[Federal Register Volume 64, Number 121 (Thursday, June 24, 1999)]
[Proposed Rules]
[Pages 33813-33816]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-16182]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[CC Docket Nos. 96-45 and 97-21; FCC 99-49]


Changes to the Board of Directors of the National Exchange 
Carrier Association, Inc., Federal-State Joint Board on Universal 
Service

AGENCY: Federal Communications Commission.

ACTION: Further notice of proposed rulemaking.

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SUMMARY: In this document, the Commission proposes a method for 
allocating funds in the event that the Administrator's initial denial 
of a request for support is reversed by the Administrator or the 
Commission. The Commission proposes a method for allocating support 
when there is sufficient funding to support all telecommunications 
service and Internet access (priority one services) appeals, but not 
sufficient funding to support all internal connection appeals. The 
Commission also proposes a method for allocating support in the 
unlikely event that sufficient funds are not available for all priority 
one service appeals.

DATES: Comments are due on or before June 30, 1999.

ADDRESSES: All filings must be sent to the Commission's Secretary, 
Magalie Roman Salas, Office of the Secretary, Federal Communications 
Commission,

[[Page 33814]]

445 Twelfth Street, S.W., TW-A325, Washington, D.C. 20554.

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

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's 
document released on May 28, 1999. The full text of this document is 
available for public inspection during regular business hours in the 
FCC Reference Center, Room CY-A257, 445 Twelfth Street, S.W., 
Washington, D.C., 20554.

I. Introduction

    1. In the this Further Notice of Proposed Rulemaking (Further 
Notice), we propose a method for allocating funds in the event that the 
Administrator's initial denial of a request for support is reversed by 
the Administrator or the Commission. Specifically, we propose a method 
for allocating support when there is sufficient funding to support all 
telecommunications service and Internet access (priority one services) 
appeals, but not sufficient funding to support all internal connection 
appeals. We also propose a method for allocating support in the 
unlikely event that sufficient funds are not available for all priority 
one service appeals.
    2. The Commission's rules provide that an applicant may file a 
request for review with the Administrator or the Commission in 
connection with the Administrator's denial of an application. Although 
the Administrator has taken all reasonable and appropriate steps to 
ensure that it will be able to fund fully all appeals that may be 
granted, we conclude that it is necessary to adopt additional funding 
priority rules setting forth how funds will be allocated in the 
unlikely event that sufficient funds are not available at the appeal 
phase. Consistent with the Commission's funding priority rules, we 
propose that, when a filing window is in effect, the Administrator 
shall first fund all priority one service appeals that have been 
granted and, if sufficient funds remain, shall allocate funds to 
internal connection appeals at each descending single discount 
percentage, e.g., ninety percent, eighty-nine percent, and so on. In no 
case, however, would an applicant be able to receive support for 
internal connections below the discount level for which an applicant 
received support in the original application process. That is, if the 
Administrator were only able to provide support during the original 
application process to applicants at a discount level of seventy 
percent or above, an applicant would not be able to receive support on 
appeal for an internal connection request at a sixty-nine percent 
discount level. To the extent funds do not exist to fund all appeals 
granted within a single discount percentage, we propose that the 
Administrator allocate the remaining support on a pro rata basis within 
that single discount percentage. We seek comment on this proposal.
    3. If the Administrator determines that sufficient funds are not 
available to fund all priority one service appeals, we propose that the 
Administrator allocate the available funds to all appeals for priority 
one services, i.e., telecommunications services and Internet access on 
a pro rata basis, irrespective of the discount level associated with 
the request. We believe that this is the best approach in light of both 
the funding priority rules, which grant first priority to requests for 
telecommunications services and Internet access, and the Commission's 
goal of ensuring that every eligible school and library receive some 
assistance. We seek comment on this proposal. In particular, we seek 
comment on how this proposed allocation method should be implemented in 
light of our appeal procedures, which permit applicants to seek review 
of decisions issued by the Administrator from either the Administrator 
or the Commission. We tentatively conclude that, to ensure an equitable 
distribution of funds to all priority one service appeals, the 
Administrator should wait until a final decision has been issued on all 
priority one service appeals before it allocates funds on a pro rata 
basis. We seek comment on this tentative conclusion. We also seek 
comment on whether it would be more appropriate for the Commission to 
permit the Administrator to use funds collected in the next funding 
year to fund priority one service appeals for the prior year. While we 
recognize that using funds collected for the next funding year may 
deplete the available funds for that year, we nevertheless seek comment 
on whether there are any advantage to such an approach. We also invite 
parties to submit alternative proposals that would enable the 
Administrator to distribute fairly funds for appeals in the event that 
sufficient funds are not available to fund all priority one service 
appeals.
    4. We recognize that applicants must complete the installation of 
internal connections by a date certain for each funding year. We 
tentatively conclude that an applicant would be required to complete 
the installation of internal connections that received support pursuant 
to an appeal within six months from the date that the final decision on 
appeal is issued. We seek comment on this tentative conclusion.
    5. Finally, pending the outcome of this Further Notice, we find 
that, if the Administrator is able to determine that sufficient funds 
are available to provide support for all priority one service appeals 
that may be granted for the first funding year, the Administrator may 
allocate support immediately to such appeals. To the extent funds 
remain, and the Administrator is able to determine that sufficient 
funds are available to allocate funds to all internal connection 
appeals down to the seventy percent discount level, i.e., the lowest 
discount level for which applicants received support during the 
original funding period, the Administrator may allocate support 
immediately to such internal connection appeals that may be granted.

VI. Filing Procedures

    6. Pursuant to sections 1.415 and 1.419 of the Commission's rules, 
47 CFR 1.415, 1.419, interested parties may file comments by June 30, 
1999. Pursuant to section 1.3 of the Commission's rules, 47 CFR 1.3, we 
find good cause to waive section 1.415(c) of the Commission's rules, 
which provides for the submission of replies to original comments. 
Dispensing with reply comments is crucial in light of the urgent need 
to provide definitive guidance to the Administrator regarding the 
priorities for allocating funds to applications whose initial denials 
are reversed by the Administrator or the Commission.
    7. 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>. Generally, only one 
copy of an electronic submission must be filed. If multiple docket or 
rulemaking numbers appear in the caption of this proceeding, however, 
commenters must transmit one electronic copy of the comments to each 
docket or rulemaking number referenced in the caption. 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

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e-mail to [email protected], and should include the following words in the 
body of the message, ``get form .'' A sample form 
and directions will be sent in reply.
    8. Parties who choose to file by paper must file an original and 
four copies of each filing. If more than one docket or rulemaking 
number appear in the caption of this proceeding, commenters must submit 
two additional copies for each additional docket or rulemaking number. 
All filings must be sent to the Commission's Secretary, Magalie Roman 
Salas, Office of the Secretary, Federal Communications Commission, 445 
12th Street, S.W., Washington, D.C. 20554. Parties who choose to file 
by paper should also submit their comments on diskette. These diskettes 
should be submitted to: Sheryl Todd, Federal Communications Commission, 
Common Carrier Bureau, Accounting Policy Division, 445 12th Street, 
S.W., room 5-A523, 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 labeled with the 
commenter's name, proceeding (including the lead docket number in this 
case (97-21)), type of pleading (comment or reply comment), date of 
submission, and the name of the electronic file on the diskette. The 
label should also include the following phrase ``Disk Copy--Not an 
Original.'' Each diskette should contain only one party's pleadings, 
preferably in a single electronic file. In addition, commenters must 
send diskette copies to the Commission's copy contractor, International 
Transcription Service, Inc., room CY-B400, 445 Twelfth Street, S.W., 
Washington, D.C. 20554. For further information, please contact: Sharon 
Webber, Common Carrier Bureau, Accounting Policy Division, (202) 418-
7400.
    9. Pursuant to section 1.1206 of the Commission's rules, 47 CFR 
1.1206, this proceeding will be conducted as a permit-but-disclose 
proceeding in which ex parte communications are permitted subject to 
disclosure.

VII. Regulatory Flexibility Analysis

A. Initial Regulatory Flexibility Analysis

    10. As required by the Regulatory Flexibility Act (RFA), the 
Commission has prepared this present Initial Regulatory Flexibility 
Analysis (IRFA) of the possible significant economic impact on small 
entities by the policies and rules proposed in this Further Notice of 
Proposed Rulemaking. Written public comments are requested on this 
IRFA. Comments must be identified as responses to the IRFA and must be 
filed by the deadlines for comments on the Further Notice of Proposed 
Rulemaking provided above. The Commission will send a copy of the 
Further Notice of Proposed Rulemaking, including this IRFA, to the 
Chief Counsel for Advocacy of the Small Business Administration. See 5 
U.S.C. 603(a). In addition, the Further Notice of Proposed Rulemaking 
and IRFA (or summaries thereof) will be published in the Federal 
Register. See id.
    11. Need for an Objectives of the Proposed Rules. The Commission's 
rules provide that an applicant may file a request for review with the 
Administrator or the Commission in connection with the Administrator's 
denial of an application. Although the Administrator has taken all 
reasonable and appropriate steps to ensure that it will be able to fund 
fully all appeals that may be granted, we conclude that it is necessary 
to adopt additional funding priority rules setting forth how funds will 
be allocated in the unlikely event that sufficient funds are not 
available at the appeal phase. Accordingly, the Further Notice proposes 
that, when a filing window is in effect, the Administrator shall first 
fund all priority one service appeals that have been granted and, if 
sufficient funds remain, shall allocate funds to internal connection 
appeals at each descending single discount percentage, e.g., ninety 
percent, eighty-nine percent, and so on. To the extent funds do not 
exist to fund all appeals granted within a single discount percentage, 
we propose that the Administrator allocate the remaining support on a 
pro rata basis within that single discount percentage. If the 
Administrator determines that sufficient funds are not available to 
fund all priority one service appeals, the Further Notice proposes that 
the Administrator allocate the available funds to all appeals for 
priority one services, i.e., telecommunications services and Internet 
access on a pro rata basis, irrespective of the discount level 
associated with the request.
    12. Legal Basis. The proposed action is supported by sections 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.
    13. Description and Estimate of the Number of Small Entities to 
which the proposed rules will Apply. The RFA directs agencies to 
provide a description of and, where feasible, an estimate of the number 
of small entities that may be affected by the proposed rules, if 
adopted. The RFA generally defines the term ``small entity'' as having 
the same meaning as the terms ``small business,'' ``small 
organization,'' and ``small governmental jurisdiction.'' In addition, 
the term ``small business'' has the same meaning as the term ``small 
business concern'' under the Small Business Act. A small business 
concern is one which: (1) is independently owned and operated; (2) is 
not dominant in its field of operation; and (3) satisfies any 
additional criteria established by the Small Business Administration 
(SBA). A small organization is generally ``any not-for-profit 
enterprise which is independently owned and operated and is not 
dominant in its field.'' Nationwide, as of 1992, there were 
approximately 275,801 small organizations. ``Small governmental 
jurisdiction'' generally means ``governments of cities, counties, 
towns, townships, villages, school districts, or special districts, 
with a population of less than 50,000.'' As of 1992, there were 
approximately 85,006 such jurisdictions in the United States. This 
number includes 38,978 counties, cities, and towns; of these, 37,566, 
or 96 percent, have populations of fewer than 50,000. The Census Bureau 
estimates that this ratio is approximately accurate for all 
governmental entities. Thus, of the 85,006 governmental entities, we 
estimate that 81,600 (91 percent) are small entities.
    14. Schools and Libraries. The Commission specifically noted in the 
Universal Service Order that the SBA defined small elementary and 
secondary schools and small libraries as those with under $5 million in 
annual revenues. The Commission further estimated that there are fewer 
than 86,221 public and 26,093 private schools and fewer than 15,904 
libraries that may be affected by the decisions and rules adopted in 
the Universal Service Order. We believe that these same small entities 
may be affected potentially by the rules proposed in this Further 
Notice.
    15. Rural Health Care Providers. The Commission noted in the 
Universal Service Order that neither the Commission nor the SBA has 
developed a definition of small, rural health care providers. Section 
254(h)(5)(B) defines the term ``health care provider'' and sets forth 
the seven categories of health care providers eligible to receive 
universal service support. We estimated that there are fewer than 
12,296 health care providers potentially affected by the rules in the 
Universal Service Order. We note that these small entities may

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potentially be affected by the rules proposed in this Further Notice.
    16. Description of Projected Reporting, Record keeping, and Other 
Compliance Requirements. We tentatively conclude that there will not be 
any additional burdens or costs associated with the proposed rules on 
any entities, including on small entities. We seek comment on this 
tentative conclusion.
    17. Steps Taken to Minimize Significant Economic Impact on Small 
Entities and Significant Alternatives Considered. In the FRFA to the 
Universal Service Order, the Commission described the steps taken to 
minimize the significant economic impact on a substantial number of 
small entities consistent with stated objectives associated with the 
Schools and Libraries section, the Rural Health Care Provider section, 
and the Administration section of the Universal Service Order. Our 
current action to amend our rules will benefit schools, libraries, and 
rural health care providers, by ensuring that funds are allocated first 
to the neediest schools and libraries and that schools, libraries, and 
rural health care providers will be able to receive any support 
approved by the Administrator that is not the subject of an appeal. We 
believe that the amended rules fulfill the statutory mandate to enhance 
access to telecommunications services for schools, libraries, and rural 
health care providers, and fulfill the statutory principle of providing 
quality services at ``just, reasonable, and affordable rates,'' without 
imposing unnecessary burdens on schools, libraries, rural health care 
providers, or service providers, including small entities.
    18. Federal Rules That May Overlap, Duplicate, or Conflict with the 
Proposed Rule. None.

VIII. Ordering Clauses

    19. Accordingly, it is ordered that, pursuant to the authority 
contained in sections 1-4, 201-205, 218-220, 254, 303(r), 403 and 405 
of the Communications Act of 1934, as amended, 47 U.S.C. 151-154, 201-
205, 218-220, 254, 303(r), 403 and 405, section 553 of the 
Administrative Procedure Act, 5 U.S.C. 553, and section 1.108 of the 
Commission's rules, 47 CFR 1.108, the Further Notice of Proposed 
Rulemaking is adopted.
    20. It is further ordered that, because the Commission has found 
good cause, this Further Notice of Proposed Rulemaking is effective 
upon publication in the Federal Register.
    21. It is further 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.

List of Subjects in 47 CFR Part 54

    Healthcare providers, Libraries, Reporting and recordkeeping 
requirements, Schools, Telecommunications, Telephone.

Federal Communications Commission.
Magalie Roman Salas,
Secretary.
[FR Doc. 99-16182 Filed 6-23-99; 8:45 am]
BILLING CODE 6712-01-P