[Federal Register Volume 65, Number 102 (Thursday, May 25, 2000)]
[Proposed Rules]
[Pages 33787-33790]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-12657]


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DEPARTMENT OF AGRICULTURE

Rural Utilities Service

7 CFR Part 1735

RIN 0572-AB56


General Policies, Types of Loans, Loan Requirements--
Telecommunications Program

AGENCY: Rural Utilities Service, USDA.

ACTION: Supplemental proposed rule.

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SUMMARY: The Rural Utilities Service (RUS) is proposing to amend its 
regulations to update the criteria for determining ``reasonably 
adequate service'' levels for local exchange carriers and providers of 
specialized telecommunications service. This supplemental proposed rule 
is part of an ongoing RUS project to modernize agency policies in order 
to provide borrowers with the flexibility to continue providing 
reliable, modern telephone service at reasonable costs in rural areas, 
while maintaining the security and feasibility of the Government's 
loans.

DATES: Written comments on this supplemental proposed rule must be 
received by RUS by or carry a postmark or equivalent of June 26, 2000.

ADDRESSES: Submit written comments on this supplemental proposed rule 
to Roberta D. Purcell, Assistant Administrator, Telecommunications

[[Page 33788]]

Program, Rural Utilities Service, 1400 Independence Avenue, SW., Room 
4056, STOP 1590, Washington, DC 20250-1590. RUS requires a signed 
original and three copies of all comments (7 CFR part 1700.4). All 
comments received will be available for public inspection in room 4056, 
South Building, U.S. Department of Agriculture, Washington, DC, between 
8 a.m. and 4 p.m., Monday through Friday (7 CFR part 1.27(b)).

FOR FURTHER INFORMATION CONTACT: Jonathan P. Claffey, Deputy Assistant 
Administrator, Telecommunications Program, Rural Utilities Service, 
1400 Independence Avenue, SW., Room 4056, STOP 1590, Washington, DC 
20250-1590. Telephone: (202) 720-9556.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This proposed rule has been determined to be not significant and, 
therefore, has not been reviewed by the Office of Management and Budget 
(OMB) under Executive Order 12866.

Executive Order 12988

    This proposed rule has been reviewed in accordance with Executive 
Order 12988, Civil Justice Reform. RUS has determined that this 
proposed rule meets the applicable standards provided in section 3 of 
that Executive Order. In addition, all State and local laws and 
regulations that are in conflict with this rule will be preempted; no 
retroactive effect will be given to this rule; and in accordance with 
section 212(e) of the Department of Agriculture Reorganization Act of 
1994 (7 U.S.C. 6912(e)) administrative appeal procedures, if any are 
required, must be exhausted prior to initiating litigation against the 
Department or its agencies.

Regulatory Flexibility Act Certification

    RUS has determined that this proposed rule will not have a 
significant economic impact on a substantial number of small entities, 
as defined by the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). 
The RUS telecommunications loan program provides borrowers with loans 
at interest rates and terms that are more favorable than those 
generally available from the private sector. RUS borrowers, as a result 
of obtaining Federal financing, receive economic benefits that exceed 
any direct cost associated with complying with RUS regulations and 
requirements.

Information Collection and Recordkeeping Requirements

    This proposed rule contains no new reporting or recordkeeping 
burdens, under OMB control number 0572-0079 that would require approval 
under the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35).
    Send questions or comments regarding this burden or any other 
aspect of these collections of information, including suggestions for 
reducing the burden to F. Lamont Heppe, Director, Program Development 
and Regulatory Analysis, Rural Utilities Service, 1400 Independence 
Avenue, SW., Room 4034, STOP 1522, Washington, DC 20250-1522.

National Environmental Policy Act Certification

    The Administrator of RUS has determined that this proposed rule 
will not significantly affect the quality of the human environment as 
defined by the National Environmental Policy Act of 1969 (42 U.S.C. 
4321 et seq.). Therefore, this action does not require an environmental 
impact statement or assessment.

Catalog of Federal Domestic Assistance

    The program described by this proposed rule is listed in the 
Catalog of Federal Domestic Assistance programs under numbers 10.851, 
Rural Telephone Loans and Loan Guarantees, and 10.852, Rural Telephone 
Bank Loans. This catalog is available on a subscription basis from the 
Superintendent of Documents, the United States Government Printing 
Office, Washington, DC 20402-9325. Telephone: (202) 512-1800.

Executive Order 12372

    This program is excluded from the scope of Executive Order 12372, 
Intergovernmental Consultation, which may require consultation with 
State and local officials. See the final rule related notice entitled 
``Department Programs and Activities Excluded from Executive Order 
12372,'' (50 FR 47034).

Unfunded Mandates

    This proposed rule contains no Federal mandates (under the 
regulatory provisions of title II of the Unfunded Mandates Reform Act 
of 1995) for State, local, and tribal governments or the private 
sector. Thus, this proposed rule is not subject to the requirements of 
sections 202 and 205 of the Unfunded Mandates Reform Act of 1995.

Background

    The telecommunications industry is becoming increasingly 
competitive. The Telecommunications Act of 1996 (Public Law 104-104) 
and regulatory actions by the Federal Communications Commission (FCC) 
are drastically altering the regulatory and business environment of all 
telecommunications systems, including RUS borrowers. At the same time, 
changes in overall business trends and technologies continue to place 
pressure on RUS-financed systems to offer a wider array of services and 
to operate more efficiently.
    The Telecommunications Act of 1996 mandates that universally 
available and affordable telecommunications services, including 
advanced services, be made available to all US citizens--whether in 
rural areas or city centers, affluent or poor communities. RUS supports 
this mandate and the goal that, with the assistance of advanced 
telecommunications technology, rural citizens be provided the same 
economic, educational, and health care benefits available in the larger 
metropolitan areas. RUS believes that the most expeditious way to bring 
the full range of telephone services to rural areas is to make certain 
providers of advanced services, in addition to providers of local 
exchange services, eligible for RUS financing.
    RUS regulations currently contain criteria for RUS to consider in 
determining whether telecommunications service is reasonably adequate 
(7 CFR 1735.12(c), Nonduplication). However, these criteria do not 
recognize certain technological and other factors that are currently 
employed to determine adequate service. RUS is proposing separate 
criteria for local exchange carriers and providers of specialized 
telecommunications service. These revised criteria for determining 
``reasonably adequate service'' are derived primarily from RUS policies 
related to telecommunications carriers generally, the 
Telecommunications Act of 1996, and FCC rules and regulations.
    Under the Telecommunications Act of 1996, all incumbent local 
exchange carriers (ILECs) are automatically considered eligible 
telecommunications carriers (ETCs). An ETC is certified by the 
regulatory commission having jurisdiction, which makes it eligible to 
receive universal service support. Each State regulatory commission 
will name at least one ETC for every area. In return for universal 
service support, the ETC must make available an FCC-specified level of 
service throughout a designated area. Furthermore, an ETC must agree to 
advertise basic services in a specific area and offer service to 
everyone in that area.

[[Page 33789]]

    If a LEC that has not previously borrowed from RUS applies for 
financing, RUS is proposing to lend only to those LECs that are ETCs 
within the State or tribal jurisdiction in which their financed 
facilities are to be located, LECs that have made commitments, 
satisfactory to RUS, to become ETCs, or LECs that commits to act as 
ETCs with respect to the area coverage requirements as described in 
Sec. 1735.11. ETCs are eligible for universal service support and have 
accepted the obligations of being an ETC. ETC status, therefore, both 
enhances loan feasibility and promotes area wide coverage.
    The Governor of RTB utilizes RUS policies in carrying out RTB's 
loan program. Therefore, these policy revisions would apply to loans 
made by RTB, as well.
    RUS proposed amending certain provisions of 7 CFR part 1735 in a 
Proposed Rule published on February 11, 2000 at 65 FR 6922. 
Subsequently, RUS continued to review and analyze the rapidly 
developing telecommunications environment and decided to propose 
further revisions of certain provisions of 7 CFR part 1735, including 
portions of Secs. 1735.2, 1735.10(c), 1735.12, and 1735.14 as published 
on February 2, 2000. RUS requests comments on all provisions published 
in this Supplemental Proposed Rule. Those proposed amendments published 
first on February 11, 2000, but revised again by this supplement will 
be subject to the procedures, including those concerning public 
comments, applicable hereto.

List of Subjects in 7 CFR Part 1735

    Accounting, Loan programs--communications, Reporting and 
recordkeeping requirements, Rural areas, Telephone.

    For the reasons set forth in the preamble, 7 CFR chapter XVII is 
proposed to be amended as follows:

PART 1735--GENERAL POLICIES, TYPES OF LOANS, LOAN REQUIREMENTS--
TELECOMMUNICATIONS PROGRAM

    1. The authority citation for part 1735 continues to read as 
follows:

    Authority: 7 U.S.C. 901 et seq., 1921 et seq., and 6941 et seq.

    2. In Sec. 1735.2, as proposed to be amended February 11, 2000, at 
65 FR 6923, revise the definition of Mobile telecommunications service 
and add the following definitions in alphabetical order to read as 
follows:


Sec. 1735.2  Definitions.

* * * * *
    Exchange access means the offering of access to telephone exchange 
services or facilities for the purpose of the origination or 
termination of telephone toll services.
* * * * *
    Local exchange carrier (LEC) means an organization that is engaged 
in the provision of telephone exchange service or exchange access.
* * * * *
    Mobile telecommunications service means radio communication voice 
service between mobile and land or fixed stations, or between mobile 
stations.
    Modernization Plan (State Telecommunications Modernization Plan) 
means a State plan, which has been approved by RUS, for improving the 
telecommunications network of those telecommunications providers 
covered by the plan. A Modernization Plan must conform to the 
provisions of 7 CFR part 1751, subpart B.
* * * * *
    RE Act means the Rural Electrification Act of 1936, as amended (7 
U.S.C. 901 et seq.).
* * * * *
    Specialized telecommunications service means any telephone service 
other than telephone exchange service, exchange access, or mobile 
telecommunications service.
* * * * *
    Telecommunications means the transmission or reception of voice, 
data, sounds, signals, pictures, writings, or signs of all kinds, by 
wire, fiber, radio, light, or other visual or electromagnetic means.
    Telephone exchange service means: (1) Service provided primarily to 
fixed locations within a telephone exchange, or within a connected 
system of telephone exchanges within the same exchange area operated to 
furnish to subscribers intercommunicating service of the character 
ordinarily furnished by a single exchange, and which is covered by the 
exchange service charge; or (2) Comparable service provided through a 
system of switches, transmission equipment, or other facilities (or 
combination thereof) by which a subscriber can originate and terminate 
a telecommunications service.
* * * * *
    3. Revise Sec. 1735.10(c), as proposed to be revised February 11, 
2000, at 65 FR 6923, to read as follows:


Sec. 1735.10  General.

* * * * *
    (c) A borrower receiving a loan to provide mobile 
telecommunications services or special telecommunications services 
shall be considered to be participating in the state telecommunications 
plan (TMP) with respect to the particular loan so long as the loan 
funds are not used in a manner that, in RUS' opinion, is inconsistent 
with the borrower achieving the goals set forth in the plan, except 
that a borrower must comply with any portion of a TMP made applicable 
to the borrower by a state commission with jurisdiction.
* * * * *
    4. In Sec. 1735.12, as proposed to be amended at 65 FR 6923, revise 
paragraph (c) and add paragraph (f) to read as follows:


Sec. 1735.12  Nonduplication.

* * * * *
    (c) RUS shall consider the following criteria for any wireline 
local exchange service or similar fixed-station voice service provided 
by a local exchange carrier (LEC) in determining whether such service 
is reasonably adequate:
    (1) The LEC is providing area coverage as described in 
Sec. 1735.11.
    (2) The LEC is providing all one-party service or, if the State 
commission has mandated a lower grade of service, the LEC is 
eliminating that service in accordance with the requirements of the 
Telecommunications Act of 1996, 47 U.S.C. 151 et seq.
    (3) The LEC's network is capable of providing transmission and 
reception of data at a rate of at least 1,000,000 bits per second (1 
Mbps) with reasonable modification to any subscriber who requests it.
    (4) The LEC makes available custom calling features (at a minimum, 
call waiting, call forwarding, abbreviated dialing, and three-way 
calling).
    (5) The LEC is able to provide E911 service to all subscribers, 
when requested by the government entity responsible for this service.
    (6) The LEC is able to offer local service with blocked toll access 
to those subscribers who request it.
    (7) The LEC's network is capable of accommodating Internet access 
at speeds of at least 28,800 bits per second (28.8 Kbps) via modem 
dial-up from any subscriber location.
    (8) There is an absence of frequent service interruptions.
    (9) The LEC is interconnected with the public switched network.
    (10) No Federal or State regulatory commission having jurisdiction 
has determined that the quality, availability, or reliability of the 
service provided is inadequate.
    (11) Services are provided at reasonably affordable rates.

[[Page 33790]]

    (12) Any other criteria the Administrator determines to be 
applicable to the particular case.
* * * * *
    (f) RUS shall consider the following criteria for any provider of a 
specialized telecommunications service in determining whether such 
service is reasonably adequate:
    (1) The provider of a specialized telecommunications service is 
providing area coverage as described in Sec. 1735.11.
    (2) An adequate signal strength is provided throughout the largest 
practical portion of the service area.
    (3) There is an absence of frequent service interruptions.
    (4) The quality and variety of service provided is comparable to 
that provided in nonrural areas.
    (5) The service provided complies with industry standards.
    (6) No Federal, State, or local regulatory commission having 
jurisdiction has determined that the quality, availability, or 
reliability of the service provided is inadequate.
    (7) Services are provided at reasonably affordable rates.
    (8) Any other criteria the Administrator determines to be 
applicable to the particular case.
    5. In Sec. 1735.14, as proposed to be amended at 65 FR 6924, remove 
``and'' at the end of paragraph (c)(1), remove the period at the end of 
paragraph (c)(2) and add ``; and'' in its place, and add new paragraph 
(c)(3) to read as follows:


Sec. 1735.14  Borrower eligibility.

* * * * *
    (c) * * *
    (3) If a local exchange carrier, must be either an eligible 
telecommunications carrier (ETC) within the State or tribal 
jurisdiction in which the RUS-financed facilities are to be located, a 
LEC that has made a commitment, satisfactory to RUS, to become an ETC 
within the State or tribal jurisdiction in which the financed 
facilities are to be located, or a LEC that commits to act as an ETC in 
such a manner as to meet the area coverage requirements as described in 
Sec. 1735.11.

    Dated: May 12, 2000.
Jill Long Thompson,
Under Secretary, Rural Development.
[FR Doc. 00-12657 Filed 5-24-00; 8:45 am]
BILLING CODE 3410-15-P