[Federal Register Volume 65, Number 133 (Tuesday, July 11, 2000)]
[Rules and Regulations]
[Pages 42615-42619]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-17474]


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DEPARTMENT OF AGRICULTURE

Rural Utilities Service

7 CFR Part 1735

RIN 0572-AB53


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

AGENCY: Rural Utilities Service, USDA.

ACTION: Final rule.

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SUMMARY: The Rural Utilities Service (RUS) is amending its regulations 
to provide that applicants may seek financial assistance to provide 
mobile telecommunications service without regard to whether the 
applicant is providing basic local exchange service in the territory to 
be served. RUS is also clarifying its regulations with regard to the 
application of nonduplication provisions and state telecommunications 
modernization plans to mobile telecommunications services. In addition, 
RUS has included criteria for determining ``reasonably adequate 
service'' levels for mobile telecommunications service. This final 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: This rule is effective July 11, 2000.

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

Executive Order 12988

    This rule has been reviewed in accordance with Executive Order 
12988, Civil Justice Reform. RUS has determined that this 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, must be exhausted 
prior to initiating litigation against the Department or its agencies.

Regulatory Flexibility Act Certification

    RUS has determined that this 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 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 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 rule is listed in the Catalog of 
Federal Domestic Assistance programs under numbers 10.851, Rural 
Telephone Loans and

[[Page 42616]]

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, 
20402-9325. Telephone: (202) 512-1800.

Executive Order 12372

    This rule 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 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 
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 (Pub. L. 104-104) and 
regulatory actions by the Federal Communications Commission 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.
    RUS regulations currently stipulate that an entity must provide or 
propose to provide the basic local exchange telephone service needs of 
rural areas to be eligible for RUS financing (7 CFR 1735.14, Borrower 
Eligibility) and that loans cannot be made for facilities to serve 
subscribers outside the borrower's local exchange service area (7 CFR 
1735.17, Facilities Financed). The Telecommunications Act of 1996, 
however, made the term ``basic local exchange service'' obsolete. The 
law mandates that universally available and affordable 
telecommunications services, including access to 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 
telecommunications services to rural areas is to make certain providers 
of services, in addition to providers of local exchange services, 
eligible for RUS financing. Mobile telecommunications services are 
included among the telecommunications services financeable under the 
Rural Electrification Act (RE Act) and among those contemplated in the 
Telecommunication Act of 1996. Therefore, RUS believes that, in 
addition to wireline service, mobile telecommunications services should 
be made available in all rural areas. As such, RUS is deleting its 
requirement that all borrowers provide local exchange service. Mobile 
telecommunications service, which allows the user to move within the 
service area while making and receiving telephone calls and other 
services, is fundamentally different from wireline service and is not, 
therefore, duplicative under the RE Act. Since mobile 
telecommunications services do not and cannot serve the same function 
as contemplated in state telecommunications modernization plans (TMPs) 
for wireline services (see 7 CFR 1751.106), RUS policy is to consider a 
borrower receiving a loan to finance such services to be participating 
in the state's plan so long as the loan funds are not used in a manner 
that, in RUS' opinion, is inconsistent with the borrower achieving the 
goals contained in the plan. RUS will continue to follow this policy 
regardless of whether the borrower provides any local exchange 
services. In addition, RUS has included criteria for determining 
``reasonably adequate service'' levels for mobile telecommunications 
service.
    RUS regulations are also utilized by the Governor of the Rural 
Telephone Bank in carrying out the loan program of the Rural Telephone 
Bank (the Bank); therefore, these policy revisions would apply to loans 
made by the Bank, as well.

Comments

    RUS received eight comments regarding the proposed rule, published 
at 65 FR 6922 on February 11, 2000, which were taken into consideration 
in preparing the final rule. A list of the commenters and comment 
summaries and responses follows:

    1. Cellular Telecommunications Industry Association (CTIA).
    2. Farmers Telephone Cooperative, Inc. (FTC).
    3. Joint comments submitted from the National Rural Telecom 
Association, Organization for the Promotion and Advancement of Small 
Telecommunications Companies, United States Telecom Association and 
the Western Rural Telephone Association, (the Associations).
    4. National Rural Telecommunications Cooperative (NRTC).
    5. National Telephone Cooperative Association (NTCA).
    6. Noverr Publishing, Inc. (NPI).
    7. Rural Telephone Finance Cooperative (RTFC).
    8. Western Wireless Corporation (WWC).

    Comment: NPI, a mobile wireless telephone service, supports the 
proposed amendments to the existing regulations, stating that they will 
increase rural access to advanced telecommunications technology. CTIA 
and WWC also support the expansion of the RUS loan program to 
facilitate the provision of wireless telecommunications services to 
rural areas. They believe that the proposed rule correctly recognizes 
that wireless services fall within the definition of ``telephone 
service'' as defined by Congress for RUS. CTIA and WWC support RUS' 
conclusion that prudent public policy ensures that consumers in rural 
areas have access to wireless and advanced telecommunications services 
comparable to that of their urban counterparts. However, CTIA, WWC, and 
FTC recommended that RUS go further to encourage the development of 
competitive telecommunications services in rural areas between wireless 
and wireline service providers. They stated that RUS policies should 
facilitate wireline-wireless competition. They further stated that the 
proposed rule should be amended by removing the word ``incidentally'' 
to allow rural consumers to receive the benefits of genuine facilities-
based competition. RUS' new rules should encourage multiple competing 
carriers to provide service to presently unserved and underserved rural 
markets.
    Reply: RUS appreciates the support for its efforts to expand modern 
telecommunications in rural areas. However, unless authorized by the 
provisions of the RE Act, RUS is prohibited from making a loan that 
results in ``duplication of lines, facilities, or systems providing 
reasonably adequate services * * *.'' (7 U.S.C. 922) (hereinafter 
referred to as ``duplication''). Replies to other comments explain that 
RUS believes that wireline and mobile service do not duplicate each 
other. RUS' mission is to ensure that rural consumers have access to 
modern telecommunications service including wireless and advanced 
telecommunications services comparable to urban and suburban 
subscribers. The rule, therefore,

[[Page 42617]]

promotes the financing of mobile service where such service is non-
existent or is determined to be inadequate.
    Comment: CTIA and WWC stated that RUS should modify its rules to 
specify that, because states are federally preempted from requiring 
certificates of convenience (CCN) and necessity for wireless providers, 
Sec. 1735.12(a) of the rule does not apply to wireless carriers, and 
mobile wireless carriers should be subject to Sec. 1735.12(b) instead.
    Reply: The RE Act dictates what action RUS will take when borrowers 
have a CCN or do not have a CCN. RUS will make a nonduplication finding 
in those cases where one is required.
    Comment: CTIA and WWC further recommended that Sec. 1735.12(d) of 
the proposed rule be revised to insure that it does not impose greater 
requirements on commercial mobile radio service (CMRS) carriers than 
those imposed by the FCC. Thus, RUS should hold that the clarity, 
reliability and signal strength requirements contained in proposed 
Sec. 1735.12(d)(2) and (3) are met so long as a wireless provider is 
operating within the parameters of its FCC license, and that the mobile 
911 requirements of proposed Sec. 1735.12(d)(5) are consistent with 
those established by the FCC. NRTC recommended that the proposed 
requirements for mobile telecommunications service be interconnected 
with the public switched telephone network (PSTN) and that mobile 911 
service be available to all subscribers, should not be determinative of 
eligibility for RUS loans. NRTC stated that the safety advantages of 
wireless technology do not depend on access to the PSTN or 911. 
Businesses and individuals using mobile wireless services not connected 
to the PSTN may still report emergency situations at the scene, rather 
than going to the nearest telephone. NRTC recommended that RUS 
eliminate the requirements of interconnection (Sec. 1735.12(d)(4)) and 
911 availability (Sec. 1735.12(d)(5)) in its proposed rule changes.
    Reply: The criteria used in determining if service is reasonably 
adequate are designed to ensure that no rural area is trapped with 
inferior, substandard service. RUS has, therefore, established criteria 
to ensure that service being provided is adequate. RUS will consider 
all criteria in Sec. 1735.12(d) before making a determination as to 
whether a loan can be made based on a finding of inadequate service. 
RUS and the FCC have different roles. RUS' function is to promote and 
finance telecommunications service in rural areas. RUS is prohibited 
from financing duplication. The service features described in 
determining adequate service are a minimum standard of service RUS 
believes present-day subscribers should receive.
    Comment: CTIA and WWC recommended that RUS should also implement 
proposed Sec. 1735.12(d)(8), which allows the Administrator to impose 
``any other criteria * * * determine[d] to be applicable,'' in a manner 
that ensures that wireless carriers applying for RUS loans are not 
subjected to unreasonable requirements or provisions that conflict with 
FCC rules and policies. In addition, RUS should likewise implement 
proposed Sec. 1735.12(d)(7), which precludes RUS loans from being used 
to provide service ``at rates which render [it] unaffordable to a 
majority of rural persons,'' in a manner that takes into account 
competition in the wireless marketplace.
    Reply: RUS appreciates the comment and will consider all relevant 
circumstances in applying Sec. 1735.12(d) in a manner designed to 
promote modern mobile service in rural areas. Allowing the RUS 
Administrator the discretion to establish or evaluate ``other 
criteria'' is necessary and prudent in the rapidly evolving 
technological environment of the telecommunications industry. In 
addition, since the Administrator is responsible to the taxpayers for 
the security of the government's loans, he or she must be afforded the 
ability to adequately assess unique or rare situations to determine 
what is in the best interest of the rural residents measured against a 
provider's ability to repay its debt. With regard to rates, the word 
``majority'' in the proposed rule has been changed to ``significant 
number.'' RUS believes that the mobile service offered at unaffordable 
rates is not ``available'' if it is offered at rates that are 
unaffordable to a significant number of persons, and cannot, therefore, 
be adequate. Financing for mobile wireless service will only be 
provided where such facilities and the resulting service do not 
currently exist or is found to be inadequate.
    Comment: The Associations stated that RUS should not distinguish 
between mobile telecommunications service and wireline 
telecommunications service. The Rural Electrification Act defines 
``telephone service'' so as to include both. The two kinds of service 
duplicate each other if both are offered in the same area.
    Reply: RUS believes that mobile and wireline telecommunications 
services are easily distinguishable from each other. The most obvious 
difference is that wireline service reaches only a fixed location while 
a receiver for mobile service allows the subscriber to send and receive 
communications while moving within a wide area. There is also a 
significant difference in capacity, with the wireline facilities being 
able to handle a significantly larger volume of information. Wireline's 
greater capacity is reflected in the difference in the pricing of the 
two services with subscribers being predominantly charged a fixed 
monthly rate while mobile service subscribers are charged rates that 
are more sensitive to usage levels. The RE Act definition of 
``telephone service'' is sufficiently broad to allow RUS to finance 
wireline services and mobile services. Neither the definition nor any 
other provision of the RE Act prevents the RUS from financing more than 
a single provider of non-duplicating services in a specific area.
    Comment: The Associations stated that Congress never envisioned RUS 
financing telecommunications competition. Neither the RE Act nor the 
Telecommunications Act of 1996 gives RUS the authority to finance 
competition.
    Reply: As noted in the reply to the previous comment, the mobile 
and wireline services are distinct and, therefore, do not duplicate or 
compete with each other when offered in the same area. Moreover, the RE 
Act prohibits RUS financing of duplication, not competition, so that 
RUS may provide financing in some situations, even though another 
provider purports to serve the same area. The RE Act makes another 
distinction, between (1) cases where there is ``a state regulatory body 
having authority to regulate telephone service and to require 
certificates of convenience and necessity,'' 7 U.S.C. 922, and (2) 
cases where there is not such a body. Non-duplication findings are 
required only in the second.
    Comment: RTFC stated that RUS should concentrate on financing 
telecommunications services in rural areas, instead of promoting 
competition and also asserted that there are other sources of funds for 
mobile telecommunications services.
    Reply: RUS' mission is to promote and finance the widest range of 
telecommunications services defined in the RE Act throughout rural 
America. RUS is not simply a lender of last resort as the comment 
implies. Just as RUS in the last 50 years led extension of telephone 
service in rural areas, it looks forward to leading in the deployment 
of mobile wireless and advanced

[[Page 42618]]

telecommunications services currently underway.
    Comment: The Associations stated that RUS, by financing wireless 
and wireline services in the same area, increases the risk of default 
on its loans and jeopardizes provision of services in the area.
    Reply: RUS is alert to the possibility of the risks mentioned in 
the comment. The agency believes that mobile wireless and wireline are 
distinct and do not, therefore, duplicate each other to any significant 
degree. Therefore, entry of a mobile telecommunications provider into 
an area poses little financial risk to an existing wireline provider. 
The language in the regulation states that generally, RUS will not make 
a loan to another entity to provide the same service (i.e., mobile 
where mobile already exists) already being provided by a RUS borrower 
unless the borrower is unable to meet its obligations to RUS (this 
section, in proposed rule as an amendment to Sec. 1735.14, will instead 
be added to Sec. 1735.17). As a Federal lender, it is RUS' 
responsibilities to ensure, to the best of its ability, security for 
all outstanding and future loans, and to encourage telecommunications 
services in rural areas.
    Comment: In the proposed regulations, the Associations assert that 
RUS fundamentally changed its definition of adequate telephone service 
by making the existing definition of adequate service apply only to 
wireline service and by adopting a new definition of mobile 
telecommunications services.
    Reply: The RE Act requires the Administrator of RUS to determine 
that a loan will not result in the ``duplication of lines, facilities, 
or systems, providing reasonably adequate services''. If the existing 
service is not reasonably adequate, an RUS loan to improve service does 
not result in duplication. Mobile service is distinct from wireline 
service thereby requiring a definition of adequacy that properly 
reflects its uniqueness. With rapidly advancing technologies, the 
quality of telecommunication service expected by all persons has risen 
dramatically in recent years. Therefore, the new definition of adequate 
mobile telecommunications service reflects these developments.
    Comment: The Associations assert that RUS does not have authority 
to determine the affordability of wireline or wireless service.
    Reply: The new regulations state that ``mobile telecommunications 
service is not provided at rates which render the service unaffordable 
to a majority of the rural persons'' is one of the criteria RUS will 
use in determining whether existing mobile telecommunications service 
is adequate (7 CFR 1735.12(d)(7)). RUS believes that service available 
only at extremely high rates that render it inaccessible to a 
significant number of rural subscribers is not adequate service. The 
evaluation of whether rates are affordable to rural subscribers is made 
only to determine whether RUS will make a loan in the particular 
situation and is clearly different from the regulatory judgement of 
whether rates are reasonable. Therefore, RE Act purposes would be 
furthered by a loan to finance mobile telecommunications services at 
reasonable rates that are affordable to rural persons who would not 
otherwise have access to such services.
    Comment: The Associations believe that RUS should not eliminate the 
requirement in its existing regulations that borrowers must provide 
basic exchange service. Instead, RUS should amend its regulations to 
authorize the financing of mobile and other advanced telecommunications 
services for providers that are also providing basic exchange service.
    Reply: Telecommunications providers offering basic local exchange 
telephone service are eligible for RUS loans currently and will 
continue to be eligible under the new regulations. The facilities used 
to deliver mobile services are distinct from wireline facilities, 
including those facilities that provide basic exchange service, and RUS 
believes that treating mobile services separately will expedite their 
expansion in rural areas. Limiting RUS funding of mobile services to 
those companies providing basic exchange services would in most 
instances mean that the existing telephone company could decide not to 
provide mobile services and then prevent persons and businesses in its 
service area from receiving the service from any other company as well.
    Comment: The Associations stated that RUS cannot exempt carriers 
from the statutory State telecommunications plan (TMP) requirements.
    Reply: The RE Act requires, as a condition of receiving a loan, 
that ``the applicant is a participant in the [TMP]'' for the state in 
which the proposed service is located, ``if the plan was developed by 
telephone borrowers under [the RE Act]'' (7 U.S.C. 935(d); 7 U.S.C. 
948(b)(4)(B)). The statute sets forth requirements for a TMP that 
contemplate only wireline carriers (see 7 U.S.C. 935(d)(3)) and 
existing regulations have been developed utilizing that interpretation 
(7 CFR 1751.101(d)). RUS believes that technologies that allow mobile 
service to meet TMP standards will not be practical for a considerable 
time, if ever, and that it was not Congress' intention to delay 
expansion of mobile services in rural areas. Under the existing 
interpretation of the TMP standards, RUS does not require that all of 
the wireline services provided by a borrower be upgraded to comply with 
the TMP, including services not covered by the loan. Instead, RUS 
requires that loan funds be spent in a manner consistent with the 
borrower achieving TMP standards (7 CFR 1751.103). RUS interprets the 
provision in the same way for mobile loans--the borrower must not use 
the funds in a manner inconsistent with achieving TMP standards. This 
interpretation will facilitate both accomplishing TMP standards at the 
earliest possible date and the expansion of mobile service in rural 
areas.
    This rule becomes effective on the date of publication in the 
Federal Register because any further delay would contribute to denying 
benefits to residents in rural areas. This rule is part of an 
Administration initiative to ensure that rural areas receive access to 
all types of telecommunications services--services already available to 
urban residents. Part of the intent of that initiative is to provide 
funding, this fiscal year (fiscal year 2000), to entities to provide 
mobile telecommunications service where that service does not exist or 
is inadequate. In order to do that, applicants must have time to 
prepare and submit applications in accordance with this and other 
applicable RUS regulations; RUS must also have adequate time to process 
and approve eligible applications. A delay in the effective date of 
this rule of 30 days, coupled with application preparation, review and 
processing times, would undermine the ability to provide funding this 
fiscal year, thereby denying benefit to rural residents.

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 
amended as follows:

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

    The authority citation for part 1735 is revised to read as follows:

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


[[Page 42619]]


    2. In Sec. 1735.2, the following definitions are added in 
alphabetical order to read as follows:


Sec. 1735.2  Definitions.

* * * * *
    Mobile telecommunications service means the transmission of a radio 
communication voice service between mobile and land or fixed stations, 
or between mobile stations.
* * * * *
    Public switched network means any common carrier switched network, 
whether by wire or radio, including local exchange carriers, 
interexchange carriers, and mobile telecommunications service 
providers, that use the North American Numbering Plan in connection 
with the provision of switched services.
    RUS means the Rural Utilities Service, an agency of the United 
States Department of Agriculture, successor to the Rural 
Electrification Administration.
* * * * *

    3. Amend Sec. 1735.10 by:
    A. Revising paragraph (b);
    B. Redesignating paragraphs (c), (d), and (e) as (d), (e), and (f), 
respectively; and
    C. Adding a new paragraph (c).
    This revision and addition read as follows:


Sec. 1735.10  General.

* * * * *
    (b) RUS will not make hardship loans, RUS cost-of-money loans, or 
RTB loans for any wireline local exchange service or similar fixed-
station voice service that, in RUS' opinion, is inconsistent with the 
borrower achieving the requirements stated in the State's 
telecommunication modernization plan within the time frame stated in 
the plan (see 7 CFR part 1751, subpart B), unless RUS has determined 
that achieving the requirements as stated in such plan is not 
technically or economically feasible.
    (c) A borrower applying for a loan to finance mobile 
telecommunication services shall be considered to be a participant in 
the State's telecommunication modernization plan so long as the loan 
funds are not used in a manner that, in the opinion of the 
Administrator, is inconsistent with the borrower achieving the goals 
set forth in the plan.
* * * * *
    4. Amend Sec. 1735.12 by:
    A. Revising paragraph (c) introductory text; and
    B. Adding new paragraphs (d) and (e).
    The revision reads 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 in 
determining whether such service is reasonably adequate:
* * * * *
    (d) RUS shall consider the following criteria for any of mobile 
telecommunications service in determining whether such service is 
reasonably adequate:
    (1) The extent to which area coverage is being provided as 
described in 7 CFR 1735.11.
    (2) Clear and reliable call transmission is provided with 
sufficient channel availability.
    (3) The mobile telecommunications service signal strength is at 
least -85dBm (decibels expressed in miliwatts).
    (4) The mobile telecommunications service is interconnected with 
the public switched network.
    (5) Mobile 911 service is available to all subscribers, when 
requested by the local government entity responsible for this service.
    (6) No Federal or State regulatory commission having jurisdiction 
has determined that the quality, availability, or reliability of the 
service provided is inadequate.
    (7) Mobile telecommunications service is not provided at rates 
which render the service unaffordable to a significant number of rural 
persons.
    (8) Any other criteria the Administrator determines to be 
applicable to the particular case.
    (e) RUS does not consider mobile telecommunications service a 
duplication of existing wireline local exchange service or similar 
fixed-station voice service. RUS may finance mobile telecommunications 
systems designed to provide eligible services in rural areas under the 
Rural Electrification Act even though the services provided by the 
system may incidentally overlap services of existing mobile 
telecommunications providers.


Sec. 1735.14  [Amended]

    5. Amend Sec. 1735.14 by:
    A. Removing paragraph (c)(1); and
    B. Redesignating paragraphs (c)(2) and (c)(3) as (c)(1) and (c)(2) 
respectively.

    6. Amend Sec. 1735.17 by:
    A. Removing paragraph (c)(3);
    B. Redesignating paragraphs (c)(4) and (c)(5) as (c)(3) and (c)(4), 
respectively, redesignating paragraph (d) as paragraph (e); and
    C. Adding new paragraph (d):
    The addition reads as follows:


Sec. 1735.17  Facilities Financed.

* * * * *
    (d) Generally, RUS will not make a loan to another entity to 
provide the same telecommunications service in an area served by an 
incumbent RUS telecommunications borrower providing such service. RUS 
may, however, consider an application for a loan to provide the same 
type of service being provided by an incumbent RUS borrower if the 
Administrator determines that the incumbent borrower is unable to meet 
its obligations to the government, including the obligation to provide 
service set forth in its loan documents and to repay its loans.

    Dated: July 5, 2000.
Jill Long Thompson,
Under Secretary, Rural Development.
[FR Doc. 00-17474 Filed 7-10-00; 8:45 am]
BILLING CODE 3410-15-P