Connect America Fund: A National Broadband Plan for Our Future High-Cost Universal Service Support; ETC Annual Reports and Certifications; Telecommunications Carriers Eligible To Receive Universal Service Support; Connect America Fund-Alaska Plan; Expanding Broadband Service Through the ACAM Program, 57383-57388 [2023-18084]

Agencies

• FEDERAL COMMUNICATIONS COMMISSION

[Federal Register Volume 88, Number 162 (Wednesday, August 23, 2023)]
[Proposed Rules]
[Pages 57383-57388]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-18084]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[WC Docket Nos. 10-90, 14-58, 09-197, 16-271; RM 11868; FCC 23-60; FR 
ID 164476]


Connect America Fund: A National Broadband Plan for Our Future 
High-Cost Universal Service Support; ETC Annual Reports and 
Certifications; Telecommunications Carriers Eligible To Receive 
Universal Service Support; Connect America Fund--Alaska Plan; Expanding 
Broadband Service Through the ACAM Program

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In this document, the Federal Communications Commission (FCC 
or Commission) takes a longer term view and seeks to build a record to 
help the Commission explore methods for modifying the Universal Service 
Fund (USF) high-cost program to promote affordable and available 
broadband services in the years to come.

DATES: Comments are due on or before October 23, 2023, and reply 
comments are due on or before November 21, 2023.

ADDRESSES: You may submit comments, identified by WC Docket Nos. 10-90, 
14-58, 09-197 and 16-271, by any of the following methods:
     Electronic Filers: Comments may be filed electronically 
using the internet by accessing the ECFS: www.fcc.gov/ecfs.
     Paper Filers: Parties who choose to file by paper must 
file an original and one copy of each filing.
    [cir] Filings can be sent by commercial overnight courier, or by 
first-class or overnight U.S. Postal Service mail. All filings must be 
addressed to the Commission's Secretary, Office of the Secretary, 
Federal Communications Commission.
    [cir] Commercial overnight mail (other than U.S. Postal Service 
Express Mail and Priority Mail) must be sent to 9050 Junction Drive, 
Annapolis Junction, MD 20701.
    [cir] U.S. Postal Service first-class, Express, and Priority mail 
must be addressed to 45 L Street NE, Washington, DC 20554.
    [cir] Effective March 19, 2020, and until further notice, the 
Commission no longer accepts any hand or messenger delivered filings. 
This is a temporary measure taken to help protect the health and safety 
of individuals, and to mitigate the transmission of COVID-19. See FCC 
Announces Closure of FCC Headquarters Open Window and Change in Hand-
Delivery Policy, Public Notice, 35 FCC Rcd 2788, 2788-89 (OS 2020).
    Interested parties may file comments and reply comments on or 
before the dates indicated in this document. Comments may be filed 
using the Commission's Electronic Comment Filing System (ECFS). See 
Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121 
(1998).
    Comments and reply comments exceeding ten pages must include a 
short and concise summary of the substantive arguments raised in the 
pleading. Comments and reply comments must also comply with Sec.  1.49 
and all other applicable sections of the Commission's rules. The 
Commission directs all interested parties to include the name of the 
filing party and the date of the filing on each page of their comments 
and reply comments. All parties are encouraged to utilize a table of 
contents, regardless of the length of their submission. The Commission 
also strongly encourages parties to track the organization set forth in 
the Notice of Inquiry (NOI) or the concurrently adopted Notice of 
Proposed Rulemaking (NPRM) in order to facilitate its internal review 
process.
    People with Disabilities. To request materials in accessible 
formats for people with disabilities (braille, large print, electronic 
files, audio format), send an email to [email protected] or call the 
Consumer & Governmental Affairs Bureau at (202) 418-0530.

FOR FURTHER INFORMATION CONTACT: For further information, please 
contact, Jesse Jachman, Telecommunications Access Policy Division, 
Wireline Competition Bureau, at [email protected] or Theodore 
Burmeister, Special Counsel, Telecommunications Access Policy Division, 
Wireline Competition Bureau, at [email protected] or 202-418-
7400.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's NOI in 
WC Docket Nos. 10-90, 14-58, 09-197, 16-271; RM 11868, adopted on July 
23, 2023 and released on July 24, 2023. Due to the COVID-19 pandemic, 
the Commission's headquarters will be closed to the general public 
until further notice. The full text of this document is available at 
the following internet address: https://www.fcc.gov/document/fcc-adopts-plan-bring-reliable-broadband-rural-communities.
    Ex Parte Presentations--Permit-But-Disclose. The proceedings this 
NOI and concurrently adopted NPRM initiate shall be treated as 
``permit-but-disclose'' proceedings in accordance with the Commission's 
ex parte rules. Persons making ex parte presentations must file a copy 
of any written presentation or a memorandum summarizing any oral 
presentation within two business days after the presentation (unless a 
different deadline applicable to the Sunshine period applies).
    In light of the Commission's trust relationship with Tribal Nations 
and its commitment to engage in government-to-government consultation 
with them, it finds the public interest requires a limited modification 
of the ex parte rules in these proceedings. Tribal Nations, like other 
interested parties, should file comments, reply comments, and ex parte 
presentations in the record to put facts and arguments before the 
Commission in a manner such that they may be relied upon in the 
decision-making process consistent with the requirements of the 
Administrative Procedure Act. However, at the option of the Tribe, ex 
parte presentations made during consultations by elected and appointed 
leaders and duly appointed representatives of federally recognized 
Indian Tribes and Alaska Native Villages to Commission decision makers 
shall be exempt from disclosure in permit-but-disclose proceedings and 
exempt from the prohibitions during the Sunshine Agenda period. To be 
clear, while the Commission recognizes

[[Page 57384]]

consultation is critically important, it emphasizes that they will rely 
in its decision-making only on those presentations that are placed in 
the public record for these proceedings.
    Persons making oral ex parte presentations are reminded that 
memoranda summarizing the presentation must (1) list all persons 
attending or otherwise participating in the meeting at which the ex 
parte presentation was made, and (2) summarize all data presented and 
arguments made during the presentation. If the presentation consisted 
in whole or in part of the presentation of data or arguments already 
reflected in the presenter's written comments, memoranda, or other 
filings in the proceeding, the presenter may provide citations to such 
data or arguments in his or her prior comments, memoranda, or other 
filings (specifying the relevant page and/or paragraph numbers where 
such data or arguments can be found) in lieu of summarizing them in the 
memorandum. Documents shown or given to Commission staff during ex 
parte meetings are deemed to be written ex parte presentations and must 
be filed consistent with rule 1.1206(b). In proceedings governed by 
rule 1.49(f) or for which the Commission has made available a method of 
electronic filing, written ex parte presentations and memoranda 
summarizing oral ex parte presentations, and all attachments thereto, 
must be filed through the electronic comment filing system available 
for that proceeding, and must be filed in their native format (e.g., 
.doc, .xml, .ppt, searchable .pdf). Participants in these proceedings 
should familiarize themselves with the Commission's ex parte rules.

I. Introduction

    1. With the NOI, the Commission takes significant next steps in 
achieving its goal of ensuring all consumers, even those living in the 
costliest areas in the nation, have access to affordable and reliable 
broadband service so that they can work, learn, engage, and obtain 
essential services no matter where they live. The Commission also 
focuses on the future and seeks comment on how to reform its high-cost 
programs so that it can continue to efficiently promote broadband 
deployment and meaningfully support networks long term in the face of a 
significantly changing broadband landscape.

II. Notice of Inquiry

    2. The NOI seeks to build a record to help the Commission explore 
methods to ensure universally affordable and available fixed broadband 
services into the future, in light of section 254(c)(1)'s definition of 
universal service as an ``evolving level of . . . service, taking into 
account advances in telecommunications and information technologies and 
services.'' The Commission seeks comment on whether and how it should 
modify its USF high-cost support program considering the anticipated 
deployment in most high-cost areas of robust, scalable, next-generation 
broadband networks offering a minimum of 100/20 Mbps service made 
possible through Commission programs, programs created by the 
Infrastructure Act, and other state and Federal subsidy programs. In 
the past, the high-cost support program largely sought to incrementally 
upgrade deployed broadband network speeds in high-cost areas. In areas 
where robust scalable networks such as fiber are deployed, however, 
future speed upgrades may be relatively low cost. The Commission's 
traditional approach, therefore, may no longer be well-suited to a 
changed broadband landscape. In the Future of USF Report, the 
Commission stated in such landscape, it ``could consider the creation 
of a process to support operating costs that are not recoverable from 
revenues earned when prices are set at just, reasonable, and affordable 
levels and from other sources of income, e.g., governmental grants.'' 
This NOI explores several options for how this could be accomplished, 
including through cost modeling, business case analysis, and 
competitive mechanisms. In addition, given that broadband adoption 
rates in rural areas still lag considerably behind those in urban 
areas, the Commission explores whether the high-cost program's focus 
should be redirected towards a goal of universal broadband adoption and 
affordability. The Commission seeks comment on these approaches and 
invites comment on other approaches for how best to further the 
Commission's universal service goals.
    3. The Commission's focus since the USF/ICC Transformation Order, 
76 FR 73830, November 29, 2011, has been on supporting the deployment 
of new, robust networks and their associated operational costs for a 
limited term. However, providers in high-cost areas that already 
operate such fully deployed networks might not have a business case for 
continuing to operate those networks and provide services absent 
ongoing programmatic support that will augment existing revenues. 
Similarly, providers that receive support under programs such as the 
Broadband, Equity, Access, and Deployment Program (BEAD) that are 
designed to kick-start network deployment without providing support for 
sustained operations may face similar circumstances. Depending on the 
scope of this problem, lack of funding could threaten the 
sustainability of these full-service networks in high-cost areas. 
Accordingly, with the NOI, the Commission will assess the scope of this 
problem and explore whether it should adopt a mechanism or process to 
address, including soliciting information about the best methods for 
determining the support needed by carriers to efficiently maintain 
these full-service networks. The Commission seeks comment on 
appropriate methods of measuring and evaluating the future support 
needs of carriers with full-service networks, particularly where 
providers have received significant upfront Federal and/or state 
funding. The Commission seeks comment on whether differences in how 
providers were previously subsidized should be considered to avoid 
paying for the same costs twice, and if so, how.
    4. The Commission expects this effort will require, at a minimum, 
determining which networks should be considered full service and thus, 
potentially eligible for sustainability support, and which full-service 
networks should be deemed ineligible because their operations are 
economically viable independent of such support. Further, to assess 
economic viability of continued operations, the Commission will need to 
determine capital costs (including the cost of debt and equity), 
operating costs, and the estimated revenues from network over time, 
which in turn requires estimates of penetration rates. In estimating 
expected costs and revenues, the Commission should consider any current 
or expected support and may need to consider expected inflation rates. 
In developing a methodology for determining the need for ongoing 
support for operating expenses, the Commission must also consider how 
often to recalculate the need for support and how it can ensure that 
other past, current, and future support are properly considered. The 
Commission seeks comment on this approach and these considerations 
against the backdrop of the universal service goals adopted in the 
Future of USF Report.
    5. Within its high-cost programs, the Commission has measured 
successful deployment based on meeting and sustaining certain public 
interest obligations, including specific service speeds and latency. 
The Commission expects a support program designed to

[[Page 57385]]

sustain operations would meet consumers' service and pricing needs. The 
Commission seeks comment on what those needs should be. How should the 
Commission define a full-service network, meaning a network potentially 
eligible for sustainability support? Should the Commission factor in 
network performance standards, if any, that the provider was required 
to meet pursuant to the terms and conditions of other Federal or state 
funding, and if so, how? Are there other requirements that the 
Commission should adopt as part of its definition of a full-service 
network?
    6. In addition, to what extent must a full-service network deploy 
service to residential and business locations within an area? Does the 
Commission need to factor in businesses that would take mass market 
service versus ones expected to subscribe to an enterprise service? For 
example, should the Commission require, as a prerequisite to any 
funding, that the network can turn on service in a set number of days, 
e.g., 7-10 days, to each broadband serviceable location identified in 
the Fabric, which serves as the foundation for availability data in the 
National Broadband Map? Should the Commission factor in the deployment 
obligations under other Federal or state programs, and if so, how? 
Should the Commission require a provider claiming to operate a full-
service network to show that it can extend service to any new locations 
within a defined period? What kinds of information would the Commission 
ask such providers to submit to make these showings?
    7. The Commission also seeks comment on whether the definition of a 
full-service network should differ for areas outside the contiguous 
United States or for Tribal lands, and if so, how? How should the 
Commission define Tribal lands when considering the definition of a 
full-service network? What unique characteristics of such areas should 
the Commission consider? Should the Commission evaluate whether, and if 
so, to what extent, those factors impact the carrier through 
individualized reporting, or should the Commission presume that these 
factors generally exist for all carriers serving these areas? For 
example, the Commission has permitted carriers to use Alaska Plan 
support to maintain service to existing locations without upgrade if 
they can demonstrate that they were not able to deploy additional 
service or upgrade their facilities (usually due to limited access to 
middle mile facilities). Should the Commission define a full-service 
network in Alaska or other remote and isolated areas with reference to 
existing service in those areas? Should there be some minimum 
deployment requirement or public interest standards?
    8. The Commission seeks comment on whether it can or should 
leverage its existing cost models, or develop a new model, to estimate 
the monthly costs necessary to sustain a full-service network. If so, 
what would be the key assumptions about the design of the network and 
network engineering? For example, the Connect America Cost Model (CAM) 
assumes a green-field, internet protocol (IP)-based fiber-to-the-
premises network capable of providing both voice-grade access and 
broadband services. The Commission estimates the terminal value of the 
network at the end of a five-year term determined by the book value of 
the assets. Should the Commission use the same assumptions, standards, 
and attributes when referring to a full-service efficient network? What 
would be the appropriate topology of this network? What other 
assumptions, standards, and attributes should the Commission use? For 
example, what is the appropriate geographic unit for evaluating costs 
and revenue, e.g., census blocks or individual locations?
    9. The Commission also seeks comment on how it addresses costs in 
areas in which locations are served by multiple carriers, but not all 
locations are served by all carriers. For example, does the Commission 
need to disaggregate the costs of serving such areas and if so how 
should it do so? Are there common costs for all locations for a carrier 
serving an area that must be taken into account even if the carrier is 
the sole provider for some but not all of the locations in the area?
    10. Currently, the Commission models the forward-looking operating 
costs of an efficient network using a range of data sources organized 
and aligned with relevant cost drivers, i.e., demand and associated 
capital investments. The model estimates the annualized total cost 
(including operating costs) of deploying a network using today's 
technology to all locations within a specified geographic area less an 
assumed per-location expected revenue. When adopting this approach, the 
Commission specifically rejected a proposed model that would limit 
support to brownfield development because, while a brownfield model 
accounts for the cost of initial upgrades to the extent that the 
existing network is not up to standard, a brownfield model does not 
account for replacement capital after an initial capital investment is 
made. Should the Commission use the same approach here, a modified 
version of this approach, or a new approach?
    11. Inputs. What inputs should the Commission use to quantify 
certain operating and capital costs, and what should those costs be, 
e.g., costs associated with making networks scalable to consumer 
demands and needs? In developing the CAM, the Commission took steps to 
account for a range of operating costs by considering, among other 
things, network operations expenses (both plant specific and plant non-
specific, factoring company size and by density), general and 
administrative costs (including property tax indices by state), selling 
and marketing costs, and bad debt. Can this approach be readily adapted 
to estimate the support necessary to sustain networks that have been 
full-service? Are there other factors that should be considered when 
estimating operating costs? Should the Commission adjust the model on a 
routine basis to account for changes to costs and if so, how often 
should this be done?
    12. The CAM uses Annual Charge Factors (ACFs) to capture the cost 
of capital investments that are used over time, accounting for 
depreciation, income taxes, and cost of money. The cost of capital is 
the cost a firm will incur in raising funds in a competitive capital 
market based on a firm's overall systematic risk, and is generally 
estimated as a weighted average of the cost of equity and the cost of 
debt. In order to adopt final values for ACFs, the Commission must make 
certain assumptions regarding asset depreciation, income taxes, and the 
cost of money. For example, CAM determines the terminal value of the 
network based on ``book value'' calculated as the difference between 
investment and economic depreciation, which takes into account the 
economic life of the equipment and infrastructure. To determine a CAM 
input to capture the cost of money, the Commission used an analytical 
approach to establish a ``zone of reasonableness,'' and selected an 
input at the midpoint of that range. What assumptions about each input 
are relevant here?
    13. How should a model supporting full-service networks reflect the 
carrier's composition of capital? Prior models have not recognized 
carrier-specific mixes of debt and equity financing, instead reflecting 
a uniform cost of capital for all carriers subject to a particular 
model. If the Commission were to adopt a uniform cost of capital, how 
would it identify that cost and how often should it be reevaluated? 
Should that evaluation differ, as it does now, between carriers 
operating in price-cap

[[Page 57386]]

areas receiving support through the CAM and rate-of-return carriers 
receiving support through the Alternative Connect America Cost Model? 
How should the Commission evaluate the impact of other sources of 
capital (such as Federal and state grants)? In determining the cost of 
capital, does it matter whether different carriers have different debt-
equity ratios? If a carrier has chosen a relatively expensive form of 
financing, should the Commission provide support that validates that 
choice? Would this approach be consistent with treating carriers 
equally? Are there circumstances in which using a uniform cost of 
capital would create problems? Are such circumstances common? Could the 
waiver process resolve such instances?
    14. Should capital inputs differ for carriers operating in areas 
outside the contiguous United States, and if so, how? For the CAM, the 
Commission incorporated specific factors to generate unique inputs for 
carriers operating in non-contiguous states and territories (such as 
the United States Virgin Islands, Puerto Rico, Alaska, and other 
areas), including those relating to the plant mix, undersea and 
submarine cable, terrain methodology, state-specific inputs, and 
company size. Should these same factors be taken into consideration 
when developing a model for sustaining full-service networks? Should 
other factors be taken into consideration?
    15. Data sources. What objective, up-to-date, and available data 
sources can the Commission use in the development of this cost model? 
Alternatively, or in addition to such sources, should the Commission 
require the submission of accounting and financial information to model 
costs, revenues, past one-off grants, and similar? Should the 
Commission require submission of information on specific and approved 
network plans, to the extent there are any, and associated funding? 
What other kinds of information should the Commission collect to ensure 
realistic cost model and revenue estimates? And how often should this 
information be collected? For example, should it be collected 
periodically (annually or biennially, etc.) or only as current support 
arrangements come to their end, or some other way? What are the 
benefits and costs of different information collection timing choices? 
What would be the benefits of collecting and consolidating such 
information to supplement or replace other general industry research? 
What would be the administrative costs and resources required for 
completing this process? How could the Commission make use of this 
information while avoiding the pitfalls of rate-of-return regulation?
    16. Revenues. How would the Commission model the present value of 
expected revenues of an efficient full-service network? How should the 
Commission account for the fact that providers receiving current 
support must set prices to mass market customers that are reasonably 
comparable to urban rates? For the CAM model, the Commission adopted a 
funding benchmark that takes into account both assumed expected 
revenues per subscriber and an assumed subscription rate, and the model 
calculates support for areas where such assumed revenues do not cover 
costs up to an extremely high cost threshold consistent with the 
budget. For full-service networks, should the Commission similarly take 
into consideration the actual take rate (subscribership) of these 
networks, particularly in and to areas where subscribership is 
influenced by regional factors such as limited income, mobile 
populations, and other factors? How would the Commission measure and 
account for variable investments, and effectiveness, in marketing? 
Should expected take rates differ when measuring revenue and costs?
    17. How should the Commission account for revenue received from 
other Federal and state grants that provide support on a one-time basis 
for deployment or provide continuing support to sustain operations? 
Where urban broadband providers are unsubsidized and not subject to 
meeting a rate benchmarks, urban rates can adjust upwards when costs 
rise. Since rural rates can be set to the urban rate benchmark, could 
the Commission assume any future rural cost increases could be 
recovered by accompanying rural price increases? Is there a reason to 
think that rural costs could rise at rates materially above the rate of 
increase in urban costs? If so, would the requirement to provide 
services that are reasonably comparable to urban services in quality 
and price not allow USF supported providers to fully recover their 
costs?
    18. Updates. How often should the Commission consider updates to an 
ongoing support model? Several commenters in the Future of USF 
proceeding asserted that funding should be made available for network 
improvements responsive to changes in consumer demands. Such changes 
could require adjustments to the model and/or model inputs. How would 
the Commission determine when such changes should or must be made? 
Could this be achieved, consistent with the Commission's past practice, 
by setting service standards and subsidy amounts for a set period, in 
order to grant providers a degree of certainty while allowing periodic 
adjustment? What would an appropriate support term be to offer 
certainty to providers while limiting inefficient payments? Should a 
support term consider the pace of technological development, changing 
geographic and demographic conditions, or other factors? Should updates 
to the model similarly consider such changing circumstances?
    19. Alternatives to a model. The Commission next asks about other 
alternatives to a model. There may be certain disadvantages to the 
model-based approach. For example and based on previous experience, it 
may take some time, several years, to develop and update the model. In 
addition, a model makes certain assumptions of uniformity among 
potential support recipients, including uniform assumptions about cost, 
particularly given terrain and population characteristics, and uniform 
penetration and expected revenues. The CAM, as currently designed does 
not take into consideration other sources of support, such as those 
from the states or Federal agencies. In light of these complications, 
are there any alternatives to a model that the Commission should 
consider?
    20. Given that the adaption of existing models is likely to require 
significant time and investment, should the Commission prioritize other 
approaches? Should the Commission adopt an interim plan for providing 
support while the cost model is developed? For example, as suggested in 
one publication, the Commission could measure the need for universal 
service support by requiring applicants for support to answer certain 
standard financially-oriented questions, the answers to which would 
then be fed into a standard financial model. This model would take into 
account potential sources of finance (including the cost of equity and 
debt and other possible sources of support), the cost of the initial 
build-out (or initial network capex), the relative amounts of fixed and 
success-based capex, the penetration rate and changes in the 
penetration rate over time, and projected revenues. One advantage of 
this approach is that it can permit the Commission to take into account 
the individual characteristics of the applicants for support. The 
Commission seeks comment on this approach.
    21. Since the USF/ICC Transformation Order, the Commission has 
sought to use competitive processes

[[Page 57387]]

to determine support levels. The Commission seeks comment on whether it 
should use such competitive mechanisms going forward to assign 
universal service support obligations and determine support levels, 
either in the context of determining ongoing operating support or more 
generally to achieve its universal service goals. Would it be possible 
to competitively determine support levels following the BEAD Program, 
and are there areas where competitive mechanisms could not be used? 
What obligations should apply to winners of support? One approach for 
using a competitive mechanism would be to change the focus of the high-
cost program from the deployment of networks towards the long-standing 
universal service goals of universal affordability and adoption. The 
most recent internet Access Services Report shows that broadband 
adoption rates in the wealthiest and most dense areas of the country 
are well above 90 percent, but below 40 percent in some of the least 
dense and poorest areas of the country. The Commission seeks comment on 
whether and how the USF high-cost program could be reoriented towards 
closing these substantial digital equity and affordability gaps. Should 
the Commission consider reorienting its high-cost programs towards 
closing the adoption and affordability gaps in high-cost areas?
    22. The Commission also asks about force majeure events and whether 
and how a high-cost program focused on providing ongoing operating 
support should account for these events. Are there events that 
providers cannot reasonably anticipate, or insure against, that will 
materially affect the need for universal service support going forward? 
Are these location-specific events, or is it possible to accommodate 
support needed in responses to these events equally across the United 
States and territories? If the USF were to cover certain unforeseeable 
costs that a carrier could not reasonably anticipate, such as generally 
rare weather-related events (e.g., hurricanes, volcanic eruptions, 
tornados, floods), should the Commission establish and administer a 
separate funding mechanism? Or would it be simpler to incorporate such 
costs in the broader universal service program? The Commission also 
seeks information about the role private, commercial or government 
insurance can play in helping to offset the financial harm caused by 
these events.
    23. Area eligibility. The Commission next seeks comment on areas 
and locations eligible to receive support. When would a full service 
network be deemed or become economically viable without continuing 
support, and thus become ineligible for support? Consistent with past 
Commission policy, it expects to preclude support to any overbuilt 
locations, i.e., locations where an unsubsidized network provider 
offers broadband services comparable to those in urban areas at 
comparable prices and seeks comment on maintaining this policy going 
forward. What parameters should the Commission place around such a 
restriction? Should the Commission also preclude support to locations 
or areas where future overbuild is likely to occur? How would the 
Commission identify these areas? How would the Commission ensure the 
overbuild rates would remain comparable to urban rates if the 
subsidized provider were to exit the market? If the Commission does not 
provide support in areas with an unsubsidized competitor, how would it 
ensure the overbuild rates would remain comparable to urban rates if 
the subsidized provider were to exit the market?
    24. The Commission has an obligation to limit support to carriers 
to no more than necessary and to encourage carriers to be prudent and 
efficient in their expenditures, including operating as well as capital 
expenses. First and foremost, the Commission must ensure that its 
support mechanisms remain responsive to consumer needs by balancing the 
need for affordable broadband service against the burden on 
contributors to the USF. How should the Commission determine a budget 
for ongoing support to sustain operations of a full-service network 
operating in high-cost areas while protecting the interests of 
ratepayers? Can the Commission use a cost model to set a budget or 
should it use some other means, and if so, what should those means be?
    25. Further, to ensure that support does not continue for a longer 
time period than carriers will need such support, the Commission 
expects that a fixed term for support is necessary to permit the 
Commission to revisit carriers' support eligibility. A set support term 
has the advantage of providing firms with good incentives to reduce 
costs from the start and adds predictability to revenue estimates. 
Incentives for cost reduction arise because, for the duration of the 
promised payments, any cost reductions directly increase the provider's 
profit. The Commission seeks comment on this position.
    26. How long should the support term be and what data or 
assumptions should the Commission use to evaluate term length? Should 
it be based on predictions regarding how quickly consumer demand will 
change or on routine evaluations of factors that define high-cost 
areas, such as population density? How should the Commission coordinate 
the support term and the schedule for updating the model? Should 
support terms differ based on the probability of unsubsidized 
competition developing? Should there be automatic triggers for cutting 
off funding, perhaps with a glide path, if, for example, population 
reaches a certain density? Should the Commission reserve the right to 
revisit ongoing commitments in the light of radical technological 
change? How should the Commission account for the pace of technological 
development and how that may end up affecting service demand/
expectations, while also balancing the effect that would have 
potentially on support amounts and contributions?
    27. The Commission's current high-cost programs include specific, 
defined service obligations for deployment and specific reporting 
requirements. In addition, the Commission requires recipients of high-
cost support to participate in performance testing to monitor 
compliance with speed and latency requirements, which includes 
conducting, at a minimum, one download test and one upload test per 
testing hour at each subscriber test location over a week time frame 
each quarter and to provide that information to the Commission. 
Performance testing has protected ratepayers' investment and ensured 
that carriers receiving universal service high-cost support deploy 
networks that meet the performance standards they promised to deliver. 
To ensure accountability in the use of support to sustain operation of 
full-service networks, should the Commission consider adopting similar 
rules for a future funding mechanism or should it require annual 
reporting regarding the state of facilities, business operations, and 
other factors? Should the Commission require annual or quarterly 
performance testing and if so, what would be the parameters of such 
testing? If performance testing shows that a provider has failed to 
meet the requirements imposed for continuing support receipt, should 
the support be placed on hold until the problems are remediated? What 
kind of time limit should the Commission impose to remediate? Should 
the Commission implement any mechanisms similar to those used for other 
high-cost programs, such as receipt of a letter of credit, that would 
enable recovery of disbursed support in the event of default? Should

[[Page 57388]]

the Commission limit these requirements to service providers that are 
currently receiving support?

III. Procedural Matters

A. Paperwork Reduction Act

    28. The document does not contain proposed information collection 
requirements subject to the Paperwork Reduction Act of 1995, Public Law 
104-13. In addition, therefore, it does not contain any proposed 
information collection burden for small business concerns with fewer 
than 25 employees, pursuant to the Small Business Paperwork Relief Act 
of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4).

IV. Ordering Clauses

    29. It is further ordered that, pursuant to the authority contained 
in sections 4(i), 214, 218-220, 254, 303(r), and 403 of the 
Communications Act of 1934, as amended, 47 U.S.C. 154(i), 214, 218-220, 
254, 303(r), and 403, and Sec.  1.1 of the Commission's rules, 47 CFR 
1.1, this Notice of Inquiry is adopted. The Notice of Inquiry will be 
effective upon publication in the Federal Register, with comment dates 
indicated therein.

Federal Communications Commission.
Marlene Dortch,
Secretary.
[FR Doc. 2023-18084 Filed 8-22-23; 8:45 am]
BILLING CODE 6712-01-P