[Federal Register Volume 65, Number 175 (Friday, September 8, 2000)]
[Rules and Regulations]
[Pages 54399-54403]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-23092]



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  Federal Register / Vol. 65, No. 175 / Friday, September 8, 2000 / 
Rules and Regulations  

[[Page 54399]]



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: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Rural Utilities Service (RUS) is amending its regulations 
to update the criteria for determining ``reasonably adequate service'' 
levels for local exchange carriers and providers of specialized 
telecommunications service. This 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 September 8, 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 are required, 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 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 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 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 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 telecommunications services to rural areas 
is to provide RUS funding for the full range of telecommunications 
services defined under the RE Act.
    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

[[Page 54400]]

criteria do not recognize certain technological and other factors that 
are currently employed to determine adequate service. RUS is adopting 
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.
    If the borrower is a LEC, RUS will consider whether a borrower has 
been designated as an ETC when assessing loan feasibility. 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.

Comments

    RUS received comments from nine organizations regarding the 
proposed rule, published at 65 FR 33787 on May 25, 2000, and took all 
into consideration in preparing the final rule. A list of the 
commenters and comment summaries and responses follows:
    1. Joint comments submitted from the National Rural Telecom 
Association, the Organization for the Protection and Advancement of 
Small Telecommunications Companies, the United States Telecom 
Association and the Western Rural Telephone Association, (the 
Associations).
    2. The National Telephone Cooperative Association (NTCA).
    3. GTE Service Corporation (GTE).
    4. iSKY, Inc.
    5. Rural Community Assistance Corporation.
    6. City of Granite.
    7. Umatilla County, Board of Commissioners.
    8. Greater Eastern Oregon Development Corporation.
    9. City of Heppner.
    Comment: The Associations, as a general comment, stated that there 
was no need for RUS to try to conform its policies in administering the 
Rural Electrification Act of 1936 (RE Act) to the Telecommunications 
Act of 1996.
    Reply: As RUS stated in the background section of this rule, the 
Telecommunications Act of 1996 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 
changes contained in this rule are designed to facilitate, within the 
limits imposed by the RE Act, the deployment of advanced services in 
all of rural America--both the areas served by existing RUS borrowers 
and where necessary, rural areas that are underserved by non-RUS 
borrowers or receiving no service at all. The technologies used to 
provide telecommunications services continue to evolve rapidly and RUS 
is updating its regulations under the RE Act to meet the growing demand 
of rural service.
    Comment: The Associations objected to the requirement that a 
borrower, in order to be eligible for RUS financing, be an eligible 
telecommunications carrier (ETC), commit to become an ETC, or commit to 
act as an ETC with respect to RUS' area coverage requirements. They 
stated that sections 201, 203, and 305 of the RE Act cover RUS 
eligibility requirements and therefore, ETC status should have no 
impact on RUS' determination of eligibility to borrow. The Associations 
disagreed with RUS' assertion that ETC status enhances loan feasibility 
and promotes area wide coverage. The Associations also objected to 
entities that, in the absence of ETC designation, can ``act'' or 
``commit to act'' as ETCs to be eligible for RUS financing.
    Reply: RUS has removed the provision regarding ETC status as an 
eligibility requirement for LECs. However, as noted in the general 
comment, RUS believes that the Telecommunications Act of 1996 and the 
RE Act should compliment each other to produce the goals set forth by 
Congress and the Administration for the deployment of advanced 
telecommunications services in rural America. ETC status advances the 
objectives of the RE Act by adding certain new requirements that 
enhance area coverage. ETC status, as noted by the Associations, allows 
a local exchange carrier to be eligible to receive universal service 
support. Given the high cost to serve areas where RUS borrowers 
construct plant, universal service funding is a very import component 
of loan feasibility. Without it, many areas would not be served due to 
exorbitant costs of providing such service and rates required to 
support that service. In addition, ETC status provides some assurance 
beyond RUS' loan feasibility study period that borrowers will continue 
to be eligible to receive universal service support throughout the life 
of the loan. ETC status also brings with it the responsibility to 
provide service to an entire, designated service territory and to 
advertise this availability. These two aspects of ETC status clearly 
enhance the ability of a borrower to repay its loans. Therefore, in 
making loans, RUS will take into consideration ETC status when 
determining loan feasibility.
    Comment: NTCA recommended that RUS abandon use of ETC status as an 
eligibility requirement for a LEC to obtain financing from RUS and 
revert to the requirement that any borrower must be providing ``basic 
local exchange'' service in their rural study areas. NTCA commented 
that ``[a]dequate telephone service has always been basic local 
exchange service.''
    Reply: As noted in response to the previous comment, RUS has 
removed the requirement that a LEC be designated an ETC. With regard to 
requiring all borrowers to provide ``basic local exchange'' service, 
RUS believes that modern telecommunications services are just as vital 
to rural areas as to the rest of the United States and there are 
entities providing these services in addition to LECs. RUS would 
eliminate these providers, and many of the services they could provide 
for rural America, if RUS made loans only to LECs. In today's high-tech 
market, a wide array of advanced services are being demanded by 
consumers, both urban and rural. Specialized service providers play an 
important role in the delivery of advanced services and RUS believes 
that financing should be available to such providers and not limited to 
just LECs. As RUS borrowers know, rural residents need more than just 
dial tone. RUS must ensure that its loan funds are used to provide a 
level of service--including all types of advanced services--beyond just 
basic local exchange service. The RE Act allows for

[[Page 54401]]

the financing of ``any communication service,'' not just basic local 
exchange service.
    Comment: GTE stated that linking eligibility to ETC status would 
limit the participation in the telephone lending program by new 
entrants.
    Reply: RUS is in fact encouraging the participation of new entrants 
in the program for the purpose of providing services not offered in the 
area to be served or where existing service is inadequate. As noted in 
the previous two comments, RUS has removed the requirement that a LEC 
be designated an ETC and will consider whether a borrower is an ETC 
when determining loan feasibility.
    Comment: The Associations objected to extending eligibility to a 
``separate class'' of borrowers referred to in the regulation as 
entities providing specialized telecommunications services. They stated 
that `` `specialized telecommunications service' is an impermissible 
non-statutory definition of telephone service.'' They further expressed 
concern that this would permit loans to multiple borrowers providing 
telephone service in the same service area, which, they state, would 
effectively circumvent the statutory prohibition against those RUS 
loans which would duplicate lines, facilities or systems providing 
reasonably adequate service.
    Reply: The RE Act definition of ``telephone service'' is 
sufficiently broad to allow RUS to finance special services (such as 
Internet service, pager service, etc.), mobile service, and wireline 
service. In addition, neither the definition nor any other provision of 
the RE Act prevents the RUS from financing more than a single provider 
of nonduplicating services in a specific area. Specialized 
telecommunications service, as defined in the regulation, means any 
telephone service other than telephone exchange service, exchange 
access, or mobile telecommunications service. This definition clearly 
recognizes the difference between wireline exchange access, mobile 
service, and specialized service. RUS believes that specialized 
services are clearly different from other forms of telecommunications 
services and they are not duplicative because the different services 
are used for different purposes; use of one does not displace use of 
the other.
    Comment: NTCA stated that, because RUS has not acknowledged that 
wireline, wireless, and specialized telecommunications carriers can 
provide the ``same telecommunications service'' as an incumbent rural 
LEC, the proposed rule allows for multiple RUS-financed carriers 
offering the same or equivalent services in the same competing 
territories. They stated that the new rule leaves the door open for a 
RUS-financed rural LEC providing adequate telephone and broadband 
services to incur revenue losses as a result of a new competing RUS-
financed carrier offering basic or advanced services that duplicate a 
LEC's service in a rural study area. NTCA added that RUS should avoid 
lending policies that create incentives for borrowers to compete 
against each other.
    Reply: Again, RUS believes that wireline, wireless, and specialized 
are distinct services and do not duplicate each other. In fact, 
wireless and wireline services co-exist in many places in today's 
market, both providing different services and neither replacing the 
other. Therefore, entry of a mobile or specialized service provider 
into a wireline-only service area should pose no significant risk or 
duplication. If the existing mobile service being provided is adequate, 
RUS cannot finance the same service in the same territory offered by 
another carrier. In addition, as a lender, RUS is aware of its 
responsibilities regarding the security for its loans. In the final 
rule 7 CFR part 1735 published in the Federal Register on July 11, 
2000, at 65133, RUS clarified that it would generally not make a loan 
to another entity to provide the same service (i.e., wireline where 
wireline exists) already being provided by an RUS borrower unless the 
borrower is unable to meet its obligations to RUS. 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: The Associations recognized the need for RUS to update the 
criteria used to determine whether service is reasonably adequate. 
However, they stated that RUS should rely on a single standard for 
determining whether telephone service is reasonably adequate to all 
providers of telephone service. In addition, the Associations assert 
that RUS does not have authority to determine the affordability of any 
type of service.
    Reply: The criteria used in determining whether service is 
reasonably adequate are designed to ensure that no rural area is 
trapped with inferior, substandard service. As stated previously, there 
is a distinction between wireline, mobile, and special 
telecommunications services. It is prudent, therefore, to have separate 
criteria for determining adequate service for each type of service 
being offered. 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'' where 
a state does not have the authority to issue a certificate of 
convenience and necessity.
    If the existing service is not reasonably adequate, an RUS loan to 
improve service does not result in duplication. Since the types of 
service mentioned above are distinct, they require an adequacy 
definition that is unique to that specific type of service. With regard 
to the affordability of rates, RUS believes that service available only 
at extremely high rates that render it inaccessible to subscribers in 
rural areas is not adequate. The evaluation of whether rates are 
affordable to rural subscribers is made only to determine whether RUS 
will make a loan in a particular situation and is clearly different 
from the regulatory judgement of whether rates are reasonable.
    Comment: The Associations asserted that the proposed rule changes 
should not be made applicable to the Rural Telephone Bank (RTB), 
stating that injecting ``new classes of stockholders'' into existing 
stockholders would impede accelerated privatization and potentially 
harm the legitimate interests of the existing equity owners of the 
Bank.
    Reply: Concurrent lending (whereby a borrower applying for a loan 
from RUS must receive part of its funding requirement from the RTB) was 
mandated by Congress through passage of the Rural Electrification Loan 
Restructuring Act of 1993. Today, the RTB operates as an agency of the 
Federal government, fulfilling its role as a supplemental lender to 
those entities eligible to borrow from RUS. All rules and regulations 
governing the processing and purposes of loans for RUS borrowers also 
apply to the RTB. No ``new classes'' of borrowers would result from 
this rule. New borrowers would purchase Class B stock in the same 
manner as existing borrowers and they would receive the same privileges 
associated with stock ownership. Privatization of the RTB, as proposed 
by the President's budget, will benefit all borrowers, whatever types 
of service they provide. It should be noted that the rate of 
privatization rests in the control of the RTB Board of directors. 
However, in recent years, that control over the decision to privatize 
or not, has been limited by Congressional appropriations language that 
effectively removes the Board's power to privatize the RTB.
    Comment: GTE objected to the criterion that plant be capable of

[[Page 54402]]

carrying Internet access at speeds of at least 28.8 Kbps in determining 
whether service is reasonably adequate. They stated that such a 
requirement would dictate significant upgrades and modifications to 
existing networks at substantial costs. For instance, they stated that 
loops that are loaded and exceed 18,000 feet would have to be 
redesigned for service through a remote switch unit or digital loop 
carrier (DLC). In addition, they stated that end-user and Internet 
service provider equipment beyond the control of the LEC could have a 
negative effect on the ability to achieve the prescribed speed.
    Reply: All RUS financing provided since 1993 must provide for the 
construction of telecommunication plant that is consistent with 
provision of various broadband services. Specifically, the Rural 
Electrification Loan Restructuring Act of 1993 limited RUS to making 
loans only to borrowers that were participating in statewide 
telecommunications modernization plans. RUS provided the essential 
minimum requirements for the development of such plans (see 7 CFR 
1751.100 et seq.). This included building plant that was capable of 
evolving toward broadband deployment and the elimination of loaded 
plant in new construction. RUS cannot set a lower standard for 
determining ``adequate service'' for new entrants.
    Comment: NTCA, quoting the National Exchange Carriers Association's 
$10.9 billion estimate for completing upgrades for broadband capability 
throughout NECA's rural study areas, stated that RUS should reserve its 
funding to complete the unfinished business of bringing broadband to 
rural areas.
    Reply: As noted in the previous reply, RUS has been providing 
funding to further the deployment of broadband services in rural areas. 
RUS does not believe, in view of the many ways now available to provide 
telecommunications services, that funding to provide these services 
should be limited to just LECs. The investment needed, as noted in the 
comment, will be formidable. However, by targeting areas where service 
is nonexistent or inadequate, RUS hopes to use its loan funds to, 
within the limits of the RE Act, finance broadband services where they 
are needed the most.
    Comment: iSKY requested that RUS modify its rule to clarify that 
satellite-based specialized communications services capable of covering 
broad geographic areas are not automatically precluded from RUS funding 
on the basis of duplication of services.
    Reply: RUS is ``technology neutral''--it lends to finance the 
service to be provided, not the technology used to provide that 
service. Where no service currently exists, or where existing service 
is inadequate, RUS may fund a carrier to provide such service, 
delivered by any means. RUS will work with any provider to try to 
devise a feasible method for providing the service to rural areas. 
Where service is to be provided to both rural and nonrural areas, see 7 
CFR 1735.13.
    Comment: The Rural Community Assistance Corporation, City of 
Granite, Umatilla County Board of Commissioners, Greater Eastern Oregon 
Development Corporation, and City of Heppner all expressed strong 
support for the proposed changes to the regulations. Citing the need 
for advanced telecommunications in rural communities as the single most 
promising opportunity to prosper and grow, these organizations 
applauded RUS' efforts to help ensure that rural America receives the 
same services and benefits as its urban counterparts.
    Reply: RUS appreciates the support and involvement of the 
commenters' organizations in bringing advanced telecommunications 
technologies to rural America.
    Good cause is shown to make this rule 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 advanced 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.
    7 CFR part 1735 was previously amended through publication in the 
Federal Register on July 11, 2000, at 65133. This final rule further 
amends 7 CFR part 1735, as amended by those amendments published July 
11, 2000.

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

    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, 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 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.

[[Page 54403]]

    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) 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, 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.
    (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.

    Dated: September 5, 2000.
Inga Smulkstys,
Acting Under Secretary, Rural Development.
[FR Doc. 00-23092 Filed 9-7-00; 8:45 am]
BILLING CODE 3410-15-P