[Federal Register Volume 63, Number 17 (Tuesday, January 27, 1998)]
[Rules and Regulations]
[Pages 3830-3832]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-1833]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 54
[CC Docket No. 96-45; FCC 97-411]
Universal Service Support Mechanisms
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: The Commission authorized the Administrator of the universal
service support mechanisms to require payment of quarterly
contributions to universal service in equal monthly installments. This
action was intended to ease contributor's cash flow problems.
EFFECTIVE DATE: February 26, 1998.
FOR FURTHER INFORMATION CONTACT: Diane Law, (202) 418-7400.
SUPPLEMENTARY INFORMATION:
I. Introduction
In this Third Order on Reconsideration (Order), we reconsider, on
our own motion, the Commission's decisions governing the amount of
money that may be collected during the first six months of 1998 for the
federal universal service support mechanisms for schools and libraries
and rural health care providers. We direct the administrator to collect
only as much as required by demand, but in no event more than $25
million per quarter for the first and second quarters of 1998 to
support the rural health care universal service support mechanism. We
direct the administrator to collect only as much as required by demand,
but in no event more than $625 million for the first six months of
1998, to support the schools and libraries universal service support
mechanism. These actions will reduce the financial burdens on universal
service contributors without jeopardizing the sufficiency of the
support mechanisms. The Commission may revise the collection caps if we
receive evidence of additional demand for services. The rules adopted
in this Order will become effective February 26, 1998.
II. Background
1. In the NECA Report and Order (62 FR 41294 (Aug. 1, 1997)), the
Commission established the administrative structure of the federal
universal service support mechanisms. The Commission directed the
National Exchange Carrier Association (NECA) to create an independent
subsidiary, the Universal Service Administrative Company (USAC), to
administer temporarily portions of the support mechanisms. The
Commission also directed NECA to create two independent corporations,
Schools and Libraries Corporation and Rural Health Care Corporation, to
administer portions of the schools and libraries and rural health
support mechanisms. USAC, Schools and Libraries Corporation, and Rural
Health Care Corporation are required to submit to the Commission
quarterly projections of demand and administrative expenses for their
respective support mechanisms.
2. The schools and libraries and rural health care support
mechanisms are newly created and have no historical data upon which to
estimate accurately the demand for services in the initial months of
the support mechanisms. The Commission specified that the administrator
should collect $100 million per month for the first three months of
1998 for the schools and libraries support mechanism and ``adjust
future contribution assessments quarterly based on its evaluation of
schools and library demand for funds, within the limits of the spending
caps. . . .'' The Commission further held that, between January 1, 1998
and June 30, 1998, the administrator ``will only collect as much as
required by demand, but in no case more than $1 billion.'' For the
rural health care support mechanism, the Commission directed the
administrator to collect $100 million for the first three months of
1998. In addition, the Commission instituted annual caps on both
support mechanisms, $2.25 billion for the schools and libraries support
mechanism and $400 million for the rural health care support mechanism.
In setting forth a collection schedule, the Commission sought to ensure
that ``funds will be available as needed while avoiding the potential
problems arising from the accumulation of large amounts of funds in a
federal universal service fund.''
III. Discussion
3. We conclude that we should adjust downward the rate of
collections for the schools and libraries and rural health care support
mechanisms during the first six months of 1998. We anticipate that this
action will not jeopardize the sufficiency of the support mechanisms.
The annual caps were designed to estimate the maximum, rather than the
actual, amount of demand for the schools and libraries and rural health
care universal service support mechanisms. Based on what we have
learned about the status of preparatory arrangements being made by
schools, libraries, and rural health care providers to obtain the
benefit of the universal service support mechanisms, we have no reason
to believe that demand will reach the maximum projection levels in the
initial implementation stages of these new support mechanisms. We do
not want to impose unnecessary financial burdens on service provider
contributors to universal service by requiring the administrator to
collect funds that exceed demand. We also wish to ensure the successful
implementation of the schools and libraries and rural health care
support mechanisms. Accordingly, we find that it better serves the
public interest to reduce the collection amounts specified in the Order
(62 FR 32862 (June 17, 1997)) for the first six months of 1998, as
described below.
4. Rural Health Care. The rural health care support mechanism
supports the
[[Page 3831]]
difference, if any, between the urban and the rural rates for a
telecommunications service of a bandwidth up to and including 1.544
Mbps. The rural health care support mechanism also provides limited
support to health care providers that do not have toll-free access to
the Internet. In the initial stages of implementing the rural health
care support mechanism, we anticipate that demand will not exceed $25
million per quarter during the first six months of 1998. We therefore
amend our previous decision, and direct the administrator to collect
only as much as required by demand, but in no event more than $25
million per quarter for the first and second quarters of 1998 for the
rural health care universal service support mechanism.
5. Schools and Libraries. The schools and libraries support
mechanism provides discounts to eligible schools and libraries for
commercially available telecommunications services, internal
connections, and access to the Internet. Because many schools and
libraries will not begin the installation of internal connections until
the summer when students are not present in instructional buildings, we
anticipate that initial demand for the schools and libraries support
mechanism will not reach projected maximums. We therefore conclude that
demand from schools and libraries in the second quarter of 1998 is
unlikely to exceed substantially demand in the first quarter.
Accordingly, we direct the administrator to collect only as much as
required by demand, but in no event more than $625 million for the
first six months of 1998.
IV. Procedural Matters
6. According to the Administrative Procedure Act, substantive rules
shall not become effective until 30 days after their publication in the
Federal Register unless there is good cause to waive that requirement.
We find that good cause exists to waive the 30-day requirement because
the rules adopted herein are critical to the expeditious and efficient
implementation of the new federal universal service support mechanisms.
The Commission's regulations implementing section 254 will take effect
January 1, 1998. The rules adopted herein are necessary to calculate
the first quarter 1998 universal service contribution factors and
primarily affect the administrator of the support mechanisms. In order
to collect contributions in February 1998, the administrator must know
what the contribution factors will be before beginning the billing
process in January 1998. The rules, therefore, do not place additional
burdens on the administrator. They enable the administrator to carry
out its existing responsibilities. In addition, certain carriers must
file tariffs in December 1997 that reflect the contribution factors.
Moreover, the rules adopted herein reduce the financial burdens imposed
on universal service contributors by minimizing the amounts collected
in the first six months of 1998. Thus, we find that good cause exists
to make the rules adopted herein effective upon their publication in
the Federal Register.
V. Supplemental Final Regulatory Flexibility Analysis
7. As required by section 603 of the Regulatory Flexibility Act
(RFA), 5 U.S.C. 603, an Initial Regulatory Flexibility Analysis (IRFA)
was incorporated in the Notice of Proposed Rulemaking and Order
Establishing Joint Board (NPRM). In addition, the Commission prepared
an IRFA in connection with the Recommended Decision, seeking written
public comment on the proposals in the NPRM and Recommended Decision.
(See 61 FR 63778, 63796). A Final Regulatory Flexibility Analysis
(FRFA) was included in the Order. The Commission's Supplemental Final
Regulatory Flexibility Analysis (SFRFA) in this Order conforms to the
RFA, as amended.
A. Need for and Objectives of This Report and Order and the Rules
Adopted Herein
8. The Commission is required by section 254 of the Act, as amended
by the 1996 Act, to promulgate rules to implement promptly the
universal service provisions of section 254. On May 8, 1997, the
Commission adopted rules whose principle goal is to reform our system
of universal service support mechanisms so that universal service is
preserved and advanced as markets move toward competition. In this
Order, we reconsider one aspect of those rules. In order to reduce
financial burdens on all contributors to universal service, we
reconsider, on our own motion, the amounts that will be collected
during the first six months of 1998 for the schools, libraries, and
rural health care support mechanisms.
B. Summary and Analysis of the Significant Issues Raised by Public
Comments in Response to the IRFA
9. Other than those described in the Order, no additional comments
were filed in response to the IRFAs described above.
C. Description and Estimates of the Number of Small Entities to Which
the Rules Adopted in This Report and Order will Apply
10. Because the rules adopted herein apply to the administrator of
the support mechanisms, the rules will not directly affect small
entities. It is possible, however, that small entities will indirectly
be affected by these rules. In the FRFA at paragraphs 890-922 of the
Order, we described and estimated the number of small entities that
would be affected by the new universal service rules. The rules adopted
herein may apply to the same telecommunications carriers and entities
affected by the universal service rules. We therefore incorporate by
reference paragraphs 890-922 of the Order.
D. Summary Analysis of the Projected Reporting, Recordkeeping, and
Other Compliance Requirements and Significant Alternatives and Steps
Taken to Minimize the Significant Economic Impact on a Substantial
Number of Small Entities Consistent With Stated Objectives
11. In the FRFA to the Order, we described the projected reporting,
recordkeeping, and other compliance requirements and significant
alternatives and steps taken to minimize significant economic impact on
a substantial number of small entities consistent with stated
objectives associated with the Administration section of the Order.
Because the rules adopted herein may only marginally affect those
requirements, we incorporate by reference paragraphs 980-981 of the
Order, which describe those requirements and provide the following
analysis of the new requirements adopted herein. Under the rules
adopted herein, the administrator is instructed to collect during the
first six months of 1998 no more than $625 million for the schools and
libraries support mechanism and $50 million for the rural health care
support mechanism.
VI. Ordering Clauses
12. Accordingly, It is ordered that, pursuant to the authority
contained in sections 1-4, 201-205, 218-220, 254, 303(r), 403, and 405
of the Communications Act of 1934, as amended, 47 U.S.C. 151-154, 201-
205, 218-220, 254, 303(r), 403, and 405, section 1.108 of the
Commission's rules, 47 CFR 1.108, and section 553 of the Administrative
Procedure Act, 5 U.S.C. 553, part 54 of the Commission's rules, 47 CFR
part 54, is amended as set forth
[[Page 3832]]
in the rule changes, effective February 26, 1998.
Federal Communications Commission.
Magalie Roman Salas,
Secretary.
Rule Changes
For the reasons set forth in the preamble, part 54 of title 47 of
the Code of Federal Regulations is amended as follows:
PART 54--UNIVERSAL SERVICE
1. The authority citation for part 54 continues to read as follows:
Authority: 47 USC Secs. 1, 4(i), 201, 205, 214, and 254 unless
otherwise noted.
Sec. 54.507 Cap.
2. Section 54.507 is amended by revising the second sentence of
paragraph (a) to read as follows:
(a) * * * First, no more than $625 million shall be collected or
spent for the funding period from January 1, 1998 through June 30,
1998. * * *
* * * * *
Sec. 54.623 Cap.
3. Section 54.623 is amended by adding a new sentence at the end of
paragraph (a) to read as follows:
(a) * * * No more than $50 million shall be collected or spent for
the funding period from January 1, 1998 through June 30, 1998.
* * * * *
[FR Doc. 98-1833 Filed 1-26-98; 8:45 am]
BILLING CODE 6712-01-P