[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