[Federal Register Volume 60, Number 194 (Friday, October 6, 1995)]
[Proposed Rules]
[Pages 52359-52362]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-25036]



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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 36
[CC Docket No. 80-286; FCC 95-416]

Proposed Six-Month Extension of the Interim Indexed Cap on the 
Total Level of the Universal Service Fund
AGENCY: Federal Communications Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Federal Communications Commission proposes to extend the 
duration of the interim indexed cap on the total level of the Universal 
Service Fund (USF) for an additional six months. The cap was intended 
to be 

[[Page 52360]]

effective as an interim measure moderating the growth of the USF during 
the pendency of a broader rulemaking revising the Part 36 
jurisdictional separations rules governing the USF. The Federal 
Communications Commission proposes to extend the interim cap, which 
expires January 1, 1996, for an additional six months while that 
rulemaking is completed.

DATES: Comments must be filed on or before October 18, 1995, and reply 
comments must be filed on or before October 27, 1995.

ADDRESSES: Comments should be addressed to Office of the Secretary, 
Federal Communications Commission, 1919 M Street, NW., Washington, DC 
20554.

FOR FURTHER INFORMATION CONTACT:
Deborah A. Dupont, Senior Attorney, 202-418-0873, Accounting and Audits 
Division, Common Carrier Bureau.

SUPPLEMENTARY INFORMATION:

I. Introduction

    In this Notice of Proposed Rulemaking we propose extending the 
duration of the two-year indexed cap (``interim cap'') on the total 
level of the Universal Service Fund (``USF'').\1\ The cap was intended 
to be effective as an interim measure moderating the growth of the USF 
during the pendency of our broader rulemaking revising the Part 36 
jurisdictional separations rules governing the USF.\2\ We propose to 
extend the interim cap for an additional six months while we complete 
that rulemaking.

    \1\ 47 CFR 36.601(c) (1994). Under the interim cap, growth in 
the total level of the USF is indexed to growth in the total number 
of working loops. Id.; see also Amendment of Part 36 of The 
Commission's Rules And Establishment of a Joint Board, Report and 
Order, 9 FCC Rcd 303, 305, para. 20 (1993) (Interim Order). A 
working loop is ``[a] revenue producing pair of wires, or its 
equivalent, between a customer's station and the central office from 
which the station is served.'' 47 CFR Part 36, Appendix-Glossary 
(1994).
    \2\ Interim Order, supra note 1, at 303, paras. 1-2.
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    2. We request comment on our proposed extension of the interim cap. 
We also refer the proposed extension of the interim cap on the Federal-
State Joint Board in this proceeding for a recommended decision, as 
required by Section 410(c) of the Communications Act of 1934, as 
amended.\3\

    \3\ 47 U.S.C. 410(c).
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    3. To continue to moderate the growth of the USF effectively during 
the entire rulemaking period, the six-month extension must be effective 
by the January 1, 1996 expiration \4\ of the interim cap. For this 
reason, and because we are proposing only to extend the current interim 
rules for a limited duration, we set a relatively short comment cycle. 
Comments will be due on October 18, 1985, and reply comments will be 
due on October 27, 1995.

    \4\ 47 CFR 36.601(c).
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II. Background

    4. The USF rules were adopted in 1984 to promote universally 
available telephone services at reasonable rates.\5\ The rules allow 
local exchange carriers (``LECs'') with an average unseparated loop 
cost per working loop \6\ (``average cost per loop'') above the 
assistance threshold to allocate a percentage of these costs to the 
interstate jurisdiction.\7\ The current rules offer the most assistance 
to smaller LEC study areas \8\ with higher average cost per loop,\9\ 
although all study areas with average cost per loop above the 
assistance threshold receive some assistance.\10\

    \5\ Amendment of Part 67 of the Commission's Rules and 
Establishment of a Joint Board, Decision and Order, 96 FCC 2d 781, 
794, para. 29 (1984).
    \6\ The costs included in the unseparated loop costs are 
enumerated in 47 CFR 36.621(a) (1994). The number of working loops 
within a LEC study area is defined in 47 CFR 36.611(a)(8) (1994). 
The average unseparated loop cost per working loop and national 
average unseparated loop cost per working loop are defined in 47 CFR 
36.622 (1994).
    \7\ LECs with average cost per loop above 115% of the national 
average cost per loop can allocate a specified percentage of these 
costs to the interstate jurisdiction. 47 CFR 36.631 (c), (d) (1994). 
This allocation is in addition to the interstate allocation allowed 
under our general jurisdictional separations rules. See 47 CFR 
36.154(c) (1994).
    \8\ 47 CFR 36.631(c) (allowing LEC study areas with 200,000 or 
fewer working loops to allocate to the interstate jurisdiction 65% 
or more of their average cost per loop above 115% of the national 
average cost per loop) with Sec. 36.631(d) (allowing LEC study areas 
with greater than 200,000 working loops to allocate to the 
interstate jurisdiction 60% or more of their average cost per loop 
above 200% of the national average cost per loop and 10% to 30% of 
their average cost per loop above 115% and at or below 200% of the 
national average cost per loop).
    \9\ Compare 47 CFR 36.631(c)(1) (allowing LEC study areas with 
200,000 or fewer working loops to allocate to the interstate 
jurisdiction 65% of their average cost per loop above 115% and at or 
below 150% of the national average cost per loop) with 
Sec. 36.631(c)(2) (allowing LEC study areas with 200,000 or fewer 
working loops to allocate to the interstate jurisdiction 75% of 
their average cost per loop above 150% of the national average cost 
per loop); compare Sec. 36.631(d)(1) (allowing LEC study areas with 
greater than 200,000 working loops to allocate to the interstate 
jurisdiction 10% of their average cost per loop above 115% and at or 
below 160% of the national average cost per loop) with 
Sec. 36.631(d)(4) (allowing LEC study areas with greater than 
200,000 working loops to allocate to the interstate jurisdiction 75% 
of their average cost per loop above 250% of the national average 
cost per loop).
    \10\ LECs of any size with average cost per loop above 115% of 
the national average cost per loop can allocate some portion of 
these costs to the interstate jurisdiction. 47 CFR 36.631 (c), (d).
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    5. In 1993, in response to pronounced and erratic growth in the 
total level of the USF, we stated our intention to reappraise the USF 
high-cost assistance mechanisms to determine whether changes were 
needed to better serve our underlying public policy goals.\11\ The 
completion of the eight-year USF phase-in period and ``numerous 
regulatory, technological, and market changes in the telecommunications 
industry'' also supported a reevaluation of the high-cost assistance 
mechanisms at that time.\12\ We intended to address possible changes in 
the Part 36 USF rules through a notice of proposed rulemaking.\13\ An 
indexed cap on the total level of the USF was imposed for the purpose 
of moderating growth in the USF for the anticipated duration of that 
rulemaking period.\14\ The interim cap expires on January 1, 1996.\15\

    \11\ Amendment of Part 36 of The Commission's Rules And 
Establishment of a Joint Board, Notice of Proposed Rulemaking, FCC 
Rec 7114, 7114-15, paras. 2, 11-15 (1993) (Interim Notice). 58 FR 
48815, September 20, 1993.
    \12\ Interim Order, supra note 1, at 305, para. 15.
    \13\ Id. at 303, paras. 1-2.
    \14\ Id. at 303, para. 1.
    \15\ 47 CFR 36.601(c).
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    6. In order to focus the issues in advance of the proposed 
rulemaking,\16\ we requested comments on several policy questions 
relating to the goals and effects of high-cost assistance.\17\ We also 
requested comment on two broad alternative approaches to the high-cost 
assistance mechanisms of Part 36.\18\ Under the first approach, 
assistance would be based on actual reported costs, as is the case 
under our present rules.\19\ Under the second, proxy factors reasonably 
correlated with either the need for assistance or with costs would be 
used to determine assistance.\20\

    \16\ Amendment of Part 36 of The Commission's Rules And 
Establishment of a Joint Board, Notice of Inquiry, 9 FCC Rec 7404, 
7406 n.5 (1994) 59 FR 46606, September 9, 1994.
    \17\ Id. at 7406, para. 2.
    \18\ Id.
    \19\ Id. at 7414-15, para. 26.
    \20\ Id. at 7426-27, paras. 61-64.
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    7. On July 13, 1995, we issued a Notice of Proposed Rulemaking and 
Notice of Inquiry (``Notice'') proposing revisions to our USF rules. 
The Notice requested comments by September 12 and reply comments by 
October 12.\21\ The Notice invited comment on three proposals for 
revising our USF rules.\22\ The first proposal presented three specific 
alternative modifications to the existing rules that would continue to 

[[Page 52361]]
base high-cost assistance on actual costs reported by LECs.\23\ Under 
the second proposal, assistance would be distributed on the basis of 
factors related to the cost of providing service rather than on the 
basis of actual reported costs.\24\ The third proposal suggested the 
distribution of assistance among the States, with State utility 
commissions deciding the allocation of assistance among the carriers 
serving the State under distribution plans developed under Commission 
guidelines and reviewed by the Commission.\25\ In addition to the three 
proposals, comment was solicited on the use of credits, or customer 
vouchers, directing assistance to LECs selected by the customer.\26\ 
Finally, the Notice invited comment on the abolition, revision, or 
combination with USF assistance of dial equipment minute (``DEM'') 
weighting, which currently allows LEC study areas with fewer than 
50,000 loops to allocate part of their local switching costs to the 
interstate jurisdiction.\27\

    \21\ Amendment of Part 36 of The Commission's Rules And 
Establishment of a Joint Board, CC Docket No. 80-286, FCC 95-282, 
36, para. 91 (released July 13, 1995), 60 FR 46803, September 8, 
1995.
    \22\ Id. at 10, para. 17.
    \23\ Id, at 17, paras. 37-38, at 22, para. 47, at 23-24, para. 
51.
    \24\ Id. at 25-31, paras. 56-75.
    \25\ Id. at 32, paras. 76-77.
    \26\ Id. at 10, para. 17.
    \27\ Id. at 7-9, paras. 9-12.
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    8. On August 31, we granted requests from interested parties, 
including the Alaska Public Utilities Commission, for an extension of 
time for the filing of comments and reply comments, because we were 
persuaded that an extension would serve the public interest.\28\ We 
noted that an extension would encourage more detailed analysis by 
interested parties of the complex issues presented in the Notice for 
their consideration.\29\ The new deadlines for filing comments are 
October 10 and November 9, 1995.\30\

    \28\ Amendment of Part 36 of the Commission's Rules and 
Establishment of a Joint Board, Order, CC Docket No. 80-286, DA 95-
1876, 2 para. 4 (released September 1, 1995).
    \29\ Id.
    \30\ Id. at 2, para. 5.
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III. Discussion

    9. We proposed the interim cap for the purpose of moderating growth 
in the total level of the USF for the duration of an intended 
rulemaking that would address possible permanent changes to the USF 
rules.\31\ In imposing the interim cap, we noted that previous changes 
to the jurisdictional separations rules involved lengthy phase-in 
periods to ease the transition for affected carriers.\32\ Since the 
intended rulemaking could result in new USF rules retargeting 
assistance, we concluded that the interim cap would facilitate our 
ability to implement the new rules in a timely manner.\33\

    \31\ Interim Notice, supra note 11, at 7114, paras. 1-2.
    \32\ Interim Order, supra note 1, at 305, paras. 17-18.
    \33\ Id. at 305, paras. 16-18.
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    10. We note that the Commission had limited the duration of the 
interim cap to two years in the belief that two years would be 
sufficient for the completion of the rulemaking.\34\ We specifically 
stated that should rulemaking conclude prior to the expiration of the 
cap, the new rules would replace the interim cap.\35\ The issues 
addressed in this rulemaking are complex, however, and despite diligent 
effort by the Commission staff and interested parties, it is now clear 
that their resolution will take more time than the anticipated two 
years.

    \34\ Interim Notice, supra note 11, at 7114, para. 4.
    \35\ Id. at 7114 n. 2; Interim Order, supra note 1 at 306, para. 
24.
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    11. In view of the progress in the rulemaking process to date, we 
believe that an additional six months should be sufficient to complete 
it. Given the scope of the proposals presently under consideration for 
amending the jurisdictional separations rules,\36\ we conclude that the 
extension of the interim cap for the purpose of continuing to moderate 
the growth of the USF for the remainder of the rulemaking period is 
prudent. We propose extending the interim cap for an additional six 
months while we complete the rulemaking. We seek comment on this 
proposed extension of the interim rules. We also invite interested 
parties to propose longer or shorter extensions, with accompanying 
justifications for the length of time proposed.

    \36\ See supra para. 7.
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IV. Procedural Matters

A. Ex Parte

    12. This is a non-restricted notice and comment rulemaking 
proceeding. ``Ex parte'' presentations are permitted, except during the 
Sunshine Agenda period, provided they are disclosed as provided in the 
Commission's rules.\37\

    \37\ See generally 47 CFR 1.1202, 1.1203, 1.1206(a) (1994).
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B. Regulatory Flexibility

    13. We certify that the Regulatory Flexibility Act of 1980 does not 
apply to this rulemaking proceeding because if the proposals in this 
proceeding are adopted, there will not be a significant economic impact 
on a substantial number of small business entities, as defined by 
Section 601(3) of the Regulatory Flexibility Act.\38\ Because of the 
nature of local exchange and access service, the Commission has 
concluded that LECs, including small LECs, are dominant in their fields 
of operation and therefore are not ``small entities'' as defined by 
that act.\39\ The Secretary shall send a copy of this Notice of 
Proposed Rulemaking, including the certification, to the Chief Counsel 
for Advocacy of the Small Business Administration in accordance with 
Section 603(a) of that act.\40\

    \38\ 5 U.S.C. 601(3).
    \39\ See MTS and WATS Market Structure, 93 FCC 2d 241, 338-39 
(1983).
    \40\ 5 U.S.C. 603(a).
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C. Comment Dates

    14. We invite comment on the proposals and tentative conclusions 
set forth above. Pursuant to applicable procedures set forth in 
Sections 1.415 and 1.419 of the Commission's Rules,\41\ interested 
parties may file comments on or before October 18, 1995, and reply 
comments on or before October 27, 1995. To file formally in this 
proceeding, you must file an original and four copies of all comments, 
reply comments, and supporting comments. If you want each Commissioner 
to receive a personal copy of your comments, you must file an original 
plus nine copies. You should send comments and reply comments to Office 
of the Secretary, Federal Communications Commission, Washington, D.C. 
20554. Parties should send one copy of any documents filed in this 
docket to the Commission's copy contractor, International Transcription 
Service (ITS), 2100 M Street, N.W., Suite 140, Washington, D.C. 20037. 
We also ask that parties send a copy of their comments to each member 
of the Federal State Joint Board and its staff, as indicated in the 
attached service list. Comments and reply comments will be available 
for public inspection during regular business hours in the FCC 
Reference Center, Room 239, 1919 M Street, N.W., Washington, D.C. 
20554.

    \41\ 47 CFR 1.415, 1.419 (1994).
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V. Ordering Clauses

    15. Accordingly, it is ordered that, pursuant to Sections 1, 4(i), 
4(j), and 403 of the Communications Act of 1934, as amended, 47 U.S.C. 
Sec. Sec. 151, 154(i), 154(j), and 403, notice is hereby given of 
proposed interim amendments to Part 36, Subpart F of the Commission's 
Rules, 47 C.F.R. Part 36, Subpart F, as described in the Notice of 
Proposed Rulemaking.
    16. It is further ordered, pursuant to Section 410(c) of the 
Communications Act of 1934, as amended, 47 U.S.C. 

[[Page 52362]]
410(c), that the issues relating to interim amendments to Part 36, 
Subpart F of the Commission's Rules, 47 C.F.R. Part 36, Subpart F, as 
described in the Notice of Proposed Rulemaking, shall be and hereby are 
referred to the Federal State Joint Board established in this 
proceeding for a recommended decision.

List of Subjects in 47 CFR Part 36

    Communications commoncarriers; Reporting and recordkeeping 
requirements; Telephone; Uniform System of Accounts.

Federal Communications Commission.
William F. Caton,
Acting Secretary.

Federal-State Joint Board Service List

The Honorable Sharon L. Nelson, Chairman; Washington Utilities and 
Transportation Commission; Chandler Plaza Building; 1300 South Evergeen 
Park Drive, S.W.; Olympia, Washington 98504-7250
The Honorable Cheryl L. Parrino, Chair; Wisconsin Public Service 
Commission; Post Office Box 7854; Madison, Wisconsin 53707-7854
The Honorable Stephen O. Hewlett, Commissioner; Tennessee Public 
Service Commission; 460 James Robertson Parkway; Nashville, Tennessee 
37243-0505
The Honorable Laska Schoenfelder, Chairman; South Dakota Public 
Utilities Commission; State Capitol Building; Pierre, South Dakota 
57501-5070
The Honorable Reed E. Hundt, Chairman; Federal Communications 
Commission; 1919 M Street, N.W.--Room 814; Washington, D.C. 20554
The Honorable Andrew C. Barrett, Commissioner; Federal Communications 
Commission; 1919 M Street, N.W.--Room 826, Stop 0105; Washington, D.C. 
20554
The Honorable Susan Ness, Commissioner; Federal Communications 
Commission; 1919 M Street, N.W.--Room 832; Washington, D.C. 20554
Deborah A. Dupont, FCC Joint Board Staff Chair; Federal Communications 
Commission; Common Carrier Bureau--Accounting & Audits Div.; 2000 L 
Street, N.W.--Room 257; Washington, D.C. 20036
Teresa Pitts, State Joint Board Staff Chair; Washington Utilities and 
Transportation Commission; 1300 South Evergreen Park Drive, S.W.; 
Olympia, Washington 98504-7250
Charles Bolles; South Dakota Public Utilities Commission; State Capitol 
Building; Pierre, South Dakota 57501-5070
Elton Calder; Georgia Public Service Commission; 162 State Office 
Building; 244 Washington Street, S.W.; Atlanta, Georgia 30334
Ronald Choura; Michigan Public Service Commission; 6545 Mercantile Way; 
Lansing, Michigan 48910
Rowland Curry; Texas Public Utility Commission; 7800 Shoal Creek 
Blvd.--Suite 400N; Austin, Texas 78757
Ann Dean; Maryland Public Service Commission; 6 St. Paul Centre; 
Baltimore, Maryland 21202
Dean Evans; California Public Utilities Commission; 505 Van Ness 
Avenue--Room 4004; San Francisco, California 94102
William Howden; Federal Communications Commission; Common Carrier 
Bureau--Accounting & Audits Div.; 2000 L Street, N.W.--Room 812; 
Washington, D.C. 20036
George Johnson; Federal Communications Commission; Common Carrier 
Bureau--Accounting & Audits Div.; 2000 L Street, N.W.--Room 257; 
Washington, D.C. 20036
Chris Klein; Tennessee Public Service Commission; 460 James Robertson 
Parkway; Nashville, Tennessee 37243-0505
Robert Loube; Public Service Commission of District of Columbia; 450 
Fifth Street, N.W.; Washington, D.C. 20001
Sam Loudenslager; Arkansas Public Service Commission; 1000 Center 
Street; Post Office Box C-400; Little Rock, Arkansas 72203
Rafi Mohammed; Federal Communications Commission; Common Carrier 
Bureau--Accounting and Audits Div.; 2000 L Street--Room 812; 
Washington, D.C. 20036
Paul Pederson; Missouri Public Service Commission; Post Office Box 360; 
Jefferson City, Missouri 65102
James Bradford Ramsay; National Association of Regulatory Utility 
Commissioners; 1102 ICC Building; Constitution Avenue & 12th Street, 
N.W.; Post Office Box 684; Washington, D.C. 20044
Jonathan Reel; Federal Communications Commission; Common Carrier 
Bureau--Accounting and Audits Div.; 2000 L Street, N.W.--Room 257; 
Washington, D.C. 20036
Jeff Richter; Wisconsin Public Service Commission; Post Office Box 
7854; Madison, Wisconsin 53707-7854
Gary Seigel; Federal Communications Commission; Common Carrier Bureau--
Accounting & Audits Div.; 2000 L. Street, N.W.--Room 812; Washington, 
D.C. 20036
Joel B. Shifman; Maine Public Utilities Commission; State House Station 
# 18; Augusta, Maine 04333
Fred Sistarenik; New York Public Service Commission; 3 Empire State 
Plaza; Albany, New York 12223
Mary Steele; North Carolina Utilities Commission; Box 29510; Raleigh, 
North Carolina 27626-0510

[FR Doc. 95-25036 Filed 10-5-95; 8:45 am]
BILLING CODE 6712-01-M