[Federal Register Volume 67, Number 228 (Tuesday, November 26, 2002)]
[Rules and Regulations]
[Pages 70703-70704]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-29966]



[[Page 70703]]

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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[CC Docket No. 96-45; FCC 02-307]


Federal-State Joint Board on Universal Service

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this document, the Commission asks the Federal-State Joint 
Board on Universal Service to review certain of the Commission's rules 
relating to the high-cost universal service support mechanisms to 
ensure that the dual goals of preserving universal service and 
fostering competition continue to be fulfilled.

DATES: Effective December 26, 2002.

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

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Order 
in CC Docket No. 96-45 released on November 8, 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.
    1. In this Order, we ask the Federal-State Joint Board on Universal 
Service (Joint Board) to review certain of the Commission's rules 
relating to the high-cost universal service support mechanisms to 
ensure that the dual goals of preserving universal service and 
fostering competition continue to be fulfilled. In particular, we 
request the Joint Board to review the Commission's rules relating to 
high-cost universal service support in study areas in which a 
competitive eligible telecommunications carrier (ETC) is providing 
service, as well as the Commission's rules regarding support for second 
lines. We request that the Joint Board provide recommendations to the 
Commission regarding if and how those rules should be modified. We 
anticipate that the Joint Board will seek public comment on whether 
these rules continue to fulfill their intended purposes, and whether 
modifications are warranted in light of developments in the 
telecommunications marketplace. We also ask the Joint Board to examine 
the process for designating ETCs.
    2. In light of developments in the telecommunications marketplace 
since 1997, we believe that it is appropriate to request the Joint 
Board to review the Commission's rules relating to support in 
competitive study areas and support for second lines. We also ask the 
Joint Board to examine the process for designating ETCs. The Joint 
Board should address how its recommendations regarding the issues set 
forth below further the universal service goals outlined in section 254 
of the Act, including the principle of competitive neutrality. In 
addition, the Joint Board should consider how its analysis relates to 
the five-year time frame for high-cost support adopted in the Rural 
Task Force Order.
    3. We ask the Joint Board to review the methodology for calculating 
support for ETCs in competitive study areas. In the First Report and 
Order, 62 FR 32862, June 17, 1997, the Commission determined that it 
was appropriate to calculate per-line portable universal service 
support for all ETCs based on the support that the incumbent LEC would 
receive for the same line. The Commission reasoned that calculating 
support based on the incumbent LEC's costs would aid the emergence of 
competition and would be the least burdensome way to administer the 
support mechanisms. In addition, the Commission explained that although 
a competitive ETC may have different costs than the incumbent LEC, a 
competitive ETC must also comply with section 254(e) of the Act, and 
that section 214(e) requirements would prevent competitive ETCs from 
profiting by limiting service to low cost areas. Some groups have 
argued that this methodology provides a windfall and creates an unfair 
advantage for competitive ETCs with lower costs, whereas others argue 
that the current rules are necessary for competitive neutrality and are 
the least administratively burdensome way to administer support. We ask 
the Joint Board to review the methodology for calculating support for 
ETCs in competitive study areas, taking into consideration the 
universal service principles outlined in section 254 of the Act and the 
principle of competitive neutrality. We also ask the Joint Board to 
examine the rules governing calculation of high-cost support for 
competitive ETCs utilizing UNEs.
    4. Support for competitive ETCs currently is not capped under the 
Commission's rules. On the other hand, the Commission's rules limit the 
overall amount of rural high-cost loop support available to incumbent 
LECs. When the Commission adopted these rules in 2001, it concluded 
that the modified embedded cost mechanism would provide rural carriers 
with specific, predictable and sufficient support over the next five 
years. The Joint Board should address the potential benefits and costs 
of modifying these rules for stability, predictability, and sufficiency 
of the fund, as well as their potential effects on competition and 
competitive neutrality. In addition, the Joint Board should address the 
specific concerns raised in the Rural Task Force Order regarding 
excessive growth in the fund if incumbent rural carriers lose a 
significant number of lines to competitive ETCs. The Joint Board should 
also consider the methodology for determining the location of a line 
served by a mobile wireless service provider, and whether modifications 
are warranted.
    5. The Joint Board should also consider the extent to which the 
Commission's current rules relating to support for second lines may 
impact the size of the universal service fund, and provide 
recommendations on whether the Commission should adopt modifications in 
this area. Under our current rules, all residential and business 
connections provided by ETCs are eligible for high-cost support. In 
adopting these rules in 1997, the Commission recognized that ``overly 
expansive universal service mechanisms potentially could harm all 
consumers by increasing the cost of telecommunications services for 
all.'' At that time, the Commission indicated it would continue to 
evaluate the issue. We now ask the Joint Board to consider whether the 
goals of section 254 would be served if support were limited to a 
single connection to the end-user--whether provided by the incumbent or 
a competitive ETC. We also ask the Joint Board to consider whether such 
a rule would be competitively neutral and how it would impact 
competition.
    6. Finally, the Joint Board should address the system for resolving 
requests for ETC designations under section 214(e)(2) of the Act. Some 
parties have argued that shortcomings in the current system hamper the 
emergence of competition in rural areas, whereas others have expressed 
concerns that universal service goals will be undermined if state 
commissions do not impose similar universal service obligations on 
incumbent LECs and competitive ETCs. Taking into consideration these 
concerns, we ask the Joint Board to consider whether it is advisable to 
establish federal processing guidelines for ETC applications, and if 
so, what should be included in such guidelines. Furthermore, in the 
Rural Task Force Order, the Commission determined that the level of 
disaggregation of support should be

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considered in determining whether to certify new ETCs for a service 
area other than a rural carrier's entire study area. We ask the Joint 
Board to consider whether the Commission should provide additional 
guidance regarding the manner in which the level of disaggregation of 
support should be considered, and if so, what guidance the Commission 
should provide.
    7. Pursuant to sections 1, 4(i) and (j), 214(e), 254, and 410 of 
the Communications Act of 1934, as amended, this Order is adopted.
    8. Pursuant to sections 1, 4(i) and (j), 214(e), 254, and 410 of 
the Communications Act of 1934, as amended, the Federal-State Joint 
Board on Universal Service is requested to review the Commission's 
rules relating to high-cost universal service support in study areas in 
which a competitive eligible telecommunications carrier is providing 
service and support for second lines and provide recommendations to the 
Commission.

List of Subjects in 47 CFR Part 54

    Reporting and recordkeeping requirements, Telecommunications, 
Telephone.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 02-29966 Filed 11-25-02; 8:45 am]
BILLING CODE 6712-01-P