[Federal Register Volume 64, Number 189 (Thursday, September 30, 1999)]
[Proposed Rules]
[Pages 52738-52756]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-25479]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[CC Docket No. 96-45; FCC 99-204]


Federal-State Joint Board on Universal Service: Promoting 
Deployment and Subscribership in Unserved and Underserved Areas, 
Including Tribal and Insular Areas

AGENCY: Federal Communications Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document concerning the responsibilities and potential 
actions of the Federal-State Joint Board on Universal Service addresses 
the unique issues that may limit telecommunications deployment and 
subscribership in the unserved or underserved regions of our Nation, 
including on tribal lands and in insular areas. The Commission seeks 
comment on current levels of deployment and subscribership in unserved, 
tribal and insular areas, including penetration rates, availability of 
telecommunications services, and possible impediments to increased 
deployment and penetration. With respect to tribal areas, the 
Commission seeks comment on issues that may be affecting the 
availability of universal service in tribal areas, including who has 
jurisdiction, how eligible telecommunications carriers may be 
designated, and possible modifications to federal high-cost and low-
income support mechanisms that may be necessary to promote deployment 
and subscribership in these areas.

DATES: Comments are due November 29, 1999 and reply comments are due 
December 29, 1999.

ADDRESSES: All filings must be sent to the Commission's Secretary, 
Magalie Roman Salas, Office of the Secretary, Federal Communications 
Commission, 445 Twelfth Street, SW, TW-A325, Washington, DC 20554.

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

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's 
Further Notice of Proposed Rulemaking released on September 3, 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, SW, Washington, DC 20554.

[[Page 52739]]

I. Introduction

    1. An important goal of the Telecommunications Act of 1996 is to 
preserve and advance universal service in a competitive 
telecommunications environment. The 1996 Act mandates that ``consumers 
in all regions of the Nation, including low-income consumers and those 
in rural, insular, and high[-] cost areas, should have access to 
telecommunications and information services * * *.'' Congress also 
directed that the support mechanisms employed by the Commission for 
this task should be ``specific, predictable and sufficient.'' Through 
decisions adopted over the past two years, the Commission has been 
striving to ensure that federal universal service support mechanisms 
for high-cost areas, low-income consumers, schools and libraries, and 
rural health care providers, enable consumers to obtain 
telecommunications services that would otherwise be prohibitively 
expensive.
    2. The absence of telecommunications service in a home puts its 
occupants at a tremendous disadvantage in today's society. Parents 
cannot be reached when urgent situations arise at school. Job seekers 
cannot offer prospective employers a quick and convenient means of 
communication. People in immediate need of emergency services cannot 
contact police departments, fire departments, or medical providers. In 
short, telephone service provides a vital link between individuals and 
society as a whole. Given the importance of telephone service in modern 
society, it is imperative that the Commission take swift and decisive 
action to promote the deployment of facilities to unserved and 
underserved areas and to provide the support necessary to increase 
subscribership in these areas.
    3. The Commission took additional steps in the Thirteenth Order on 
Reconsideration, 64 FR 30917 (June 9, 1999), toward realizing 
Congress's goal of bringing telecommunications services to all regions 
of the Nation. Specifically, in consultation with the Federal-State 
Joint Board on Universal Service (Joint Board), we adopted the 
framework for a new, forward-looking high-cost support mechanism for 
non-rural carriers. This new high-cost support mechanism is intended to 
ensure that high-cost areas receive support that is specific, 
predictable, and sufficient, even as local competition develops. 
Moreover, we believe that the forward-looking methodology, as opposed 
to a methodology based on book costs, will encourage efficient entry 
and investment in high-cost areas because forward-looking costs drive 
market decisions.
    4. In addition to adopting the methodology for the new high-cost 
support mechanism for non-rural carriers, the Thirteenth Order on 
Reconsideration also sought comment on certain issues regarding the 
implementation of the new mechanism. The Commission intends to resolve 
these implementation issues in the fall of 1999, so that the new high-
cost support mechanism will begin providing support to non-rural 
carriers beginning on January 1, 2000. In addition, the Commission 
reaffirmed its intention that rural carriers will receive support based 
on the forward-looking costs of providing supported services, but not 
before January 1, 2001, and only after further review by the 
Commission, the Joint Board, and a Rural Task Force appointed by the 
Joint Board. In the meantime, rural carriers will continue to receive 
high-cost support based on the existing mechanism until the Commission 
adopts an appropriate forward-looking mechanism for determining rural 
support.
    5. The Commission has also recognized that, despite the steps it 
had taken to achieve the universal service goals of the 1996 Act, some 
areas of the nation remain unserved or inadequately served. In the 
First Report and Order, 62 FR 32862 (June, 17, 1999), the Commission 
stated that it would revisit certain issues pertaining to the 
availability of service in unserved areas and universal service support 
in insular areas. In its Second Recommended Decision, 63 FR 67837 
(December 9, 1998), the Joint Board recommended that the special needs 
of unserved areas be investigated and subjected to a more comprehensive 
evaluation in a separate proceeding. Telephone penetration rates among 
low-income consumers, and in insular, high-cost, and tribal lands lag 
behind the penetration rates in the rest of the country. Indeed, while 
approximately 94.2 percent of all households in the United States have 
telephone service today, subscribership levels for very low income 
households (78.3 percent), insular areas, certain high-cost areas, and 
tribal lands (46.6 percent), are significantly lower than the national 
average. The Commission has stated that these low penetration rates are 
largely the result of ``income disparity, compounded by the unique 
challenges these areas face by virtue of their location.''
    6. The Commission has been particularly concerned that Indians on 
reservations, in comparison to other Americans, have less access even 
to basic telecommunications services. In 1998, the Commission began 
formally examining its relationship with Indian tribes and the unique 
issues involved in providing access to telephone service for Indians on 
reservations. As a first step, Commissioners and staff met with many 
tribal leaders and other Indian representatives to obtain their input. 
In meetings on April 30, 1998, and July 7, 1998, Commissioners and 
staff heard from a variety of tribal leaders, tribal telephone company 
representatives, academics, government personnel, and others with 
experience and expertise in the deployment of telecommunications 
services on reservations. Experts discussed problems ranging from 
geographic isolation to lack of information to economic barriers. These 
meetings provided an unprecedented opportunity for the Commission to 
hear about the variety of interrelated obstacles that have resulted in 
the lowest penetration rates in the country. Following these meetings, 
several of the experts returned in the fall of 1998, to provide a 
tutorial on Indian law for Commission staff.
    7. Based on this informal dialogue with experts, the Commission 
determined that it would conduct public hearings to explore further the 
reasons for the lack of telephone service and to determine what 
specific actions the Commission could take that would improve access to 
telephone service on Indian reservations. The hearings, entitled 
``Overcoming Obstacles to Telephone Service for Indians on 
Reservations,'' BO Docket No. 99-11, provided an opportunity to obtain 
formal testimony and comments on the range of problems the Commission 
had begun to identify. The first field hearing was held on January 29, 
1999 at the Indian Pueblo Cultural Center in Albuquerque, New Mexico. 
The second field hearing was held on March 23, 1999 at the Gila River 
Indian Community in Chandler, Arizona. Each hearing consisted of three 
panels representing tribal authorities and tribal telephone companies, 
industry, and government and consumer groups. The Commission heard 
extensive testimony on issues including the costs of delivering 
services to remote areas having very low population densities; the 
impact of the size and extent of local calling areas on affordability 
of service; the quality of telephone service on reservations; the 
complexities of governmental jurisdiction and sovereignty issues; and 
the effects on telephone service of low incomes and high unemployment 
on reservations. Transcripts of the hearings and comments filed by 
interested parties are

[[Page 52740]]

available on the Commission's website. Comments filed in BO Docket 
Number 99-11 will be incorporated, where relevant, into the record of 
this proceeding.
    8. Further, in connection with each of the field hearings, 
Commissioners and staff made site visits to Indian reservations and 
tribally-owned telephone companies. These included visits to the 
Rosebud Reservation, the Santa Domingo, Jemez, and Picuris Pueblos, and 
to Saddleback Communications, the Gila River Telephone Company, the 
Salt River Pima-Maricopa Reservation, the Navajo Nation, the Hopi 
Reservation, and the Havasupai Reservation. These site visits provided 
an opportunity for Commissioners and staff to observe firsthand the 
state of telephone service in these reservations and pueblos and to 
hear directly from tribal members about their experiences. For example, 
Commissioners and staff visited the home of an elderly couple who could 
not afford the cost of installing a telephone in their home. The 
husband of the couple explained that he was suffering from a chronic 
illness, but was unable to reach the hospital or his doctor by 
telephone to schedule medical appointments and discuss his treatment. 
During another site visit, a tribal member stated that a relative had 
died during a medical emergency when his family was unable to call an 
ambulance in time when critical medical attention was needed. In 
addition, the trips to Saddleback Communications and the Gila River 
Telephone Company enabled Commission staff to view the successful 
operations of some tribally-owned telephone companies.
    9. In this Further Notice of Proposed Rulemaking (Further Notice), 
the Commission addresses the unique issues that may limit 
telecommunications deployment and subscribership in the unserved or 
underserved regions of our Nation, including on tribal lands and in 
insular areas. In particular, the Commission seeks comment on current 
levels of deployment and subscribership in unserved, tribal and insular 
areas, including penetration rates, availability of telecommunications 
services, and possible impediments to increased deployment and 
penetration. With respect to tribal areas, the Commission seeks comment 
on issues that may be affecting the availability of universal service 
in tribal areas, including the assignment of jurisdiction, designation 
of eligible telecommunications carriers, and possible modifications to 
federal high-cost and low-income support mechanisms that may be 
necessary to promote deployment and subscribership in these areas. In 
particular, the Commission seeks comment on the possibility of allowing 
carriers to establish separate tribal study areas, raising the cap on 
the high-cost fund to allow for growth based on separate tribal study 
areas, and revisions to its Lifeline rules. In a companion Notice of 
Proposed Rulemaking we are adopting today, we seek comment on the 
potential of wireless technology to provide basic telephone service to 
tribal lands.
    10. With respect to unserved areas, the Commission seeks further 
comment regarding the implementation of section 214(e)(3) of the Act, 
which permits the Commission or state commissions to order a carrier to 
provide service to an unserved community, including the possibility of 
adopting a competitive bidding mechanism to identify the carrier or 
carriers best able to serve an unserved area. The Commission also seeks 
comment on possible modifications to the federal low-income and rural 
health care support mechanisms in underserved areas, including tribal 
and insular areas, including the possibility of expanding LinkUp to 
include facilities based charges, and providing support for intrastate 
toll-calling and rural health care infrastructure. The Commission seeks 
comment on rule changes designed to enhance the availability of support 
for rural health care providers in insular areas, including determining 
the urban rate and the nearest large city. Through these efforts, we 
seek to ensure that unserved and underserved areas have access to 
telecommunications services. With respect to tribal lands, we also seek 
to ensure that our efforts are consistent with principles of tribal 
sovereignty, the federal trust relationship, and support for tribal 
self-determination.

II. Current Levels of Deployment and Subscribership

A. Penetration Rates

    11. The Industry Analysis Division of the Common Carrier Bureau 
publishes a Subscribership Report three times per year. The data in 
this report is based on the Current Population Survey (CPS), conducted 
monthly by the Census Bureau to keep track of the unemployment rate and 
other socio-economic conditions. The survey, however, is based on 
information from only 50,000 households nationwide and does not 
identify geographic areas with fewer than 100,000 people. Because many 
unserved, tribal and insular areas fall below this population 
threshold, the CPS cannot be used to estimate penetration rates for 
these areas. In addition, this data does not include areas of the 
United States that are not states, including Puerto Rico and the Virgin 
Islands. The long form of the decennial census, which is delivered to 
millions of households, contains a question about telephone 
subscribership. As a result, the census data can be used to estimate 
telephone penetration for smaller geographic areas. This data, however, 
is collected only every ten years and it takes the Census Bureau one 
year to compile results.
    12. We seek detailed information, to the extent that it is 
available, on penetration rates in high-cost areas, insular areas, 
tribal lands, and any other areas considered to be underserved. By the 
term penetration rate, we mean the percentage of households within a 
specified area that have telephone service in the housing unit. We seek 
this information on a national level, on a state-by-state or territory-
by-territory level, and on an area-by-area level. To the extent 
possible, we encourage commenters to provide the following additional 
information in each of the areas, and on each of the levels, where they 
measure penetration rates: (1) total population; (2) population 
density; (3) average annual income; and (4) average unemployment rate. 
We also ask that commenters briefly explain the methods by which they 
gather their data (e.g., census data, statistical sampling, etc.). We 
also seek comment on the difficulty of getting such information, such 
as the difficulty of mapping a telephone service territory onto the 
census territories (such as census block groups) because the boundaries 
may not always coincide, and questions concerning the definitions of 
the terms ``household'' and ``telephone service.''

B. Availability and Cost of Telecommunications Services

    13. In each of the areas, and on each of the levels described, we 
seek to determine the nature of the telecommunications services 
available and the costs of such services. In particular, we seek 
comment on the extent to which these areas receive the following 
service, if any: basic telephone service, services included within the 
definition of universal service, and/or advanced telecommunications 
services. We also seek comment on whether any carrier is providing the 
following services and the approximate number of households served by 
each service: wireline, wireless, Basic Exchange Telecommunications 
Radio Systems (BETRS), or other telecommunications

[[Page 52741]]

services; cable television; direct broadcast satellite service; other 
satellite services that provide voice and data, such as those provided 
through VSAT networks; Internet service; and electric service. In 
addition, we seek comment on the monthly rate for each of these 
services. With specific regard to basic telephone service, we seek 
comment on the average monthly bill for local service, local toll 
service, and long-distance service.
    14. To the extent that underserved, high-cost, insular, and/or 
tribal lands have basic telephone service, we seek comment on whether 
the local calling area includes the nearest metropolitan area or other 
area where the nearest medical, government, cultural or entertainment 
facilities exist, i.e., the ``community of interest.'' For unserved 
areas, and in particular tribal lands, we also seek comment to 
determine whether these areas fall within the designated service area 
of existing carriers, regardless of whether such carriers are providing 
service to the area.
    15. We seek comment on the extent to which existing facilities 
currently used to provide other services (e.g., radio broadcast towers, 
cable television plant, electrical poles and satellite infrastructure) 
could be adapted to provide the services included within the definition 
of universal service. We also seek comment on whether specific services 
included within the definition of universal service could not be 
provided via these facilities. We seek comment on the extent to which 
facilities used to provide telecommunications service to customers 
outside the unserved or underserved areas exist adjacent to or nearby 
the unserved or underserved areas. In particular, we seek comment on 
whether railroad tracks, or towers used for the placement of antennas, 
are found in these adjacent areas. We seek comment on what role the 
Commission might play in encouraging the use of these other facilities 
to provide service in underserved areas. For example, we seek comment 
on whether the Commission, or some other entity, should develop a 
database to maintain information about facilities that could be used to 
provide service in currently unserved or underserved areas, including 
tribal lands and insular areas.
    16. We also seek comment on the possible shared use of existing 
federal telecommunications infrastructure, facilities or other 
resources, including government rights-of-way, to provide service in 
unserved or underserved areas, including tribal and insular areas. We 
seek comment on whether federal telecommunications resources could be 
made available in the short term to serve as connecting backbone 
infrastructure for health and safety telecommunications in unserved 
areas. We encourage federal entities with government owned 
telecommunications resources, particularly the Bureau of Indian 
Affairs, to comment on this issue.
    17. Individuals from Indian communities, state agencies and the 
telecommunications industry have commented that satellite and 
terrestrial wireless systems may represent practical and cost-effective 
alternatives for providing service in unserved areas, including tribal 
lands. In the pending 2 GHz proceeding, which proposes policies and 
rules for licensing and operation of the 2 GHz mobile satellite service 
(MSS) systems in the United States, the Commission sought comment on 
incentives and policies to encourage provision of satellite services to 
unserved, rural, insular or economically isolated areas. The commenters 
generally support the Commission's tentative conclusion that satellites 
represent an excellent technology for providing basic and advanced 
telecommunications services to unserved areas, including tribal lands. 
Several commenters stated that the Commission should take positive 
steps to encourage access to Universal Service Funds by satellite 
operators or service providers. Several commenters also requested that 
the Commission should identify express and implicit regulatory 
provisions that may prevent satellite providers from seeking universal 
support subsidies and reform those provisions, or forbear from imposing 
these provisions, so that MSS providers can fully participate in the 
Universal Service Support initiative.
    18. Satellite networks, used either on a stand alone basis or in 
combination with a terrestrial wireless network, may offer a cost 
advantage over wireline or other alternatives in remote areas where a 
limited population may not provide the economies of scale to support 
the deployment of wireline or other networks for each community. 
Because satellites have large coverage areas, and in many cases, can 
reach an entire nation, satellite providers may achieve greater 
economies of scale in serving isolated areas since the costs of 
deployment could be spread across a number of communities. The basic 
build-out required to obtain satellite service is for earth stations to 
transmit and receive satellite signals. We seek comment on why 
satellite or terrestrial wireless systems have not been used more 
extensively to serve these areas. Specifically, we seek comments 
regarding the particular characteristics of satellite or terrestrial 
wireless systems that render these technologies suited for serving 
unserved areas, the costs associated with deployment, the availability 
of federal universal service support, and any other impediments to 
deployment. To the extent that costs deter satellite and terrestrial 
wireless deployment, we seek comment on what actions the Commission 
should take to support the establishment and maintenance of satellite 
and terrestrial wireless services. We ask parties to comment on whether 
specific aspects of our universal service rules may deter both current 
and future satellite services providers from providing service to 
rural, insular, and other unserved communities, and what specific steps 
the Commission can undertake to encourage the use of universal service 
support by satellite service providers. We also seek comment on any 
other actions the Commission should take to encourage the deployment of 
the most cost-effective, practical solution in these geographically 
extreme areas.

C. Impediments to Increased Penetration

    19. In addition to identifying impediments to increased penetration 
rates, we also ask commenters to discuss potential solutions for 
overcoming those impediments. We do not reach tentative conclusions on 
any of the proposals discussed. Instead, we seek comment on the need 
for the Commission to address the specific concerns set forth and the 
costs and benefits of the proposals discussed. We seek comment on how 
the Commission should measure its success in satisfying the mandate in 
the 1996 Act that consumers in all regions of the nation have access to 
telecommunications services. We seek comment on what measure we could 
use, other than penetration rates, to evaluate our success in achieving 
this goal.
1. Demographic Factors
    20. We ask commenters to supply data for high-cost, insular, and 
tribal lands regarding: (1) total population; (2) population density; 
(3) average annual income; and (4) average unemployment rate. Bureau of 
Census data indicates that income and education levels greatly affect 
telephone penetration rates and that geographic location can also make 
a difference. In this section, we seek specific comments on how these 
demographic factors affect penetration rates. For example, do income 
levels have a greater effect on penetration rates than population 
density? Do the

[[Page 52742]]

combined effects of low income and low population density have an 
exponential effect on penetration rates? We seek comment on whether 
other demographic factors significantly affect penetration rates in 
high-cost, insular, and tribal lands, e.g., education levels.
2. Geographic Factors
    21. One of the more obvious explanations for low penetration rates 
in high-cost, insular, and tribal lands is that these areas are 
unusually expensive to serve. Distance appears to be one reason line 
extension charges are so high. During the New Mexico and Arizona Field 
Hearings, several tribes testified about the remoteness of their 
locations and the challenges that remote locations presented in terms 
of telecommunications services. For example, in 1997, the Navajo 
Communications Company issued 72 line extension charge estimates that 
averaged more than $40,000, including eight over $100,000 and one over 
$157,000. The cost for installation of a line on the Salt River Pima-
Maricopa Indian Community (located in the heart of metropolitan 
Phoenix) is $5,000. We seek comment on the general terrain, including 
the existence of mountains, plains, swamps, water, plateaus, canyons, 
etc., that create challenges in providing telecommunications services. 
We also seek comment on the extent to which the absence of necessary 
infrastructure, for example roads or electrical capacity, constitutes a 
barrier to deployment in rural, insular, high-cost, and tribal lands.
3. Financial Factors
    22. We seek comment on whether difficulties in obtaining access to 
financing limits the ability of carriers to provide service in unserved 
or underserved rural, insular, high-cost, and tribal lands. We seek 
comment on any specific provisions in loan agreements that serve to 
deter deployment in these areas. We also seek comment on any measures 
the Commission could take that would diminish the risks faced by 
investors and would enhance the ability of carriers to attract 
financing necessary to provide service in unserved or underserved 
rural, insular, high-cost, and tribal lands. We also seek comment on 
the availability and utility of existing programs that may provide 
funding and assistance to carriers seeking to provide 
telecommunications service in unserved areas and underserved areas, 
including tribal and insular areas, including whether the availability 
of existing sources of funding and assistance is adequately publicized.
4. Cultural Factors
    23. We seek comment on the extent to which cultural values or 
lifestyle preferences deter consumer interest in subscribing to 
telecommunications services in unserved or underserved areas. For 
example, we seek comment on whether concerns about cultural 
preservation, religion, identity, and values may affect the willingness 
of tribal authorities to allow or promote the availability of 
telecommunications services in their communities. Similarly, we seek 
comment on whether there are a significant number of individuals that 
simply do not want telecommunications services because of personal 
lifestyle choices. We also seek comment on the extent to which carriers 
justify the lack of deployment in unserved or underserved rural, 
insular, high-cost, and tribal lands based on concerns for cultural 
preservation and whether these concerns are legitimate. In addition, we 
seek comment on whether the Commission's efforts to promote deployment 
and subscribership in unserved and underserved areas should be 
constrained by the cultural choices expressed by tribal authorities or 
other local leadership.
5. Regulatory Factors
    24. We seek comment on impediments imposed by various laws, 
regulations or practices that may deter carriers from providing service 
to unserved or underserved areas, including federal, state, tribal or 
insular authorities.
    25. Federal Regulatory Impediments. We seek comment on the current 
process for obtaining access to rights-of-way on tribal lands and to 
what extent this process deters carriers from providing service on 
tribal lands. Under the Right-of-Way Act of 1948, there are three 
critical components for obtaining rights-of-way over tribal land: (1) 
the Secretary of the Interior through the Bureau of Indian Affairs must 
grant the easement for the right-of-way; (2) compensation of not less 
than fair market value, as determined by the Secretary, plus severance 
damages must be paid to the property owner; and (3) tribal consent must 
be obtained. The first of these requires a service provider to undergo 
environmental assessments and secure cultural and archaeological 
clearances from the Bureau of Indian Affairs. The second component 
requires the service provider to obtain the standard appraisal it would 
for any easement but under standards set by Bureau of Indian Affairs. 
Finally, the service provider must also meet any conditions imposed by 
the particular tribe because the tribe has the ultimate authority to 
accept or reject the right-of-way. Carriers have indicated that this 
process is a significant barrier to entry. Tribal authorities have 
expressed concern about the ability of carriers to use existing rights-
of-way to establish new terrestrial networks without obtaining the 
consent of the tribal authority. In addition, carriers and tribal 
authorities appear to have concerns concerning appropriate compensation 
for use of rights-of-way in tribal lands. To the extent rights-of-way 
management issues pose a barrier to entry on tribal lands, we seek 
comment on what role, if any, the Commission could play in addressing 
these issues.
    26. We also seek comment on whether any aspect of our universal 
service rules deters carriers from providing service to unserved and 
underserved areas. For example, does the definition of supported 
services deter terrestrial wireless or satellite service providers from 
providing services in these areas? In our ongoing proceeding to reform 
the high-cost universal service support mechanism for non-rural 
carriers, several parties representing rural carriers have filed 
comments asking that we adjust or eliminate the cap on the high-cost 
loop fund to coincide with the anticipated transition of non-rural 
carriers to a new forward-looking support mechanism on January 1, 2000. 
We observe that the cap on the existing high-cost fund properly allows 
for growth based on the rate of growth in the total number of working 
loops nationwide. We also observe that carriers do invest in facilities 
in an amount greater than that which is supported through federal 
universal service support mechanisms. We seek comment regarding the 
extent to which the interim cap on the high-cost fund is a factor 
contributing to the lack of deployment in unserved areas, including 
tribal and insular areas.
    27. We comment on whether existing LATA boundaries prevent calls 
from unserved or underserved areas, including tribal lands, to the 
nearest metropolitan area or community of interest from being included 
in local service. We seek comment on any other federal rules or 
Commission regulations which may deter carriers from providing service 
to unserved or underserved areas. We also observe that issues specific 
to wireless providers will be addressed in a separate proceeding.
    28. State Regulations. We also seek comment on regulations or 
actions at the state level that may impact deployment and 
subscribership in unserved and underserved areas. We seek comment on 
the extent to which

[[Page 52743]]

statewide rate-averaging requirements or limited local calling areas 
may make the costs of telecommunications service unaffordable to low-
income consumers living in unserved or underserved areas. We also seek 
comment on existing state programs designed to ensure that rates in 
remote and tribal lands are affordable.
    29. Tribal/Insular Regulatory Impediments. We seek comment on any 
regulations or requirements imposed by tribal or insular authorities 
that may deter entry in tribal lands or in insular areas. For example, 
we seek comment on whether local governments own or operate the local 
exchange carrier in their areas and what impact this may have on 
competitive entry from other cost-effective wireline, terrestrial 
wireless, or satellite service providers. We seek comment on whether 
government ownership or operation affects the provision of services 
supported by universal service mechanisms in these areas. We seek 
comment on any ownership or employment requirements imposed by tribal 
authorities that may impair the ability of carriers to provide service 
and/or compete with tribally-owned carriers. For example, we seek 
comment on the extent to which tribes require an ownership interest in 
a carrier as a prerequisite to allowing the carrier to provide service 
on tribal lands. We seek comment on the impact such requirements may 
have on the deployment of telecommunications facilities and services on 
tribal lands.

III. Tribal Lands

    30. For our universal service support mechanisms to be effective on 
tribal lands, we seek to promote active involvement and collaboration 
between the Commission and tribal authorities. As a general matter, we 
seek comment on how we can increase Indian participation in the 
Commission's decision-making process. At a more specific level, we seek 
comment throughout this section on issues unique to tribal lands that 
may affect the goals and incentives of federal universal service 
support mechanisms and consider additional, targeted assistance the 
Commission may want to provide to promote deployment and subscribership 
on tribal lands. As described, the trust relationship between the 
federal government and Indians as well as principles of tribal 
sovereignty suggest that the federal government may have the authority 
to implement particularized measures to address the factors causing the 
unusually low subscribership on tribal lands. We emphasize that these 
proposals are not meant to imply that the states have not, or will not, 
do their share in promoting the availability of universal service on 
tribal lands. In fact, many states have made significant efforts in 
this area. We commend them for doing so and we encourage them to 
continue. In this proceeding, however, we consider measures the 
Commission may take to fulfill its obligation to address 
telecommunications needs on tribal lands.

A. Jurisdiction

1. Issues for Comment
    31. We recognize that principles of Indian law, including the trust 
relationship between the federal government and Indian tribes, tribal 
sovereignty, and tribal self-determination, must apply with equal force 
in the area of telecommunications. With respect to telecommunications 
services provided by tribal carriers on or off the reservation or by 
non-tribal carriers within tribal lands (all of which are referred to 
jointly as ``tribal telecommunications'') the parameters of federal, 
state and tribal authority, however, are not always clear. The Supreme 
Court, itself, has acknowledged that ``generalizations on this subject 
have become treacherous.'' Nonetheless, some of the proposals presented 
in this Further Notice necessitate an effort to evaluate these 
jurisdictional relationships. In this Further Notice, we seek comment 
to determine how best to give effect to principles of Indian law in the 
context of rule changes intended to benefit unserved and underserved 
tribal lands.
    32. State Jurisdiction. Three of the proposals detailed later in 
this Further Notice deal with provisions of sections 254 and 214 of the 
Act, and of our existing rules that are triggered when the state lacks 
jurisdiction over a carrier providing telephone exchange or access 
service in a particular area. First, the determination of whether a 
state has jurisdiction over a common carrier providing telephone 
exchange service and exchange access is key in determining whether the 
Commission is required to designate telecommunications carriers as 
eligible to receive federal universal service support in high-cost 
areas. Second, in unserved areas where the state lacks jurisdiction the 
Commission, pursuant to section 214(e)(3) shall determine which common 
carrier or carriers are best able to provide service. Third, we propose 
that revisions to our Lifeline rules to address the situation faced by 
carriers not subject to state jurisdiction.
    33. The issue of the extent to which tribal authorities or state 
governments have authority to regulate activities occurring on tribal 
lands, whether by tribal members or not, has a long and complex legal 
history, involving considerations of whether state regulation is 
preempted by federal regulation, whether state regulation is consistent 
with tribal sovereignty and self-determination, and whether tribes have 
consented to state jurisdiction, either in treaties or pursuant to the 
Indian Civil Rights Act of 1968. In addition, Indian law jurisprudence 
finds state law generally inapplicable when states attempt to regulate 
the conduct of Indians directly within reservation boundaries.
    34. We recognize that some state commissions have asserted 
jurisdiction over carriers seeking to provide service on tribal lands 
and regulate certain aspects of the provision of telecommunications 
service on tribal lands. We seek comment, in particular from state 
commissions as well as any other interested parties, concerning the 
extent of state and tribal regulation of telecommunications provided on 
tribal lands and by tribally-owned or operated carriers. In particular, 
we seek comment on the appropriate jurisdictional authority in the 
following situations: (1) tribally-owned or operated carriers providing 
service within the reservation (a) to tribal members, (b) to non-tribal 
members, and (c) to non-tribal members living on non-native fee lands 
(within the reservation); (2) non-tribally owned or operated carriers 
offering service both inside and outside of the reservation; and (3) 
tribally-owned or operated carriers offering service outside of the 
reservation. We refer parties commenting on these issues to the various 
ways in which tribal lands could be defined, as discussed, and seek 
comment on how these definitions inform the jurisdictional analysis 
requested in this section.
    35. In addition, we seek comment on the jurisdictional treatment of 
the following geographic entities, as classified by the Bureau of the 
Census: (1) American Indian Reservations, which are areas with 
boundaries established by treaty, statute and /or executive or court 
order; (2) Trust Lands, which are real property held in trust by the 
federal government that is associated with a specific American Indian 
reservation or tribe and which may be located within or outside the 
reservation; (3) Tribal Jurisdiction Statistical Areas, which are 
delineated by those Federally-recognized tribes in Oklahoma that no 
longer have a reservation; (3) Tribal Designated

[[Page 52744]]

Statistical Areas, which encompasses federally and state-recognized 
tribes without reservation or trust lands; (4) Alaska Native Regional 
Corporations, which are corporate entities established under the Alaska 
Native Claims Settlement Act of 1972 (ANCSA) to conduct the commercial 
and nonprofit business of Alaska Natives; and (5) Alaska Village 
Statistical Areas, which are tribes, bands, clans, groups, villages, 
communities, or associations in Alaska that are recognized pursuant to 
the ANCSA.
    36. We seek comment on whether there are any other kinds of tribal 
relationships that would inform our jurisdictional analysis. We seek 
comment on whether the state commission has jurisdiction over 
telecommunications in the situations described, the legal authority for 
such jurisdiction (e.g. the state constitution, state statute, Indian 
treaty, etc.); and the extent to which the particular state commission 
exercises that jurisdiction. We also seek comment on the existence of 
any concurrent jurisdiction.
    37. In addition, we observe that wireline telephone calls between 
Indian tribal lands and the state in which tribal land is located are 
currently treated as intrastate calls, subject to state jurisdiction. 
We seek comment on whether this treatment is consistent with principles 
of tribal sovereignty and the Indian law jurisprudence regarding the 
limits of state authority, referenced. We also seek comment on whether 
the treatment of these calls as intrastate is consistent with the 
division of jurisdiction between the Commission and the states under 
section 2 of the Act. We seek comment as well on the need, impact, and 
Commission's authority to reclassify these calls as interstate for the 
purpose of giving effect to principles of tribal sovereignty.
    38. We observe further that state jurisdiction may be preempted by 
the operation of federal law ``if it interferes with or is incompatible 
with federal and tribal interests reflected in federal law, unless the 
state interests at stake are sufficient to justify the assertion of 
state authority.'' An express Congressional statement of preemption is 
not required. Instead, a preemption analysis ``requires a 
particularized examination of the relevant state, federal and tribal 
interests.'' We seek comment on state interests in regulating 
telecommunications on tribal lands, including the ability to ensure 
reasonable rates, quality service, and the continued viability of local 
exchange carriers (LECs). We also seek comment from each tribal 
government, and any other interested parties, on the extent to which 
the state's exercise of jurisdiction over telecommunications on tribal 
lands and over tribal carriers that serve areas both inside and outside 
Indian sovereign territory is warranted.
    39. Tribal Regulation. We seek comment from each tribal government, 
and any other interested parties, on the extent of tribal authority 
over regulation of telecommunications on tribal lands. As a threshold 
matter, we note that the Commission has previously spoken to some 
aspects of this issue in the A.B. Fillins Order, in which the 
Commission considered the extent of tribal regulatory authority over 
the provision of cellular service within a tribal reservation. In that 
order, the Commission held that under well-settled case law, the 
Communications Act applies with equal force to tribal reservations as 
to other areas, and that the Commission has sole authority under Title 
III of the Act with respect to management and licensing of radio 
spectrum in tribal areas. The Commission also concluded, however, that 
the Communications Act does not preempt tribal authority over access by 
telecommunications carriers to tribal lands, because the provisions of 
the Act that preempt state and local impediments to entry do not apply 
to tribal authorities.
    40. In light of this statutory framework, we seek comment on the 
current extent to which tribal authorities have engaged in 
telecommunications regulation and on any future plans of tribal 
authorities to regulate telecommunications in tribal areas. We seek 
comment on the extent to which tribal authorities consider regulation 
of tribal telecommunications important to the right to self-government 
and self-determination. We also seek comment on whether tribal 
authorities should be considered as comparable to state authorities for 
purposes of regulating telecommunications services, and the degree to 
which the federal-tribal relationship on communications matters is 
similar or dissimilar to the federal-state relationship. Finally, while 
we have determined in the A.B. Fillins Order that tribal authorities 
are not subject to preemption under provisions of the Act applicable to 
state and local governments, we seek comment on what authority, if any, 
the Commission has to preempt tribal regulations that may be 
inconsistent with our federal regulatory scheme.
    41. Tribal Self-determination and Universal Service Goals. We seek 
comment to determine how principles of Indian law and federal support 
for tribal self-determination affect the Commission's statutory mandate 
to ensure that consumers in all regions of the nation have access to 
the services supported by federal universal service support mechanisms. 
Pursuant to the Act, the Commission is bound by its statutory mandate 
to promote the availability of the services supported by federal 
universal service support mechanisms in all regions of the Nation. We 
seek comment on whether this statutory obligation is affected or 
constrained by any contrary interests, for cultural or other reasons, 
of certain tribal authorities. We seek comment, in particular from 
tribal authorities, to ascertain whether tribal authorities share the 
goals established by the 1996 Act, which the Commission is bound to 
implement. We seek comment on the extent to which tribal authorities 
seek to promote the availability of telecommunications services and 
competition among telecommunications providers.
    42. We also seek comment on whether the services supported by 
federal universal service support mechanisms are consistent with the 
interests of tribal authorities in promoting service in tribal lands. 
We recognize that some tribal authorities may prefer a different mix of 
services to be supported. For example, some tribes may prefer support 
for terrestrial wireless or satellite services, rather than wireline 
services. Other tribes may want to prioritize the ability for each 
member to receive basic telecommunications service, rather than the 
entire package of services included in the definition of universal 
service. We seek comment on whether the Commission has the authority to 
and whether it should develop a procedure by which the Commission, the 
Joint Board and the sovereign Indian tribes could identify a single 
alternative definition of the services supported by federal universal 
service support mechanisms in tribal lands. We seek comment on 
additional administrative burdens that would be associated with 
implementing this procedure.

B. Defining ``Tribal Lands''

    43. The definition we adopt of ``tribal lands'' will be used to 
identify those areas in which, for reasons based on principles of 
Indian sovereignty, the Commission seeks comment to determine whether 
possible modifications to our federal universal service policies and 
rules may be warranted. In defining tribal lands, we seek to ensure 
that we limit the reach of these proposals to those areas in which 
principles of tribal sovereignty and tribal self-determination apply. 
We also seek to balance the reasonable exercise

[[Page 52745]]

of federal jurisdiction with appropriate deference to state sovereignty 
and jurisdiction.
    44. We seek comment on defining tribal lands as all land within the 
limits of any Indian reservation under the jurisdiction of the United 
States Government, notwithstanding the issuance of any patent, and, 
including rights-of-way running through the reservation. Alternatively, 
we seek comment on defining tribal lands to have the same meaning as 
the term ``Indian country,'' as that term is defined by the Bureau of 
Indian Affairs. ``Indian country'' means (a) all land within the limits 
of any Indian reservation under the jurisdiction of the United States 
Government, notwithstanding the issuance of any patent, and, including 
rights-of-way running through the reservation, (b) all dependent Indian 
communities within the borders of the United States whether within the 
original or subsequently acquired territory thereof, and whether within 
or without the limits of a state, and (c) all Indian allotments, the 
Indian titles to which have not been extinguished, including rights-of-
way running through the same.
    45. In addition, we seek comment on whether the geographic 
entities, as classified by the Bureau of the Census, should be included 
in the definition of tribal lands: (1) American Indian Reservations, 
which are areas with boundaries established by treaty, statute and/or 
executive or court order; (2) Trust Lands, which are real property held 
in trust by the federal government that is associated with a specific 
American Indian reservation or tribe and which may be located within or 
outside the reservation; (3) Tribal Jurisdiction Statistical Areas, 
which are delineated by those Federally-recognized tribes in Oklahoma 
that no longer have a reservation; (4) Tribal Designated Statistical 
Areas, which encompasses federally and state-recognized tribes without 
reservation or trust lands; (5) Alaska Native Regional Corporations, 
which are corporate entities established under the ANCSA to conduct the 
commercial and nonprofit business of Alaska Natives; and (6) Alaska 
Village Statistical Areas, which are tribes, bands, clans, groups, 
villages, communities, or associations in Alaska that are recognized 
pursuant to the ANCSA.
    46. We observe that, with the exception of the first category, 
American Indian Reservations, the listed classifications used by the 
Bureau of the Census would not be encompassed in a definition of tribal 
lands that is limited to ``all land within the limits of any Indian 
reservation under the jurisdiction of the United States Government.'' 
We recognize that tribes encompassed by these classifications may face 
obstacles in obtaining telecommunications services that are similar to 
those faced by tribes in living in American Indian Reservations. 
Commenters supporting the inclusion of any of these categories should 
explain the source of the Commission's authority to implement the 
additional measures proposed in this item with respect to these areas, 
including noting any jurisdictional arguments provided in response to 
questions raised.

C. High-Cost Support Mechanisms

1. Federal Share of High-Cost Support
    47. As discussed, because the trust relationship creates a unique 
relationship between the federal government and Indian tribes, the 
federal government may have authority to undertake additional measures 
to promote deployment and subscribership on tribal lands and to provide 
universal service support necessary to offset the particular challenges 
facing these areas. With respect to high-cost support on tribal lands, 
we seek comment on the extent to which states currently support the 
costs of universal service in tribal lands and whether the Commission 
should provide an additional portion of the universal service support 
calculated by the federal support methodology in high-cost, tribal 
lands. For instance, with regard to the forward-looking high-cost 
support mechanism for non-rural carriers, we seek comment on whether, 
rather than providing support for costs that exceed both a national 
cost benchmark and the individual state's resources to support those 
costs, the mechanism should provide support for all costs in unserved 
tribal lands that exceed the national benchmark.
2. Separate Study Areas Option for Tribal Lands
    48. In order to provide additional high-cost support to tribal 
lands, we seek comment on modifications to our study area rules. Our 
study area rules provide a mechanism through which the Commission has 
controlled the growth of the high-cost universal service support 
mechanism. Universal service support for high-cost areas is determined 
on the basis of average loop costs throughout a study area. Averaging 
costs on a study-area wide basis spreads the burden of serving high-
cost areas among all of the telecommunications subscribers in that 
study area. As a result, however, carriers with relatively low average 
loop costs in a particular study area receive no support for serving 
additional customers in a high-cost portion of that study area if the 
loop costs in the high-cost portion do not raise the overall average 
loop costs for the study area above a specific national benchmark, 
currently 115% of the national average cost per loop. By freezing study 
area boundaries, the Commission sought to eliminate incentives for 
carriers to place high-cost exchanges in separate study areas in order 
to receive additional support for providing service to those study 
areas. As a result of these two policies, however, certain carriers may 
experience strong financial disincentives to serving unprofitable high-
cost customers in their study areas and other carriers may lack 
incentives to purchase those unserved exchanges.
    49. In order to promote the deployment of universal services on 
tribal lands, we seek comment on modifying our rules to permit carriers 
to treat tribal lands as a distinct study area. We seek comment on 
whether, by providing an exception to our study area rules, we can 
eliminate regulatory requirements that may deter carriers from serving 
high-cost, tribal lands. For example, one option may be that the tribal 
study area for a carrier will consist of all of the tribal lands served 
by the carrier within the borders of a single state. This means that 
carriers may have a tribal study area in each state in which it 
provides service on tribal lands. We seek comment on whether the tribal 
study area should include all of the tribal lands in a state (rather 
than, for example, a single nationwide tribal study area) because 
states use study areas for purposes of determining intrastate revenue 
requirements.
    50. We emphasize that the proposal to allow tribal study areas is 
not related to the issue of the area over which costs are averaged to 
determine support using the new high-cost mechanisms, which is pending 
in the high-cost proceeding. We seek comment on how allowing a separate 
tribal study area could affect whether the carrier serving that area 
falls within the statutory definition of a rural carrier for providing 
service to that area. If a carrier designates the tribal lands within a 
state as a separate study area, the number of access lines or 
inhabitants in that newly created study area may qualify the carrier as 
a rural carrier with respect to that study area. We seek comment on 
whether this may result in some carriers, currently designated as non-
rural, being considered rural for purposes of receiving universal 
service support in certain tribal study areas.

[[Page 52746]]

3. Interim Cap on the High-Cost Fund
    51. In the First Report and Order, the Commission concluded that it 
would maintain the cap on the existing high-cost loop support mechanism 
until all carriers receive support based on the new high-cost funding 
mechanism. The cap on the high-cost loop fund was initially intended as 
an interim measure. Commission rules require that if total support, 
based on each carrier's actual costs, is above the total allowed capped 
amount, each recipient of high-cost loop support will receive a reduced 
amount of support to keep the total fund at the capped amount. The cap 
has served its purpose in controlling excessive growth in the size of 
the fund during the past six years as the Commission has reformed its 
universal service support mechanisms. We have stated that the rural 
carriers will receive support based on the new high-cost funding 
mechanism no earlier than January 1, 2001. The Commission has not 
established a timetable for moving rural carriers to a forward-looking 
high-cost support mechanism. Rather, this undertaking is on hold 
pending the Rural Task Force making its recommendation to the Joint 
Board; the Joint Board may recommend that the Commission conduct 
further proceedings on certain issues.
    52. Allowing carriers to designate separate tribal study areas, as 
proposed, could mean that additional carriers may be entitled to a 
portion of the high-cost support fund. We seek comment on the need for 
the Commission to provide additional high-cost support under the 
existing mechanisms to tribal lands. In order to do so, the Commission 
may either lift the cap on the high-cost fund to allow for growth in 
the size of the fund attributable to the separate study area proposal 
or reallocate the existing funds among the expanded category of 
recipients. We seek comment on these options. We also seek comment on 
any other options that may assist the Commission in achieving the goal 
of targeting additional federal high-cost support to tribal lands.

D. Revisions to Lifeline

    53. The Commission's Lifeline support program for low-income 
consumers is designed to reduce the monthly billed cost of basic 
service for low-income consumers, which we anticipate will increase 
telephone penetration. Lifeline provides carriers with three elements 
of universal service support. The support must be passed through to 
each qualifying low-income consumer by an equivalent reduction in his 
or her monthly bill for telephone service. All carriers receive a 
baseline amount of $3.50 per month per Lifeline customer in the form of 
a waiver of the federal subscriber line charge (SLC). An additional 
$1.75 per month is available per Lifeline customer if ``the state 
commission approves an additional reduction of $1.75 in the amount paid 
by consumers * * *'' Finally, carriers can receive federal matching 
funds of fifty percent of the amount of state Lifeline support, up to a 
maximum of an additional $1.75 per month, as long as the entire amount 
is passed on to subscribers. Federal Lifeline support per qualifying 
low-income consumer is capped at $7.00 per month.
1. State Commission Approval
    54. The Commission has received petitions for waiver of our 
Lifeline rules to allow carriers not subject to the jurisdiction of a 
state commission to receive the second tier of federal support where no 
regulations issued by local authorities (including state commissions 
and tribal authorities) exist that would prevent an equivalent 
reduction in the monthly telephone bills of qualifying low-income 
consumers. In drafting our rule, we did not consider the situation 
faced by carriers not subject to the jurisdiction of a state 
commission. Based on these waiver petitions, it appears that our rule 
has given rise to certain situations that we did not anticipate. The 
requirement of state consent prior to making available the second tier 
of federal Lifeline support was intended to reflect deference to the 
states in such areas of traditional state expertise and authority. We 
did not intend to require carriers not subject to state commission 
jurisdiction to seek either state commission action or a Commission 
waiver in order to receive the additional $1.75 available under federal 
support mechanisms, where that additional support would be passed 
through to consumers. For these reasons, we propose to modify our rule 
to state that an additional $1.75 per qualifying low-income consumer 
will be provided to the carrier where the additional support will 
result in an equivalent reduction in the monthly bill of each 
qualifying low-income consumer. This proposed revision maintains 
deference to the state commission because the additional support will 
not be provided where a state commission with jurisdiction to do so has 
not permitted an equivalent reduction in the consumer's bill. The 
proposed revision is intended to eliminate the need for carriers not 
subject to the jurisdiction of a state commission to seek state 
commission action or a Commission waiver. We seek comment on the 
proposed revision.
2. Federal Support on Tribal Lands
    55. In addition, in keeping with principles of tribal sovereignty, 
we seek comment on modifying our rule to provide that the third tier of 
federal support, a maximum of $1.75 per month per low-income consumer, 
is available to customers on tribal lands. As described, the federal 
government has a special trust relationship with Indian tribes, and 
this entails special responsibilities, particularly where tribal 
reservations appear to be particularly disadvantaged by a lack of 
important resources, like telecommunications. With respect to tribal 
lands, we seek comment on the extent to which states currently provide 
the support necessary to qualify for matching funds for the third tier 
of Lifeline support. We also seek comment on whether the federal 
government, in light of its trust relationship with Indian tribes, 
should provide carriers serving tribal lands the third tier of Lifeline 
support, $1.75 per qualifying Lifeline customer, as long as all such 
Lifeline customers receive an equivalent reduction in their bills. 
Unlike in other areas, this federal support amount would not be 
contingent upon the state in which the tribal lands are located 
providing support.
3. Amendments to Consumer Qualification Criteria
    56. We seek comment on whether the Commission should expand the 
consumer qualifications for Lifeline assistance to ensure that low 
income consumers on tribal lands are able to participate fully in the 
Lifeline assistance program. Under our current rules, in states that 
provide intrastate matching funds, a consumer must meet the criteria 
established by the state commission to receive federal Lifeline 
support. In most states, a consumer can meet the criteria by 
demonstrating or certifying that he or she participates in one of 
several narrowly targeted low income assistance programs. We are 
concerned that some state commissions have established Lifeline 
criteria that may inadvertently exclude low income consumers on tribal 
lands because the criteria do not include low income assistance 
programs that are specifically targeted toward Indians living on tribal 
lands. Similarly, in those states that do not provide intrastate 
matching funds (and thus do not establish the consumer qualifications 
for Lifeline participation), a consumer seeking Lifeline support must 
certify his or her participation in one of the following Commission-

[[Page 52747]]

designated low income assistance programs: Medicaid; food stamps; 
Supplemental Security Income; federal public housing assistance; or 
Low-Income Home Energy Assistance Program.
    57. We seek comment on how the Commission might expand the consumer 
qualifications for Lifeline support to enable low income consumers on 
tribal lands to participate in the Lifeline assistance program. In 
particular, we seek comment about whether we should amend our rules to 
allow low income consumers on tribal lands to qualify for Lifeline 
support by certifying their participation in additional means tested 
assistance programs, such as the programs administered by the Bureau of 
Indian Affairs or Indian Health Services. We encourage commenters to 
indicate whether there might be other suitable criteria--based solely 
on income or factors related to income--that should be used to 
determine qualification for low income members of tribal lands. We ask 
commenters to indicate whether providing Indians living on tribal lands 
with greater access to Lifeline assistance might increase incentives 
for eligible telecommunications carriers to serve these tribal lands. 
Finally, we seek comment on whether the Commission could apply any new 
criteria specifically targeted to low income Indians living on tribal 
lands both to states that do not provide matching funds and states that 
do provide such funds.

IV. Designating Eligible Telecommunications Carriers Pursuant to 
Section 214(e)(6)

    58. Pursuant to section 254(e) of the 1996 Act, not all 
telecommunications providers are eligible for federal universal service 
support. For purposes of the universal service support mechanisms for 
high-cost areas and low income consumers ``only an eligible 
telecommunications carrier designated under section 214(e) shall be 
eligible'' to receive federal universal service support. To be 
designated as an eligible telecommunications carrier, a carrier must:

    (A) offer the services that are supported by Federal universal 
service support mechanisms under section 254(c), either using its 
own facilities or a combination of its own facilities and resale of 
another carrier's services (including the services offered by 
another eligible telecommunications carrier); and
    (B) advertise the availability of such services and the charges 
therefor using media of general distribution.

    59. Under section 214(e), the primary responsibility for 
designating a prospective carrier as an eligible telecommunications 
carrier lies with the state commission. In a situation where there is 
no common carrier willing to provide supported services to an unserved 
community that requests such services, section 214(e)(3) states that:

    [T]he Commission, with respect to interstate services * * * or a 
State commission, with respect to intrastate services, shall 
determine which common carrier or carriers are best able to provide 
such service to the requesting unserved community or portion thereof 
and shall order such carrier or carriers to provide such service for 
that unserved community or portion thereof.

In the event that a common carrier is not subject to the jurisdiction 
of a state commission, section 214(e)(6) authorizes the Commission, 
upon request, to designate the carrier as an eligible 
telecommunications carrier, for a service area designated by the 
Commission, if the carrier meets the qualifications for eligible 
telecommunications carrier status.
    60. Section 214(e) of the Act states that only an ``eligible 
telecommunications carrier'' designated under section 214(e) shall be 
eligible to receive federal universal service support. Pursuant to 
section 214(e)(2) and (e)(5) of the Act, state commissions are 
generally responsible for designating eligible telecommunications 
carriers and for designating service areas for such carriers. 
Initially, section 214(e) did not include a provision for designating 
carriers not subject to the jurisdiction of a state commission. The Act 
was amended in 1997 to address this ``oversight.'' Section 214(e)(6) 
authorizes the Commission to designate as an eligible 
telecommunications carrier ``a common carrier providing telephone 
exchange service and exchange access that is not subject to the 
jurisdiction of a State Commission.'' We tentatively conclude that, by 
adding section 214(e)(6), Congress sought to ensure that carriers 
serving all regions of the United States have access to a mechanism 
that will allow them to be designated as eligible telecommunications 
carriers, if they meet the statutory requirements. Recognizing that the 
designation of eligible telecommunications carriers is primarily a 
state commission function, Congress granted this Commission the 
authority for this task in the event that a carrier is not subject to 
the jurisdiction of a state commission.
    61. Although some of the legislative history of section 214(e)(6) 
focuses on the ability of tribally-owned carriers to be designated as 
eligible telecommunications carriers, the statutory language and other 
legislative history is not so limited. The other legislative history 
states that ``the intent of this bill is to cover such situations where 
a State commission lacks jurisdiction over a carrier, in which case the 
FCC determines who is eligible to receive federal universal service 
support.'' The legislative history also makes clear that ``nothing in 
this bill is intended to impact litigation regarding jurisdiction 
between State and federally recognized tribal entities'' or to ``expand 
or restrict the existing jurisdiction of State commissions over any 
common carrier or provider in any particular situation.'' In the 
following paragraphs, we seek comment on how section 214(e)(6) should 
be interpreted and implemented with respect to carriers (whether 
tribally owned or otherwise) that provide telecommunications services 
to tribal areas.
    62. First, however, we seek comment identifying other situations in 
which carriers providing telephone exchange and exchange access 
services to areas other than tribal lands are not subject to state 
commission jurisdiction and thus must seek designation as eligible 
telecommunications carriers from the Commission. In this context, we 
seek comment on whether the Commission, rather than state commissions, 
has the jurisdiction to designate terrestrial wireless or satellite 
carriers as eligible telecommunications carriers. If such carriers 
submit applications for designation pursuant to section 214(e)(6) 
during the pendency of this proceeding, we will consider them on a case 
by case basis in light of the statutory language and the showings made 
by the affected parties. We also note that our analysis of the scope of 
the designation provision of section 214(e)(6) is not intended to 
affect any other decision with respect to the authority of state 
commissions or tribal authorities to regulate telecommunications on 
tribal lands or over terrestrial wireless or satellite carriers.
    63. The statutory language of section 214(e)(6) is ambiguous with 
respect to when the Commission's authority to designate eligible 
telecommunications carriers is triggered. It is not clear whether the 
Commission's authority is triggered when a carrier is not subject to 
the jurisdiction of a state commission or when the service or access 
the carrier provides is not subject to the jurisdiction of a state 
commission. Thus, the initial question in interpreting section 
214(e)(6) with respect to the provision of telecommunications service

[[Page 52748]]

in tribal lands is under what circumstances the Commission may 
designate carriers as eligible telecommunications carriers. The title 
of section 214(e)(6), ``Common Carriers not Subject to State Commission 
Jurisdiction,'' suggests that the triggering inquiry is whether the 
carrier is subject to state commission jurisdiction. We tentatively 
conclude, however, that the better interpretation of section 214(e)(6) 
is that the determination of whether a carrier is subject to the 
jurisdiction of a state commission depends in turn on the nature of the 
service provided (e.g. telephone exchange or access service provided by 
wire, satellite or terrestrial wireless) or the geographic area in 
which the service is being provided (e.g. tribal lands). This 
interpretation is supported by the legislative history of section 
214(e)(6). Representative Tauzin stated that ``S.1354 makes a technical 
correction to the Act that will make it possible for telephone 
companies serving areas not subject to the jurisdiction of a State 
Commission, to be eligible to receive federal Universal Service 
support.'' Our tentative conclusion that the nature of the service or 
the geographic area in which the carrier provides it should be the 
basis for distinguishing between the designation authority of the 
Commission and state commission under section 214(e)(6), is consistent 
with other provisions of the Act. Section 2 of the Act similarly 
distinguishes between federal and state jurisdiction over 
telecommunications services based on the geographic area in which the 
service is provided. Section 332(3) of the Act limits state authority 
on the basis of the service provided (i.e. commercial and private 
mobile service). We seek comment on this analysis and on any other 
factors which may be relevant to this determination.
    64. Our next question then is under what circumstances are 
telecommunications carriers providing telecommunications services on 
tribal lands subject to state commission authority? We seek comment on 
the extent to which a state commission has jurisdiction over tribally-
owned carriers seeking to provide telecommunications service on tribal 
lands and over non-tribally-owned carriers seeking to provide such 
service on tribal lands. The answer to these questions will determine 
whether the Commission may designate carriers seeking to provide 
service on tribal lands as eligible telecommunications carriers. With 
respect to tribally-owned carriers seeking to provide 
telecommunications service on tribal lands, we note that state law is 
generally inapplicable when states attempt to regulate the conduct of 
tribal members directly within reservation boundaries, except in 
``exceptional circumstances.'' We seek comment on whether, for the 
purpose of eligible telecommunications carrier designation, tribally-
owned carriers providing telecommunications services within tribal 
reservations would be subject to state regulatory authority.
    65. We further recognize that when states seek to regulate non-
tribal members and their activities conducted within a reservation, the 
appropriateness of the state's assertion of regulatory authority is 
determined by a ``particularized inquiry'' into the nature of the 
state, federal, and tribal interests at stake. Specifically, the 
analysis turns ``on whether state authority is pre-empted by the 
operation of federal law; and `[s]tate jurisdiction is pre-empted * * * 
if it interferes or is incompatible with federal and tribal interests 
reflected in federal law, unless the state interests at stake are 
sufficient to justify the assertion of state authority.' The inquiry is 
to proceed in light of traditional notions of Indian sovereignty and 
the congressional goal of Indian self-government, including its 
`overriding goal' of encouraging tribal self-sufficiency and economic 
development.'' We recognize that this inquiry is a particularized one, 
and thus specific to each state and the facts and circumstances 
surrounding the provision of telecommunications services by non-tribal 
members within those tribal lands. However, we seek comment on whether 
there are any general federal, state and tribal interests at stake 
which might inform the inquiry and help provide general guidance on the 
proper boundaries of state authority in this case. Specifically, we 
seek comment on the federal government's interest in assuming authority 
over the designation of eligible telecommunications services, and the 
extent to which state authority would be preempted by the operation of 
federal law--namely section 214 or other relevant provisions or other 
federal or tribal interests reflected in federal law.
    66. We also seek comment on the states' interests in designating 
eligible telecommunications carriers, as well as the implications of 
state designation on Indian sovereignty, self-government and ``tribal 
self-sufficiency and economic development.'' We recognize, however, 
that some state commissions have asserted jurisdiction over carriers 
seeking to provide service on tribal lands, and that these commissions 
regulate certain aspects of a carrier's provisions of service on tribal 
lands.
    67. In implementing section 214(e)(6), we are concerned that the 
fact intensiveness and the legal complexity of determining whether a 
state has jurisdiction over carriers seeking designation as an eligible 
telecommunications carrier may lead to confusion, duplication of 
efforts and needless controversy among carriers, tribal authorities, 
state commissions and this Commission, which could undermine efforts to 
achieve our universal service goals. For these reasons, we propose the 
following process to treat applications for the Commission's 
designation of eligible telecommunications companies eligible to 
receive universal service support for serving tribal land. Carriers 
seeking designation as an eligible telecommunications carrier from this 
Commission, whether to serve tribal lands or on the basis of other 
jurisdictional arguments, should consult with the relevant tribal 
authority, where appropriate, and the state commission on the issue of 
whether the state commission has jurisdiction to designate the carrier. 
In situations where the tribal authority and the state commission agree 
that the state has jurisdiction, we anticipate that the state would 
conduct the designation proceeding. In instances where the tribal 
authority challenges the state's exercise of jurisdiction, we encourage 
the carriers, with the support of the tribal authority, to apply to 
this Commission for designation. In the public comment period 
subsequent to a carrier's application for designation as an eligible 
telecommunications carrier, the carriers and tribal authorities would 
be expected to demonstrate why Commission designation is appropriate. 
Interested parties, including the state commission, that disagree with 
the Commission's exercise of jurisdiction would also be expected to 
raise their challenges in that proceeding. We seek comment on this 
proposal and suggestions for other ways in which the determination of 
whether the designation must be performed by the Commission or a state 
commission could be simplified or streamlined.

V. Unserved Areas--Implementation of Section 214(e)(3)

A. Defining ``Unserved Area''

    68. In order to determine whether an allegedly unserved community 
is eligible for relief pursuant to section 214(e)(3), we must first 
decide whether the area at issue is unserved. Only after making this 
initial determination can

[[Page 52749]]

we proceed with the rest of the analysis required by section 214(e)(3). 
We propose defining an unserved area as ``any area in which facilities 
would need to be deployed in order for its residents to receive each of 
the services designated for support by the universal service support 
mechanisms.'' In the First Report and Order, we identified the services 
that would be supported by universal service support mechanisms as: 
single-party service; voice grade access to the public switched 
network; DTMF signaling or its functional equivalent; access to 
emergency services; access to operator services; access to 
interexchange service; access to directory assistance; and toll 
limitation services for qualifying low-income consumers. These services 
were identified based on the statutory directive embodied in section 
254(c)(1)(A)-(D), requiring the Joint Board and the Commission to 
``consider the extent to which * * * telecommunications services'' 
included in the definition of universal service: (1) Are essential to 
education, public health, or public safety; (2) have, through the 
operation of market choices by customers, been subscribed to by a 
substantial majority of residential customers; (3) are being deployed 
in public telecommunications networks by telecommunications carriers; 
and (4) are consistent with the public interest, convenience and 
necessity.
    69. The proposed definition is based on whether facilities would 
need to be deployed to provide the supported services to distinguish 
unserved areas from areas in which a large percentage of the population 
does not subscribe to available services. This definition is intended 
to help further our statutory mandate to promote the availability of 
services supported by federal universal service support mechanisms. We 
recognize that this definition may result in certain areas being deemed 
unserved, even though those areas are receiving some level of service 
that includes less than all of the services designated for support by 
the universal service support mechanisms. We also recognize that this 
definition may result in the existence of relatively small unserved 
areas within larger areas that are currently receiving service. We seek 
comment on whether this definition will enable us to appropriately 
target our efforts to those areas that do not receive all of the 
services supported by federal universal service support mechanisms.
    70. We emphasize, however, that determining whether a particular 
area meets the definition of unserved area is only the beginning of the 
analysis under section 214(e)(3). To obtain relief pursuant to section 
214(e)(3), each of the steps discussed must be followed. We seek 
comment on this analysis and we invite commenters to propose 
alternative definitions.

B. Determining When a Community Is Unserved

    71. The language ``or any portion thereof'' in section 214(e)(3) 
suggests that we are not meant to impose minimum size requirements on 
the number of potential subscribers needed to invoke the authority of 
section 214(e)(3). We seek comment on whether the language should be 
interpreted differently or suggests a particular definition.

C. Determining When No Common Carrier Will Provide Service

    72. By its terms, the relief afforded in section 214(e)(3) is not 
triggered until a determination is made that ``no common carrier will 
provide'' the services supported by the federal universal service 
support mechanisms. Therefore, we seek comment on the meaning of the 
phrase ``no common carrier will provide'' the supported services.
    73. As an initial matter, section 214(e)(3) does not specify 
whether the request for service must be received from members of the 
unserved community or whether state, local, or tribal authorities must 
make an official request for service from the carrier on behalf of the 
unserved members of the community. We tentatively conclude that 
limitations on who may issue the request are not warranted by the terms 
of the statute or the goals it seeks to achieve. We seek comment on 
this tentative conclusion.
    74. We tentatively conclude that the language ``no common carrier 
will provide'' the services supported by the federal universal service 
support mechanisms means something more than no common carrier is 
actually providing the supported services. We seek comment on how we 
can determine that no common carrier is willing to provide the 
supported services. We seek comment on which common carriers must be 
asked in order to reach the conclusion that no common carrier will 
provide the service. We seek comment on how a satellite services 
provider should be treated for this issue, given that they can 
potentially provide service to these unserved areas. We also seek 
comment on whether the reasons for the common carrier's refusal to 
provide service are relevant to a determination that the area is 
unserved. For example, what if the refusal to provide service is based 
on the poor credit histories of the individuals requesting service or 
an existing overdue debt? Given the extremely low annual incomes, on 
average, on tribal lands, it seems possible that inadequate credit 
histories of the potential customers may cause a carrier to be 
unwilling to provide service.

D. Identifying Carrier or Carriers Best Able To Serve Unserved Areas

    75. Section 214(e)(3) authorizes the Commission, with respect to 
interstate service or an areas served by a carrier to which section 
214(e)(6) applies, and state commissions, with respect to intrastate 
service, to determine which carrier or carriers are best able to 
provide service to the requesting, unserved community and order that 
carrier or carriers to provide service. We seek comment on the relative 
roles that the Commission and the states should play in determining 
which carriers are best able to provide the supported services in 
unserved areas, including any coordination that should occur in making 
this determination.
    76. We seek comment on whether the Commission is authorized to and 
whether it should establish national guidelines by which states may or 
must make this determination, when they have jurisdiction to do so. We 
recognize that the selection of the carrier to serve some unserved 
areas pursuant to section 214(e)(3) of the Act is to be made by state 
commissions. We seek comment on whether a consistent, national approach 
is necessary to further the universal service goals of the Act or to 
provide certainty to carriers regarding the possible application of 
this important provision. We seek comment on whether, in situations 
where the state has jurisdiction to designate eligible 
telecommunications carriers, all aspects of this decision should be 
left to the states because states have more familiarity with the areas 
in question. We also seek comment on the role of tribal authorities 
with respect to the Commission's determination of the carrier or 
carriers best able to serve unserved, tribal lands. We also seek 
comment to determine whether the Commission's obligation to identify 
and order a carrier to provide service in tribal lands should be 
affected by the interests of the tribal authorities.
    77. One approach for making a determination pursuant to section 
214(e)(3) would be to conduct a fact-intensive inquiry, polling common 
carriers serving nearby or surrounding areas to determine where 
existing facilities are deployed, to estimate the costs for each 
carrier to provide the supported services, and to consider other 
possible factors that may be

[[Page 52750]]

relevant to the conclusion that a carrier is ``best able.'' We 
tentatively conclude, however, that our preferred approach would be to 
adopt a competitive bidding mechanism for identifying the carrier or 
carriers best able to provide service in unserved areas for which the 
Commission has authority to order carriers to provide service. We seek 
comment on the use of a competitive bidding mechanism. We seek comment 
on whether it is within our authority to require states to adopt a 
competitive bidding mechanism to determine which carrier or carriers 
will be ordered to provide intrastate service in unserved areas to 
which section 214(e)(6) does not apply.
    78. If the competitive bidding mechanism does not give rise to a 
carrier willing and able to provide the supported services in the 
unserved area at a reasonable cost, we seek comment on whether the 
Commission should then initiate an inquiry to determine the carrier or 
carriers best-able to provide service to the area. We seek comment on 
whether the following factors would be relevant in making that 
determination: (1) Whether the area falls within the designated service 
area of an existing carrier; (2) the extent to which a carrier has 
deployed facilities capable of providing supported services in the 
surrounding area; (3) the cost for that carrier to build facilities 
capable of providing the supported services; (4) the quality of 
services that would be provided; (5) the financial strength of the 
carrier; (6) the proportionate impact serving the area would have on 
the number of lines and the geographic area served by the carrier; (7) 
the amount of time required for the carrier to deploy facilities; and 
(8) a carrier's status as either an incumbent LEC or a competitive 
eligible telecommunications carrier. We seek comment on any other 
factors that may be relevant. We also seek comment on whether our 
inquiry must be limited to incumbent LECs and competitive eligible 
telecommunications carriers or whether we may also include other 
competitive LECs, interexchange carriers, terrestrial wireless or 
satellite service providers, or providers of cable or electric services 
that would be capable of providing the supported services to the 
unserved area. We seek comment on whether to exclude certain carriers 
from consideration, for example, carriers that are considered small 
entities for purposes of the Regulatory Flexibility Act. Finally, we 
seek comment on whether the preferences of the unserved community for a 
particular carrier or technology should be considered in making a 
determination of which carrier is best able to provide service to the 
area.
1. Competitive Bidding Proposal
    79. We tentatively conclude that we should adopt a competitive 
bidding mechanism to identify the carrier or carriers best able to 
provide the supported services in unserved tribal lands and to set the 
level of support provided for serving the area. We are hopeful that we 
may be able to design a competitive bidding mechanism that will 
generate public awareness of the needs of a particular area for service 
and elicit proposals from one or more carriers that could be compared 
before determining which carrier or carriers should be designated as an 
eligible telecommunications carrier for the area. We seek comment on 
this proposal.
    80. We seek comment on whether the possibility that a carrier will 
be ordered to provide service pursuant to section 214(e)(3) will 
provide incentives for carriers to participate in the competitive 
bidding mechanism in order to be able to set the terms on which they 
will provide service. We seek comment on whether the competitive 
bidding mechanism could bring unserved areas to the attention of 
carriers previously unaware of the need for telecommunications services 
in those areas and thus identify carriers that would be willing to 
provide service to the area for a support amount equal to or lower than 
the amount that would be provided under existing federal universal 
service support mechanisms. In addition, we seek comment on possible 
negative incentives and distortions that may be created by using a 
competitive bidding mechanism. For example, we seek comment on whether 
a competitive bidding approach will likely lead carriers to provide the 
lowest-cost, lowest-quality service that meets the definition of 
supported services, unfairly depriving residents of higher quality or 
advanced services.
    81. We also seek comment on whether the Commission should conduct a 
trial to determine whether a competitive bidding mechanism is the most 
efficient means of identifying the carrier or carriers best able to 
provide the supported services in unserved areas. We seek comment on 
how large a service area would be appropriate for such a trial. We seek 
comment on whether the Commission should solicit volunteers from Indian 
tribes that currently have large unserved areas.
    (a) Participants. 82. We seek comment on the possible participants 
in a competitive bidding proceeding. Section 214(e)(3) states that any 
carrier ordered to provide service pursuant to this section shall meet 
the requirements necessary and be designated an eligible 
telecommunications carrier for the unserved area. We seek comment on 
whether a carrier must first be designated an eligible 
telecommunications carrier for the area prior to participating in the 
competitive bidding mechanism. We seek comment on whether any carrier 
that can demonstrate that it can meet the requirements of section 
214(e)(1) may participate in the competitive bidding mechanism. We seek 
comment on what kind of showing is necessary to demonstrate that a 
carrier can meet the requirements of section 214(e)(1). We seek comment 
on whether terrestrial wireless or satellite providers will be able to 
participate in the competitive bidding mechanism. We also seek comment 
on the number of bidders we should anticipate for auctions in the 
universal service context, and the extent to which we should consider 
that number in deciding the type of auction that should be used, as 
discussed.
    (b) Number of Winners. 83. We seek comment on whether the 
characteristics of the unserved tribal lands may be such that it is not 
economically practical to support more than one provider to serve 
unserved, tribal lands. To the extent that supporting a single provider 
is more economical, permitting multiple providers to receive federal 
universal service support may not be in the public interest. In 
addition, if all carriers were entitled to receive support at the level 
determined in the competitive bidding auctions, bidders would have no 
incentive to bid below the opening level; that is, competitive bidding 
would not reveal the minimum amount of support necessary to provide 
service to the area. For these reasons, we propose that qualified 
eligible telecommunications carriers bid to secure an exclusive right 
to receive universal service support for serving the unserved tribal 
area. That is, the winning bidder would be the only carrier designated 
as an eligible telecommunications carrier for providing the supported 
services to the unserved, tribal lands subject to competitive bidding.
    84. We seek comment on whether the Commission has the authority to 
and whether we should try to attract carriers by agreeing to designate 
only one carrier to serve the unserved tribal land or permitting only 
one carrier to receive federal universal service support for serving 
the area. We seek comment on whether a decision to limit support to a 
single carrier is consistent with the universal service provisions and 
pro-

[[Page 52751]]

competitive goals of the Act. We observe that, in the case of an area 
served by a rural carrier, the Commission ``may'' designate more than 
one eligible telecommunications carrier but must make a specific 
showing that an additional eligible telecommunications carrier would 
serve the public interest. With respect to all other carriers, the 
Commission ``shall'' designate more than one common carrier as an 
eligible telecommunications carrier. We seek comment on whether these 
provisions apply with respect to an unserved area. We seek comment on 
whether the statutory language that the Commission ``shall determine 
which carrier or carriers are best able to provide such service'' 
indicates that the Commission may determine that a single carrier shall 
be designated. Finally, we seek comment concerning the ability of 
bidders to accurately estimate the possible future challenges from 
other carriers for the more profitable customers in the previously 
unserved, tribal lands.
    85. As an alternative to a single winner, we consider the 
possibility of supporting two or more winning bidders. We generally 
believe that customers benefit most when multiple providers are 
available, because competition leads to lower prices and provides an 
alternative where service quality is unsatisfactory. Supporting two 
winning bidders means that a second carrier would be able to compete 
vigorously with the lowest bidder. We seek comment on whether to use 
the competitive bidding mechanism to identify a level of support which 
would be provided for serving the area and to allow any carrier with a 
bid within a specific range of the winning bidder, who also satisfies 
the requirements of section 214(e)(1) of the Act, to receive that level 
of support for providing service to the area. We seek comment on 
whether the possibility of having multiple carriers receive support for 
these previously unserved areas would substantially diminish or even 
eliminate any incentives carrier might have to participate in 
competitive bidding. We seek comment on whether providing support 
sufficient to allow competing carriers to build the necessary 
infrastructure would generate customer benefits over the long-term that 
would offset the additional cost associated with supporting two 
carriers. In making this determination, we must consider the duration 
of the service term and the rate of change in network technology. For 
example, if technological change were so rapid that both the new 
entrant and incumbent carrier would need to install and recover the 
cost of new facilities for each contract term, the benefits of creating 
competing carriers would be significantly reduced. We seek comment on 
these issues.
    (c) Term of Exclusivity Period. 86. If the Commission determines 
that a bidder should win the exclusive right to federal universal 
service support, we would seek to establish an exclusivity period that 
is of an adequate length to provide incentives for carriers to deploy 
facilities yet does not result in unnecessary support being provided. 
We seek comment on the appropriate duration of any exclusivity period. 
After the exclusivity period has ended, we could choose to re-auction 
the service obligation and consider multiple providers if the costs of 
providing service decreased or market conditions improved so that 
multiple providers became practical. we anticipate that the length of 
the exclusivity period will affect the bids for monthly support levels. 
In addition, the length of the exclusivity period will affect the 
average administrative and transaction costs for conducting the 
auction. Granting exclusivity periods that are too short could be 
harmful because the winning carrier is likely to need time to establish 
its network, and to amortize its investments. In addition, more 
frequent auctions entail increased administrative costs. Granting 
periods that are too long, however, also could be harmful. 
Technological advances over time can create more efficient means of 
providing communications, which would enable firms to offer service at 
a lower cost. To the extent that the winning bidder is shielded from 
competition during the exclusivity period, the benefits of adopting a 
more efficient technology will accrue to the carrier, rather than the 
customer. In addition, with longer contract terms, the carriers' 
prediction of their costs at later stages in the contract becomes more 
speculative, which could translate into higher bids in the auction. We 
seek comment on this analysis and the appropriate length of the 
exclusivity period. We suggest that commenters review the competitive 
bidding proposals and mechanisms summarized that may assist in 
determining the length of the exclusivity requirement.
    (d) Bidding Process. 87. We seek comment on whether to use a 
single-round, sealed bid process or a descending, multi-round auction. 
Each bidder would submit an amount of support necessary per line given 
our universal service technical specifications. We observe that the 
Commission has successfully implemented multi-round auctions in other 
contexts. We seek comment on whether a descending multi-round bidding 
system would be preferable to a single-round sealed bid auction.
    88. We also seek comment on how to establish the reservation 
price--the highest bid that would qualify for support--for the 
competitive bidding mechanism. One option would be to use the new high-
cost mechanism to estimate the amount of support that would be 
available for providing the supported services in the unserved, tribal 
area and set that as the reservation price. We seek comment on what 
incentives carriers would have, if any, to bid an amount lower than the 
reservation price determined by the model. Alternatively, we seek 
comment on whether we should set a reservation price that is some 
percentage above the support amount determined under the new high-cost 
mechanisms. We seek comment on whether a rational percentage can be 
identified. We also seek comment on whether of conduct an auction 
without establishing a particular reservation price or specifically 
identifying the amount that would be provided under the new high-cost 
mechanism in an effort to determine the amount of support each carrier 
believes is necessary. We seek comment on whether, if we were to 
proceed in this manner, the Commission should reserve the right to 
conclude that the competitive bidding mechanism was not successful and 
to proceed to the fact-based inquiry.
    (e) Support Amount. 89. A well-designed auction should provide 
incentives for carriers to disclose the minimum amount of support they 
require, even though this information may be competitively sensitive. 
We seek comment on how to provide incentives for carriers to reveal the 
minimum amount of support necessary to provide service to the unserved 
area. We seek comment on whether we should employ a ``Second Price'' or 
`'Vickrey'' auction, in which the successful bidder gets support at the 
level of the lowest bid made by a non-successful bidder. In theory, 
this style of auction appears to induce bidders to reveal their actual 
costs and would thereby generate the same total support requirements as 
a first price, sealed bid auction. Another factor relevant in setting 
the support level is whether the federal support provided constitutes 
the entire amount of subsidy available to the carrier. We tentatively 
conclude that we would need to establish that the competitive bidding 
mechanism for unserved areas would be used to determine the entire 
amount of support to be divided and the relevant share of support would 
be

[[Page 52752]]

allocated to the federal and state authorities, in whatever proportion 
is established for the high-cost support mechanism in general. We seek 
comment on this analysis.
    (f) Obligations Assumed by Winning Bidder. 90. We tentatively 
conclude that, pursuant to section 214(e), a successful bidder must 
provide the services supported by the universal service support 
mechanisms to all customers requesting service in the designated area 
and advertise the availability of such service throughout the service 
area. We seek comment on this tentative conclusion.
2. Other Proposals and Examples of Competitive Bidding
    91. A number of parties submitted competitive bidding proposals in 
the universal service docket, the most detailed of which were submitted 
by GTE, consultants to Ameritech, and Frank Kelly and Richard Steinberg 
of Cambridge University, Great Britain. These proposals were designed 
to determine the carrier or carriers entitled to receive universal 
service support and the level of support to be provided. In addition, 
other government agencies have used competitive bidding systems that 
may have features relevant to the market at issue here. We seek comment 
on these other competitive bidding proposals, because aspects of these 
proposals may be preferable to the competitive bidding approach 
proposed.

E. Ordering Carriers To Provide Service

    92. We seek comment on the ramifications of ordering a carrier to 
provide service in an unserved area. We tentatively conclude that this 
requirement entails an obligation to deploy the facilities necessary to 
provide the services supported by federal universal service support 
mechanisms, to offer the services to all customers requesting service 
in the designated area, and to advertise the availability of such 
service throughout the service area. These requirements are consistent 
with the language in section 214(e)(3) of the Act, stating that the 
carrier ordered to provide service shall meet the requirements of 
section 214(e)(1) of the Act. We seek comment on this tentative 
conclusion.
    93. We also seek comment whether additional measures may be 
necessary to ensure that the carrier ordered to provide service is able 
to earn an appropriate return on its investment. For example, a carrier 
may deploy facilities, advertise the availability of services and offer 
service to all customers and yet an inadequate number of customers may 
subscribe to the service, rendering the operation unprofitable. This 
result may occur due to faulty estimations by the carrier, but it may 
also be the result of unpredictable demand. Similarly, it is possible 
that carriers may provide services to all requesting customers, yet the 
customers might default on their bills. If the carrier is ordered to 
provide service, to what extent must it retain customers who cannot pay 
overdue debts or with poor credit records? How will the carrier recover 
its investment on the facilities deployed to provide service to 
subscribers who do not pay their bills? We seek comment on these 
issues, including the appropriate role for the Commission and state 
commissions to play in addressing these issues.

VI. Underserved Areas

    94. In this section of the Further Notice, the Commission considers 
whether additional support for low-income consumers is necessary to 
promote subscribership in unserved and underserved areas, including 
tribal and insular areas.

A. Defining ``Underserved Area''

    95. In the Thirteenth Order on Reconsideration, the Commission 
observed that there may be inadequately served areas that are 
characterized by extremely low penetration, low population density, and 
high costs. We seek comment on the need for the Commission to establish 
a definition of ``underserved area'' that would be used in targeting 
supplemental universal service support to those areas. For example, a 
community may be considered underserved if the penetration rate of the 
community is significantly below the national average. In addition to 
the number of supported services available, and the percentage of the 
population receiving those supported services, there may be other 
identifying characteristics that describe an underserved area. We seek 
comment on an appropriate definition for underserved area. For example, 
we could define underserved area as a geographic area that meets 
certain statistical benchmarks, i.e., a penetration rate below a 
certain percentage, a population density below a certain level, costs 
of providing supported services above a certain level, etc. We also 
seek comment on whether there is sufficient, readily available 
statistical data to make such a definitional approach viable.

B. Expanding LinkUp to Include Facilities-Based Charges

    96. We seek comment on whether increasing federal support to offset 
initial connection charges may be necessary to increase the success of 
our universal service support mechanisms in underserved areas, 
including insular and tribal lands. In the proceeding leading up to the 
Second Recommended Decision, the Arizona Corporation Commission 
(Arizona Commission) submitted a proposal to use a portion of federal 
support to address the problem of unserved areas and the inability of 
low-income residents to obtain telecommunications service because they 
cannot afford to pay the required line extension or construction costs. 
The Arizona Commission's proposal was not intended to be a 
comprehensive alternative to the high-cost fund distribution model, but 
rather to address a discrete concern related to low-income residents in 
remote areas. We seek comment on the Arizona Commission's proposal and 
the extent to which the problem identified by the Arizona Commission is 
widespread. In particular, we seek further data on the cost of line 
extensions in rural areas and regarding the number of residents that 
are deprived of telecommunications services because of high line 
extension or construction costs and areas in which this problem is 
acute.
    97. The Joint Board recognized that investments in line extensions 
historically have been an issue addressed by the states through 
intrastate proceedings that establish reasonable rates for line 
extension agreements and encourage carriers to minimize unserved 
regions of the states. The Joint Board suggested that these issues 
should continue to be dealt with by states, to the extent that the 
states are able to do so. We note that regulators generally require 
carriers to use rate averaging to reduce the rates for their highest-
cost customers in rural and insular areas, but those regulators often 
still permit carriers to charge particularly isolated customers a 
supplementary ``initial connection'' charge for installing a new line. 
Moreover, while regulators also generally require carriers to amortize 
the cost of installing new lines, if there is a reasonable chance that 
those lines will not be used over their full life-span, regulators 
often permit carriers to charge most, if not all, of the initial 
connection charge up front. These charges can be prohibitive. We seek 
comment on whether states have the ability to address this problem, or, 
in the

[[Page 52753]]

alternative, whether federal assistance, in some instances, may be 
necessary.
    98. We seek comment on what role the Commission might play in 
trying to alleviate this problem. We seek comment on whether we might 
provide additional support through the LinkUp America program--which 
provides federal support to reduce the price of initial connection 
charges--at least for locations with significantly lower than average 
telecommunications penetration rates, e.g., below 75 percent. 
Commenters supporting such an approach should also explain whether 
support would be provided as a one-time payment or over a number of 
years. We also seek comment on what we might do to encourage carriers 
to offer installment loans for such extensions over a practical time 
frame. We seek comment on these and any other alternatives that might 
be more effective ways of addressing this problem. For example, we seek 
comment on whether the provision of telecommunication service to remote 
areas using terrestrial wireless or satellite technologies might allow 
service at lower cost compared to the cost of line extension or 
construction of wireline facilities. Commenters offering proposals 
should also explain how their proposals would avoid encouraging 
uneconomic investments in relatively high-cost technologies.

C. Support for Intrastate Toll Calling

    99. We seek comment on the extent to which limited local calling 
areas impose a barrier to increased penetration in certain underserved 
areas. For example, the local calling area for the Jemez Pueblo in New 
Mexico includes only about half a dozen other towns. It does not 
include any other Pueblos or hospitals nor the cities of Albuquerque or 
Santa Fe, where most residents work. Similarly, the calling area for 
the Picuris Pueblo does not even include 911 calls. To the extent that 
limited local calling areas impose a barrier to increased penetration, 
we seek comment on how to remove this barrier. For example, expanding 
the local calling area to include the unserved or underserved area and 
the nearest metropolitan area or community of interest may entice more 
consumers to request service. Expanding local calling areas, however, 
would likely cause upward pressure on local rates. We seek comment on 
how expanded local calling areas would impact local rates, including 
rates for consumers living in communities outside of tribal lands. We 
seek comment on what role, if any, the Commission is authorized to and 
should play in seeking to address impediments caused by limited local 
calling areas.
    100. We seek comment on whether federal universal service support 
mechanisms should provide additional support for low-income consumers 
living in remote areas or low-income consumers living on tribal lands. 
For example, the Commission could provide support for calls outside of 
the local calling area that fall within specified federally-designated 
support areas. Similarly, federal universal service support could be 
provided to pay for a foreign exchange (FX) line service from the 
remote or tribal area to the nearest metropolitan area or community of 
interest. We seek comment on whether such proposals would eliminate 
incentives for states to ensure affordable local rates. We also seek 
comment on whether the provision of service by terrestrial wireless or 
satellite providers would alleviate any problems associated with 
limited local calling areas.

D. Expanded Availability of Toll Limitation Devices

    101. Many households may forgo telecommunications service because 
of past or anticipated future problems with high telephone bills. The 
general prevalence of this bill management problem was documented in a 
GTE-Pacific Bell commissioned survey done in 1993 by the Field Research 
Corp. for the California PUC. The Commission sought to address the 
problem, however, by requiring carriers offering low-income subscribers 
``Lifeline'' service, to permit those subscribers to secure a ``toll 
limitation'' service--either toll blocking or toll control. We believe 
that our actions in this regard should alleviate this bill management 
problem. We seek comment on whether expanded options for toll-control 
or toll-blocking would make telecommunications service more desirable 
in unserved and underserved areas, including tribal lands. We ask that 
commenters identify any specific toll-control or toll-blocking features 
that would be useful, including, for example, the ability to require 
the use of a Personal Identification Number (PIN) in order to restrict 
access to toll calls. We also recognize that the benefits of these 
options are minimal if consumers are not aware of them. We seek comment 
on what additional measures, if any, the Commission should undertake to 
ensure consumers are educated about the availability of toll-limitation 
devices.

E. Publicizing Availability of Low-Income Support

    102. We observe that customers may fail to subscribe to 
telecommunications service because they are unaware of the Commission's 
Lifeline and LinkUp programs, which are intended to make service more 
affordable, and the availability of toll-control and toll-blocking, 
which are intended to help low-income consumers control the amount of 
their monthly bills. Although the Commission's Lifeline and LinkUp 
programs have been providing universal service support to eligible 
customers for more than a decade, we are concerned that carriers may 
have failed to publicize the programs in some areas, particularly on 
Indian reservations. Unfortunately, it appears that in markets where 
carriers find it unprofitable to provide service, they have no 
particular incentive to publicize the availability of Lifeline and 
LinkUp. Thus, the Commission found that none of the representatives of 
the pueblos testifying in the January, 1999 Albuquerque field hearings 
were aware of the Lifeline and LinkUp programs. Furthermore, despite 
the 60-percent unemployment rate in the Cheyenne River Sioux Telephone 
Authority area, only about 10-percent of the subscribers there receive 
Lifeline service.
    103. We seek comment on whether the Commission should play a role 
in ensuring the spread of information on tribal lands, or in other low-
income, underserved areas, about the availability of low-income support 
that may make telecommunications service affordable. We recognize that 
carriers already have an incentive to convince potential customers of 
the value of their service--assuming the customers will be profitable 
to serve. We are concerned about those consumers whom carriers may 
consider unprofitable to serve. We tentatively conclude that a lack of 
information may contribute to the significantly low penetration rates 
on tribal lands.
    104. We seek comment on what options the Commission may have to 
promote awareness of low-income support mechanisms on tribal lands. 
Section 214(e)(1)(B) of the Act requires an eligible telecommunications 
carrier to ``advertise the availability of'' the services supported by 
federal universal service support mechanisms ``and the charges therefor 
using media of general distribution.'' We seek comment on the 
possibility of amending our current universal service rules to require 
carriers to publicize the availability of Lifeline and LinkUp and toll-
limitation options. For example, we could revise section 54.405 of our 
rules by adding the following italicized language:

    All telecommunications carriers shall (a) make available 
Lifeline service, as defined in

[[Page 52754]]

Sec. 54.401, to qualifying low-income consumers, and (b) publicize 
the availability of Lifeline service in a manner reasonably designed 
to reach those likely to qualify for the services.

    105. We seek comment on the costs and benefits of requiring 
carriers to publicize the availability of Lifeline, LinkUp and toll-
control devices. Alternatively, the Commission could encourage and 
participate in other marketing and information dissemination efforts, 
such as preparing consumer information fact-sheets that would be 
distributed in local communities. We seek comment on whether there is, 
or should be, some entity that would collect and verify the accuracy of 
data on Lifeline rates for each reservation, the eligibility standards 
for Lifeline in the relevant state, and how individuals who desired 
Lifeline service could confirm their eligibility and how they could 
sign up for service. We also seek comment on the best ways to 
disseminate this information to the relevant audience of potential 
Lifeline subscribers. We seek comment on any research or other data 
that indicates the most effective way of marketing to this population, 
whether via broadcast, print, wireline, or other media; whether 
separately or in combination with the marketing efforts of other social 
programs seeking to reach this audience; and whether on a federal, 
state or tribal level. Commenters aware of a particularly effective 
program are requested to provide us with sufficient information to 
enable us to contact that program administrator.

F. Support for Rural Health Care Infrastructure

    106. We seek comment on the technical limitations of the 
telecommunications services available to rural health care providers 
throughout the United States, including Alaska and insular areas. We 
ask commenters to provide as much detail as possible regarding the 
extensions or improvements needed in areas lacking adequate 
infrastructure. We ask that commenters identify the most urgent needs, 
such as those that would address threats to the health and safety of 
residents. We particularly encourage providers of fixed satellite 
services, geo-stationary satellites, and emerging technologies, to 
describe the capability of these technologies to serve Alaska and 
insular areas, and ask these providers to estimate the costs, provide a 
timetable for deploying particular technologies, and provide 
information regarding the capability of different technologies to 
support telehealth and telemedicine applications. We ask providers of 
other technologies, such as fixed wireless technology, to describe 
whether these technologies could effectively supplement the apparently 
inadequate infrastructure in the rural areas of Alaska, insular areas, 
and the mainland United States.
    107. We seek comment on whether and to what extent improvements to 
the telecommunications network required to meet the telecommunications 
needs of rural health care providers should be supported by federal 
universal service mechanisms and whether other mechanisms exist that 
would provide support for improving infrastructure. We ask parties to 
submit detailed descriptions of any programs supporting infrastructure 
development that would assist rural health care providers. We 
specifically ask the sponsors of programs cited in the State Health 
Care Report and other commenters familiar with these programs to detail 
their scope, identify any needs that are unmet by existing programs, 
and explain why.
    108. We invite commenters to submit specific proposals that they 
have already prepared for expanding the federal universal service 
support for rural health care providers to include infrastructure 
improvement costs of telecommunications carriers. Any commenter 
submitting a proposal should analyze the extent to which the proposal 
is competitively neutral, technically feasible, and economically 
reasonable, as required pursuant to section 254(h)(2). Commenters 
should also file detailed cost information for any proposal submitted. 
We recognize that some improvements to the telecommunications network 
made to provide service to rural health care providers may also be used 
to provide commercial services. We seek comment on whether and to what 
extent we should take account of such additional revenue sources in the 
event that support is provided to extend or improve telecommunications 
networks.

VII. Insular Areas

A. Defining ``Insular Area''

    109. In articulating the principle that consumers in all regions of 
the nation should have access to telecommunications services, Congress 
explicitly included insular areas within this mandate. As the Joint 
Board noted in the Recommended Decision, however, the Act does not 
define the phrase insular areas. We tentatively conclude that we should 
adopt a definition of insular areas to provide clarity regarding the 
availability of universal service support in those areas.
    110. We observe that, in other statutes, the term insular area 
generally refers to the island portions of the United States that are 
not states or portions of states. In addition, we observe that in 
common usage, the term insular area means ``of, or having the form of 
an island.'' Accordingly, we propose the following definition of 
insular areas: ``islands that are territories or commonwealths of the 
United States.'' By including the phrase ``territories or 
commonwealths,'' we intend to restrict the definition to areas that are 
populated islands that have a local government. We also observe that 
the proposed definition comports with publications of the Department of 
Interior's Office of Insular Affairs (OIA) and various provisions of 
the United States Code. We seek comment on this proposal.
    111. We seek comment on whether the definition of insular areas 
should include only those areas that are subject to the laws of the 
United States, and for which carriers serving those areas would be 
required to contribute to our universal service support mechanisms, 
and, if so, we seek comment on whether the proposed definition 
satisfies this goal. We seek comment on whether the definition of 
insular areas should exclude sovereign states that are not subject to 
the laws of the United States nor eligible to receive universal service 
support under the Act, unpopulated islands, and insular areas subject 
to the jurisdiction of, and receiving telecommunications service from, 
the United States military. We tentatively conclude that Puerto Rico, 
American Samoa, CNMI, Guam, and the U.S. Virgin Islands are properly 
included in the definition of insular areas and seek comment on this 
tentative conclusion.
    112. We seek comment on whether the Freely Associated States (FAS), 
including the Republic of the Marshall Islands, the Federated States of 
Micronesia, and the Republic of Palau, should be included in the 
definition of insular areas. These islands are associated with the 
United States through the terms of a Compact of Free Association, which 
gives the Commission authority and jurisdiction over various 
telecommunications services in the FAS, but carriers are not subject to 
universal service contribution requirements for the services they 
provide on these islands. We also observe that Midway Atoll is being 
transferred from the jurisdiction of the United States Navy to the U.S. 
Fish & Wildlife Service of the Department of Interior and has a 
population of 450 persons. We seek comment on whether Midway Atoll 
should be included in the

[[Page 52755]]

definition of insular areas. We invite commenters to provide 
alternative definitions of ``insular areas'' and to describe which 
areas would and would not be included with any alternative definition.
    113. We seek comment on whether similarities between the historical 
experience of Indians and persons living in insular areas warrant the 
extension of federal trust-type principles, including supplemental 
measures to promote the availability of universal service, to insular 
areas.

B. Rural Health Care Support

    114. Parties have already submitted information to us demonstrating 
that insular areas may have few hospitals and substantial undeveloped 
terrain and that travel between insular areas and more developed states 
or countries nearest to them may be very expensive. For these reasons, 
we anticipate that telehealth and telemedicine initiatives may be 
particularly important in insular areas. We encourage interested 
parties to highlight previous comments they have made on this issue or 
present any relevant new information to us. We are particularly 
interested in the differences between the needs and opportunities of 
rural health care providers in insular areas and those located in the 
remainder of the United States.
    115. Urban Rates. In the First Report and Order, the Commission 
adopted rules requiring carriers to provide rural health care providers 
with access to telecommunications services permitting speeds up to 1 
Mbps at rates comparable to those offered in urban areas. Consistent 
with the statute, the Commission's rules for rural health care 
providers calculate support amounts on the basis of the difference 
between the ``urban rate'' and the ``rural rate'' for the supported 
service. The urban rate is determined with reference to the rates 
charged other commercial customers of a similar service in the nearest 
large city in the state. The nearest large city is defined as having a 
population of at least 50,000 people.
    116. In the First Report and Order, the Commission found that the 
mechanism of using urban rates as a benchmark for reasonable rates may 
be ill-suited to certain insular areas that are relatively rural all 
over. The Commission concluded that it required additional information 
about whether telecommunications rates differ in urban and non-urban 
areas or insular areas, including areas of the Pacific Islands and the 
U.S. Virgin Islands. Accordingly, we seek comment on whether the rules 
concerning calculation of rural health care support need modifications 
to address the geographic or demographic situation in insular areas. We 
invite commenters to propose specific revisions in this regard.
    117. Nearest Large City. Consistent with the statute, the 
Commission's rules for providing universal service support to rural 
health care providers limit the length of the supported service to the 
distance between the health care provider and the point farthest from 
that provider on the jurisdictional boundary of the nearest large city 
in the state. The Governor of Guam proposed that we modify this rule to 
provide support for telecommunications services between an insular 
area's medical facilities and a supporting medical center in an urban 
area outside the insular area, such as in Hawaii or on the west coast 
of the continental United States. We seek comment on this proposal. We 
encourage commenters supporting this proposal to present detailed 
estimates of the cost of such a proposal and steps that must be taken 
to implement it. Commenters favoring this proposal should also provide 
legal analysis explaining whether it would be consistent with section 
254 to treat insular areas differently from the remainder of the United 
States, where support is only provided based on intrastate distances, 
as section 254(h)(1)(A) appears to require.
    118. Finally, we seek comment on whether health care providers and 
telecommunications carriers that serve insular areas face unique 
challenges that have not been documented previously in the record of 
this proceeding, and, if so, how we should tailor additional support 
mechanisms to address those problems, consistent with the statute. We 
encourage commenters to present proposals for additional support 
mechanisms through which rural health care providers located in insular 
areas could have access to the telecommunications services available in 
urban areas of the nation at affordable rates.

C. Access to Toll-Free Services in Insular Areas

    119. Because of their traditional treatment as international 
destinations, the Pacific Island areas have faced high rates for 
interexchange service and have had limited ability to obtain access to 
toll-free and advanced services. Calls between these insular areas and 
the remainder of the United States also required callers to use the 
``011'' international access code. Recent changes have begun to address 
these problems. Specifically, the 1996 Act requires that insular areas 
become subject to rate integration and averaging, which means that 
interexchange carriers are required to offer domestic interstate 
service using a uniform rate structure throughout the United States. In 
addition, many insular areas have been integrated into the North 
American Numbering Plan (NANP). In the First Report and Order, the 
Commission permitted residents of CNMI and Guam to access toll-free 
(e.g., 800) services by using 880 and 881 codes and paying the cost of 
reaching Hawaii where the calls could be connected thereafter toll-free 
to the called party until July 1, 1998, and that date was subsequently 
extended indefinitely.
    120. In the First Report and Order, the Commission determined that 
``these changes will have a significant impact on how residents of 
the[se] islands place interexchange calls and the rates that they, and 
toll-free access customers, will pay for the calls they place.'' Based 
upon the recommendation of the Joint Board, the Commission concluded 
that it should delay, until after July 1, 1998, consideration of 
whether the Commission should provide additional support for toll-free 
access and access to advanced and information services for insular 
areas so that the impact of rate integration and averaging and 
incorporation into the NANP could be evaluated. We seek comment on 
whether rate integration, rate-averaging, and incorporating insular 
areas into the NANP are leading toll-free customers to include insular 
areas in their toll-free calling areas. We seek comment on whether 
additional universal service support is needed to support toll-free 
calling from insular areas. We ask commenters to present any evidence 
that the marketplace will not fully solve this problem.

VIII. Procedural Matters

A. Ex Parte Procedures

    121. The Further Notice is a non-restricted notice and comment 
rulemaking proceeding. Ex parte presentations are permitted, except 
during the Sunshine Agenda period, provided they are disclosed as 
provided in the Commission's rules.

B. Comment Filing Procedures

    122. Pursuant to Secs. 1.415 and 1.419 of the Commission's rules, 
interested parties may file comments as follows: comments are due 
November 29, 1999 and reply comments are due December 29, 1999. 
Comments may filed using the Commission's Electronic Comment Filing 
System (ECFS) or by filing paper copies.
    123. Comments filed through the ECFS can be sent as an electronic 
file

[[Page 52756]]

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 copy 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 .'' A sample form and directions will be sent in reply.
    124. 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 appears in the caption of this proceeding, commenters must 
submit two additional copies for each additional docket or rulemaking 
number. All paper filings must be sent to the Commission's Secretary, 
Magalie Roman Salas, Office of the Secretary, Federal Communications 
Commission, 445 Twelfth Street S.W., Room TW-A325, Washington, DC 
20554.
    125. Parties who choose to file by paper should also submit their 
comments on diskette to Sheryl Todd, Accounting Policy Division, Common 
Carrier Bureau, Federal Communications Commission, 445 Twelfth Street 
SW, Room 5-A523, Washington, DC 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 a 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 the 
proceeding (CC Docket No. 96-45), 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 should sent diskette copies to the Commission's copy 
contractor, International Transcription Service, Inc., 1231 20th St. 
NW, Washington DC 20037.

C. Initial Regulatory Flexibility Act Analysis

    126. The Regulatory Flexibility Act (RFA) requires a Regulatory 
Flexibility Act analysis whenever an agency publishes a notice of 
proposed rulemaking or promulgates a final rule, unless the agency 
certifies that the proposed or final rule will not have ``a significant 
economic impact on a substantial number of small entities,'' and 
includes the factual basis for such certification. Pursuant to section 
603 of the RFA, the Commission has prepared an Initial Regulatory 
Flexibility Analysis (IRFA) of the possible significant economic impact 
on small entities by the policies and actions considered in this 
Further Notice. The text of the IRFA is set forth. 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 
provided. The Commission will send a copy of the Further Notice, 
including the IRFA, to the Chief Counsel for Advocacy of the Small 
Business Administration. In addition, summaries of the Further Notice 
and IRFA will be published in the Federal Register.

IX. Ordering Clauses

    127. Accordingly, it is ordered that, pursuant to the authority 
contained in sections 1-4, 201-205, 214(e), and 254 of the 
Communications Act of 1934, as amended, 47 U.S.C. 151-154, 201-205, 
214(e), and 254, this Further Notice of Proposed Rulemaking is hereby 
adopted and comments are requested as described.
    128. 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 Act Analysis, to the Chief Counsel for Advocacy of the 
Small Business Administration.

List of Subjects in 47 CFR Part 54

    Universal service.

Federal Communications Commission.
Shirley Suggs,
Chief, Publication Branch.
[FR Doc. 99-25479 Filed 9-29-99; 8:45 am]
BILLING CODE 6712-01-P