[Federal Register Volume 66, Number 241 (Friday, December 14, 2001)]
[Rules and Regulations]
[Pages 64775-64776]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-30793]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[CC Docket No. 96-45; FCC 01-268]


Federal-State Joint Board on Universal Service; Petition of 
Federal Transtel, Inc. for Waiver of Universal Service Fund 
Contribution Requirements

AGENCY: Federal Communications Commission.

ACTION: Final rule; denial of waiver request.

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SUMMARY: In this document, the Commission denies the request of Federal 
Transtel, Inc. (Federal Transtel) to waive or reconsider the 
Commission's rules and permit Federal Transtel to recalculate its 1998 
and 1999 contributions to the federal universal service mechanisms. 
Specifically, the Commission concludes that Federal Transtel has failed 
to demonstrate good cause to grant a waiver.

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

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's 
Memorandum Opinion and Order and Order on Reconsideration in CC Docket 
No. 96-45 released on September 20, 2001. 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, 
S.W., Washington, D.C., 20554.

I. Introduction

    1. In this Order, the Commission denies the request of Federal 
Transtel to waive or reconsider the Commission's rules in 47 CFR 
54.703, 54.709, and 54.711 and permit Federal Transtel to recalculate 
its 1998 and 1999 contributions to the federal universal service 
mechanisms. Specifically, the Commission concludes that Federal 
Transtel has failed to demonstrate good cause to grant a waiver. 
Furthermore, to the extent that Federal Transtel's petition seeks 
reconsideration of Commission rules that required carriers to base 
federal universal service contributions on prior year revenues, the 
Commission denies such request as untimely. In so doing, we also note 
that the Commission has recently amended its contribution methodology 
and these changes may address many of the substantive concerns raised 
in Federal Transtel's petition.

II. Discussion

    2. The Commission concludes that Federal Transtel has failed to 
demonstrate that good cause exists to grant its request to waive the 
Commission's rules and thereby permit the recalculation of its 1998 and 
1999 contributions to the federal universal service mechanisms. 
Consistent with the Commission's prior decisions, we conclude that 
granting such a request would be contrary to the principle of 
competitive neutrality and Congress' mandate that all carriers 
contribute to the federal universal service mechanisms on an equitable 
and nondiscriminatory basis. To the extent that Federal Transtel seeks 
reconsideration of the requirement to base federal universal service 
contributions on prior year revenues, the Commission concludes that 
such request is untimely. In addition, many of Federal Transtel's 
concerns have been addressed in a recent Commission proceeding.

A. Federal Transtel's Waiver Petition

    3. Generally, the Commission's rules may be waived for good cause 
shown. As noted by the Court of Appeals for the D.C. Circuit, however, 
agency rules are presumed valid. The Commission may exercise its 
discretion to waive a rule where the particular facts make strict 
compliance inconsistent with the public interest. In addition, the 
Commission may take into account considerations of hardship, equity, or 
more effective implementation of overall policy on an individual basis. 
Waiver of the Commission's rules is therefore appropriate only if 
special circumstances warrant a deviation from the general rule, and 
such a deviation will serve the public interest.
    4. We are not persuaded that Federal Transtel's alleged inability 
to recover contributions in 1998 and 1999 from its current customers is 
a special circumstance warranting waiver of the prior year revenue 
contribution methodology. The Commission does not require carriers to 
recover their universal service contributions from customers. Rather, 
the Commission has given carriers the flexibility to decide whether and 
how they should recover their contributions, as markets become 
increasingly competitive. Although the Commission permits carriers to 
pass through all or part of their universal service contributions to 
their customers, the requirement to contribute remains whether or not a 
carrier passes such costs through to its customers. In addition, 
carriers are not precluded from anticipating the possible effects of 
declining revenues in the following year and reserving a portion of 
their current revenues to meet the contribution obligations that arise 
in the following year. Contrary to Federal Transtel's contention, the 
obligation to contribute to the universal service mechanisms based upon 
prior year revenues was not retroactively imposed on carriers. Carriers 
were given notice in July 1997 that contributions to the federal 
universal service mechanisms in 1998 would be based on prior year 
revenues. Therefore, the Commission concludes that carriers were 
provided with sufficient notice to develop business plans in 
anticipation of the implementation of the universal service 
contribution methodology beginning January 1, 1998.

[[Page 64776]]

    5. Furthermore, The Commission concludes that such a waiver would 
not serve the public interest. We note that section 254(d) requires 
that the Commission establish a universal service contribution 
mechanism that is ``specific, predictable and sufficient'' to preserve 
and advance universal service. As discussed, in implementing section 
254, the Commission adopted rules setting forth the specific method of 
computation for universal service contributions. To grant retroactively 
a waiver or reconsideration of those rules to individual carriers from 
one year to the next creates the potential for continuing uncertainty 
and confusion in the administration of the fund. The Commission notes 
in particular that Federal Transtel has not suggested how its 
contributions should be calculated if it were granted a waiver of the 
Commission's rules. The Commission finds that it cannot reconcile 
granting the waiver with the Act's mandate that the universal service 
mechanisms be specific and predictable, and that all telecommunications 
providers of interstate telecommunications service contribute on an 
equitable and nondiscriminatory basis. This mandate is essential to the 
preservation and advancement of universal service to ensure that 
consumers who rely upon universal service funding, including low-income 
consumers and those residing in rural and high-cost areas, may continue 
to receive telecommunications at affordable rates.

B. Federal Transtel's Petition for Reconsideration

    6. To the extent that Federal Transtel seeks reconsideration of the 
universal service contribution methodology, we dismiss that request as 
untimely. The Commission's rules require that petitions for 
reconsideration be filed within 30 days after public notice of the 
Commission action. Federal Transtel's petition was filed on July 20, 
1999, nearly two years after the deadline to file petitions for 
reconsideration of the Second Order on Reconsideration, 62 FR 56120, 
October 29, 1997, in which the Commission adopted the contribution 
methodology based on prior year revenues. Accordingly, the Commission 
dismisses Federal Transtel's petition for reconsideration as untimely 
filed. Moreover, even if this petition were timely filed, the 
Commission would not grant such a request. The Commission has recently 
provided substantive reasoning for denying similar requests. The 
Commission does note, however, that based on a newly developed 
industry-wide record, the Commission recently took action to reduce the 
interval between the accrual of revenues by carriers and the assessment 
for universal service contributions. We believe this action alleviates 
many of the concerns raised in Federal Transtel's petition. In 
addition, the Commission has recently sought further comment on how to 
streamline and reform both the manner in which the Commission assesses 
carrier contributions to the universal service fund and the manner in 
which carriers may recover those costs from their customers. Although 
the Commission dismisses Federal Transtel's petition, we will 
incorporate a copy of its petition into the record relating to the 
Contribution Methodology NPRM, 66 FR 28718, May 24, 2001.

III. Ordering Clause

    7. It is ordered, pursuant to sections 1, 4(i), 254, and 405 of the 
Communications Act of 1934, as amended, and Secs. 1.3 and 1.429 of the 
Commission's rules, that the Petition for Waiver or Reconsideration 
filed July 20, 1999 by Federal Transtel, Inc. is denied.

Federal Communications Commission.
Magalie Roman Salas,
Secretary.
[FR Doc. 01-30793 Filed 12-13-01; 8:45 am]
BILLING CODE 6712-01-P