[Federal Register Volume 67, Number 121 (Monday, June 24, 2002)]
[Rules and Regulations]
[Pages 42504-42506]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-15840]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[CC Docket Nos. 00-256 and 96-45; FCC 02-181]


Multi-Association Group (MAG) Plan for Regulation of Interstate 
Services of Non-Price Cap Incumbent Local Exchange Carriers and 
Interexchange Carriers; Federal-State Joint Board on Universal Service

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this document, the Commission waives, on its own motion, 
the requirement that carriers file annual certifications on June 30, 
2002, in order to receive Interstate Common Line Support (ICLS). The 
Commission finds that this requirement is unnecessary because carriers 
have already filed such certifications on April 18, 2002, for the ICLS 
funding year beginning July 1, 2002. The Commission also amends its 
rules to permit adjustments to Long Term Support (LTS) to reflect 
projected revenues of carriers that participate in the National 
Exchange Carrier Association (NECA) common line pool. This amendment 
conforms the rules governing the calculation of LTS to the Commission's 
intent in the MAG Order, ensures appropriate LTS funding levels, and 
will enable NECA to file common line tariffs that comply with the 
Commission's rules.

DATES: Effective June 24, 2002.

FOR FURTHER INFORMATION CONTACT: Theodore Burmeister, Attorney, 
Telecommunications Access Policy Division, Wireline Competition Bureau, 
(202) 418-7400.

SUPPLEMENTARY INFORMATION: This is a summary of a Commission's Order 
and Second Order on Reconsideration in CC Docket Nos. 00-256 and 96-45 
released on June 13, 2002. 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.

I. Introduction

    1. In this Order we waive, on our own motion, the requirement that 
carriers file annual certifications on June 30, 2002, in order to 
receive Interstate Common Line Support (ICLS). We find that this 
requirement is unnecessary because carriers have already filed such 
certifications on April 18, 2002, for the ICLS funding year beginning 
July 1, 2002. We also amend our rules to permit adjustments to Long 
Term Support (LTS) to reflect projected revenues of carriers that 
participate in the National Exchange Carrier Association (NECA) common 
line pool. This amendment conforms the rules governing calculation of 
LTS to the Commission's intent in the MAG Order, 66 FR 59719, November 
30, 2001, ensures appropriate LTS funding levels, and will enable NECA 
to file common line tariffs that comply with part 69 of the 
Commission's rules.

II. Waiver of the June 30, 2002, Filing Requirement

A. Discussion

    2. We waive, on our own motion, the requirement that carriers file 
an annual certification on June 30, 2002. The Commission may exercise 
its discretion to waive a rule where special circumstances make strict 
compliance with the rule inconsistent with the public interest. We find 
that special circumstances exist here to warrant a waiver. Generally, 
the requirement that carriers file a certification on June 30 of each 
year serves the public interest by ensuring that carriers use ICLS only 
for the ``provision, maintenance, and upgrading of facilities and 
services for which the support is intended,'' in accordance with 
section 254(e). In the initial ICLS funding year, however, the June 30 
filing requirement merely duplicates the earlier filing required on 
April 18, 2002, which covers the same certification period. The 
duplicative filing requirement is therefore unnecessary. We therefore 
conclude that special circumstances warrant a waiver of the June 30, 
2002 filing requirement.

III. Long Term Support Rules

A. Discussion

    3. On our own motion, we amend our rules to permit LTS to be 
adjusted so that it does not exceed the difference between each 
carrier's projected common line revenue requirement and its projected 
revenues from SLCs, other common line end-user charges, and 
transitional CCL charges. This amendment conforms the rules governing 
the calculation of LTS to our intent in the MAG Order, ensures 
appropriate LTS funding levels, and will enable NECA to file common 
line tariffs that comply with our rules.
    4. Amendment of our LTS rule is necessary to fulfill our goals in 
reforming the interstate universal service support mechanisms and 
access rate structure in the MAG Order. The current LTS rule does not 
take into account the increased SLC revenues resulting from the reforms 
adopted in the MAG Order. This makes no difference for the vast 
majority of carriers, whose common line revenue requirements will 
exceed their revenues from SLCs, other end-user common line

[[Page 42505]]

charges, transitional CCL charges, and LTS. For some carriers, however, 
the reforms adopted in the MAG Order reduced the need for high-cost 
support for interstate loop costs below the amount of LTS they 
currently receive. Failure to adjust LTS for these carriers would lead 
to earnings in excess of their common line revenue requirements. We 
retained LTS in the MAG Order solely for the purpose of stabilizing 
membership in the common line pool during the transition to a more 
efficient rate structure. We did not intend to negate our cost recovery 
rules for rate-of-return carriers and permit the carriers to recover 
more than their common line revenue requirements, nor did we intend 
that any carrier would have a ``negative'' ICLS amount. Accordingly, we 
conclude that amendment of the LTS rule is necessary.
    5. We also find that this amendment is necessary to ensure the 
appropriate LTS funding levels. This amendment will prevent waste of 
universal service support by ensuring that LTS is not distributed to 
any rate-of-return carrier except to the extent that it is required to 
maintain the affordability of the carrier's interstate common line 
services. We conclude that the potential alternatives to adjusting LTS 
would not serve the public interest. For example, we decline to require 
NECA to reduce its tariffed SLC or transitional CCL rates to offset the 
excess LTS payments. Reducing SLCs would use universal service funds to 
subsidize rates below the caps the Commission has set. Reducing the 
transitional CCL rate would undermine the decision to use a 
transitional CCL charge to gradually implement the reforms adopted in 
the MAG Order.
    6. Finally, this amendment will enable NECA to file common line 
tariffs that comply with our part 69 rules. Rate-of-return carriers, 
including members of the common line pool, are limited to recovery of 
their costs plus a prescribed rate of return. The common line pool 
would over earn if NECA filed tariffs for SLCs and CCL charges that 
reflect the aggregate cost and revenue data included in the April 18 
projected ICLS filing, without adjustment of LTS. If NECA files a 
tariff that on its face permits excessive recovery, any ratepayer--end 
users or interexchange carriers subject to CCL charges-could request 
that the Commission suspend the tariff to prevent over-recovery.

IV. Procedural Matters

A. Supplemental Final Regulatory Flexibility Analysis

    7. In compliance with the Regulatory Flexibility Act (RFA), this 
Supplemental Final Regulatory Flexibility Analysis (Supplemental FRFA) 
supplements the Final Regulatory Flexibility Analysis (FRFA) included 
in the MAG Order, to the extent that changes to that Order adopted here 
on reconsideration require changes in the conclusions reached in the 
FRFA. We note that we do not find that this Order on Reconsideration 
creates a significant economic impact on small entities. We could 
therefore meet our obligations under the RFA by certifying that there 
is no significant economic impact on small entities, rather than 
including this SFRFA. We nonetheless include this Supplemental FRFA to 
demonstrate that we have considered the impact of our action on small 
entities in adopting this Order on Reconsideration.
1. Need For, and Objective of, the Second Order on Reconsideration
    8. This Second Order on Reconsideration is necessary to conform the 
rules governing the calculation of LTS to our intent in the MAG Order, 
ensure appropriate LTS funding levels, and enable NECA to file common 
line tariffs that comply with our rules. Section 254 of the 
Communications Act of 1934, as amended by the 1996 Act, requires the 
Commission to promulgate rules to preserve and advance universal 
service support. Pursuant to that mandate, the Commission, in the MAG 
Order, adopted reforms to the interstate access rate structure and 
universal service support mechanisms for rate-of-return carriers. In 
making these reforms, the Commission created ICLS to provide explicit 
universal service support for the interstate common line, but left the 
existing interstate support mechanism, LTS, unchanged for the July 1, 
2002-June 30, 2003, funding year. We now conclude that it is necessary 
to amend LTS to permit reductions of LTS to certain carriers in certain 
circumstances. As described, this is necessary in order to permit NECA 
to file a tariff on behalf pooling carriers that does not result in 
revenues in excess of their authorized rate-of-return. This is 
consistent with our intent in adopting the reforms in the MAG Order.
2. Summary of Significant Issues Raised by Public Comments
    9. No petitions were submitted in response to the previous FRFA.
3. Description and Estimate of the Number of Small Entities to Which 
This Order on Reconsideration Will Apply
    10. In the previous FRFA at paragraphs 289-300 of the MAG Order, we 
described and estimated the number of small entities that would be 
affected by the new universal service rules. These included local 
exchange carriers, interexchange carriers, competitive service 
providers, and providers of wireless telephony, rural radiotelephone 
service, fixed microwave services, and 39 GHz service. The rule 
amendment adopted herein may apply to the same entities affected by the 
rules adopted in that order. We therefore incorporate by reference 
paragraphs 289-300 of the MAG Order.
4. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements
    11. The rule amendment adopted in this Second Order on 
Reconsideration contains no new reporting, recordkeeping, or other 
compliance requirement.
5. Steps Taken To Minimize the Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered
    12. As noted, the amendment to our rules adopted in this Order on 
Reconsideration does not have a significant impact on small entities. 
We take action to reaffirm the ability of rate-of-return carriers to 
recover their costs plus the Commission-approved rate of return on 
investment. Although the amendment does limit the carriers' ability to 
recover its revenue from a particular source, LTS, it has no net impact 
on their overall ability to recover their costs and rate return.
    13. We did consider other alternatives that would have limited 
carriers revenue recovery from other sources, but concluded that 
reducing the tariffed SLC rates or transitional CCL charge rates 
imposed by these carriers would not be in the public interest. Reducing 
SLCs would use universal service funds to subsidize rates below the 
caps the Commission has set. Reducing the transitional CCL rate would 
undermine the decision to use a transitional CCL charge to gradually 
implement the reforms adopted in the MAG Order.
6. Report to Congress
    14. The Commission will send a copy of this Second Order on 
Reconsideration, including this Supplemental FRFA, in a report to be 
sent to Congress pursuant to the Congressional Review Act, see 5 U.S.C. 
801(a)(1)(A). In addition, the

[[Page 42506]]

Commission will send a copy of this Second Order on Reconsideration, 
including the Supplemental FRFA, to the Chief Counsel for Advocacy of 
the Small Business Administration. A copy of the Second Order on 
Reconsideration and Supplemental FRFA (or summaries thereof) will also 
be published in the Federal Register. See 5 U.S.C. 604(b).

B. Paperwork Reduction Act

    15. The action contained herein has been analyzed with respect to 
the Paperwork Reduction Act of 1995 (PRA) and found to impose no new or 
modified reporting or recordkeeping requirements or burdens to the 
public.

V. Ordering Clauses

    16. Pursuant to the authority contained in sections 1-4, 10, 201-
02, and 254 of the Communications Act of 1934 as amended, 47 U.S.C. 1-
4, 10, 201-02, and 254, and Secs. 1.3 and 1.103 of the Commission's 
rules, this Order and Second Order on Reconsideration is adopted.
    17. Section 54.904(d) is waived with respect to the filing required 
pursuant to that rule on June 30, 2002.
    18. Section 54.303(b) of the Commission's rules is amended, 
effective June 24, 2002. Good cause exists to make this effective June 
24, 2002. The actions we take in this Order on Reconsideration are 
intended to facilitate compliance other Commission rules. It is 
necessary that the amendment take effect as soon as possible in order 
to best fulfill this purpose.
    19. The Commission's Consumer and Governmental Affairs Bureau, 
Reference Information Center, shall send a copy of this Second Order on 
Reconsideration, including the Supplemental Final Regulatory 
Flexibility Analysis, to the Chief Counsel for Advocacy of the Small 
Business Administration.

List of Subjects 47 CFR Part 54

    Reporting and recordkeeping requirements, Telecommunications, 
Telephone.

    Federal Communications Commission.
Marlene Dortch,
Secretary.

Rule Change

    For the reasons discussed in the preamble, the Federal 
Communications Commission amends 47 CFR part 54 as follows:

PART 54--UNIVERSAL SERVICE

    1. The authority citation for part 54 continues to read as follows:

    Authority: 47 U.S.C. 1, 4(i), 201, 205, 214, and 254 unless 
otherwise noted.


    2. Section 54.303 is amended by adding paragraph (b)(5) to read as 
follows:


Sec. 54.303  Long term support.

* * * * *
    (b) * * *
    (5)(i) Beginning July 1, 2002, each carrier will be eligible to 
receive LTS equal to the lesser of:
    (A) The LTS for which the carrier would be eligible pursuant to 
paragraph (b)(4) of this section, or
    (B) Its common line revenue requirement as calculated in accordance 
with part 69 of this chapter, minus:
    (1) The study area revenues obtained from end-user common line 
charges at their allowable maximum as determined by Secs. 69.104(n) and 
69.104(o) of this chapter;
    (2) The carrier common line charge revenues to be phased out 
pursuant to Sec. 69.105 of this chapter;
    (3) The special access surcharges pursuant to Sec. 69.114 of this 
chapter; and
    (4) The line port costs in excess of basic analog service pursuant 
to Sec. 69.130 of this chapter.
    (ii) Under no circumstance shall a carrier have LTS that is less 
than zero.
    (iii) In calculating an LTS amount pursuant to paragraph 
(b)(5)(i)(B) of this section, the Administrator shall use data filed 
pursuant to Sec. 54.903 of this chapter.

[FR Doc. 02-15840 Filed 6-20-02; 8:45 am]
BILLING CODE 6712-01-P