[Federal Register Volume 63, Number 237 (Thursday, December 10, 1998)]
[Rules and Regulations]
[Pages 68208-68209]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-32802]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[CC Docket No. 96-45; FCC 98-278]


Federal-State Joint Board on Universal Service

AGENCY: Federal Communications Commission.

ACTION: Final rule; interim guidelines.

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SUMMARY: On July 18, 1997, the Commission released a draft copy of the 
Universal Service Worksheet (Worksheet) which requires contributors to 
list their revenues by certain categories. In response to the release 
of the draft Worksheet, several wireless telecommunications providers 
requested clarification on how, for purposes of completing the 
Worksheet, entities that cannot derive various revenue data directly 
from their books of account should calculate the requested revenue 
information. In this document, the Commission addressed the concerns of 
wireless telecommunications providers with regard to certain aspects of 
universal service administration.

DATES: Effective: December 10, 1998.

FOR FURTHER INFORMATION CONTACT: Lori Wright, Attorney, Common Carrier 
Bureau, Accounting Policy Division, (202) 418-7400.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's 
document released on October 26, 1998. The full text of this document 
is available for public inspection during regular business hours in the 
FCC Reference Center, Room 239, 1919 M Street, N.W., Washington, D.C., 
20554.

I. Introduction

    1. In this Memorandum Opinion and Order (Order), we provide 
wireless telecommunications providers with interim guidelines for 
reporting on FCC Form 457, the Universal Service Worksheet (Worksheet) 
their percentage of interstate wireless telecommunications revenues. 
Specifically, until we issue final rules regarding the mechanisms that 
wireless telecommunications providers should use in allocating their 
wireless telecommunications revenues between the interstate and 
intrastate jurisdictions, we establish ``safe-harbor'' percentages that 
we believe reasonably approximate the percentage of interstate wireless 
telecommunications revenues generated by each category of wireless 
telecommunications provider. These percentages can be used for purposes 
of calculating these providers' federal universal service contribution 
obligations. We conclude that wireless telecommunications providers 
that report on the Worksheet a percentage of interstate wireless 
telecommunications revenues that is less than the ``safe harbor'' 
percentage established for that category of provider should continue to 
document how they arrived at their reported percentage and make such 
information available to the Commission or the universal service 
Administrator upon request.

Interim Guidelines for Separating Interstate and Intrastate Revenues

    2. In this Order, we provide wireless telecommunications providers 
with additional interim guidance on reporting their wireless interstate 
telecommunications revenues for purposes of universal service 
contributions. We share the concern expressed by Comcast and Vanguard 
that some CMRS carriers presently may have an unreasonable advantage in 
the market as a result of either unintentional or purposeful under-
reporting of their end-user interstate telecommunications revenues. To 
illustrate, some CMRS providers reported seven percent of their CMRS 
revenues as interstate, while others reported 28 percent as interstate. 
We anticipate that the interim safe harbor, in combination with our 
willingness to inquire about individual carriers' methods for 
calculating interstate revenues, will address this matter until we 
develop final rules.
    3. The NECA II Order, 62 FR 47369 (September 9, 1997), permitted 
contributors that cannot readily derive interstate revenues from their 
books of account to provide on the Worksheet good faith estimates of 
these figures pending final Commission resolution of this issue. The 
NECA II Order also directed such contributors to document how they 
calculated their estimates and to make such information available to 
the Commission or Administrator upon request. In this Order, we 
identify, on an interim basis, suggested, or ``safe harbor,'' 
percentages that we believe reasonably approximate the percentage of 
interstate wireless telecommunications revenues generated by each 
category of wireless telecommunications provider. We identify the safe 
harbor percentages set forth below in response to the requests of 
wireless telecommunications providers for specific guidance beyond that 
provided in the NECA II Order and for expeditious resolution of the 
issues raised by these providers. The safe harbor percentage suggested 
for each category of provider is set forth below. Wireless 
telecommunications providers that choose to avail themselves of these 
suggested percentages may assume that the Commission will not find it 
necessary to review or question the data underlying their reported 
percentages. Conversely, a provider that elects to report a percentage 
of interstate telecommunications revenues that is less than the ``safe 
harbor'' percentage established for that category of provider should 
document the method used to calculate its percentage and make that 
information available to the Commission or Administrator upon request. 
The Commission retains its authority to require carriers that report 
interstate revenues below the safe harbors to document, perhaps through 
traffic studies, the method by which they arrived at their reported 
percentage of interstate telecommunications revenues.
    4. We emphasize that these percentages are intended only to provide 
guidance to carriers in reporting on the Worksheet their percentage of 
interstate wireless telecommunications revenues and are not 
prescriptive in nature. The Commission may elect to adopt final 
prospective rules that deviate from the interim guidance provided here. 
Accordingly, we note that our guidance here is an interim measure 
pending final Commission resolution of these issues.
    5. Cellular, broadband PCS, and digital SMR providers. We establish 
a safe harbor percentage of interstate revenues for cellular and 
broadband PCS providers of 15 percent of their total cellular and 
broadband PCS telecommunications revenues. The Commission, therefore, 
will not seek supporting data from cellular and broadband PCS providers 
regarding their reported percentage of interstate telecommunications 
revenues if they report at least 15 percent of their

[[Page 68209]]

cellular and broadband PCS telecommunications revenues as interstate. 
We reach this determination based on the level of interstate traffic 
experienced by wireline providers. Several wireless telecommunications 
providers have suggested that the Commission consider establishing for 
cellular and broadband PCS providers a safe harbor percentage of 
interstate cellular and broadband PCS revenues based on the percentage 
of interstate wireline traffic reported for purposes of the Dial 
Equipment Minutes (DEM) weighting program, i.e., approximately 15 
percent. Current Commission statistics indicate that the nationwide 
average percentage of interstate wireline traffic reported for purposes 
of the DEM weighting program is approximately 15 percent. We believe it 
is reasonable to use this percentage as a proxy for the percentage of 
interstate wireline traffic as whole. Furthermore, we note that we do 
not have evidence before us to indicate that the level of interstate 
wireless traffic experienced by cellular and broadband PCS providers is 
less than the level experienced by wireline providers. We find that 
establishing a safe harbor that assumes that wireless carriers receive 
interstate and intrastate revenues in similar proportions to wireline 
carriers represents a conservative estimate, and that such a 
conservative approach is reasonable as an interim safe harbor. 
Moreover, unlike paging and analog SMR providers, cellular and 
broadband PCS providers have not, as a group, reported on the Worksheet 
sufficiently similar percentages of interstate cellular and broadband 
PCS revenues.
    6. Paging providers. We establish a safe harbor percentage of 
interstate revenues for paging providers of 12 percent of their total 
paging revenues. Therefore, paging providers that report at least 12 
percent of their paging revenues as interstate will not be asked by the 
Commission to provide documentation supporting their reported level of 
interstate telecommunications revenues. Our determination is based on 
the fact that paging providers, as a group, reported on the Worksheets 
due on March 31 that approximately 12 percent of their paging revenues 
generated in the 1997 calendar year was interstate. We realize that the 
percentage of interstate telecommunications revenues derived from the 
provision of paging service may vary according to the amount of local 
service versus nationwide service that a paging carrier provides. 
Therefore, with regard to a paging carrier that reports less than 12 
percent of their revenues as interstate, we will consider the amount of 
local service versus nationwide service that such a carrier provides. 
We believe that, until the Commission issues final rules regarding the 
mechanisms that paging providers should use to allocate their revenues 
between the interstate and intrastate jurisdictions, it is reasonable 
to establish a safe harbor based on the average percentage of 
interstate paging revenues reported by paging providers for 1997.
    7. SMR providers. We establish a safe harbor percentage for analog 
Specialized Mobile Radio (SMR) providers of one percent of their total 
revenues derived from the provision of analog SMR service. Therefore, 
if analog SMR providers report at least one percent of their analog SMR 
revenues as interstate, the Commission will not seek supporting 
documentation from those analog SMR providers that indicate in Block 4 
of the Worksheet that their principal communications business is ``SMR/
dispatch.'' We reach this determination based on the fact that these 
analog SMR providers, as a group, reported on the Worksheets due on 
March 31 that approximately one percent of their analog SMR revenues 
generated in the 1997 calendar year was interstate. As with the safe 
harbor percentage we establish for paging providers, we believe that it 
is reasonable to establish an interim safe harbor percentage based on 
the average interstate revenues percentage reported by analog SMR 
providers for 1997.

II. Procedural Matters and Ordering Clauses

A. Initial Regulatory Flexibility Analysis

    8. As required by the Regulatory Flexibility Act (RFA), the 
Commission has prepared this Initial Regulatory Flexibility Analysis 
(IRFA) of the possible significant economic impact on small entities by 
the policies and rules proposed in this Order. In addition, the Order 
and IRFA (or summaries thereof) will be published in the Federal 
Register.
    9. Description of Projected Reporting, Record keeping, and Other 
Compliance Requirements. Section 254(d) states ``that all 
telecommunications carriers that provide interstate telecommunications 
services shall make equitable and nondiscriminatory contributions'' 
toward the preservation and advancement of universal service. Under the 
Commission's rules, all telecommunications carriers that provide 
interstate telecommunications services and some providers of interstate 
telecommunications are required to contribute to the universal service 
support mechanisms. Contributions for support for programs for high 
cost areas and low-income consumers are assessed on the basis of 
interstate and international end-user telecommunications revenues. 
Contributions for support for programs for schools, libraries, and 
rural health care providers are assessed on the basis of interstate, 
intrastate, and international end-user telecommunications revenues. 
Contributors are required to submit information on the Universal 
Service Worksheet regarding their end-user telecommunications revenues. 
Contributors are required to distinguish between their interstate and 
intrastate revenues. In this Order, we provide interim safe harbor 
percentages that carriers may use in reporting their interstate 
telecommunications revenues. Under our interim guidance, those carriers 
that choose not to report the safe harbor percentage may be required to 
perform reporting and record keeping assignments in order to use a 
different percentage. This task may require some administrative, 
accounting, and legal skills.
    10. It is furthered ordered that the Commission's Office of Public 
Affairs, Reference Operations Division, shall send a copy of this 
Memorandum Opinion and Order, including the Initial Regulatory 
Flexibility Analysis, to the Chief Counsel for Advocacy of the Small 
Business Administration.

B. Ordering Clauses

    It is ordered, pursuant to sections 1, 4(i) and (j), 201-209, 218-
222, 254, and 403 of the Communications Act, as amended, 47 U.S.C. 151, 
154(i), 154(j), 201-209, 218-222, 254, and 403 that this Memorandum 
Opinion and Order is hereby adopted.

List of Subjects in 47 CFR Part 54

    Reporting and recordkeeping requirements, Telecommunications, 
Telephone.

Federal Communications Commission.
Magalie Roman Salas,
Secretary.
[FR Doc. 98-32802 Filed 12-9-98; 8:45 am]
BILLING CODE 6712-01-P