[Federal Register Volume 63, Number 96 (Tuesday, May 19, 1998)]
[Proposed Rules]
[Pages 27542-27544]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-13336]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[CC Docket No. 96-45; DA 98-872]


Proposed Revision of 1998 Collection Amounts for Schools and 
Libraries and Rural Health Care Universal Service Support Mechanisms

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: The Common Carrier Bureau seeks comment on the proposed 
revision of 1998 collection amounts for the schools and libraries and 
rural health care universal service support mechanisms.

DATES: Comments in response to this proposed rule are due May 22, 1998.

ADDRESSES: One original and five copies of all comments responsive to 
this Public Notice must be sent to Magalie Roman Salas, Secretary, 
Federal Communications Commission, 1919 M Street, N.W., Washington, 
D.C. 20554. Three copies also should be sent to Sheryl Todd, Accounting 
Policy Division, Common Carrier Bureau, 2100 M Street, N.W., 8th Floor, 
Washington, D.C. 20554.

FOR FURTHER INFORMATION CONTACT: Irene Flannery, Accounting Policy 
Division, Common Carrier Bureau, (202) 418-7383.

SUPPLEMENTARY INFORMATION: The final rules providing for universal 
service support for schools, libraries, and health care providers 
appear in 47 CFR part 54, subparts F and G, which were originally 
published on June 17, 1997 (62 FR 32862) and amended in rules published 
on January 3, 1998 (63 FR 2094) and January 27, 1998 (63 FR 3830).
    By the Common Carrier Bureau:
    Consistent with section 254 of the Communications Act, as amended, 
and the recommendations of the Federal-State Joint Board on Universal 
Service, we remain committed to providing support to eligible schools 
and libraries for telecommunications services, Internet access, and 
internal connections. We also remain committed to providing the 
greatest level of support to the most economically disadvantaged 
schools and libraries. At the same time, however, we strive to ensure a 
smooth transition to the new universal service support mechanisms and 
to minimize disruption to consumers. We seek to provide support to 
schools, libraries, and rural health care providers in a manner that 
does not require consumers' rates to rise, and without causing rate 
churn. We thus seek comment on a proposal to implement a gradual phase-
in of the schools, libraries, and rural health care universal service 
support mechanisms that takes advantage, and reflects the timing, of 
access charge reductions, will provide substantial support and at the 
same time will minimize disruption to consumers.
    As of May 1, 1998, SLC projected that $2.02 billion in discounts 
have been requested by applicants who have filed through April 28, 
1998. RHCC projected that the rural health care support mechanism will 
require $25 million for the third quarter. Although the local exchange 
carriers will not file their access tariffs until June 16, 1998, based 
on preliminary information provided by the local exchange carriers, we 
estimate that the July 1, 1998 access charge reductions will be 
approximately $700 million below current levels. Given projected access 
charge reductions, we estimate that the quarterly collection rate for 
schools and libraries could rise from $325 million (the second quarter 
collection rate) to approximately $524 million (We reach this result in 
the following manner: Long distance carriers pay direct contributions 
to universal service and, through interstate access charges, indirectly 
pay for most of the local exchange carrier contributions. Directly and 
indirectly, long distance carriers are responsible for approximately 
82.5 percent of schools and libraries and rural health care 
contributions. Multiplying $700 million by 1/.825 yields $848 million. 
We divide $848 million by 4 to find the incremental amount available 
for each quarter, which is $212 million. We then add $212 million to 
the average quarterly collection rate for the first half of 1998, $312 
million (the average of $300 and 325 million). Accordingly, access 
charge reductions of $700 million yield $524 million as a quarterly 
collection rate for the third and fourth

[[Page 27543]]

quarters of 1998 without increasing total access and universal service 
payments by long distance carriers. Accordingly, schools and libraries 
could be funded at approximately $1.67 billion for the 1998 calendar 
year. Because the 75-day initial filing window period for the rural 
health care support mechanism just opened on May 1, 1998, we propose 
that the quarterly collection rate for the rural health care support 
mechanism remain at $25 million for the third and fourth quarters of 
1998. Accordingly, rural health care providers would be funded at $100 
million for the 1998 calendar year.)
    We do not seek comment on revising the annual caps adopted in the 
Universal Service Order. Rather, we seek comment on adjusting the 
maximum amounts that may be collected and spent during the initial year 
of implementation in order to ensure that collection rates do not 
exceed access charge reductions and to prevent rate churn for 
subscribers. We emphasize that any adjustments should not impact the 
level of support available to the most economically disadvantaged 
schools and libraries, and seek comment on ways to ensure that those 
entities receive adequate support.
    We seek comment on directing the Universal Service Administrative 
Company (``USAC'') to collect only as much money as is required by 
demand, but in no event more than $25 million per quarter for the third 
and fourth quarters of 1998 to support the rural health care universal 
service support mechanism, and no more than $524 million per quarter 
for the third and fourth quarters of 1998 to support the schools and 
libraries universal service support mechanism. We also seek comment on 
directing the administrative corporations to neither commit nor 
disburse more than $100 million for the health care support mechanism 
or more than $1.67 billion for the schools and libraries support 
mechanism during the 1998 funding year.
    While we have not had an opportunity to review fully the statement 
of Commissioner Furchtgott-Roth, we do take this opportunity to note 
that the 60-day congressional review period referenced in that 
statement does not apply to ``any rule promulgated under the 
Telecommunications Act of 1996 and the amendments made by that Act.''
    Parties wishing to comment on these issues and the Initial 
Regulatory Flexibility Analysis below are directed to file comments on 
or before May 22, 1998, and to follow the following procedures. All 
filings should reference: Proposed Revision of Maximum Collection 
Amounts for Schools and Libraries and Rural Health Care Providers, 
Public Notice, CC Docket No. 96-45, DA 98-872. All interested parties 
should include the name of the filing party and the date of the filing 
on each page of their comments. Parties should include a table of 
contents in all documents regardless of length and should indicate 
whether they are filing an electronic copy of a submission via the 
Internet or via diskette. Pleadings must comply with Commission rules. 
One original and five copies of all comments must be sent to Magalie 
Roman Salas, Secretary, Federal Communications Commission, 1919 M 
Street, N.W., Washington, D.C. 20554. Three copies also should be sent 
to Sheryl Todd, Accounting Policy Division, Common Carrier Bureau, 2100 
M Street, N.W., 8th Floor, Washington, D.C. 20554. Copies of documents 
filed with the Commission may be obtained from the International 
Transcription Service, 1231 20th Street, N.W., Washington, D.C. 20037, 
(202) 857-3800. Such documents are also available for review and 
copying at the FCC Reference Center, Room 239, 1919 M Street, N.W., 
Washington, D.C., from 9:00 a.m. to 4:30 p.m.
    Parties may also file informal comments or an exact copy of formal 
comments electronically via the Internet at: <http://www.fcc.gov/e-
file/ecfs.html>. Only one copy of an electronic submission must be 
submitted. A party must note whether an electronic submission is an 
exact copy of formal comments on the subject line and should note in 
its paper submission that an electronic copy of its comments is being 
submitted via the Internet. A commenter also must include its full name 
and Postal Service mailing address in its submission. Parties not 
submitting an exact copy of their formal comments via the Internet are 
also asked to submit their comments on diskette. Parties submitting 
diskettes should submit them to Sheryl Todd, Accounting Policy 
Division, Common Carrier Bureau, 2100 M Street, N.W., Room 8606, 
Washington, D.C. 20554. Such a submission should be on a 3.5 inch 
diskette formatted in an IBM compatible format using WordPerfect 5.1 
for Windows or compatible software. The diskette should be accompanied 
by a cover letter and should be submitted in ``read only'' mode. The 
diskette should be clearly labelled with the party's name, proceeding, 
type of pleading (comment), date of submission, and the name of the 
electronic file on the diskette. Each diskette should contain only one 
party's pleadings, preferably in a single electronic file. Electronic 
submissions are in addition to and not a substitute for the formal 
filing requirements addressed above.
    Ex parte contact. Filing of this petition initiates a permit-but-
disclose proceeding under the Commission's rules.

Initial Regulatory Flexibility Analysis

    1. The Regulatory Flexibility Act (RFA) 1 requires that 
an initial regulatory flexibility analysis be prepared for notice-and-
comment rulemaking proceedings, unless the agency certifies that ``the 
rule will not, if promulgated, have a significant economic impact on a 
substantial number of small entities.'' 2
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    \1\ The RFA, see 5 U.S.C. Sec. 601 et seq., has been amended by 
the Contract With America Advancement Act of 1996, Pub. L. No. 104-
121, 110 Stat. 847 (1996) (CWAAA). Title II of the CWAAA is the 
Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA).
    \2\ 5 U.S.C. Sec. 605(b).
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    2. Description of the Reasons Why Agency Action Is Being 
Considered. This Notice requests comment on adjusting the maximum 
amounts that may be collected and spent during the initial year of 
implementation of the universal service support mechanisms for schools, 
libraries, and rural health care providers in order to ensure that 
collection rates do not exceed access charge reductions and to prevent 
rate churn for subscribers. The notice emphasizes that any adjustments 
should not impact the level of support available to the most 
economically disadvantaged schools and libraries, and seeks comment on 
ways to ensure that those entities receive adequate support. As the 
notice indicates, some parties have already suggested ways to 
prioritize the distribution of funds if necessary in response to a 
prior public notice.
    3. Objectives and Legal Basis for the Proposed Action. The proposed 
action is supported by sections 1, 4(i) and (j), and 254, of the 
Communications Act, as amended, 47 U.S.C. Secs. 151, 154(i) and (j), 
and 254. The objective is to provide support to schools, libraries and 
rural health care providers in a manner that does not require 
consumers' rates to rise, and without causing rate churn.
    4. Description and Estimate of the Number of Small Entities That 
May Be Affected by this Notice. The RFA generally defines ``small 
entity'' as having the same meaning as the terms ``small business,'' 
``small organization,'' and ``small governmental jurisdiction'' and the 
same meaning as the term ``small business concern'' under the Small 
Business Act, 15 U.S.C. Sec. 632,

[[Page 27544]]

unless the Commission has developed one or more definitions that are 
appropriate to its activities.3 Under the Small Business 
Act, a ``small business concern'' is one that: (1) is independently 
owned and operated; (2) is not dominant in its field of operation; and 
(3) meets any additional criteria established by the Small Business 
Administration (SBA).4
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    \3\ 5 U.S.C. Sec. 601(3) (incorporating by reference the 
definition of ``small business concern'' in 15 U.S.C. Sec. 632).
    \4\ Small Business Act, 15 U.S.C. Sec. 632 (1996).
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    5. The SBA has defined a small business for Standard Industrial 
Classification (SIC) categories 4812 (Radiotelephone Communications) 
and 4813 (Telephone Communications, Except Radiotelephone) to be small 
entities having fewer than 1,500 employees.5 Small incumbent 
LECs subject to the universal service rules are either dominant in 
their field of operation or are not independently owned and operated, 
and consistent with our prior practice they are excluded from the 
definition of ``small entity'' and small business concerns. 
Accordingly, our use of the terms ``small entities'' and ``small 
business'' does not encompass small incumbent LECs. Out of an abundance 
of caution, however, for regulatory flexibility analysis purposes, we 
will consider small incumbent LECs within this analysis and use the 
term ``small incumbent LECS'' to refer to any incumbent LECs that 
arguably might be defined by the SBA as ``small business concerns.''
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    \5\  13 C.F.R. Sec. 121.201.
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    6. In the final regulatory flexibility analysis (FRFA) in the 
Universal Service Order, the Commission described and estimated in 
detail the number of small entities that would be affected by the new 
universal service rules.6 These entities included various 
types of telecommunications carriers and service providers, as well as 
schools, libraries, rural health care providers and other beneficiaries 
of the universal service mechanisms. The proposal in this notice would 
apply to the same entities described in the FRFA. Therefore we 
incorporate by reference the description and estimate of the number of 
small entities affected included in the FRFA to the Order.7
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    \6\ Order, 12 FCC Rcd at 9227-9243.
    \7\ 12 FCC Rcd at 9227-9243.
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    7. Description of Projected Reporting, Recordkeeping and Other 
Compliance Requirements. The notice does not propose any new reporting 
or recordkeeping requirements. It proposes to change the existing 
compliance requirements for universal service by adjusting the amount 
of support available to schools, libraries, and rural health care 
providers in the first year of the new universal service support 
mechanisms and to ensure that the most economically disadvantaged 
schools and libraries receive adequate support.
    8. Description of Significant Alternatives which could Minimize Any 
Significant Economic Impact on Small Entities. The requirements 
proposed could have a significant economic impact on small 
telecommunications carriers and providers, including small LECs by 
reducing the amount of their universal service contributions in the 
first year of the support mechanisms for schools and libraries, and 
rural health care providers. In addition the proposed requirements 
could have a significant economic impact on small schools, libraries, 
rural health care providers, and small government jurisdictions by 
reducing the amount of support available during that year. The notice 
seeks comments on alternative ways of ensuring adequate support for the 
most economically disadvantaged schools and libraries. We invite 
specific comment on the impact of the proposed requirements on small 
entities.
    9. Federal Rules that May Duplicate, Overlap, or Conflict With the 
Notice. None.

Federal Communications Commission.
Magalie Roman Salas,
Secretary.
[FR Doc. 98-13336 Filed 5-15-98; 11:24 am]
BILLING CODE 6712-01-P