[Federal Register Volume 63, Number 237 (Thursday, December 10, 1998)]
[Proposed Rules]
[Pages 68224-68233]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-32803]


=======================================================================
-----------------------------------------------------------------------

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: Notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: Between September, 1997 and March, 1998, the Commission's 
Wireless Telecommunications Bureau and Common Carrier Bureau hosted a 
series of ex parte meetings with representatives of the wireless 
telecommunications industry. The Bureau's primary objective in hosting 
those meetings was to solicit proposals on methods by which wireless 
telecommunications providers might allocate between the intrastate and 
interstate jurisdictions their end-user telecommunications revenues for 
purposes of the universal service reporting requirements. In this 
document, the Commission seeks comment on what amount of local usage, 
if any, eligible telecommunications carriers should be required to 
provide.

DATES: Comments are due on or before January 11, 1999 and reply 
comments are due on or before January 25, 1999.
    Written comments by the public on the proposed information 
collections are due January 11, 1999. Written comments must be 
submitted by the Office of Management and Budget (OMB) on the proposed 
information collections on or before February 8, 1999.

ADDRESSES: Parties who choose to file by paper must file an original 
and four copies of each filing. All filings must be sent to the 
Commission's Secretary, Magalie Roman Salas, Office of the Secretary, 
Federal Communications Commission, 445 Twelfth Street, S.W., TW-A325, 
Washington, D.C. 20554. In addition to filing comments with the 
Secretary, a copy of any comments on the information collections 
contained herein should be submitted to Judy Boley, Federal 
Communications Commission, Room 234, 1919 M Street, N.W., Washington, 
DC 20554, or via the Internet to [email protected], and to Timothy Fain, 
OMB Desk Officer, 10236 NEOB, 725--17th Street, N.W., Washington, DC 
20503 or via the Internet to [email protected].

FOR FURTHER INFORMATION CONTACT: Lori Wright, Attorney, Common Carrier 
Bureau, Accounting Policy Division, (202) 418-7400. For additional 
information concerning the information collections contained in this 
Further Notice of Proposed Rulemaking contact Judy Boley at 202-418-
0214, or via the Internet at [email protected].

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.

Initial Paperwork Reduction Act Analysis

    1. This Further Notice of Proposed Rulemaking (Further Notice) 
contains a proposed information collection. The Commission, as part of 
its continuing effort to reduce paperwork burdens, invites the general 
public and the Office of Management and Budget (OMB) to comment on the 
information collections

[[Page 68225]]

contained in this Further Notice, as required by the Paperwork 
Reduction Act of 1995, Public Law 104-13. Public and agency comments 
are due at the same time as other comments on this Further Notice; OMB 
notification of action is due February 8, 1999. Comments should 
address: (a) whether the proposed collection of information is 
necessary for the proper performance of the functions of the 
Commission, including whether the information shall have practical 
utility; (b) the accuracy of the Commission's burden estimates; (c) 
ways to enhance the quality, utility, and clarity of the information 
collected; and (d) ways to minimize the burden of the collection of 
information on the respondents, including the use of automated 
collection techniques or other form of information technology.
    OMB Approval Number: None.
    Form No.: N/A.
    Type of Review: New collection.
    Respondents: Business or Other for Profit.
    Title: Data to Determine Percentage of Interstate 
Telecommunications Revenues from Wireless Carriers and Submission of 
Data to Determine Eligibility.

----------------------------------------------------------------------------------------------------------------
                                                                                   Estimate time
                                                                     Number of     per response    Total annual
                                                                    respondents       (hours)     burden (hours)
----------------------------------------------------------------------------------------------------------------
Data to Determine Percentage of Interstate Telecommunications
 Revenue by Wireless Carriers...................................             900              10            9000
 Submission of Data to Determine Eligibility....................            3400             .25             850
----------------------------------------------------------------------------------------------------------------

    Total Annual Burden: 9,850 hours.
    Estimated costs per respondent: $0.
    Needs and Uses: The Commission seeks comment on various mechanisms 
for allocating between the intrastate and interstate jurisdictions the 
end-user telecommunications revenues of universal service contributors 
that cannot derive this information readily from their books of 
account. The Commission seeks comment on its proposals for wireless 
carriers to conduct traffic studies and extrapolate from the data the 
percentage of their revenues that should be attributed to the 
interstate jurisdiction. This allocation will be used for purposes of 
calculating the federal universal service reporting and contribution 
obligations. The Commission also seeks comment on whether to require 
eligible telecommunications carriers to include some fixed number of 
minutes of use per month as part of the basic universal service package 
or whether we should require some number of calls. This information 
would be reported by the carriers to their state utility commission 
when they seek designation as an eligible telecommunications carriers.

I. Introduction

    2. Between September, 1997 and March, 1998, the Commission's 
Wireless Telecommunications Bureau and Common Carrier Bureau hosted a 
series of ex parte meetings with representatives of the wireless 
telecommunications industry. The Bureau's primary objective in hosting 
those meeting was to solicit proposals on methods by which wireless 
telecommunications providers might allocate between the intrastate and 
interstate jurisdictions their end-user telecommunications revenues for 
purposes of the universal service reporting requirements. In this 
Further Notice, we propose and seek comment on various mechanisms for 
allocating between the intrastate and interstate jurisdictions the end-
user telecommunications revenues of universal service contributions 
that cannot derive this information readily from their books of 
account. This allocation will be used for purposes of calculating the 
federal universal service reporting and contribution obligation. On 
March 8, 1996, the Commission adopted an initial Notice of Proposed 
Rulemaking and Order Establishing Joint Board, 61 FR 10499 (March 14, 
1996) seeking comments on recommended changes to our regulations to 
implement the universal service directives of the Telecommunications 
Act of 1996.

A. Proposed Mechanisms for Separating Interstate and Intrastate 
Revenues

a. Good Faith Estimates
    3. We tentatively conclude that we should provide specific guidance 
to wireless telecommunications providers in identifying their 
interstate revenues, as required on the Universal Service Worksheet 
(Worksheet). Certain parties initially proposed that we adopt on a 
permanent basis the revenue reporting approach relied upon for purposes 
of the Telecommunications Relay Services (TRS) Fund Worksheet. The 
Commission's TRS rules permit carriers that are not subject to the 
Uniform System of Accounts (USOA) in Part 32, such as CMRS providers, 
to rely on a special study to estimate their percentages of interstate 
and international traffic. Under this approach, contributors must 
document how they calculated their estimates and make such information 
available to the Commission or TRS Administrator upon request. Although 
the NECA II Order, 62 FR 47369 (September 9, 1997), permitted certain 
universal service contributors, on an interim basis, to make good faith 
estimates of their interstate revenues along the lines of the special 
study method used for TRS, we tentatively conclude that we should not 
adopt this approach on a permanent basis. Given the greater impact 
universal service contributions have on carriers, we tentatively agree 
with CTIA and Comcast that allowing carriers to rely on good faith 
estimates on a permanent basis as a means of distinguishing 
contributors' interstate and intrastate revenues will not provide 
contributors with sufficient certainty as to the appropriate amount of 
their payment obligations and may result in inequities in payment 
obligations. Comcast contends that the Commission should provide 
specific guidance on this issue to minimize the ``potential for 
systematic underreporting or underestimating of revenues, or, in some 
cases, overestimation of revenues.'' Specifically, Comcast suggests 
that, without establishing relevant markets according to which carriers 
report their percentage of interstate telecommunications revenues, 
larger wireless carriers will ``average down their interstate 
percentages by including [revenue information from] distant markets.'' 
We seek comment on the merits of our tentative conclusions and on how 
we might amend our rules in a manner that would provide certainty and 
avoid substantial inequities in payment obligations.
b. Percentage of Interstate Revenues Estimates
    4. We tentatively conclude that, as proposed by Comcast, the 
Commission should establish a fixed percentage of interstate end-user 
wireless telecommunications revenues that a wireless telecommunications 
provider

[[Page 68226]]

must report on the Worksheet. It appears that such an approach would 
eliminate competitive inequities that may be associated with the use of 
differing allocation assumptions and methodologies. We invite parties 
to comment on the use of such an approach for determining the 
interstate wireless telecommunications revenues for wireless 
telecommunications providers.
    5. Given that various categories of wireless providers may have 
substantially differing levels of interstate traffic, we also 
tentatively conclude that we should establish different percentages 
according to the type of provider (e.g., cellular, broadband PCS, 
paging, and SMR). We adopt a similar approach for our interim 
guidelines for wireless providers' reporting on the Worksheet of their 
interstate wireless telecommunications revenues. Although this approach 
recognizes that interstate traffic levels may differ among differing 
classes of wireless providers, it assumes that such levels are 
generally similar among competing carriers with similar systems and 
operations. We seek comment on whether this is a reasonable assumption.
    6. With regard to broadband PCS and cellular services, we seek 
comment on whether the fixed percentage of interstate 
telecommunications revenues that must be reported on the Worksheet 
should be based on the level of interstate traffic experienced by 
wireline providers. We seek comment on whether the similarities between 
broadband PCS, cellular, and traditional wireline services are 
sufficient to warrant such an outcome. For wireline services, current 
Commission statistics indicate that the nationwide average percentage 
of interstate wireline traffic reported for the DEM weighting program 
is approximately 15 percent. We seek comment on whether cellular and 
broadband PCS providers should report 15 percent of their cellular and 
PCS revenues as interstate. We note that members of the wireless 
telecommunications industry have suggested that 15 percent represents a 
reasonable approximation of the percentage of cellular and PCS traffic 
that is interstate. We are not aware of evidence that cellular and 
broadband PCS providers experience substantially more or less 
interstate traffic than wireline providers, nor do we have evidence 
before us to indicate that the level of interstate traffic for wireline 
carriers reporting under the DEM weighting program differs 
substantially from wireline carriers as a whole. At the same time, we 
are cognizant that, due to the difference in pricing structures between 
wireline service and wireless service, the level of interstate 
telecommunications revenues generated by each type of service may vary 
from one to another. Moreover, some cellular and PCS carriers have 
reported as much as 28 percent of their revenues as interstate, which 
may represent a more accurate accounting given that carriers have 
incentives to underreport their interstate revenues for universal 
service reporting purposes. We therefore invite parties to comment on 
the appropriateness of using data submitted for purposes of the DEM 
weighting program to approximate the percentage of interstate cellular 
and PCS revenues generated by wireless telecommunications providers.
    7. We recognize that analog SMR and paging services do not as 
closely resemble broadband PCS, cellular, or traditional wireline 
services, and therefore seek comment on an appropriate estimation of 
these providers' interstate analog SMR and paging revenues. We adopt 
interim guidelines for paging and analog SMR providers, based on the 
average interstate revenues percentage reported by those carriers in 
1998. Paging providers and analog SMR providers reported, on average, 
interstate paging and analog SMR revenue levels at approximately 12 
percent and one percent, respectively. Unlike our estimate for the 
interstate portion of cellular and PCS revenues, however, the DEM 
weighting reports do not provide the Commission with an independent 
source for estimating the portion of paging and analog SMR revenues 
that is interstate. We also note that these carriers may have 
incentives to underreport their interstate revenues for universal 
service reporting purposes. We seek comment on whether the 12 percent 
average reported by paging carriers and one percent reported by analog 
SMR providers should form the basis for the final fixed percentages, 
and, if not, what would be an appropriate allocation. We are interested 
in knowing of any other mechanisms that, like DEM weighting, could 
provide an independent basis for a permanent rule for analog SMR and 
paging carriers. Parties are encouraged to provide alternative 
estimations of the percentage of interstate traffic experienced by 
analog SMR and paging providers and a detailed basis for the 
estimation.
    8. According to the American Mobile Telecommunications Association 
(AMTA), SMR providers, with the possible exception of NEXTEL, generate 
relatively low levels of interstate traffic. We seek comment on this 
assertion and on whether any other categories of provider, such as 
paging providers, generate similarly low levels of interstate 
telecommunications traffic relative to other categories of providers. 
We also seek comment on how to treat providers, like NEXTEL, that may 
generate atypical levels of interstate traffic. Likewise, we seek 
comment on whether any category of provider experiences higher levels 
of interstate telecommunications traffic relative to other categories 
of providers.
    9. We note that traffic studies may represent one possible 
mechanism wireless telecommunications carriers could use to determine 
their percentage of interstate telecommunications revenues. We believe 
that it would be reasonably simple for most wireless carriers to 
conduct traffic studies and extrapolate from the data the percentage of 
their revenues that should be attributed to the interstate 
jurisdiction. Some wireless carriers could conduct joint traffic 
studies, the results of which could be used by all similarly situated 
companies. We seek comment on these proposals. Furthermore, if the 
Commission elects not to use the data submitted for purposes of the DEM 
weighting program to estimate the percentage of broadband PCS and 
cellular revenues generated by broadband PCS and cellular providers 
(i.e., 15 percent), as discussed above, one alternative would be to 
derive a fixed percentage for each category of provider based upon data 
reported on the 1997 TRS Fund Worksheets. Given the impact that 
universal service contributions have on carriers, however, we believe 
that we should establish a percentage of interstate wireless 
telecommunications revenues that is based on data more certain and 
accurate than what may be obtained from TRS worksheets. Therefore, we 
tentatively conclude that we should not use the allocations made for 
the TRS Fund Worksheet to determine the proper portion of revenues 
derived from interstate calls. We seek comment on this tentative 
conclusion.
    10. We also seek comment on whether the Commission should establish 
different percentages within each category of provider, rather than 
establishing a single percentage for each category of provider. For 
example, because the service areas of some wireless telecommunications 
providers may consist of many smaller states (i.e., in the northeastern 
part of the United States) and thus experience a higher level of 
interstate traffic than service areas in, for example, the midwestern 
and western parts of the United States, the Commission could establish 
various

[[Page 68227]]

percentages within each category of provider that take into 
consideration the area of the country being served. Comcast asserts 
that, in order to estimate accurately the percentage of broadband PCS 
providers' interstate broadband PCS revenues, the Commission must first 
establish an appropriate market size. Comcast recommends that the level 
of interstate telecommunications revenues reported by wireless 
telecommunications providers whose license territories are established 
on the basis of Major Trading Areas (MTAs) should be determined on an 
MTA-by-MTA basis. Comcast, which serves markets in the northeastern 
part of the United States where there may be a relatively high number 
of interstate calls, contends that reporting the level of interstate 
revenues on an MTA-by-MTA basis would ensure consistent reporting of 
interstate revenues among wireless telecommunications providers. 
Comcast contends that this approach would minimize the possibility that 
larger carriers, that are likely to have a relatively larger proportion 
of interstate traffic, would report their interstate revenues on the 
basis of an average that includes markets with relatively low levels of 
interstate traffic. Comcast maintains, therefore, that carriers in a 
single market would be less likely to impose widely varying charges on 
bills to recover their universal service contributions. We seek comment 
on Comcast's proposal. If the Commission elects to establish a market-
by-market approach, we seek comment on the appropriate market size for 
wireless telecommunications providers that are not licensed on the 
basis of MTAs. We also seek comment on whether the Commission should 
establish different percentages within each category of provider 
according to other criteria.
    11. We seek comment on whether wireless telecommunications 
providers should be given the option of using a Commission-established 
percentage of interstate wireless telecommunications revenues, as 
discussed above, or using their own data-collection procedures to 
demonstrate to the Commission the percentage of their wireless 
telecommunications revenues derived from interstate calls. Allowing 
carriers to choose between these two options, rather than requiring all 
wireless providers to use the Commission-established percentage, may be 
preferable for wireless providers that are able, without substantial 
difficulty, to distinguish their interstate revenues. We note that this 
approach may encourage providers that can derive accurate estimates of 
their revenues from their books of account nevertheless to use the 
Commission-established percentage if they determine that using the 
Commission established percentage provides a financial advantage. We 
seek comment on whether wireless telecommunications providers that wish 
to use their own data collection procedures to identify the percentage 
of their end-user wireless telecommunications revenues that is derived 
from interstate calls should be required to obtain a waiver from the 
Commission.
    12. We also seek comment on whether we should adopt for wireless 
telecommunications providers a universal service contribution 
methodology that does not require these carriers to allocate their 
revenues as either interstate or intrastate. We seek comment on whether 
it would be competitively neutral, equitable, and economically 
efficient to require wireless telecommunications providers to 
contribute to the universal service support mechanisms on the basis of 
a flat fee per voice grade access line or voice grade equivalent, 
rather than as a percentage of their revenues. We note that parties 
have generally sought reconsideration of the Commission's decision to 
assess carriers based on a percentage of their telecommunications 
revenues, and we seek further comment on this issue with regard to 
wireless carriers. We seek comment on how we would determine the amount 
of such a flat charge. We are cognizant that the amount of a flat 
charge may need to vary according to the type of carrier on which it is 
assessed. If we were to assess different types of carriers differently, 
we seek comment on how to accomplish this in a fair and equitable 
manner. In connection with this issue, we seek comment on how to 
establish for paging carriers a voice grade equivalent on which to 
assess a flat charge, e.g., capacity level. We also seek comment on 
whether we should assess wireless carriers different amounts for 
business and residential subscribers. We also seek comment on whether a 
flat charge would be consistent with our prior determination that 
contributions to the federal high cost and low-income support 
mechanisms should be assessed only on interstate revenues. We also 
invite parties to comment on other methodologies that the Commission 
could adopt to assess universal service contribution obligations on 
wireless providers or other providers that generally do not operate 
with regard to state boundaries.
c. Simplifying Assumptions
    13. In this section, we seek comment on a number of proposed 
simplifying assumptions that either the Commission or wireless 
telecommunications providers could use to determine the appropriate 
percentage of interstate wireless telecommunications revenues that 
should be reported on the Worksheet. These simplifying assumptions 
could be used in the event that the Commission declines to establish 
the percentage of interstate wireless telecommunications revenues that 
some or all categories of wireless telecommunications providers should 
report on the Worksheet. Additionally, in the event that the Commission 
decides to provide wireless telecommunications providers with the 
option of using either a Commission-established percentage or their own 
data-collection procedures to determine their percentage of interstate 
wireless telecommunications revenues, wireless telecommunications 
providers selecting the latter option could use these simplifying 
assumptions.
    14. We seek comment on whether it would be appropriate for the 
Commission to adopt the following assumptions in light of the manner 
and extent to which wireless telecommunications providers maintain 
revenue data. These simplifying assumptions are set forth below 
according to various categories of wireless telecommunications 
providers. We note that certain simplifying assumptions may be relevant 
to more than one category of wireless telecommunications provider. 
Therefore, we invite comment on these simplifying assumptions as they 
may apply to any category of wireless telecommunications provider.
i. Cellular and Broadband PCS Providers
    15. Originating point of a call. CTIA proposes that, in determining 
the jurisdictional nature of a call, cellular and broadband PCS 
providers should consider the originating point of a call to be the 
location of the antenna that first receives the call. We understand 
that some wireless telecommunications providers use this approach for 
purposes of reporting their revenues on the TRS Fund Worksheet and 
recommend doing so for purposes of universal service reporting. We seek 
comment on this proposal. To account for the situation in which an 
antenna serves a region encompassing more than one state, a call would 
be considered to originate in the state in which the antenna that 
originally received the call is located, even though the customer

[[Page 68228]]

may be located in a different state than the antenna and even if, 
during the course of a call, the customer enters another cell area 
served by an antenna located in another state. We seek comment on 
whether this would systematically understate the amount of revenues 
derived from interstate wireless telecommunications. We also seek 
comment on whether wireless telecommunications providers experience 
difficulty in determining the jurisdictional nature of revenues derived 
from calls that originate as wireline and terminate as wireless.
    16. An assumption that a call originates in the state in which the 
antenna that first receives the call is located would address CTIA's 
concern that the billing systems of CMRS providers generally do not 
record the location of the antenna to which the call is transferred 
when the mobile customer enters a new cell area. This proposed 
assumption also would address the situation described by CTIA in which 
calls originating and terminating in the same state are transported, 
during the course of the call, to a switch in another state. We note 
that, in the Local Competition Order, 61 FR 45476 (August 29, 1996), 
the Commission determined that, ``[f]or administrative convenience, the 
location of the initial cell cite when a call begins shall be used as 
the determinant of the geographic location of the mobile customer.'' We 
seek comment on whether the originating call assumption discussed above 
adequately addresses the concerns identified by CTIA.
    17. Terminating point of a call. In addition to the originating 
point of a call, the terminating point of a call must be identified in 
order to determine the jurisdictional nature of the call. We seek 
comment on whether a cellular or broadband PCS provider should assume 
that a call terminates in the state that corresponds to the area code 
to which the call was placed. Because we have received no evidence 
indicating otherwise, we assume that this would be a reasonable 
approach for determining the terminating point of a call. We seek 
comment on our assumption that determining the terminating point of a 
cellular or broadband PCS call in this manner is reasonable and does 
not pose substantial difficulties for providers.
    18. Calls originating and terminating in a Major Trading Area. 
Because many wireless telecommunications providers operate without 
regard to state boundaries, we seek comment on whether the Commission 
should consider using MTA boundaries as the basis on which CMRS 
providers might estimate the level of interstate wireless traffic for 
universal service reporting purposes. Specifically, we seek comment on 
whether CMRS traffic that originates and terminates within an MTA 
should be classified as intrastate and all other calls classified as 
interstate for purposes of the Worksheet. Because a single MTA can 
occupy more than one state, this approach would result in some calls 
that cross state boundaries being classified as intrastate. At the same 
time, because some states have more than one MTA, a call could be 
classified as interstate under this approach, even though the call 
originates and terminates in the same state. We seek comment on the 
significance of these observations. Because different types of wireless 
telecommunications providers use different Commission-authorized 
licensed territories, we also seek comment on whether we should use the 
boundaries of other types of wireless licensed territories (e.g., 
Metropolitan Statistical Areas or Rural Service Areas) to differentiate 
between interstate and intrastate traffic.
    19. Roaming revenues. We seek comment on how ``roaming'' revenues 
obtained by broadband PCS and cellular providers should be classified. 
``Roaming'' occurs when customers located outside the scope of their 
provider's network use a different provider's network to place and 
receive calls. CTIA and AirTouch assert that when a customer is 
``roaming'' on the system of another provider (the ``serving 
provider''), the customer's principal provider, which is responsible 
for billing the customer, receives limited information about the calls 
made by the customer. In determining how a principal provider should 
account for revenues generated while its customer ``roams'' on a 
serving provider's system, AirTouch suggests that the principal 
provider apply an established percentage to such revenues to 
approximate the level of interstate usage by ``roaming'' customers. We 
seek comment on AirTouch's proposal, and, assuming we adopt AirTouch's 
proposal, the appropriate fixed percentage that should be applied to 
such revenues. AirTouch explains that this option would eliminate the 
need for extensive information exchanges between the customer's 
principal provider and the serving provider. AirTouch further notes 
that this approach would address the situation in which, because CMRS 
providers price air-time usage differently, the identical levels of 
usage do not generate uniform levels of revenues. We seek comment on 
these assertions.
    20. With regard to how ``roaming'' traffic should be treated for 
purposes of distinguishing interstate and intrastate revenues, CTIA 
notes that, some of its members have concluded that the principal 
provider should treat all roaming traffic as interstate. CTIA further 
states that some of its members have taken the position that calls 
forwarded from the customer's principal provider to a serving provider 
in the area where the customer is located should be treated as 
interstate calls. We seek comment on these proposed simplifying 
assumptions.
ii. Paging Providers
    21. Due to the technical design of a paging system, AirTouch claims 
that the information necessary to assess the jurisdictional nature of a 
paging call is unavailable. AirTouch explains that a paging network 
terminates communications simultaneously at all locations in its 
service area, because the paging network cannot identify the location 
of the paging unit. Thus, the paging network cannot identify the area 
code of the location where the customer actually receives the page. In 
light of these difficulties, we seek comment on any simplifying 
assumptions that paging carriers may adopt in determining the 
percentage of interstate paging revenues that they should report on the 
Worksheet. For example, we seek comment on whether paging providers 
should estimate their level of interstate traffic based, at least in 
part, on the percentage of customers whose service package includes 
toll-free number capabilities (e.g., 888-, 800-, and 877-numbers), with 
the assumption that these customers are more likely to receive 
interstate pages. If a paging provider is capable of distinguishing 
between the paging revenues derived from its customers who subscribe to 
local service and those who subscribe to nationwide service, we seek 
comment on whether paging carriers should assume that its nationwide 
customers generate more interstate traffic than the local customers. If 
we were to direct wireless carriers to use a Commission-established 
percentage of interstate wireless telecommunications revenues, we seek 
comment on whether we should establish two percentages, one for traffic 
to local paging customers and one for traffic to national paging 
customers.
iii. SMR Providers
    22. Analog SMR service provides land mobile communications and 
consists of at least one base station transmitter and antenna, as well 
as a mobile radio unit. Analog SMR service may be

[[Page 68229]]

interconnected with the public switched telephone network, which allows 
mobile radio units to function essentially as a mobile telephone, or 
through a dispatch system, which allows two-way, over-the-air, voice 
communications only between two mobile radio units. We seek comment on 
an appropriate estimation of the percentage of interstate 
telecommunications revenues generated by analog SMR providers and on 
whether there are appropriate simplifying assumptions to estimate the 
percentage of analog SMR providers' interstate analog SMR revenues. 
AMTA states that some of the dispatch systems provide service 
exclusively within a state and others provide service across state 
boundaries. AMTA states that, in a recent survey of its members, 63 
percent of the respondents reported that their coverage areas are 
intrastate, while the remaining 37 percent reported the use of systems 
crossing state boundaries. AMTA also reports that 90 percent of the 
survey respondents claimed to derive between zero and two percent of 
their revenues from interstate service. AMTA further notes that 97 
percent of the respondents maintain that they are exempt under the de 
minimis standard from contributing to the universal service support 
mechanisms. AMTA contends that ``the survey results to date certainly 
indicate that SMR and related services bear little resemblance to mass-
market mobile telephony such as broadband PCS and cellular.'' We seek 
comment on whether, and how, AMTA's survey results may be used to help 
determine an appropriate percentage of analog SMR providers' interstate 
analog SMR revenues. We also seek comment on other ways to arrive at 
such an estimation.
iv. Point-to-point Wireless Providers
    23. Unlike mobile service, which transmits a signal that may be 
received by any of the mobile units within a certain area, the signal 
that is transmitted as part of fixed, point-to-point wireless service 
is sent directly to a fixed location. We seek comment on whether any 
point-to-point wireless providers experience difficulty in reporting 
their percentage of interstate telecommunications revenues. If so, we 
seek comment on ways to estimate such carriers' level of interstate 
telecommunications revenues derived from the provision of fixed, point-
to-point service and on whether any simplifying assumptions should be 
applied to this type of provider. Because the service offered by 
entities that provide wireless telecommunications on a fixed, point-to-
point basis is not mobile in nature, such entities' contribution 
compliance concerns may differ from those of broadband PCS and cellular 
providers.
d. AirTouch's Methodology
    24. AirTouch states that its jurisdictional tracking system is able 
to determine, with a reasonable degree of accuracy, whether a 
particular cellular call is interstate or intrastate. AirTouch explains 
that its tracking system initially was developed for state tax 
purposes. According to AirTouch, this tracking system forwards data 
received from the originating switch to databases used for billing. The 
databases compiled from this data enable AirTouch to compare the 
originating switch location with the terminating area code. AirTouch 
uses this capability to estimate the percentage of interstate airtime 
usage and then applies this percentage to an estimated level of total 
end-user revenues, which yields the amount of interstate revenues. 
AirTouch explains that the total-revenues estimate includes charges for 
airtime revenues and monthly access charges, less non-
telecommunications revenues. Revenues from long-distance resale, 
AirTouch further explains, are then included for purposes of 
determining the total interstate revenues figure reported on the 
Worksheet. We seek comment on the extent to which wireless 
telecommunications and other providers are capable of distinguishing 
their interstate and intrastate revenues using the method employed by 
AirTouch or could, without substantial difficulty, adopt such a method. 
We seek comment on whether wireless telecommunications carriers that 
use a method similar to that described by AirTouch to identify their 
interstate revenues should be allowed to do so, in the event that the 
Commission adopts, for universal service reporting purposes, a 
Commission-established percentage. In addition, we seek comment on 
whether, for purposes of assessing certain charges, such as state 
universal service charges or state taxes, wireless providers are 
already required to distinguish their revenues in a way that could be 
applied to their federal universal service reporting obligations.
    25. AirTouch notes that its tracking system may yield inaccurate 
information to the extent that the interstate portion of a call is not 
recorded when the call originates as intrastate but terminates as 
interstate due to the customer crossing a state boundary. Similarly, we 
note that a tracking system like the one employed by AirTouch also may 
yield inaccurate results when a call originates as interstate and 
terminates as intrastate due to the customer crossing a state boundary. 
We seek comment on whether the potential inaccuracies that may arise 
from these two scenarios would, when taken together, tend to cancel 
each other out and thus have no measurable effect.
e. Other Issues Surrounding Universal Service Reporting Requirements
    26. We seek comment on whether wireless telecommunications 
providers experience difficulty in complying with any universal service 
reporting requirements other than identifying their interstate and 
intrastate revenues, as described above. We also seek comment on any 
other actions that the Commission might take to ensure that wireless 
telecommunications providers are treated in an equitable and 
nondiscriminatory manner with respect to the universal service 
reporting and contribution obligations.
f. Providers Other Than Wireless Telecommunications Providers
    27. In the previous sections, we discuss possible mechanisms that 
wireless telecommunications providers could use in allocating their 
wireless telecommunications revenues between the interstate and 
intrastate jurisdictions for universal service reporting purposes. We 
also seek comment whether there are other types of providers, such as 
satellite providers, that may not be able to derive easily from their 
books of account their percentage of interstate and intrastate 
telecommunications revenues. Parties are invited to address whether the 
proposals discussed in this Further Notice, such as the simplifying 
assumptions discussed, might benefit other telecommunications providers 
that cannot readily distinguish their interstate and intrastate 
revenues for universal service reporting purposes.

B. Competitive Neutrality

    28. In the Universal Service Order, 62 FR 32862 (June 17, 1997), 
the Commission sought to adopt rules that would facilitate the entry of 
new providers and promote competition in the context of universal 
service. The Commission also sought to establish universal service 
rules that are competitively and technologically neutral. We seek 
comment here on the success of that goal. Specifically, we seek comment 
on the extent to which our rules, in application, are accomplishing 
that goal. We seek comment on the extent to which our rules facilitate 
the provision of services eligible for universal service support by 
providers, such as wireless

[[Page 68230]]

telecommunications providers and cable operators, that historically 
have not supplied such services. We also seek comment on the extent to 
which such providers are supplying the services supported by the 
federal universal service support mechanisms to eligible beneficiaries. 
For example, we seek comment on the extent to which wireless service 
providers are supplying supported services to eligible schools and 
libraries. Similarly, we seek comment on the extent to which cable and 
other service providers are supplying supported services to entities 
eligible for universal service support.
    29. We also seek comment on whether, in practice, any of our 
universal service rules discourage wireless service providers or cable 
service providers from offering supported services to low-income 
subscribers and rural, insular, and high cost subscribers. We also seek 
comment on whether, in practice, our universal service rules may favor 
unfairly one technology over another. If parties answer these 
statements affirmatively, we seek specific suggestions on how those 
rules could be amended, consistent with the Act, to facilitate the 
provision of services eligible for universal service support by all 
eligible providers.

C. Definition of Basic Service Packages To Be Provided by Eligible 
Telecommunications Carriers

    30. We seek comment on whether some amount of minimum local usage 
should be included in the basic service packages, and if so, how to 
determine that local usage requirement. In light of the cost 
characteristics of mobile wireless service, we seek comment on how to 
define a basic service package with a local usage requirement that 
presents a realistic option to wireless customers. For example, the 
obligation to provide some local usage would be rendered meaningless if 
a wireless carrier could satisfy that obligation by offering, among 
other service options, a basic service package containing local usage 
that was priced hundreds of dollars higher than options offered by that 
wireless carrier or competing carriers, so that no one selected it. 
Thus we seek comment on how to ensure that a local usage requirement is 
included as part of an option that represents a viable choice for 
consumers. We seek comment on whether carriers should only be eligible 
to receive universal service support with respect to subscribers who 
select a basic service package that includes a certain amount of local 
usage without additional charge. Alternatively, we seek comment on 
whether carriers should only be eligible to receive universal service 
support if a certain percentage of their subscribers subscribe to a 
basic service package that includes a certain amount of flat-rated 
local usage, because that would indicate that such package presented a 
viable option to customers.
    31. We also seek comment on whether we should require eligible 
telecommunications carriers to include some fixed number of minutes of 
use per month as part of the basic universal service package, or 
whether we should require some minimum number of calls. We note that 
the cost of a call for wireless carriers may vary depending on its 
duration and on whether it is made during peak calling hours. These 
factors may be less significant for wireline carriers. Therefore, we 
seek comment on whether we should establish different requirements for 
different types of carriers, and whether we should give carriers the 
option of offering either a minimum number of minutes or a minimum 
number of calls in their basic service package.
    32. We seek comment on how much, if any, local usage to require 
carriers to offer in such a basic service package in order to be 
eligible for universal service support. According to the Statistics of 
Common Carriers, telephone customers make, on average, 135 local calls 
per month per access line. This average varies from 52 local calls per 
month in Maine to 210 local calls per month in Louisiana. Other sources 
report that cellular customers average 150 minutes of use per month, 
and broadband PCS customers average 250 minutes of use per month. The 
cellular and broadband PCS numbers are expected to increase in the 
future. We seek comment on whether we should base the amount of local 
usage that a carrier must offer, at least in part, on average usage 
rates. Commenters that argue that no level of local usage should be 
required should explain why such a requirement would not be necessary 
to meet the goals of universal service. We encourage such commenters to 
suggest alternative approaches that will promote universal service 
goals.
    33. We also seek comment on how we should determine what 
constitutes local usage. We note that wireless and wireline carriers 
may treat different sets of calls as ``local.'' The boundaries of the 
local calling areas for wireline carriers and service areas for 
eligible telecommunications carriers are set by the states, and the 
value of a particular local usage requirement will depend in part on 
the size of the area encompassed by the local calling area, which may 
vary from state to state. We seek comment on whether, and how, to 
account for differences in the size of local calling areas. We seek 
comment on whether we should vary the amount of local usage that 
carriers must offer depending on the size of their local calling areas. 
We note that the California PUC suggested in the initial rulemaking 
that we include a minimum of three dollars worth of local usage. We 
seek guidance from the states on the level of local usage that we 
should require from eligible carriers serving their residents, given 
the size of the local calling areas and the basic service packages that 
they have established, recognizing that local calling areas may be 
different for customers of wireline and wireless carriers. We further 
seek comment on whether the local usage requirement we establish should 
be the same for business and residential users.

II. Procedural Matters and Ordering Clauses

A. Ex Parte Presentations

    34. This is a permit-but-disclose notice-and-comment rulemaking 
proceeding. Ex parte presentations are permitted, except during the 
Sunshine Agenda period, provided that they are disclosed as provided in 
the Commission's rules.

B. Initial Regulatory Flexibility Analysis

    35. 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 Further Notice. Written public 
comments are requested on the IRFA. These comments must be filed in 
accordance with the same filing deadlines as comments on the rest of 
this Further Notice, and should have a separate and distinct heading 
designating them as responses to the IRFA. The Commission will send a 
copy of this Further Notice, including the IRFA, to the Chief Counsel 
for Advocacy of the Small Business Administration (SBA) in accordance 
with the RFA. See 5 U.S.C. 603(a).
    36. Need for and Objectives of the Proposed Rules. In light of the 
concerns raised by wireless telecommunications providers regarding the 
difficulties associated with distinguishing their interstate and 
intrastate revenues for universal service reporting purposes, the 
Commission tentatively concludes that it should provide such providers 
with specific guidance on how to separate their interstate and 
intrastate revenues. Therefore, the Commission seeks comment in this 
Further Notice on

[[Page 68231]]

how wireless telecommunications providers should separate their 
interstate and intrastate revenues for purposes of universal service 
reporting. The Commission sets forth and seeks comment on proposed 
methodologies and simplifying assumptions that could be used by 
wireless telecommunications providers to distinguish between their 
interstate and intrastate revenues. Until we issue final rules 
regarding the mechanisms that wireless telecommunications providers 
should use in allocating their revenues between the interstate and 
intrastate jurisdictions, we provide such providers with interim 
guidelines for reporting on the Worksheet their percentage of 
interstate telecommunications revenues. The Commission also seeks 
comment on whether, from the perspective of wireless providers, which 
historically have not supplied services eligible for universal service 
support, our universal service rules are competitively neutral, 
especially with regard to the schools and libraries program. Finally, 
we seek comment on the definition of the basic service packages that 
carriers must offer in order to be eligible to receive universal 
service support.
    37. Legal Basis. The proposed action is supported by Secs. 4(i), 
4(j), 201-205, 254, and 403 of the Communications Act of 1934, as 
amended, 47 U.S.C. 154(i), 154(j), 201-205, 254, and 403.
    38. Description and Estimate of the Number of Small Entities to 
which the Further Notice will Apply.
    39. Radiotelephone (Wireless) Carriers. The SBA has developed a 
definition of small entities for radiotelephone (wireless) companies. 
According to the SBA's definition, a small business radiotelephone 
company is one employing fewer than 1,500 persons. The Census Bureau 
reports that there were 1,176 such companies in operation for at least 
one year at the end of 1992. The Census Bureau also reported that 1,164 
of those radiotelephone companies had fewer than 1,000 employees. Thus, 
even if all of the remaining 12 companies had more than 1,500 
employees, there would still be 1,164 radiotelephone companies that 
might qualify as small entities if they are independently owned and 
operated. We do not have information on the number of carriers that are 
not independently owned and operated, and thus are unable at this time 
to estimate with greater precision the number of radiotelephone 
carriers and service providers that would qualify as small business 
concerns under the SBA's definition. Consequently, we estimate that 
there are fewer than 1,164 small entity radiotelephone companies that 
may be affected by the proposals included in this Further Notice.
    40. Cellular Service Carriers. Neither the Commission nor the SBA 
has developed a definition of small entities specifically applicable to 
providers of cellular services. The closest applicable definition under 
the SBA rules is for radiotelephone (wireless) companies (SIC 4812). 
The most reliable source of information regarding the number of 
cellular service carriers nationwide of which we are aware is the data 
that the Commission collects annually in connection with the TRS 
Worksheet. According to the most recent data, 792 companies reported 
that they were engaged in the provision of cellular services. We have 
no information on the number of carriers that are not independently 
owned and operated, nor on those that have more than 1,500 employees, 
and thus are unable at this time to estimate with greater precision the 
number of cellular service carriers that would qualify as small 
business concerns under the SBA's definition. Consequently, we estimate 
that there are fewer than 792 small entity cellular service carriers 
that may be affected by the proposals included in this Further Notice.
    41. Paging Providers. The Commission has proposed a two-tier 
definition of small businesses in the context of auctioning geographic 
area paging licenses in the Common Carrier Paging and exclusive Private 
Carrier Paging services. Under the proposal, a small business will be 
defined as either (1) an entity that, together with its affiliates and 
controlling principals, has average gross revenues for the three 
preceding years of not more than $3 million; or (2) an entity that, 
together with affiliates and controlling principals, has average gross 
revenues for the three preceding calendar years of not more than $15 
million. Since the SBA has not yet approved this definition for paging 
services, the Commission will utilize the SBA definition applicable to 
radiotelephone companies, i.e., an entity employing no more than 1,500 
persons. At present, there are approximately 24,000 Private Paging 
licenses and 74,000 Common Carrier Paging licenses. According to 
Telecommunications Industry Revenue data, there were 172 ``paging and 
other mobile'' carriers reporting that they engage in these services. 
Consequently, the Commission estimates that there are fewer than 172 
small paging carriers. The Commission estimates that the majority of 
private and common carrier paging providers would qualify as small 
entities under the SBA definition.
    42. Broadband PCS Licensees. The broadband PCS spectrum is divided 
into six frequency blocks designated A through F. The Commission has 
defined ``small entity'' in the auctions for Blocks C and F as a firm 
that had average gross revenues of less than $40 million in the three 
previous calendar years. This definition of ``small entity'' in the 
context of broadband PCS auctions has been approved by the SBA. The 
Commission has auctioned broadband PCS licenses in blocks A through F. 
Of the qualified bidders in the C and F block auctions, all were 
entrepreneurs. Entrepreneurs was defined for these auctions as 
entities, together with affiliates, having gross revenues of less than 
$125 million and total assets of less than $500 million at the time the 
FCC Form 175 application was filed. Ninety bidders, including C block 
reauction winners, won 493 C block licenses and 88 bidders won 491 F 
block licenses. For purposes of this IRFA, the Commission assumes that 
all of the 90 C block broadband PCS licensees and 88 F block broadband 
PCS licensees, a total of 178 licensees, are small entities.
    43. Narrowband PCS Licensees. The Commission has auctioned 
nationwide and regional licenses for narrowband PCS. There are 11 
nationwide and 30 regional licensees for narrowband PCS. The Commission 
does not have sufficient information to determine whether any of these 
licensees are small businesses within the SBA-approved definition for 
radiotelephone companies. At present, there have been no auctions held 
for the MTA and BTA narrowband PCS licenses. The Commission anticipates 
a total of 561 MTA licenses and 2,958 BTA licenses will be awarded in 
the auctions. Given that nearly all radiotelephone companies have no 
more than 1,500 employees, and that no reliable estimate of the number 
of prospective MTA and BTA narrowband licensees can be made, the 
Commission assumes, for purposes of this IRFA, that all of the licenses 
will be awarded to small entities, as that term is defined by the SBA.
    44. 220 MHz radio services. Since the Commission has not yet 
defined a small business with respect to 220 MHz radio services, it 
will utilize the SBA definition applicable to radiotelephone companies, 
i.e., an entity employing no more than 1,500 persons. With respect to 
the 220 MHz services, the Commission has proposed a two-tiered 
definition of small business for purposes of auctions: (1) for Economic 
Area (EA) licensees, a firm with average annual gross revenues of not 
more than $6 million for the preceding three years; and (2) for 
regional and nationwide

[[Page 68232]]

licensees, a firm with average annual gross revenues of not more than 
$15 million for the preceding three years. Given that nearly all 
radiotelephone companies employ no more than 1,500 employees, for 
purposes of this IRFA the Commission will consider the approximately 
3,800 incumbent licensees as small businesses under the SBA definition.
    45. Rural Radiotelephone Service. The Commission has not adopted a 
definition of small business specific to the Rural Radiotelephone 
Service, which is defined in Section 22.99 of the Commission's Rules. A 
subset of the Rural Radiotelephone Service is BETRS, or Basic Exchange 
Telephone Radio Systems. Accordingly, we will use the SBA's definition 
applicable to radiotelephone companies, i.e., an entity employing fewer 
than 1,500 persons. There are approximately 1,000 licensees in the 
Rural Radiotelephone Service, and we estimate that almost all of them 
qualify as small under the SBA's definition of a small business.
    46. Specialized Mobile Radio (SMR) Licensees. Pursuant to 47 CFR 
90.814(b)(1), the Commission has defined ``small entity'' in auctions 
for geographic area 800 MHz and 900 MHz SMR licenses as a firm that had 
average annual gross revenues of less than $15 million in the three 
previous calendar years. This definition of a ``small entity'' in the 
context of 800 MHz and 900 MHz SMR has been approved by the SBA. The 
proposals included in this Further Notice may apply to SMR providers in 
the 800 MHz and 900 MHz bands that either hold geographic area licenses 
or have obtained extended implementation authorizations. We do not know 
how many firms provide 800 MHz or 900 MHz geographic area SMR service 
pursuant to extended implementation authorizations, nor how many of 
these providers have annual revenues of less than $15 million.
    47. The Commission has held auctions for geographic area licenses 
in the 800 MHz and 900 MHz SMR band. There were 60 winning bidders who 
qualified as small entities in the 900 MHz auction. Based on this 
information, we conclude that the number of geographic area SMR 
licensees affected by the rule adopted includes these 60 small 
entities. In the 800 MHz SMR auction, there were 524 licenses won by 
winning bidders, of which 38 licenses were won by small or very small 
entities.
    48. Wireless Communications Services (WCS). WCS is a wireless 
service, which can be used for fixed, mobile, radiolocation, and 
digital audio broadcasting satellite uses. The Commission defined 
``small business'' for the WCS auction as an entity with average gross 
revenues of $40 million for each of the three preceding years. The 
Commission auctioned geographic area licenses in the WCS service. There 
were seven winning bidders who qualified as very small business 
entities and one small business entity in the WCS auction. Based on 
this information, the Commission concludes that the number of 
geographic area WCS licensees affected include these eight entities.
    49. 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.
    50. Steps Taken to Minimize Significant Economic Impact on Small 
Entities and Significant Alternatives Considered. Throughout this 
Further Notice, we seek comment on alternatives that will reduce the 
impact on entities affected by these proposals. We tentatively conclude 
that we should adopt a surrogate percentage that would represent the 
percentage of interstate telecommunications revenues reported by 
certain carriers. We believe that this tentative conclusion greatly 
minimizes the administrative burden on those small carriers that 
experience difficulty in identifying their interstate and intrastate 
revenues. We also seek comment on a number of other simplifying 
assumptions that certain carriers would apply in estimating their 
percentage of interstate telecommunications revenues. Some of these 
proposals may impose more administrative burdens on certain carriers 
than others. We therefore seek comment on the level of administrative 
burden that these proposals would impose and, in the event that such 
proposals were adopted, on ways in which to reduce the level of 
administrative burden that they may impose. We particularly encourage 
parties to submit proposals that will reduce the administrative burden 
on carriers in separating their interstate and intrastate revenues.
    51. Federal Rules That May Overlap, Duplicate or Conflict with the 
Proposed Rule. None.
    52. It is furthered ordered that the Commission's Office of Public 
Affairs, Reference Operations Division, shall send a copy of this 
Further Notice of Proposed Rulemaking, including the Initial Regulatory 
Flexibility Analysis, to the Chief Counsel for Advocacy of the Small 
Business Administration.

C. Instructions for Filing Comments

    53. Comments may be filed using the Commission's Electronic Comment 
Filing System (ECFS) or by filing paper copies. See Electronic Filing 
of Documents in Rulemaking Proceedings, 63 FR 24121 (1998). Comments 
filed through the ECFS can be sent as an electronic file via the 
Internet to <http://www.fcc.gov/e-file/ecfs.html>. In completing the 
transmittal screen, commenters should include their full name, Postal 
Service mailing address, and the applicable docket or rulemaking 
number. Parties may also submit an electronic comment by Internet e-
mail. To get filing instructions for e-mail comments, commenters should 
send an e-mail to [email protected], and should include the following words 
in the body of the message, ``get form