form 477. By making pre-hurricane facilities-based mobile providers 
eligible for Stage 2 support, the Commission will be able to quickly 
restore, harden, and expand service. This necessary and targeted high-
cost mobile support will help rebuild damaged networks, harden against 
future natural disasters, and improve and expand mobile services 
through the installation of 4G LTE or better technology in Puerto Rico 
and the U.S. Virgin Islands in a timely and cost-effective manner.
    101. Although the Commission uses 2018 FCC Form 477 data for fixed 
support, it uses pre-hurricane subscriber data from 2017 FCC Form 477 
to allocate mobile support as a means to account for its goals to 
restore and harden mobile networks damaged by the hurricanes. In this 
regard, pre-hurricane subscriber data, as reflected in the June 2017 
FCC Form 477 data, provides an objective measure of available data to 
approximate relative networks to achieve the Commission's goals. The 
Commission further notes that its review and analysis of the record 
does not reflect the entrance of new mobile service providers in Puerto 
Rico and the U.S. Virgin Islands, so the Commission does not need to 
deviate from the use of 2017 FCC Form 477 subscriber data to allocate 
mobile support. The Commission concludes that limiting provider 
eligibility to facilities-based providers that provided mobile services 
prior to the hurricanes best facilitates its goals for the full 
restoration and hardening mobile service networks that were devastated 
by the hurricanes, and more readily facilitates the rapid, efficient 
deployment of 4G LTE and 5G networks in the Territories.
    102. The Commission declines to adopt Viya's proposal to allocate 
mobile support based on the geographic area of a provider's network. 
Specifically, Viya proposed that ``Stage 2 mobile funding should be 
awarded pro rata to each eligible mobile carrier based on the relative 
number of square miles that the carrier served prior to the hurricanes, 
as shown in the June 2017 Form 477 shapefiles filed by the carriers.'' 
However, providers in Puerto Rico and the U.S. Virgin Islands do not 
currently employ an industry-wide standard methodology to calculate and 
report network coverage as part of their Form 477 filings. 
Consequently, the Commission does not have consistent, reliable, and 
precise geographic data needed to allocate mobile support to providers 
in the Territories. Rather than using network area reporting that 
varies among providers, the Commission concludes that allocating mobile 
support using subscriber data allows it to reach as many consumers as 
possible and as quickly as possible in the Territories with its limited 
budget and thus serves the best interest of the residents of Puerto 
Rico and the U.S. Virgin Islands in Stage 2.
    103. Support Amounts. Each eligible mobile provider that elects to 
participate in Stage 2 of the Uniendo a Puerto Rico Fund or the USVI 
Connect Fund will receive monthly installments of its pro rata share of 
mobile support amortized over the three-year support period adopted in 
the Order. Each recipient's pro rata share will be adjusted according 
to its election to receive or decline support for 4G LTE and/or 5G 
deployment.
    104. Because the Commission adopts Stage 2 of the Uniendo a Puerto 
Rico Fund and the Connect USVI Fund for mobile providers as 
comprehensive substitute mechanisms for mobile high-cost support, 
providing certainty and stability in those areas for the next three 
years, carriers that elect not to participate in Stage 2 will receive 
only transitional legacy mobile support. The Commission sets 
transitional support amounts only for existing recipients of high-cost 
support that do not elect to participate in Stage 2. Any such providers 
will receive one-half of their legacy mobile support, excluding prior 
emergency and Stage 1 support to mobile providers, amortized for the 
first 12-month period following the public notice announcing the start 
of the Stage 2, and no legacy support for mobile services thereafter. 
The Commission believes that an expeditious phase-down of legacy 
support is warranted since it is not conducting a competitive process 
for mobile high-cost support, and all carriers will have the 
opportunity to participate in this substitute mechanism. Moreover, this 
phase-down will give a predictable glidepath as the Commission 
transitions from one support mechanism to another while preserving its 
finite universal service funds to begin funding mobile service under 
the terms of Stage 2.
    105. The Commission adopts the proposed total budget over a three-
year period of $258.8 million in mobile support for the Uniendo a 
Puerto Rico Fund and the Connect U.S. Virgin Islands Fund in light of 
the unique challenges mobile providers face following Irma and Maria 
and to provide access to advanced telecommunication services, including 
5G wireless services. Given that two years have passed since Maria and 
Irma and based on the progress carriers have made in restoring their 
networks, the Commission makes clear that Stage 2 mobile support is not 
simply to restore mobile network coverage to prior service levels. The 
Commission intends for Stage 2 to foster greater access to advanced 
telecommunications for the Territories, including access to both 4G LTE 
and 5G technologies.
    106. Current high-cost support directs approximately $78.9 million 
each year to mobile services in Puerto Rico and over $67,000 each year 
to mobile services in the U.S. Virgin Islands. The Commission's budget 
increases the amount of support to the Territories by $7 million per 
year over three years to ensure that providers have sufficient funds to 
restore, harden, and expand voice and broadband-capable networks. The 
Commission therefore establishes Stage 2 of the Uniendo a Puerto Rico 
Fund for mobile networks at up to $254.4 million over a three-year 
period and establish the Connect USVI Fund Stage 2 budget for mobile 
networks at up to $4.4 million over a three-year period. This budget 
reflects an increase of approximately $17.7 million over three years in 
Puerto Rico and approximately $4.2 million over three years in the U.S. 
Virgin Islands compared to pre-existing frozen support.
    107. The Commission declines requests for additional mobile support 
beyond the budget. In reaching the Commission's decision in the Order, 
it believes that the Stage 2 mobile support they allocate--in addition 
to the $71.74 million in extra mobile support previously provided--will 
be sufficient to allow facilities-based mobile service providers to 
restore any lingering damaged or destroyed network facilities and make 
meaningful progress to harden their networks and expand the 
availability of voice services and modern, high-speed broadband 
services. In several instances, carriers have reported complete or 
near-complete restoration of their mobile networks following the 
hurricanes, suggesting that directing Stage 2 support only to 
restoration would be too limited a goal. For instance, PRTC informed 
the Commission that it has fully restored prior service levels and, in 
fact, added to its mobile network facilities. Additionally, AT&T 
reports that despite significant challenges, it has restored much of 
its network. The support amount the Commission dedicates thus reflects 
its priorities to complete any

[[Page 59956]]

remaining rebuilding and promote the deployment and hardening of 
modern, high-speed mobile networks in a fiscally responsible manner 
over a three-year term.
    108. Based on the record and the restoration that mobile providers 
have achieved following Hurricanes Irma and Maria, the Commission 
directs that 75% of Stage 2 mobile support be allocated for the 
restoration, hardening, and expansion of 4G LTE or better mobile 
networks, and it directs that the remaining 25% of Stage 2 mobile 
support be allocated specifically for the deployment of 5G technology 
in the Territories. Commenters broadly support the deployment of 4G 
LTE, and the Commission finds that requiring 4G LTE as its minimum 
standard for the majority of support for funded deployments ensures 
that finite universal service funds are used efficiently to provide 
consumers access to robust mobile broadband service in the near and 
long term that is comparable to 4G LTE network-based service being 
offered in urban areas. The Commission further specifically direct a 
portion of Stage 2 mobile support to the deployment of 5G to ensure 
that Puerto Rico and the U.S. Virgin Islands are not left behind as 
carriers increasingly invest in deploying 5G mobile network technology. 
By supporting the deployment of 5G networks, the Commission encourages 
the deployment of the types of facilities that will best achieve the 
principles set forth in section 254(b) of the Act, including the 
availability of quality services, the deployment of advanced services, 
and access by consumers in insular areas and low-income consumers to 
reasonably comparable services. In addition to furthering the universal 
service principles of 254(b), the Commission believes that encouraging 
the transition towards 5G infrastructure deployment will help unleash 
entrepreneurship, innovation, and economic opportunity for the 
Territories.
    109. Consistent with the Commission's prior round of support in 
Stage 1, it retains the pre-existing mobile support allocations and 
allocate about 80% of the proposed additional support for mobile 
services to Puerto Rico and about 20% to the U.S. Virgin Islands in 
light of the changed circumstances resulting from the destruction to 
networks caused by the 2017 hurricane season. Several commenters 
support this decision. The Commission expects that the amount of 
support available will enable eligible mobile carriers to restore, 
harden, and expand mobile networks over the next three years, to at 
least pre-hurricane network performance levels if not better, at which 
point it will revisit the amount of support necessary to further expand 
and/or harden mobile service available in the Territories.
    110. In reaching this conclusion, the Commission finds its 
allocation between fixed and mobile services to be appropriate. Except 
for the Commission's increase in fixed support to Puerto Rico, this 
relative allocation is the same that it used in Stage 1, and the 
allocation similarly reflects the greater costs of deploying fixed 
services and its expectation that improvements to fixed network 
backhaul will facilitate improved mobile services. The Commission notes 
that the budget it adopts increases annual mobile support to the U.S. 
Virgin Islands by almost twenty-two times the prior level--this large 
relative increase reflects its view that the existing, very modest 
level of mobile support for the U.S. Virgin Islands would be 
insufficient to support meaningful progress toward restoration, 
hardening, and expansion of 4G LTE and 5G mobile technology-based 
services during Stage 2 in light of the challenges of serving the 
Territory.
    111. Term of Support. Consistent with the PR-USVI Fund NPRM, the 
Commission concludes that a three-year period is appropriate for Stage 
2 support. The Commission first notes that providers did not submit 
specific comments proposing a different time period for Stage 2 mobile 
support, and only BBVI explicitly supported the proposed three-year 
period. The Commission expects the three-year period to benefit it by 
allowing time for it to develop further procedures and standards for 
mobile voice and broadband service that may be applied to a future 
long-term Stage 3 process to allocate support for mobile services in 
the Territories. The Commission anticipates issuing a further notice of 
proposed rulemaking to seek input on when and how to implement a long-
term Stage 3 mobile support process. The Commission's ultimate goal for 
mobile support is to adopt a Stage 3 mobile support mechanism to 
facilitate the deployment and maintenance of high-speed mobile 
broadband networks throughout Puerto Rico and the U.S. Virgin Islands. 
Although the Commission shifts to a competitive mechanism now for fixed 
Stage 2 support, the Commission believes it would be premature to adopt 
a long-term process for mobile support for several reasons. In 
developing a Stage 3 mobile support mechanism, the Commission will 
benefit from evaluating competitive models, including the fixed Stage 2 
competitive allocation mechanism in this proceeding, as possible models 
upon which to build. The Commission will also benefit from evaluating 
initial progress in deployment of high-speed 5G and 4G LTE networks in 
the Territories during Stage 2, and it will benefit from evaluating 
ongoing development of the 5G standard. While the Commission seeks to 
avoid delay, these factors--which do not apply to fixed support--
warrant a more incremental approach to mobile at this time. The 
Commission therefore agrees with AT&T that in the context of mobile 
support, it should divide Stage 2 of the Uniendo a Puerto Rico Fund and 
Connect USVI Fund into two stages.
    112. Eligible Areas. The Commission concludes that all areas of 
Puerto Rico and the U.S. Virgin Islands will be eligible for mobile 
high-cost support. Consistent with section 254(e) of the Act and the 
Commission's rules, the Commission believes making all areas eligible 
allows support to be used anywhere it is necessary for any remaining 
restoration efforts as well as new deployments, network upgrades, and 
storm hardening and resilience, thereby supporting the return of 
service and competition in each territory. Some mobile carriers in the 
Territories continue to work toward full restoration, and all face 
challenges in expanding and hardening their communication networks. For 
example, AT&T states that during the proposed Stage 2 period, it will 
continue ``backhaul restoration efforts includ[ing] maximizing the 
population served by buried infrastructure, hardening above-surface 
infrastructure where possible, diversifying key fiber routes, and 
expanding backup microwave backhaul capabilities.'' Viya states that 
Stage 2 mobile ``funding is vital both to complete the restoration of 
wireless telecommunications networks in the USVI and for the hardening 
of mobile networks against damage caused by the annual hurricane 
seasons in future years.'' Likewise, PRTC states that support ``will be 
critical to . . . make [its network] more resilient to future natural 
disasters.'' Facilitating network hardening is also appropriate in 
light of the heightened risk of damage due to disasters faced by and 
insular nature of the Territories, and the Commission thus finds it 
prudent and in the public interest to account for the heightened 
possibility of damaging future natural disasters in the Territories. In 
addition, the heightened economic challenges faced by the Territories, 
which were amplified by Irma and Maria, justify

[[Page 59957]]

ongoing support with respect to expanding deployment of high-speed 
mobile networks, since availability of quality, affordable mobile 
services promotes economic development. The Commission therefore gives 
support recipients certain flexibility in their businesses to determine 
where hardening and/or expansion will be most impactful, including by 
taking into account post-hurricane population shifts, subject to the 
limitation that support must be used for high-speed 4G LTE or 5G 
networks, as specified. After the three-year Stage 2 period, the 
Commission expects to reevaluate whether conditions in the Territories 
have recovered such that it can focus support in areas where market 
forces alone cannot support the provision of mobile services.
    113. Remaining Restoration. The Commission directs Stage 2 support 
principally toward new and improved deployment of hardened and high-
speed mobile networks, and many commenters state that their network 
coverage restoration to prior service levels exceeds the restoration 
benchmarks it adopts in the Order. Nevertheless, the Commission 
recognizes that some restoration of network coverage area to pre-
hurricane levels may still be necessary. Therefore, at a minimum, the 
Commission requires Stage 2 support recipients to commit to a full 
restoration of their pre-hurricane network coverage areas as reported 
on their June 2017 FCC Form 477 and at reasonably comparable levels to 
those services and rates available in urban areas. The Commission 
agrees with commenters that it should require recipients to fully 
restore service to the pre-hurricane coverage area levels because of 
the critical role telecommunications networks play in the recovery and 
economic growth and prosperity of Puerto Rico and the U.S. Virgin 
Islands. In geographic areas where continued restoration is needed, the 
Commission requires recipients to restore the network coverage area 
using 4G LTE or better technologies that meet the minimum service 
requirements in the Order. In cases where a Stage 2 support recipient 
has completed the restoration of its network to its pre-hurricane 
coverage area prior to the receipt of Stage 2 support, the Commission 
requires support to be used solely for hardening, upgrading, or 
expanding 4G LTE and 5G networks that meet the minimum service 
standards specified in the Order.
    114. The Commission concludes the full restoration of mobile 
networks is integral to rebuilding communities, serving the public 
safety needs of the islands, and providing access to telecommunication 
and information services to consumers available prior to the 
hurricanes. Moreover, the Commission notes that the full restoration of 
network service coverage pre-hurricane serves is an essential baseline 
for determining unserved areas of Puerto Rico and the U.S. Virgin 
Islands as the Commission moves forward and make voice and broadband 
service universally available to all consumers. The Commission will use 
the mobile network coverage area to determine how best to structure a 
future stage to allocate long-term mobile support in a tailored and 
cost-effective manner.
    115. Appropriate Use of Support. The Commission reaffirms that 
universal service support should be targeted towards 4G LTE and better 
technologies in order to provide the Territories with high-quality 
mobile service. The Commission has observed that consumers increasingly 
rely on greater performing mobile networks, including 4G LTE, in order 
to take advantage of the significantly better performance 
characteristics of these networks, including faster data transfer 
speeds while using the web or web-based applications. And, as noted in 
the Order, carriers are rapidly investing in 5G deployment across the 
country. Directing support in Stage 2 towards 4G LTE and 5G 
technologies will ensure that consumers in Puerto Rico and the U.S. 
Virgin Islands are not relegated to substandard mobile service in the 
near and long-terms. To help achieve the Commission's goal to advance 
4G LTE and 5G technologies, it emphasizes that Stage 2 mobile support 
may not be used towards restoration, hardening, and expansion of 3G or 
lower mobile technologies. The Commission thus concludes the use of 
Stage 2 mobile support for 4G LTE and 5G technologies will serve the 
public interest to ensure universal service for all residents of Puerto 
Rico and the U.S. Virgin Islands. To promote the efficient use of 
support and encourage high-speed deployment, the Commission directs 
that carriers use authorized support to deploy, harden, or expand 
networks consistent with the 4G LTE and 5G parameters in the Order.
    116. Minimum Service Requirements for 4G LTE Support. For the 
portion of support directed to restore, harden, or expand networks 
capable of providing 4G LTE or better service (i.e., the allocation of 
up to 75% of the provider's eligible support amount), the Commission 
adopts minimum service requirements that define the baseline 4G LTE 
performance standard for Stage 2 mobile support recipients in Puerto 
Rico and the U.S. Virgin Islands. The Commission agrees with Viya that 
it should adopt minimum service requirements for speed, latency, and 
usage consistent with its advancement of 4G LTE technology or better. 
The Commission therefore requires support recipients to meet minimum 
baseline performance requirements for data speeds, data latency, and 
data allowances for at least one plan that carriers offer where 
carriers have deployed 4G LTE, or will deploy or upgrade to 4G LTE 
networks or better using Stage 2 support as critically important to 
benefit the Territories' recovery. The data speed of the network for 
areas in which the recipient used Stage 2 support must be at least 10 
Mbps download speed or greater and 1 Mbps upload speed or greater by 
the end of the three-year support term. For latency, the required 
measurement must have a data latency of 100 milliseconds or less round 
trip by the end of the three-year support term. In addition, support 
recipients must offer at least one service plan that includes a data 
allowance of at least 5 GB. A support recipient's service plan with the 
required data allowance must be offered to consumers at a rate that is 
reasonably comparable to similar service plans offered by mobile 
wireless providers in urban areas.
    117. In adopting minimum performance standards, the Commission 
declines to adopt AT&T's proposal to implement 4G LTE service without 
minimum speed and latency requirements or, at most, requiring minimum 
speed and latency only for a small portion of the network in each 
territory. First, the record reflects that certain carriers currently 
operate 4G LTE mobile wireless networks that cover large geographic 
areas. Moreover, targeting support to measurable performance 
requirements will ensure that the Commission does not relegate the 
Territories to substandard service that is not comparable to advanced 
mobile services. The Commission therefore concludes that requiring 
minimum performance standards for the use of Stage 2 support for new or 
upgraded 4G LTE facilities or better will best serve the goals of 
universal service for consumers living outside urban areas of Puerto 
Rico and the U.S. Virgin Islands.
    118. Minimum Service Requirements for 5G Support. Consistent with 
the Commission's approach in the Order, for the portion of support 
directed to the deployment of 5G networks (i.e., the allocation of up 
to 25% of the provider's eligible support amount), it adopts minimum 
service requirements that

[[Page 59958]]

define the baseline 5G performance standard for Stage 2 mobile support 
recipients in Puerto Rico and the U.S. Virgin Islands. Specifically, as 
the Commission stated in the Order, it establishes as a minimum the 5G-
NR technology standards specified by Release 15 and require providers 
to meet these specifications as part of the optional deployment of 5G 
technology. This is consistent with the Commission's approach in the 
Digital Opportunity Data Collection, 84 FR 43705, August 22, 2019. In 
addition, deployments of 5G technologies made with Stage 2 support must 
provide a data speed of at least 35/3 Mbps. The Commission finds it 
reasonable to require at least 35 Mbps as a downlink speed because the 
minimum performance requirements of 5G technology, using a typical 10 
MHz channel bandwidth, including other system efficiencies such as 
Multiple Input Multiple Output (MIMO) should permit service providers 
to meet this speed requirement. Further, the provider must offer a plan 
with rates that must be reasonably comparable to similar service plans 
offered by mobile wireless providers in urban areas. The Commission 
declines to adopt further specifications at this time because it 
recognizes that 5G is a new and developing technology.
    119. Return of Support. The Commission will hold mobile providers 
to their specific deployment commitments in exchange for their election 
and receipt of all Stage 2 mobile support. A mobile provider that fails 
to use Stage 2 high-cost support towards its commitment for networks 
capable of providing 4G LTE or better services as specified herein and/
or towards its specific deployment of 5G mobile network technology-
based services as specified herein shall return the unused support to 
the Administrator within 30 days following the end of the three-year 
support period. The amount of support that must be returned shall be an 
amount equal to the difference between the amount spent on eligible 
expenses towards its commitment and the full amount of its elected 
commitment of up to 75% or 25%. For example, a mobile provider that 
fails to meet its commitment to use 25% of the Stage 2 mobile support 
for which it is eligible for 5G deployment shall return that amount or 
the difference between the amount spent on 5G deployment and 25% of the 
Stage 2 mobile support for which it is eligible. In addition, a mobile 
provider that elects to receive 75% of its eligible support in exchange 
for its commitment to provide networks capable of providing 4G LTE or 
better services and fails to use the support towards eligible expenses 
to meet its commitment must return any unspent amount of support to the 
Administrator.
    120. The Commission adopts annual reporting requirements that will 
enable it and USAC to ensure compliance with section 254 of the Act and 
to monitor the ongoing progress and performance of the Uniendo a Puerto 
Rico Fund and Connect USVI Fund recipients by interpreting Sec. Sec.  
54.313 and 54.320 of the Commission's rules to apply to Stage 2 mobile 
support.
    121. Consistent with the Commission's approach in other 
proceedings, it adopts reporting of an interim and final benchmarks for 
the full restoration of mobile network coverage and service 
requirements detailed in the Order, which will enable the Commission 
and USAC to monitor the ongoing progress and performance of all mobile 
support recipients. Specifically, to monitor the progress of 
restoration, the Commission declines to adopt the PR-USVI Fund NPRM's 
proposal for submission of biannual coverage maps and instead will 
require submission and certification from support recipients of one 
annual network coverage map at the conclusion of the second and third 
year of the support period. The Commission requires that each recipient 
demonstrate and certify to at least 66% of its pre-hurricane network 
coverage by the end of year two of the Stage 2 support period, and at 
least 100% of its pre-hurricane coverage, if not more, by the end of 
the three-year support period.
    122. The Commission will determine the restoration of a provider's 
network coverage area based on FCC Form 477 network coverage data 
reported by mobile providers. The Commission believes that Form 477 
network coverage data, including each support recipient's shape files, 
will provide the best comparison for determining whether mobile 
providers have met their network coverage area milestones. The 
Commission expects each support recipient to determine its network 
coverage data using the same methodology it used for the June 2017 FCC 
Form 477 so the Commission will be able to conduct an ``apples to 
apples'' comparison when analyzing whether the provider has in fact met 
its Stage 2 milestones. The Commission also requires recipients to 
submit evidence of network coverage areas, including electronic 
shapefiles site coverage plots illustrating the area reached by mobile 
services; a list of census blocks reached by mobile services; and 
results of the provider's drive, drone, and/or scattered site tests. 
The Commission directs the Bureau to define more precisely the content 
and format of the information required to be submitted by recipients.
    123. The Commission also adopts a reporting requirement to monitor 
the ongoing progress for network hardening by providers. Specifically, 
the Commission adopts AT&T's suggestion that it should require 
recipients of Stage 2 mobile support to identify on a map where they 
have undertaken hardening activities in the past year. To facilitate 
the Commission's evaluation of the information that the map contains, 
it also requires each support recipient to provide, along with the map, 
a detailed narrative description of the network hardening activities 
identified and of how it made use of the support to facilitate those 
network hardening activities.
    124. Like other high-cost recipients that are required to meet 
milestones, the Commission will require each recipient of Stage 2 
mobile support through the Uniendo a Puerto Rico Fund and the Connect 
USVI Fund to file certifications that it has met its milestones, 
including a certification of the minimum service requirements as 
provided in the Order at the end of the third year of the support 
period. As provided in the Order, a provider may demonstrate the target 
network coverage based on current FCC Form 477 standards; however, the 
Commission will require that network coverage reporting requirements 
conform to any other generally applicable mobile wireless mapping 
standards that it subsequently adopts. The Commission also requires 
each provider to submit test results verifying coverage along with 
their certification. The Commission will require that the certification 
of the minimum service requirements and the test results in verifying 
coverage, obtained via a methodology selected by the carrier and 
approved by the Bureau, demonstrate network speed and latency that meet 
or exceed the minimum service requirements the Commission adopts. The 
Commission directs the Bureau to define more precisely the content and 
format of the information required to be submitted by recipients, and 
it directs USAC to verify the representations in the submissions.
    125. The Commission further requires an annual certification for 
mobile providers that elect to receive up to 25% of their available 
support for the deployment of 5G technology. Each participant must 
specifically certify its use of Stage 2 support related to the 
deployment of 5G technology to ensure compliance with its commitment. 
As part of its certification, the Commission

[[Page 59959]]

requires each provider, no later than 30 days after the end of each 12-
month period of Stage 2 support, to (1) report the total costs incurred 
and total amount of Stage 2 support spent related to the deployment of 
5G technology during the preceding 12-month period; and (2) describe in 
detail how it used the support for deployment of 5G technology.
    126. Finally, as with all ETCs, high-cost recipients of Stage 2 
mobile support from the Uniendo a Puerto Rico Fund and the Connect USVI 
Fund will be subject to ongoing oversight to ensure program integrity 
and to deter and detect waste, fraud, and abuse. All ETCs that receive 
high-cost support are further subject to compliance audits and other 
investigations to ensure compliance with program rules and orders. The 
Commission concludes that all mobile support recipients will be subject 
generally to the same audit requirements as recipients of Connect 
America Fund Phase II support, fixed Stage 2 support in this 
proceeding, and all other high-cost support. Moreover, the Commission's 
decision in the Order does not limit its ability to recover funds or 
take other steps in the event of waste, fraud, abuse, or 
misrepresentations.
    127. In addition to the criteria the Commission adopts in the 
Order, it also adopts the following requirements for any winning 
applicants seeking Stage 2 fixed support for voice and broadband 
service and mobile providers electing to receive Stage 2 support. The 
Disaster Preparation and Response Plan and Disaster Information 
Reporting System (DIRS) requirements set forth in the Order apply to 
all Stage 2 fixed and mobile support recipients.
    128. Disaster Preparation and Response Plan. Helping to protect 
fixed and mobile networks in Puerto Rico and the U.S. Virgin Islands 
against future hurricanes and other disasters is of vital importance, 
and the Commission cannot account for all forms of disaster preparation 
via objective scoring criteria in its fixed competitive proposals 
process (nor do the Commission employ such a process for Stage 2 mobile 
support). To ensure that Stage 2 support recipients have a holistic 
plan to prepare for and respond to possible disasters, the Commission 
will require each recipient of Stage 2 fixed and mobile support to 
create, maintain, and submit to the Bureau for its review a detailed 
written plan (a ``Disaster Preparation and Response Plan'') that 
describes and commits to the methods and procedures that it will use, 
during the period in which it receives Stage 2 support, to prepare for 
and respond to disasters in Puerto Rico and/or the U.S. Virgin Islands. 
The Commission specifically requires applicants to describe in the 
Disaster Preparation and Response Plan in detail how they will meet 
five criteria: (1) Strengthening Infrastructure; (2) Ensuring Network 
Diversity; (3) Ensuring Backup Power; (4) Network Monitoring; and (5) 
Emergency Preparedness. The Commission explains these criteria in 
detail in the Order. The Commission requires applicants to document in 
detail in the Disaster Preparation and Response Plan their methods and 
processes for achieving each of these goals, identify personnel 
responsible for compliance, and conform their actions to their written 
documentation.
    129. A Stage 2 fixed support applicant must submit its Disaster 
Preparation and Response Plan to the Bureau for review and approval 
along with the provider's application, and a mobile provider electing 
Stage 2 support must submit its Disaster Preparation and Response Plan 
for review and approval along with its election of support. The 
Commission directs the Bureau to approve the documentation if it is 
complete and thoroughly addresses how the carrier will meet each of the 
criteria it identifies. If the Bureau identifies deficiencies in the 
Disaster Preparation and Response Plan, the Commission directs the 
Bureau to provide detailed written notification of the deficiencies to 
the carrier and withhold authorization to receive support until the 
support recipient has cured the deficiencies. The Commission emphasizes 
that support recipients may choose to develop their Disaster 
Preparation and Response Plans in a number of ways to meet the flexible 
criteria established here. Recipients shall materially comply with the 
representations in the Disaster Preparation and Response Plan, once 
approved.
    130. All Stage 2 support recipients must update their Disaster 
Preparation and Response Plan when they make material changes to 
internal processes or responsible staff and share the updated Disaster 
Preparation and Response Plan with the Bureau within 10 business days. 
The Commission also will require support recipients to certify annually 
to USAC that they have recently reviewed the Disaster Preparation and 
Response Plan and considered whether any changes or revisions were 
necessary. The Commission directs the Bureau to provide additional 
guidance to applicants regarding the timing, submission, and format of 
the required Disaster Preparation and Response Plan.
    131. The Commission finds it is appropriate to require and evaluate 
Disaster Preparation and Response Plans for Stage 2 support applicants 
because, as the Commission has noted, infrastructure in the Territories 
is particularly vulnerable to catastrophic failure (e.g., due to 
isolation and topography). The Commission allows carriers flexibility 
to describe how they address the criteria it specify, rather than adopt 
specific mandates, because the Commission recognizes that disaster 
preparation and recovery challenges are often unique to each carrier. 
Should a disaster similar to Maria and Irma occur, improvements to 
disaster preparation and recovery practices could mitigate at least a 
portion of the billions of dollars of damage to communications networks 
that the Territories experienced as a result of that disaster. The 
Commission acknowledges that there are costs associated with hardening 
efforts and with obtaining the Bureau's approval. However, even if 
those costs are substantial, the benefits of the requirements the 
Commission adopts in terms of potential saved lives and avoided 
economic devastation are even greater in light of the heightened risks 
faced by the Territories and the potential for devastation. The 
Commission also believes that the specific measures it will evaluate 
are warranted. For instance, the Commission previously found that after 
the 2017 hurricane season, ``unlike other affected areas, Puerto Rico 
and the U.S. Virgin Islands have struggled to restore electrical 
power'' and that there was a ``continued lack of commercial power and 
long-term reliance on backup generators''--showing the importance of 
ensuring backup power. Similarly, monitoring network performance and 
preparing for emergencies with the intent of maintaining continuity of 
operations are both common-sense steps to help ensure that networks 
will be more likely to withstand harm or be restored quickly after 
disasters. Finally, the flexibility the Commission allows will mitigate 
the costs of this requirement compared to a more rigid and prescriptive 
approach.
    132. Mandatory Participation in the DIRS. The Commission also 
conditions Stage 2 funding on recipients' agreement to perform 
mandatory DIRS reporting. DIRS is an efficient, web-based system that 
communications companies, including wireless, wireline, broadcast, and 
cable providers, can use to report communications infrastructure status 
and situational awareness information during times of crisis. While 
DIRS reporting has been

[[Page 59960]]

voluntary, in practice there is strong industry participation. The 
Commission determines whether to activate DIRS in conjunction with FEMA 
and announce the areas that will be covered to participating providers 
via public notice and email. DIRS is and will be a valuable resource 
for providing situational awareness of outages to industry and Federal, 
state, and local agencies.
    133. Following normal Commission protocol, the Commission will 
continue to activate DIRS and notify providers of its reporting 
schedule, typically in advance of an expected impending disaster event. 
Also pursuant to normal Commission protocol, DIRS reporting obligations 
will typically begin prior to onset of a disaster event, with reports 
due each time a provider's restoration status changes. The only 
difference from ordinary Commission protocol is that DIRS reporting 
will be mandatory for Stage 2 support recipients for the duration of 
the support. Note, however, that the Commission will not impose a 
penalty or sanctions if reporting deadline(s) cannot be met for reasons 
reasonably beyond a participant's control. In that case, the Commission 
requires instead that providers begin and/or resume DIRS reporting 
according to the reporting schedule as soon as they are reasonably able 
to do so. This approach ensures that participants can dedicate their 
resources to addressing network outages and basic communications needs 
when it would be unreasonable for them to divert these resources to 
DIRS reporting. Stage 2 funding recipients that fail to meet this 
mandatory DIRS reporting obligation may be subject to penalties and 
sanctions through the withholding of Stage 2 funds and/or 
disqualification from participating in future Stage 3 mobile support.
    134. Mandatory DIRS reporting for Stage 2 funding recipients will 
increase carriers' accountability by allowing the Commission to track 
their recovery efforts, which it expects will lead to improved 
hardening efforts. Moreover, DIRS reporting during prior natural 
disasters has assisted not only this agency, but also the Commission's 
Federal, state, and local partners, including during Hurricanes Irma 
and Maria, aiding in recovery efforts. While the Commission has not 
made DIRS reporting mandatory elsewhere, it believes mandatory 
reporting for Stage 2 funding recipients is justified by the 
Territories' heightened risk of natural disaster, insularity, and 
specific challenges with disaster preparation and recovery. It also is 
warranted because ``during Hurricane Maria, the major incumbent local 
exchange carrier and cable providers in Puerto Rico and the USVI did 
not provide detailed information in DIRS,'' hindering effectiveness. 
The Commission does not require daily reporting via DIRS, and instead 
it requires only updates on changes in restoration status when they 
occur. This approach alleviates concerns some commenters raised related 
to administrative burden. Moreover, imposing no penalty or sanction for 
a provider's reasonable failure to report, as outlined in this 
document, addresses concerns about the infeasibility of reporting. The 
Commission finds that the public benefit of mandatory DIRS reporting 
for Stage 2 funding recipients overwhelmingly outweighs any concerns 
carriers have about the potential burdens of reporting during post-
disaster recovery efforts.
    135. Cooperation Regarding Centralized Coordination. In addition to 
complying with any local legal mandates regarding information sharing, 
the Commission also expects Stage 2 funding recipients to make every 
effort to cooperate with local authorities (e.g., PRTRB and the U.S. 
Virgin Islands' PSC) in sharing information about proposed and actual 
construction projects, both during Stage 2-funded deployment and during 
any future post-disaster recovery efforts. Cooperation will allow other 
entities an opportunity to request joint access and cooperate on joint 
construction thus facilitating efficient use of the Commission's Stage 
2 support and expediting restoration.
    136. Wireless Resiliency Cooperative Framework. Although the 
Wireless Resiliency Cooperative Framework is not mandatory, the 
Commission strongly encourages Stage 2 support recipients to continue 
to comply voluntarily. The Commission expects that compliance with the 
Framework would carry many benefits and commenters were in consensus 
that the flexibility of the Framework allowed wireless carriers to 
quickly and effectively tailor response efforts to individual 
communities without undue administrative delays. As the Commission 
considers longer-term Stage 3 support for mobile providers, it expects 
the Commission will evaluate again whether to require support 
recipients to commit to compliance with the Framework.
    137. Reasonably Comparable Rates. Stage 2 recipients must meet the 
same reasonably comparable rates standard for recipients as the 
Commission requires of all high-cost recipients, consistent with its 
proposal in the PR-USVI Fund NPRM. The Commission considers rates 
reasonably comparable if they are ``at or below the applicable 
benchmark to be announced annually by public notice issued by the 
Wireline Competition Bureau.'' Although PRTC and Viya argue that 
additional funds are needed to cover their costs to rebuild, neither 
carrier provided evidence that rates in Puerto Rico and the U.S. Virgin 
Islands are substantially higher than in the contiguous United States. 
TCT states that there is little if any evidence of higher rates in the 
Territories. The evidence the Commission has from the Urban Rate Survey 
suggests that urban voice rates in Puerto Rico may be lower than the 
mainland urban average and that the urban broadband rates in Puerto 
Rico may be higher than on the mainland, but still within the 
comparability benchmarks. Accordingly, the Commission finds no reason 
to deviate from the typical rates standard.
    138. No Double Recovery. The Commission adopts the same protections 
against double recovery as it did with Stage 1 support. The Commission 
agrees with Free Press that support recipients should not be entitled 
to support for the same losses reimbursed by insurance funds. 
Therefore, to protect against duplicative recovery and guard against 
waste, fraud, and abuse, Stage 2 support recipients may not use their 
support for costs that are (or will be) reimbursed by other sources, 
including Federal or local government aid or insurance reimbursements. 
Further, carriers are prohibited from using Stage 2 support for other 
purposes, such as the retirement of company debt unrelated to eligible 
expenditures, or other expenses not directly related to fulfilling the 
obligations for support recipients set forth in the Order.
    139. Other Disaster Preparation and Response Requirements. At this 
time, the Commission declines to adopt additional specific obligations 
as a condition of receiving Stage 2 support, such as requiring 
compliance with TIA-222-H standards or any other industry standards or 
best practices promulgated by the FCC's Communications Security, 
Reliability and Interoperability Council. The Commission does not want 
to be unduly prescriptive in how carriers manage their networks or 
operations. The Commission also declines to adopt proposals outside the 
scope of the Commission's authority and expertise, such as a 
Commission-created local building or manufacturing industry in Puerto 
Rico or a comprehensive island-wide disaster recovery and contingency 
plan to be supervised by the Commission. While the Commission

[[Page 59961]]

appreciates the role of first-responders and emergency services, 
hospitals, and local organizations, particularly in the aftermath of a 
natural disaster, it declines to require specified entities to receive 
priority access to communications networks in the context of this 
proceeding. The Commission can more uniformly and effectively address 
any such issues in proceedings regarding priority communications 
nationwide.

III. Order on Reconsideration

    140. The Commission also takes this opportunity to dispose of two 
petitions related to Uniendo a Puerto Rico Fund and Connect USVI Fund 
advance support and Stage 1 support.
    141. The Commission denies WorldNet's request to obtain support 
equal to the amount of advance support it declined. The Commission 
recognizes that WorldNet acted with incomplete information, because it 
declined the advance support at a time when the Commission had stated 
that the advance support would be offset by future support, but the 
Commission later decided to treat the advance support as a one-time 
payment that would not be offset. The Commission must be responsible 
stewards of the Fund, however, and will not award funding meant for 
immediate post-hurricane relief after the immediate period has ended.
    142. Discussion. The Commission denies WorldNet's petition. First, 
to the extent WorldNet seeks clarification of the 2018 PR-USVI Fund 
Order, 83 FR 27515, June 13, 2018, the Commission notes that the Order 
stated that WorldNet would continue to receive its monthly frozen 
support and did not make any other specific mention of WorldNet, so it 
is clear the Commission did not confer any additional benefit on 
WorldNet.
    143. As to WorldNet's reconsideration request, the Commission's 
statutory obligation is to act as responsible stewards of the Fund. 
Therefore, the Commission must provide support only for specific and 
statutorily permissible purposes. In the 2017 Hurricane Funding Order, 
the Commission provided advance support for the express purpose of 
injecting additional resources into immediate restoration after the 
hurricanes. The Commission measured this period of immediate need as 
seven months, ending with the April 2018 payments. Payment to WorldNet 
following the conclusion of that immediate need period would not serve 
the time-sensitive purpose of the support. It was WorldNet's own 
determination not to accept the accelerated financial assistance for 
large repairs and immediate restoration of its essential 
communications. WorldNet does not dispute that its petition was filed 
in June 2018, following the immediate need period and only after the 
Commission had decided not to offset the support. Further, in that 
petition, WorldNet made no showing that it was still in the process of 
restoring its network other than to aver that the lack of support is an 
``undue disadvantage'' to WorldNet and its customers. WorldNet now 
provides information that it claims supports its entitlement to the 
advanced funding, specifically that it has not recovered all of its 
costs to restore and repair its network and that it anticipates 
significant additional costs to further harden its network against 
future disasters. While the Commission understands the financial 
hardship that continued restoration and hardening presents for 
WorldNet, those challenges are shared by other carriers in the 
Territories, and the fact that work still remains does not justify the 
provision of time-restricted support after that period has passed. 
Moreover, WorldNet received over $1.3 million in Stage 1 support for 
restoration of its network in August 2018. Therefore, the Commission 
finds that WorldNet was aware of its options for obtaining high-cost 
support after the hurricanes and, while it may not have covered all 
costs, received significant support for restoring its facilities and 
service.
    144. Last, despite its argument, WorldNet is not being 
distinguished or disqualified from receiving any benefit offered to the 
providers in Puerto Rico by the 2017 Hurricane Funding Order. WorldNet 
had the same opportunity as every other eligible carrier to elect 
support; it simply elected not to receive the advance funds within the 
timeframe identified in the 2017 Hurricane Funding Order. The 
Commission determined that the pace of restoring critical 
communications networks would have only been further delayed by 
offsetting advance support. The Commission's decision to change course 
and decline to offset the support against future disbursements is 
entirely within its authority, and such decisions do not result in any 
obligation by the Commission to retroactively cure the consequences of 
its decision. When WorldNet declined to take advance funds, that 
support was repurposed by the Fund, and is no longer available for 
disbursement. Although the Commission understands WorldNet lost out on 
an opportunity for additional restoration support, it fails to 
articulate compelling grounds for reconsideration, and its 
responsibility to use the Fund efficiently outweighs the fairness-based 
justification that WorldNet sets forth.
    145. The Commission denies the petition for reconsideration of Tri-
County Telephone Association, Inc. (TCT) requesting the Commission 
revisit several of its decisions in the 2018 PR-USVI Fund Order. The 
Commission finds the petition fails on the merits, and the Commission 
affirms its decision to issue Stage 1 support immediately.
    146. Discussion. The Commission finds it was not required to 
undertake notice and comment for Stage 1 support and provided 
acceptable justification for doing so. Specifically, the 2018 PR-USVI 
Fund Order stated that using notice and comment procedures for the 
interim and one-time relief would delay its effectiveness, would be 
impracticable and contrary to the public interest. It further reasoned 
that due to the emergency situation and the devastation to 
communications networks caused by the hurricanes, the sooner providers 
received additional funds, the sooner service could be restored to the 
people of Puerto Rico and the U.S. Virgin Islands. Accordingly, it 
invoked the good cause exception of the Administrative Procedure Act 
(APA), which ``excuses notice and comment in emergency situations, or 
where delay could result in serious harm.'' TCT uses the Sorenson case 
to support its argument that the Commission was required to undergo 
notice and comment; however, that case is clearly distinguishable. In 
that case, the court rejected ``the threat of impending fiscal peril'' 
to a Commission program as an emergency within the meaning of the APA. 
Here, the Commission was responding to two back-to-back natural 
disasters that already occurred and created widespread damage that 
posed an acute and ongoing threat to public safety and the economy, 
compounded by the fact that the 2018 hurricane season was impending. 
Therefore, unlike in Sorenson, evidence of an emergency sufficient to 
forego notice and comment is clear rather than merely speculative. 
Indeed, many commenters later noted the benefits of receiving Stage 1 
support quickly to their recovery efforts.
    147. The Commission also finds it adequately sized support for 
Stage 1. TCT argues the amount is ``pulled out of thin air'' and that 
the Commission made no attempt to explain how the figures were 
determined. But that is not true. As TCT itself concedes, the amount of 
high-cost support provided in Stage 1 was about equal to the amount 
provided in advance funds to the

[[Page 59962]]

carriers in the Territories. The Commission based the amount of 
advanced funds previously provided on what the carriers already 
received under the high-cost program, although the Commission was 
careful to explain how the allocation in Stage 1 differed from that of 
frozen support. The Commission provided advance funds for a period of 
about seven months. Likewise, the Commission provided that Stage 1 
support was for short-term expenditures through June 30, 2019, about 
seven to ten months from the time of disbursement. The Commission 
stated that it provided Stage 1 funds based on the determination that 
restoration was still incomplete. The Commission finds it was clear in 
how it determined the size and allocation of Stage 1 support. The 
Commission also finds it was reasonable for it to establish another 
stage of support, roughly equal to the previous disbursement in both 
amount and timeframe, to support similar restoration activities. The 
Commission notes that TCT has not provided any evidence or data to 
support its argument that the amount of Stage 1 funding was 
inappropriate.
    148. TCT also argues that the Commission's reasoning behind the 
allocation of Stage 1 support between Puerto Rico and USVI is 
unexplained. The Commission's allocation between territories was based 
on ``differences in landmass, geography, topography, and population,'' 
as TCT concedes. The Commission also stated that the difference was 
based on ``the significant financial and operational challenges faced 
by carriers in both areas, and the past and current availability of 
high-cost support to carriers.'' The Commission finds this 
justification to be sufficient and again note that TCT fails to offer 
an alternative or any data to show why the Commission's approach was 
improper. Further, even if the Commission were to accept TCT's 
contribution-based standing argument, it is unclear how the specific 
allocation of funds between Puerto Rico and the U.S. Virgin Islands (as 
opposed to the overall amount of funds) could have caused it any 
injury.
    149. Additionally, TCT argues the Commission should have outlined 
the acceptable uses for Stage 1 and that the Commission did not provide 
USAC enough direction on how to audit recipients. The Commission 
disagrees. Even TCT acknowledges that the Commission specified limited 
purposes for Stage 1 support. The Commission went further, however, 
stating that the support was to be used ``to help restore and improve 
coverage and service quality to pre-hurricane levels and to help 
safeguard their equipment against future natural disasters.'' The 
Commission specifically identified appropriate uses for support, 
including ``repairing, removing, reinforcing or relocating network 
elements damaged during the hurricanes; repairing or restoring customer 
premise equipment; replacing, rebuilding, and reinforcing the physical 
outside plant (poles, fiber, nodes, coaxial cables, and the like); 
hardening networks against future disasters; and increasing network 
resilience to power outages or other potential service interruptions 
due to natural disasters.'' The Commission also articulated purposes 
for which the support may not be used. Moreover, all recipients of 
Stage 1 were required to be or become ETCs to receive support, and all 
ETCs have specific high-cost record-keeping and reporting obligations, 
which can be used for auditing. The Commission directed USAC 
specifically to audit Stage 1 recipients based on all of this 
direction. USAC has a great deal of experience and effective procedures 
in place for auditing recipients of the Fund for compliance with the 
Act and the Commission's rules, so contrary to TCT's argument, the 
Commission finds that USAC has more than sufficient information to 
complete the directed audits.
    150. The Commission also finds that it did not unlawfully expand 
the scope of the high-cost fund in contravention of congressional 
intent by establishing Stage 1 support. Congress recognized that 
universal service is ever evolving and requires the Commission to 
consider a variety of factors in determining what services are 
supported by the Fund, including public health and safety. The 
Commission found that Stage 1 support was necessary as an immediate, 
one-time distribution of funds to existing carriers to continue the 
repair and restoration required to allow existing consumers to use the 
essential communications networks of the Territories in the aftermath 
of enormous destruction from multiple natural disasters. In the 2017 
Hurricane Funding Order, the Commission determined that, based on the 
circumstances and lack of access to services comparable to urban areas 
on the mainland, the entirety of Puerto Rico and USVI were 
presumptively high-cost. Further, the Commission had already provided 
many recipients of Stage 1 support significant amounts of USF support 
for years to deploy and maintain those networks, and if a provider was 
not already an ETC, it was required to become one in order to receive 
Stage 1 support. To become an ETC, a provider must satisfy several 
Commission requirements. Just as the Commission previously found it may 
condition receipt of high-cost support on offering minimum levels of 
broadband service, it affirms that it can provide support for 
maintenance of ETC networks in the Territories, thereby facilitating 
the ability of the ETCs receiving support to provide access to advanced 
telecommunications and information services for all consumers.

IV. Procedural Matters

A. Paperwork Reduction Act

    151. This document contains new information collection requirements 
subject to the PRA. 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 information collection requirements contained in this 
proceeding. In addition, the Commission notes that pursuant to the 
Small Business Paperwork Relief Act of 2002, the Commission previously 
sought specific comment on how it might further reduce the information 
collection burden for small business concerns with fewer than 25 
employees. In the Report and Order, the Commission adopts new rules 
relating to the Uniendo a Puerto Rico Fund and the Connect USVI Fund. 
The Commission has assessed the effects of the new rules on small 
business concerns. The Commission finds that the rules and procedures 
adopted here will minimize the information collection burden on 
affected entities, including small businesses.

B. Congressional Review Act

    152. The Commission has determined, and the Administrator of the 
Office of Information and Regulatory Affairs, OMB, concurs that this 
rule is non-major under the Congressional Review Act, 5 U.S.C. 804(2). 
The Commission will send a copy of the Report and Order and Order on 
Reconsideration to Congress and the Government Accountability Office 
pursuant to 5 U.S.C. 801(a)(1)(A).
    153. Final Regulatory Flexibility Certification. The Regulatory 
Flexibility Act of 1980, as amended (RFA), requires that a regulatory 
flexibility analysis be prepared for rulemaking proceedings, unless the 
agency certifies that ``the rule will not have a significant economic 
impact on a substantial number of small entities.'' The RFA generally 
defines ``small entity'' as having the same meaning as the terms 
``small business,''

[[Page 59963]]

``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.
    154. The Order adopts annual support to rebuild, improve, and 
expand fixed and mobile services in Puerto Rico and the U.S. Virgin 
Islands. The Order makes support available to any eligible fixed or 
mobile provider that obtains an ETC designation, using a competitive 
and subscriber-based process, respectively. Fifteen fixed and mobile 
carriers in Puerto Rico and the U.S. Virgin Islands currently receive 
high-cost support.
    155. Although impossible to predict, even assuming other carriers 
will obtain an ETC designation to receive the additional support 
provided in the Order, the Commission does not anticipate the proposed 
rule to affect more than 25 providers out of the 737 providers 
currently receiving high-cost support. Accordingly, the Commission 
anticipates that the Order will not affect a substantial number of 
carriers, and so the Commission does not anticipate that it will affect 
a substantial number of small entities.
    156. Therefore, the Commission certifies that the requirements of 
the Order will not have a significant economic impact on a substantial 
number of small entities.

V. Ordering Clauses

    157. Accordingly, it is ordered, pursuant to the authority 
contained in sections 1, 2, 4(i), 214, 254, 303(r), 403, and 405 of the 
Communications Act of 1934, as amended, 47 U.S.C. 151, 152, 154(i), 
214, 254, 303(r), 403, and 405, Sec. Sec.  1.1, 1.3, 1.425 and 1.429 of 
the Commission's rules, 47 CFR 1.1, 1.3, 1.425 and 1.429, that the 
Report and Order on Reconsideration is adopted. The Report and Order 
and Order on Reconsideration shall be effective 30 days after 
publication in the Federal Register, except for portions containing 
information collection requirements in Sec. Sec.  54.313, 54.316, 
54.1503, 54.1505, 54.1508, and 54.1513 through 54.1515 that have not 
been approved by OMB. The Federal Communications Commission will 
publish a document in the Federal Register announcing the effective 
date of these provisions.
    158. It is further ordered that part 54 of the Commission's rules 
is amended as set forth in the Order, and that any such rule amendments 
that contain new or modified information collection requirements that 
require approval by the OMB under the Paperwork Reduction Act shall be 
effective after announcement in the Federal Register of OMB approval of 
the rules, and on the effective date announced therein.
    159. It is further ordered that, pursuant to the authority 
contained in sections 1, 2, 4(i), 254, and 303(r) of the Communications 
Act of 1934, as amended, 47 U.S.C. 151, 152, 154(i), 254, 303(r), 
Sec. Sec.  1.1 and 1.425 of the Commission's rules, 47 CFR 1.1, 1.425, 
that the Petition for Reconsideration filed by Tri-County Telephone 
Association, Inc. on July 13, 2018 is denied.
    160. It is further ordered that, pursuant to the authority 
contained in in sections 1, 2, 4(i), 254, and 303(r) of the 
Communications Act of 1934, as amended, 47 U.S.C. 151, 152, 154(i), 
254, 303(r), Sec. Sec.  1.1 and 1.425 of the Commission's rules, 47 CFR 
1.1, 1.425, that the Petition for Clarification Or, In The Alternative, 
Reconsideration filed by WorldNet Telecommunications, Inc. on June 28, 
2018 is denied.
    161. It is further ordered that, pursuant to the authority 
contained in 1, 2, 4(i), 254, and 303(r) of the Communications Act of 
1934, as amended, 47 U.S.C. 151, 152, 154(i), 254, 303(r), Sec. Sec.  
1.1, 1.3, and 1.425 of the Commission's rules, 47 CFR 1.1, 1.3, 1.425, 
that the Petition of Puerto Rico Telephone Company, Inc. for the 
Creation of an Emergency Universal Service Fund filed on Jan. 19, 2018, 
the Emergency Petition of Virgin Islands Telephone Corp. dba Viya for 
Wireline Hurricane Restoration Support filed on Dec. 6, 2017, the 
Vitelcom Cellular, Inc. Emergency Petition filed on Oct. 5, 2017, and 
the PRWireless, Inc. dba Open Mobile Emergency Petition for Waiver and 
Other Relief filed on Oct. 4, 2017 are dismissed.

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.
Marlene Dortch,
Secretary.

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 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.

Subpart D--Universal Service Support for High Cost Areas

0
2. Amend Sec.  54.313 by revising paragraphs (e) introductory text and 
(e)(2) introductory text and adding paragraphs (n) and (o) to read as 
follows:


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

* * * * *
    (e) In addition to the information and certifications in paragraph 
(a) of this section, the requirements in paragraphs (e)(1) and (2) of 
this section apply to recipients of Phase II, Remote Areas Fund, 
Uniendo a Puerto Rico Fund Stage 2 fixed support, and Connect USVI Fund 
Stage 2 fixed support:
* * * * *
    (2) Any recipient of Phase II, Remote Areas Fund, Uniendo a Puerto 
Rico Fund Stage 2 fixed, or Connect USVI Fund Stage 2 fixed support 
awarded through a competitive bidding or application process shall 
provide:
* * * * *
    (n) Recipients of Uniendo a Puerto Rico Fund Stage 2 fixed and 
mobile support and Connect USVI Fund Stage 2 fixed and mobile support 
shall certify that such support was not used for costs that are (or 
will be) reimbursed by other sources of support, including Federal or 
local government aid or insurance reimbursements; and that support was 
not used for other purposes, such as the retirement of company debt 
unrelated to eligible expenditures, or other expenses not directly 
related to network restoration, hardening, and expansion consistent 
with the framework of the Uniendo a Puerto Rico Fund or Connect USVI 
Fund, respectively. Recipients of fixed and mobile support from Stage 2 
of the Uniendo a Puerto Rico Fund and the Connect USVI Fund shall 
certify that they have conducted an annual review of the documentation 
required by Sec.  54.1515(a) through (c) to determine the need for and 
to implement changes or revisions to disaster preparation and recovery 
documentation.
    (o) Recipients of Uniendo a Puerto Rico Fund or Connect USVI Fund 
Stage 2 mobile support shall certify that they are in compliance with 
all requirements in this part for receipt of such support to continue 
receiving Stage 2 mobile disbursements.

[[Page 59964]]


0
3. Amend Sec.  54.316 by adding paragraphs (a)(7) and (b)(7) to read as 
follows:


Sec.  54.316  Broadband deployment reporting and certification 
requirements for high-cost recipients.

    (a) * * *
    (7) Recipients subject to the requirements of Sec.  54.1506 shall 
report the number of locations for Puerto Rico and the U.S. Virgin 
Islands and locational information, including geocodes, where they are 
offering service at the requisite speeds. Recipients shall also report 
the technologies they use to serve those locations.
    (b) * * *
    (7) Recipients of Uniendo a Puerto Rico Fund Stage 2 fixed and 
Connect USVI Fund fixed Stage 2 fixed support shall provide: On an 
annual basis by the last business day of the second calendar month 
following each service milestone in Sec.  54.1506, a certification that 
by the end of the prior support year, it was offering broadband meeting 
the requisite public interest obligations specified in Sec.  54.1507 to 
the required percentage of its supported locations in Puerto Rico and 
the U.S. Virgin Islands as set forth in Sec.  54.5406. The annual 
certification shall quantify the carrier's progress toward or, as 
applicable, completion of deployment in accordance with the resilience 
and redundancy commitments in its application and in accordance with 
the detailed network plan it submitted to the Wireline Competition 
Bureau.
0
4. Add subpart O to read as follows:
Subpart O--Uniendo a Puerto Rico Fund and Connect USVI Fund
Sec.
54.1501 Uniendo a Puerto Rico Fund and Connect USVI Fund--Stage 2 
for service to fixed locations.
54.1502 Geographic areas eligible for Stage 2 fixed support.
54.1503 Geographic area and locations to be served by Stage 2 fixed 
support recipients.
54.1504 Term of Stage 2 fixed support and phase-down of legacy fixed 
support.
54.1505 Stage 2 fixed support application process.
54.1506 Stage 2 fixed support deployment milestones.
54.1507 Stage 2 public interest obligations for service to fixed 
locations.
54.1508 Letter of credit for Stage 2 fixed support recipients.
54.1509 Uniendo a Puerto Rico Fund and the Connect USVI Fund--Stage 
2 for mobile service.
54.1510 Stage 2 mobile carrier eligibility.
54.1511 Appropriate uses of Stage 2 mobile support.
54.1512 Geographic area eligible for Stage 2 mobile support.
54.1513 Provision of Stage 2 mobile support.
54.1514 Stage 2 mobile additional annual reporting.
54.1515 Disaster preparation and response measures.


Sec.  54.1501  Uniendo a Puerto Rico Fund and Connect USVI Fund--Stage 
2 for service to fixed locations.

    The Commission will use a competitive application process to 
determine the recipients of high-cost universal service support for 
offering voice and broadband service to fixed locations, and the amount 
of support that they may receive from Stage 2 of the fixed Uniendo a 
Puerto Rico Fund and of the fixed Connect USVI Fund for specific 
geographic areas in Puerto Rico and the U.S. Virgin Islands, 
respectively, subject to applicable procedures following the selection 
of competitive applications.


Sec.  54.1502  Geographic areas eligible for Stage 2 fixed support.

    High-cost universal service support may be made available for Stage 
2 of the fixed Uniendo a Puerto Rico Fund and the fixed Connect USVI 
Fund for all areas of Puerto Rico and the U.S. Virgin Islands, 
respectively, as announced by public notice.


Sec.  54.1503  Geographic area and locations to be served by Stage 2 
fixed support recipients.

    (a) For Stage 2 of the fixed Uniendo a Puerto Rico Fund, proposals 
will be accepted for each municipio in Puerto Rico.
    (b) For Stage 2 of the fixed Connect USVI Fund, proposals will be 
accepted for one geographic area composed of St. John and St. Thomas 
islands together, and a second geographic area of St. Croix island.
    (c) For both Funds, all locations must be served within each 
defined geographic area by the deployment milestone as defined in Sec.  
54.1506. The number of supported locations will be identified for each 
geographic area in the territories by public notice.


Sec.  54.1504  Term of Stage 2 fixed support and phase-down of legacy 
fixed support.

    (a) Term of support. Support awarded through Stage 2 of the fixed 
Uniendo a Puerto Rico Fund and of the fixed Connect USVI Fund shall be 
provided for ten years.
    (b) Phase-down of legacy support. Stage 2 of the fixed Uniendo a 
Puerto Rico and of the fixed Connect USVI Fund shall replace the legacy 
frozen high-cost support for the Territories. Beginning on a date 
determined by the Wireline Competition Bureau and announced by public 
notice following authorization of a winning application, frozen support 
recipient carriers will receive \2/3\ frozen fixed support amortized 
for the first 12 months following the date announced by public notice; 
\1/3\ frozen fixed support amortized over the second 12-month period; 
and zero frozen support thereafter.


Sec.  54.1505  Stage 2 fixed support application process.

    (a) Provider eligibility. A provider shall be eligible to submit an 
application for support from Stage 2 of the fixed Uniendo a Puerto Rico 
Fund or of the fixed Connect USVI Fund if it had its own fixed network 
and provided broadband service in Puerto Rico or the U.S. Virgin 
Islands, respectively, according to its June 2018 FCC Form 477 data. A 
provider must obtain eligible telecommunications carrier designation no 
later than sixty (60) days after public notice of selection to receive 
fixed support. Any entity that is awarded support but fails to obtain 
ETC designation within sixty (60) days shall be considered in default 
and will not be eligible to receive high-cost funding.
    (b) Application processing. No application will be considered 
unless it has been submitted in an acceptable form during the period 
specified by public notice. No applications submitted or demonstrations 
made at any other time shall be accepted or considered.
    (c) Application format. All applications must be substantially in 
the format as specified and announced by the Wireline Competition 
Bureau.
    (1) Any application that, as of the submission deadline, either 
does not identify the applicant seeking support as specified in the 
public notice announcing application procedures or does not include 
required certifications shall be denied.
    (2) An applicant may be afforded an opportunity to make minor 
modifications to amend its application or correct defects noted by the 
applicant, the Commission, the Administrator, or other parties. Minor 
modifications include correcting typographical errors in the 
application and supplying non-material information that was 
inadvertently omitted or was not available at the time the application 
was submitted.
    (3) Applications to which major modifications are made after the 
deadline for submitting proposals shall be denied. Major modifications 
may include, but are not limited to, any changes in the ownership of 
the applicant that constitute an assignment or change of control, or 
the identity of

[[Page 59965]]

the applicant, or the certifications required in the application.
    (d) Application contents. In addition to providing information 
required by the Wireline Competition Bureau, any applicant for support 
from Stage 2 of the fixed Uniendo a Puerto Rico Fund or of the fixed 
Connect USVI Fund shall:
    (1) Include ownership information as set forth in Sec.  1.2112(a) 
of this chapter;
    (2) Submit a detailed network plan and documents evidencing 
adequate financing for the project;
    (3) Disclose its status as an eligible telecommunications carrier 
to the extent applicable and certify that it acknowledges that it must 
be designated as an eligible telecommunications carrier for the area in 
which it will receive support prior to being authorized to receive 
support;
    (4) Describe the technology or technologies that will be used to 
provide service for each application; and
    (5) To the extent that an applicant plans to use spectrum to offer 
its voice and broadband services, demonstrate it has the proper 
authorizations, if applicable, and access to operate on the spectrum it 
intends to use, and that the spectrum resources will be sufficient to 
cover peak network usage and deliver the minimum performance 
requirements to serve all of the fixed locations in eligible areas, and 
certify that it will retain its access to the spectrum for the term of 
support; and
    (6) Provide a letter from a bank meeting the eligibility 
requirements outlined in Sec.  54.1508 committing to issue an 
irrevocable stand-by letter of credit, in the required form, to the 
winning applicant. The letter shall at a minimum provide the dollar 
amount of the letter of credit and the issuing bank's agreement to 
follow the terms and conditions of the Commission's model letter of 
credit.
    (e) Identification of winning applicant. After receipt and review 
of the proposals, a public notice shall identify each winning applicant 
that may be authorized to receive support from Stage 2 of the fixed 
Uniendo a Puerto Rico Fund and the fixed Connect USVI Fund support 
after the winning applicant submits a letter of credit and an 
accompanying opinion letter, as described in this section, in a form 
acceptable to the Commission. Each such winning applicant shall submit 
a letter of credit and accompanying opinion letter in a form acceptable 
to the Commission no later than the number of days provided by public 
notice.
    (f) Authorization to receive support. After receipt of all 
necessary information, a public notice will identify each winning 
applicant that is authorized to receive Uniendo a Puerto Rico Fund and 
the Connect USVI Fund Stage 2 fixed support.


Sec.  54.1506  Stage 2 fixed support deployment milestones.

    Recipients of support from Stage 2 of the fixed Uniendo a Puerto 
Rico Fund and the fixed Connect USVI Fund must complete deployment to 
at least 40 percent of supported locations at the end of the third year 
of support, at least 60 percent at the end of the fourth year, at least 
80 percent at the end of the fifth year, and 100 percent by the end of 
the sixth year. Compliance with the percentage of completion shall be 
determined based on the total number of supported locations in each 
geographic area. Recipients will be subject to the notification and 
default rules in Sec.  54.320(d).


Sec.  54.1507  Stage 2 public interest obligations for service to fixed 
locations.

    (a) Recipients of Stage 2 Uniendo a Puerto Rico and the Connect 
USVI Fund fixed support are required to offer broadband service with 
latency suitable for real-time applications, including Voice over 
internet Protocol, and usage capacity that is reasonably comparable to 
comparable offerings in urban areas, at rates that are reasonably 
comparable to rates for comparable offerings in urban areas.
    (1) For purposes of determining reasonable comparable usage 
capacity, recipients are presumed to meet this requirement if they meet 
or exceed the usage level announced by public notice issued by the 
Wireline Competition Bureau.
    (2) For purposes of determining reasonable comparability of rates, 
recipients are presumed to meet this requirement if they offer rates at 
or below the applicable benchmark to be announced annually by public 
notice issued by the Wireline Competition Bureau, or at or below the 
non-promotional prices charged for a comparable fixed wireline service 
in urban areas in the state or U.S. Territory where the eligible 
telecommunications carrier receives support.
    (b) Support recipients are required to offer broadband service 
meeting the performance standards as proposed in their selected 
applications, as follows:
    (1) Actual speeds of at least 25 Mbps downstream and 3 Mbps 
upstream, and a minimum usage allowance of 200 GB per month or an 
amount that reflects the average usage of a majority of fixed broadband 
customers, using Measuring Broadband America data or a similar data 
source, whichever is higher, and announced annually by public notice 
issued by the Wireline Competition Bureau over the 10-year term.
    (2) Actual speeds of at least 100 Mbps downstream and 20 Mbps 
upstream and at least 2 terabytes of monthly usage.
    (3) Actual speeds of at least 1 Gigabit per second downstream and 
500 Mbps upstream and at least 2 terabytes of monthly usage.
    (c) For each of the tiers in paragraphs (b)(1) through (3) of this 
section, support recipients are required to meet one of two latency 
performance levels:
    (1) Low latency recipients will be required to meet 95 percent or 
more of all peak period measurements of network round trip latency at 
or below 100 milliseconds; and
    (2) High latency recipients will be required to meet 95 percent or 
more of all peak period measurements of network round trip latency at 
or below 750 ms and, with respect to voice performance, and to 
demonstrate a score of four or higher using the Mean Opinion Score 
(MOS).


Sec.  54.1508  Letter of credit for stage 2 fixed support recipients.

    (a) Letter of credit. Before being authorized to receive support 
from Stage 2 of the fixed Uniendo a Puerto Rico Fund or the fixed 
Connect USVI Fund, a winning applicant shall obtain an irrevocable 
standby letter of credit which shall be acceptable in all respects to 
the Commission. No later than the number of days provided by public 
notice, the applicant shall submit a letter from a bank meeting the 
eligibility requirements outlined in this section committing to issue 
an irrevocable stand-by letter of credit, in the required form, to the 
winning applicant. The letter shall at a minimum provide the dollar 
amount of the letter of credit and the issuing bank's agreement to 
follow the terms and conditions of the Commission's model letter of 
credit. The letter of credit must remain open until the recipient has 
certified it has deployed broadband and voice service meeting the 
requirements in this subpart to 100% of the required number of 
locations, and Universal Service Administrative Company (USAC) has 
verified that the entity has fully deployed.
    (b) Value. Each recipient authorized to receive the Uniendo a 
Puerto Rico Fund and the Connect USVI Fund Stage 2 fixed support shall 
maintain the standby letter of credit or multiple standby letters of 
credit in an amount equal to at a minimum the amount of fixed support 
that has been disbursed and that will be disbursed in the coming

[[Page 59966]]

year, until the USAC has verified that the recipient met the final 
service milestone.
    (1) Once the recipient has met its 60 percent service milestone, it 
may obtain a new letter of credit or renew its existing letter of 
credit so that it is valued at a minimum at 90 percent of the total 
support amount already disbursed plus the amount that will be disbursed 
in the coming year.
    (2) Once the recipient has met its 80 percent service milestone, it 
may obtain a new letter of credit or renew its existing letter of 
credit so that it is valued at a minimum at 80 percent of the total 
support that has been disbursed plus the amount that will be disbursed 
in the coming year.
    (c) Acceptable bank issuing letter of credit. The bank issuing the 
letter of credit shall be acceptable to the Commission. A bank that is 
acceptable to the Commission is:
    (1) Any United States bank:
    (i) That is insured by the Federal Deposit Insurance Corporation; 
and
    (ii) That has a bank safety rating issued by Weiss of B- or better; 
or
    (2) CoBank, so long as it maintains assets that place it among the 
100 largest United States Banks, determined on basis of total assets as 
of the calendar year immediately preceding the issuance of the letter 
of credit and it has a long-term unsecured credit rating issued by 
Standard & Poor's of BBB- or better (or an equivalent rating from 
another nationally recognized credit rating agency); or
    (3) The National Rural Utilities Cooperative Finance Corporation, 
so long as it maintains assets that place it among the 100 largest 
United States Banks, determined on basis of total assets as of the 
calendar year immediately preceding the issuance of the letter of 
credit and it has a long-term unsecured credit rating issued by 
Standard & Poor's of BBB- or better (or an equivalent rating from 
another nationally recognized credit rating agency); or
    (4) Any non-United States bank:
    (i) That is among the 100 largest non-U.S. banks in the world, 
determined on the basis of total assets as of the end of the calendar 
year immediately preceding the issuance of the letter of credit 
(determined on a U.S. dollar equivalent basis as of such date);
    (ii) Has a branch office in the District of Columbia or such other 
branch office agreed to by the Commission;
    (iii) Has a long-term unsecured credit rating issued by a widely-
recognized credit rating agency that is equivalent to a BBB- or better 
rating by Standard & Poor's; and
    (iv) Issues the letter of credit payable in United States dollars
    (d) Bankruptcy opinion letter. A winning applicant of the Uniendo a 
Puerto Rico Fund and the Connect USVI Fund Stage 2 fixed support shall 
provide with its letter of credit an opinion letter from its legal 
counsel clearly stating, subject only to customary assumptions, 
limitations, and qualifications, that in a proceeding under Title 11 of 
the United States Code, 11 U.S.C. 101 et seq. (the ``Bankruptcy 
Code''), the bankruptcy court would not treat the letter of credit or 
proceeds of the letter of credit as property of the winning bidder's 
bankruptcy estate under section 541 of the Bankruptcy Code.
    (e) Authorization for Stage 2 support. Authorization to receive the 
Uniendo a Puerto Rico Fund and the Connect USVI Fund Stage 2 fixed 
support is conditioned upon full and timely performance of all of the 
requirements set forth in this section, and any additional terms and 
conditions upon which the support was granted.
    (1) Failure by a Uniendo a Puerto Rico Fund and the Connect USVI 
Fund Stage 2 fixed support recipient to meet its service milestones as 
required by Sec.  54.1506 will trigger reporting obligations and the 
withholding of support as described in Sec.  54.320(c). Failure to come 
into full compliance within 12 months will trigger a recovery action by 
the USAC. If the Uniendo a Puerto Rico Fund or Connect USVI Fund Stage 
2 fixed support recipient does not repay the requisite amount of 
support within six months, the USAC will be entitled to draw the entire 
amount of the letter of credit and may disqualify the Uniendo a Puerto 
Rico Fund or Connect USVI Fund Stage 2 fixed support recipient from the 
receipt of any or all universal service support.
    (2) A default will be evidenced by a letter issued by the Chief of 
the Wireline Competition Bureau, or the Chief's designee, which letter, 
attached to a standby letter of credit draw certificate, shall be 
sufficient for a draw on the standby letter of credit for the entire 
amount of the standby letter of credit.


Sec.  54.1509  Uniendo a Puerto Rico Fund and the Connect USVI Fund--
Stage 2 for mobile service.

    (a) Term of support. Uniendo a Puerto Rico Fund or the Connect USVI 
Fund Stage 2 mobile support shall be provided to eligible mobile 
carriers that elect to make a commitment to its eligible service area 
for a three-year term to begin on a date determined by the Wireline 
Competition Bureau.
    (b) Election of support. Eligible mobile carriers as provided in 
Sec.  54.1510 shall have a one-time option to elect to participate in 
Stage 2 of the mobile Uniendo a Puerto Rico Fund and the mobile Connect 
USVI Fund for the eligible service area. An eligible mobile carrier may 
elect to receive all or a subset of the Stage 2 support for which it is 
eligible. FCC will publish the order adopting Stage 2 of the Uniendo a 
Puerto Rico Fund and the Connect USVI Fund in the Federal Register. To 
participate, an eligible provider must submit an election to 
participate within 30 days following that publication. Each provider 
must provide to the Commission through the Commission's Electronic 
Comment Filing System as well as by emailing a copy to 
[email protected] either a renewal of its Stage 1 certification 
specifying the number of subscribers (voice or broadband internet 
access service) it served in the territory as of June 30, 2017; or a 
new certification specifying the number of subscribers (voice or 
broadband internet access service) it served in the territory as of 
June 30, 2017, along with accompanying evidence. Each provider will 
make two simultaneous elections. First, each provider may elect to 
receive Stage 2 support for which it is eligible to restore, harden, 
and expand networks capable of providing 4G LTE or better services. 
Second, each provider may elect to receive Stage 2 support for which it 
is eligible to deploy networks capable of providing 5G service.
    (c) Support amounts. A carrier exercising the election of support 
specified in paragraph (b) of this section shall receive a pro rata 
share of the available mobile support based on the number of 
subscribers reported in its June 2017 FCC Form 477. Each carrier may 
receive up to 75% of its eligible pro rata support amount to restore, 
harden, and expand networks capable of provider 4G LTE or better 
services meeting the minimum service requirements provided in Sec.  
54.1514(b). Each carrier may also elect to receive up to 25% of its 
eligible pro rata support amount to deploy networks capable of 
providing 5G service.
    (d) Support payments. Each eligible mobile provider that elects to 
participate in Stage 2 of the Uniendo a Puerto Rico Fund or the USVI 
Connect Fund will receive monthly installments of its pro rata share of 
mobile support amortized over the three-year support period provided in 
paragraph (a) of this section. Each recipient's pro rata share will be 
adjusted according to its election to receive or decline support for 4G 
LTE or 5G deployment. A mobile provider

[[Page 59967]]

that fails to meet its commitment to use its eligible support for 4G 
LTE or 5G deployment shall return an amount equal the unused amount of 
Stage 2 support to the Administrator within 30 days following the end 
of the three-year support period.
    (e) Phase-down of legacy support. An eligible mobile carrier may 
elect or decline to participate in Stage 2 of the mobile Uniendo a 
Puerto Rico and/or the mobile Connect USVI Fund. Beginning on a date to 
be determined by the Bureau and announced by public notice, an eligible 
mobile carrier that declines to participate in Stage 2 will receive 
one-half of its prior frozen fixed support amortized for a 12-month 
period and zero fixed support thereafter.


Sec.  54.1510  Stage 2 mobile carrier eligibility.

    Facilities-based mobile carriers that provided mobile wireless 
services to consumers in the Territories as reported by their June 2017 
FCC Form 477 shall be eligible to participate in Stage 2 of the mobile 
Uniendo a Puerto Rico Fund and the mobile Connect USVI Fund, 
respectively.


Sec.  54.1511  Appropriate uses of Stage 2 mobile support.

    Recipients of Uniendo a Puerto Rico and Connect USVI Stage 2 mobile 
support shall use the support solely for:
    (a) Deployment, replacement, and upgrade at 4G LTE or better 
technological network level, as specified in this part; and
    (b) Hardening of 4G LTE or better network facilities to help 
prevent future damage from natural disasters.


Sec.  54.1512  Geographic area eligible for Stage 2 mobile support.

    Uniendo a Puerto Rico Fund and Connect USVI Fund Stage 2 mobile 
support may be used for all geographic areas of Puerto Rico or of the 
U.S. Virgin Islands within a recipient's designated eligible 
telecommunications carrier service area consistent with the parameters 
of Stage 2 of the Uniendo a Puerto Rico Fund and the Connect USVI Fund.


Sec.  54.1513  Provision of Stage 2 mobile support.

    (a) A recipient of Stage 2 mobile support shall commit to, at a 
minimum, the full restoration of its pre-hurricane network coverage 
area, as determined by FCC Form 477 reporting standards, at a level of 
service that meets or exceeds pre-hurricane network levels and at 
reasonably comparable levels to those services and rates available in 
urban areas.
    (b) Each recipient of Stage 2 mobile support shall demonstrate 
mobile network coverage that is equal to or greater than 66 percent of 
its pre-hurricane coverage by the end of year two of the Stage 2 term 
of support, and that is equal to or greater than 100 percent of its 
pre-hurricane coverage by the end of year three of the Stage 2 term of 
support.


Sec.  54.1514  Stage 2 mobile additional annual reporting.

    (a) Each recipient of Stage 2 mobile support shall submit no later 
than 30 days following the end of the calendar year reports 
demonstrating and certifying to the fact that its mobile network 
coverage is equal to or greater than 66 percent of its pre-hurricane 
coverage by the end of year two of the Stage 2 term of support and 100 
percent of its pre-hurricane coverage by the end of year three of the 
Stage 2 term of support.
    (1) A recipient of Stage 2 mobile support shall submit with the 
report required by this section the documentation in paragraphs 
(a)(1)(i) through (iii) of this section in support of its milestone 
obligations:
    (i) Electronic shapefiles site coverage plots illustrating the area 
reached by mobile services;
    (ii) A list of all census blocks in the Territories reached by 
mobile services; and
    (iii) Data received or used from drive, drone, and/or scattered 
site tests, analyzing network coverage for mobile services.
    (2) [Reserved]
    (b) Each recipient of Stage 2 mobile support shall report and 
certify, no later than thirty (30) days following the end of the third 
year of the Stage 2 term of support for all eligible areas where a 
provider used Stage 2 support, mobile transmissions supporting voice 
and data to and from the network meeting or exceeding the following:
    (1) For 4G LTE service, outdoor data transmission rates of at least 
10 Mbps download/1 Mbps upload, at least one service plan that includes 
a data allowance of at least 5 GB that is offered to consumers at a 
rate that is reasonable comparable to similar service plans offered by 
mobile wireless providers in urban areas, and latency of 100 
milliseconds or less round trip; and
    (2) For 5G service, outdoor data transmission rates of at least 35 
Mbps download/3 Mbps upload and a plan offered to consumers at a rate 
that is reasonably comparable to similar service plans offered by 
mobile wireless providers in urban areas.
    (c) Each recipient of Stage 2 mobile support shall submit no later 
than thirty (30) days after the end of the third year of the Stage 2 
term of support a certification that it has met the requisite public 
interest obligations in paragraphs (a) and (b) of this section.
    (d) Each recipient of Stage 2 mobile support shall submit no later 
than thirty (30) days following the end of the calendar year an annual 
map reporting the network hardening activities undertaken during the 
prior calendar year. The recipient must submit, along with the map, a 
detailed narrative description of the network hardening activities 
identified and of how it made use of the support to facilitate those 
network hardening activities.
    (e) Each recipient that elects to receive Stage 2 mobile support 
for the deployment of 5G technological networks shall submit an annual 
certification no later than thirty (30) days after the end of each 12-
month period the use of Stage 2 support for the deployment of 5G 
technology to ensure compliance with its commitment. Each recipient 
must report the total cost incurred and total amount of Stage 2 support 
spent related to the deployment of 5G technology during the preceding 
12-month period. Each recipient must describe in detail how it used the 
support for deployment of 5G technology.
    (f) Each report shall be submitted to the Office of the Secretary 
of the Commission, clearly referencing the appropriate docket for the 
Uniendo a Puerto Rico Fund and the Connect USVI Fund; the 
Administrator; and the authority in the U.S. Territory, or Tribal 
governments, as appropriate.
    (g) Recipients of Stage 2 mobile support have a continuing 
obligation to maintain the accuracy and completeness of the information 
provided in their milestone reports. All recipients of Stage 2 mobile 
support shall provide information about any substantial change that may 
be of decisional significance regarding their eligibility for Stage 2 
support and compliance with Uniendo a Puerto Rico Fund and the Connect 
USVI Fund requirements in this section as an update to their milestone 
report submitted to the entities listed in paragraph (f) of this 
section. Such notification of a substantial change, including any 
reduction in the network coverage area being served or any failure to 
comply with any of the Stage 2 requirements in this part, shall be 
submitted within ten (10) business days after the reportable event 
occurs.
    (h) In order for a recipient of Stage 2 mobile support to continue 
to receive mobile support for the following calendar year, it must 
submit the milestone reports required by this

[[Page 59968]]

section by the deadlines set forth in paragraphs (a) through (g) of 
this section.


Sec.  54.1515  Disaster preparation and response measures.

    (a) Each recipient of fixed and mobile support from Stage 2 of the 
Uniendo a Puerto Rico Fund and the Connect USVI Fund shall create, 
maintain, and submit to the Wireline Competition Bureau for its review 
and approval a detailed Disaster Preparation and Response Plan document 
that describes and commits to the methods and procedures that it will 
use, during the period in which it receives Stage 2 support, to prepare 
for and respond to disasters in the Territories, including detailed 
descriptions of methods and processes to strengthen infrastructure; to 
ensure network diversity; to ensure backup power; to monitor its 
network; and to prepare for emergencies.
    (b) Each Stage 2 support recipient shall submit the Disaster 
Preparation and Response Plan to the Bureau for its review and approval 
prior to receiving Stage 2 support. The Bureau shall approve submitted 
Disaster Preparation and Response Plans that are complete and 
thoroughly address the criteria enumerated in paragraph (a) of this 
section. The Bureau shall notify the support recipient of deficiencies 
identified in the Disaster Preparation and Response Plan and withhold 
authorization to receive funding until the support recipient has cured 
the deficiencies. Recipients shall materially comply with the 
representations in the document, once approved.
    (c) Recipients shall amend their Disaster Preparation and Response 
Plan following any material change(s) to internal processes and 
responsibilities and provide the updated Disaster Preparation and 
Response Plan to the Bureau within 10 business days following the 
material change(s).
    (d) Stage 2 support recipients shall use the Disaster Information 
Reporting System for mandatory reporting. (See www.fcc.gov/general/disaster-information-reporting-system-dirs-0 for more information.)

[FR Doc. 2019-22842 Filed 11-6-19; 8:45 am]
 BILLING CODE 6712-01-P