[Federal Register Volume 68, Number 28 (Tuesday, February 11, 2003)]
[Rules and Regulations]
[Pages 6832-6833]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-3337]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[CC Docket Nos. 96-45, 98-171, 90-571, 92-237, 99-200, 95-116, 98-170; 
FCC 03-20]


Federal-State Joint Board on Universal Service

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this document, the Commission reconsiders, on its own 
motion, the definition of ``affiliate'' adopted in the recent report 
and order and second further notice of proposed rulemaking modifying 
rules regarding the assessment and recovery of contributions to the 
Federal universal service mechanisms. Specifically, the Commission 
concludes that wireless telecommunications providers are affiliated for 
purposes of making the single election whether to report actual 
interstate telecommunications revenues or use the applicable interim 
wireless safe harbor if one entity directly or indirectly controls or 
has the power to control another, is directly or indirectly controlled 
by another, is directly or indirectly controlled by a third party or 
parties that also controls or has the power to control another, or has 
an ``identity of interest'' with another contributor. The Commission 
also clarifies options for the recovery of universal service 
contribution costs by wireless telecommunications providers that choose 
to report actual interstate telecommunications revenues based on a 
company-specific traffic study.

DATES: Effective February 11, 2003.

FOR FURTHER INFORMATION CONTACT: Diane Law Hsu, Acting Deputy Chief, 
Wireline Competition Bureau, Telecommunications Access Policy Division 
or Paul Garnett, Attorney, Wireline Competition Bureau, 
Telecommunications Access Policy Division, (202) 418-7400.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Order 
and Order on Reconsideration in CC Docket Nos. 96-45, 98-171, 90-571, 
92-237, 99-200, 95-116, and 98-170 ; FCC 03-20, released on January 30, 
2003. 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 reconsider, on our own motion, the definition 
of ``affiliate'' adopted in the recent report and order and second 
further notice of proposed rulemaking modifying rules regarding the 
assessment and recovery of contributions to the Federal universal 
service mechanisms. Specifically, we conclude that wireless 
telecommunications providers are affiliated for purposes of making the 
single election whether to report actual interstate telecommunications 
revenues or use the applicable interim wireless safe harbor if one 
entity (1) directly or indirectly controls or has the power to control 
another, (2) is directly or indirectly controlled by another, (3) is 
directly or indirectly controlled by a third party or parties that also 
controls or has the power to control another, or (4) has an ``identity 
of interest'' with another contributor. We also clarify options for the 
recovery of universal service contribution costs by wireless 
telecommunications providers that choose to report actual interstate 
telecommunications revenues based on a company-specific traffic study.

II. Discussion

    2. Definition of Affiliate. In this Order, we reconsider, on our 
own motion, the definition of affiliate adopted in the Universal 
Service Contribution Methodology Order, 67 FR 79525, December 30, 2002, 
for purposes of

[[Page 6833]]

wireless providers making a single election whether to report actual 
interstate telecommunications revenues or use the applicable interim 
wireless safe harbor. We have become aware that adoption of an 
affiliate definition in this context that deems a ten percent interest 
as indicative of control would result in companies being required to 
make the same election merely because they are related through direct 
or indirect minority ownership interests of more than 10 percent. We 
understand that such cross-ownership is common in the wireless 
telecommunications industry. For example, several major national 
wireless telecommunications providers may be ``affiliated'' for 
purposes of the definition adopted as a result of greater than ten 
percent ownership interests in certain other wireless 
telecommunications providers. In short, the definition adopted in the 
Universal Service Contribution Methodology Order may force competing 
wireless telecommunications providers that are not otherwise under 
common control to adopt common universal service revenue reporting 
policies.
    3. We conclude that revising the definition of affiliate in this 
proceeding is necessary to achieve the goals of consistency, equity, 
and fairness in reporting revenues for purposes of supporting universal 
service. Entities that are not under common control may have different 
billing and administrative systems and, consequently, may have 
legitimate reasons to make different revenue reporting elections. The 
Commission previously adopted rules in the wireless auction context in 
order to evaluate affiliations for purposes of determining eligibility 
for designated entity status. We conclude a similar approach would be 
reasonable for purposes of revenue reporting for universal service. We, 
therefore, reconsider on our own motion the definition of ``affiliate'' 
adopted in the Universal Service Contribution Methodology Order. We now 
conclude, consistent with Sec.  1.2110(c)(5) of the Commission's rules, 
that wireless telecommunications providers are affiliated for purposes 
of making the single election whether to report actual interstate 
telecommunications revenues or use the applicable interim wireless safe 
harbor for universal service contribution purposes if one entity (1) 
directly or indirectly controls or has the power to control another, 
(2) is directly or indirectly controlled by another, (3) is directly or 
indirectly controlled by a third party or parties that also controls or 
has the power to control another, or (4) has an ``identity of 
interest'' with another contributor.
    4. CMRS Actual Interstate Revenues. We note that some parties have 
suggested two different readings of the Commission's universal service 
contribution cost recovery limitations for wireless telecommunications 
providers that choose to report their actual interstate 
telecommunications revenues based on a company-specific traffic study. 
Specifically, AT&T and WorldCom read the requirement that 
telecommunications carriers cannot mark up the universal service line 
item above the relevant contribution factor to mean that wireless 
carriers that do not utilize the interim safe harbors must conduct 
traffic studies on a customer-by-customer basis when recovering 
contribution costs through a line item. CTIA, on the other hand, reads 
this requirement to allow wireless carriers that report revenues based 
on a company-specific traffic study to use the same company-specific 
percentage to determine interstate revenues to compute contribution 
recovery line items.
    5. We disagree with AT&T and WorldCom's reading of the requirement. 
For wireless providers that choose to report their actual interstate 
telecommunications revenues based on a company-specific traffic study, 
the interstate telecommunications portion of each customer's bill would 
equal the company-specific percentage based on its traffic study times 
the total telecommunications charges on the bill. Accordingly, if such 
providers choose to recover their contributions through a line item, 
their line items must not exceed the interstate telecommunications 
portion of each customer's bill, as described above, times the 
contribution factor. Just as the Commission did not eliminate the 
option of reporting actual interstate telecommunications revenues 
either through a company-specific traffic study or some other means, 
the Commission did not intend to preclude wireless telecommunications 
providers from continuing to recover contribution costs in a manner 
that is consistent with the way in which companies report revenues to 
USAC. We therefore disagree with AT&T and WorldCom that the recovery 
limitations adopted in the Universal Service Contribution Order should 
be read so narrowly as to require CMRS providers to conduct traffic 
studies on a customer-by-customer basis to calculate contribution 
recovery line items.

III. Ordering Clause

    6. Accordingly, it is ordered, pursuant to sections 1-4, 201-202, 
254, and 405 of the Communications Act of 1934, as amended, and Sec.  
1.108 of the Commission's rules, this Order and Order on 
Reconsideration is adopted.
    7. Pursuant to section 553(d)(3) of the Administrative Procedure 
Act, this Order and Order on reconsideration shall become effective 
upon publication in the Federal Register.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 03-3337 Filed 2-10-03; 8:45 am]
BILLING CODE 6712-01-P