[Federal Register Volume 68, Number 102 (Wednesday, May 28, 2003)]
[Rules and Regulations]
[Pages 31620-31623]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-13232]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[CC Docket Nos. 00-256 and 96-45; FCC 03-106]


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; petition for reconsideration.

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SUMMARY: In this document, the Commission addresses a Petition for 
Reconsideration of the MAG Order filed by the National Exchange Carrier 
Association (NECA), the National Rural Telecom Association, the 
Organization for the Promotion and Advancement of Small 
Telecommunications Companies, and the United States Telecom Association 
(collectively, the Joint Petitioners). In response to the concerns 
raised by the Joint Petitioners, the Commission grants their request to 
amend of our rules to move the deadline for filing actual common line 
cost and revenue data from July 31st to December 31st of each year. The 
Commission also amends its rules to permit rate-of-return carriers to 
file updates of projected common line cost and revenue data on June 
30th of each year. Additionally, the Commission adopts several minor 
amendments to its rules in response to issues raised by the Joint 
Petitioners and on our own motion.

DATES: Effective June 27, 2003.

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

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Third 
Order on Reconsideration in CC Docket Nos. 00-256 and 96-45 released on 
May 8, 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 12th Street, SW., Washington, DC 20554.

I. Introduction

    1. The Commission addresses a Petition for Reconsideration of the 
MAG Order, 66 FR 59719, November 30, 2001, filed by the National 
Exchange Carrier Association (NECA), the National Rural Telecom 
Association, the Organization for the Promotion and Advancement of 
Small Telecommunications Companies, and the United States Telecom 
Association (collectively, the Joint Petitioners). The Joint 
Petitioners raise issues concerning the filing requirements for 
Interstate Common Line Support (ICLS), the new universal service 
support mechanism established in the MAG Order. In response to the 
concerns raised by the Joint Petitioners, the Commission grants their 
request to amend Sec.  54.903(a)(4) of our rules to move the deadline 
for filing actual common line cost and revenue data from July 31st to 
December 31st of each year. The Commission also amends Sec.  
54.903(a)(3) of our rules to permit rate-of-return carriers to file 
updates of projected common line cost and revenue data on June 30th of 
each year. As discussed, these changes will promote more accurate and 
efficient distribution of ICLS while minimizing administrative burdens 
on rate-of-return carriers. Additionally, the Commission adopts several 
minor amendments to Sec. Sec.  54.307, 54.902, and 54.903 of our rules 
in response to issues raised by the Joint Petitioners and on our own 
motion.

II. Discussion

    2. Filing of Actual Cost and Revenue Data. On reconsideration, the 
Commission grants the Joint Petitioners' request to change the filing 
date for actual cost and revenue data for the prior calendar year from 
July 31st to December 31st. The Commission finds that changing the 
filing date for actual cost and revenue data to December 31st will 
better serve the Commission's goals of minimizing administrative 
burdens on carriers and promoting accurate and efficient distribution 
of ICLS. A December 31st filing date will reduce administrative costs. 
The Joint Petitioners contend that, based on NECA's experience with the 
common line pooling process, many small carriers would have difficulty 
completing accurate cost studies by July 31st, whereas carriers have 
historically complied with a December 31st deadline. Moving the filing 
deadline to December 31st will reduce burdens on carriers and minimize 
the potential need for late filings and corrections. The resulting 
delay in the initiation of adjustments to ICLS as part of the ICLS 
true-up process will be mitigated by the measures the Commission adopts 
below to improve the accuracy of ICLS payments. In particular, 
permitting carriers to revise their projected data for the current and 
upcoming ICLS funding years on June 30th will mitigate the lag between 
projected and actual data filings and give carriers more meaningful 
opportunities to revise projections to adjust ICLS where necessary. 
Moving the deadline for filing actual cost and revenue data to December 
31st also will not result in any delay in the completion of the ICLS 
true-up process. Under the current rules, ICLS true-up payments are 
spread over the calendar year following the filing of actual data. The 
Commission concludes that ICLS true-up payments instead can be 
distributed over the final two quarters of the calendar year without 
affecting fund stability.
    3. Voluntary Updates of Projected Cost and Revenue Data. The 
Commission also concludes that certain modifications to Sec.  
54.903(a)(3), governing the filing of projected cost and revenue data, 
are warranted. Under the rules adopted in the MAG Order, carriers that 
wish to receive ICLS must, on March 31st, file projected data for the 
upcoming July 1st to June 30th funding year and may correct that data 
until April 10th. The Commission concludes that permitting carriers at 
their discretion to correct their projected data for the upcoming 
funding year until June 30th would better promote the accurate and 
efficient distribution of ICLS without increasing administrative 
burdens. Additionally, the Commission provides a voluntary opportunity 
for rate-of-return carriers to update on June 30th their projected data 
for the ICLS funding year ending on that date will promote the accurate 
and efficient distribution of ICLS.
    4. The Commission will amend Sec.  54.903(a)(3) of our rules for 
voluntarily updating the March 31st filing to replace the existing 
April 10th deadline with a June 30th deadline. The Commission agrees 
with NECA that this deadline extension will provide a more meaningful 
opportunity for carriers to revise their projections and, therefore, 
will increase the accuracy of ICLS for the coming funding year. Two 
major factors potentially affecting projections will be resolved by the 
June 30th prior to the start of each funding year. First, the 
Commission normally approves or modifies the common line average 
schedule settlements formula proposed by NECA by June 15th of each 
funding year. Because this formula functions in

[[Page 31621]]

the same manner as the common line revenue requirement for average 
schedule carriers, the specific resolution of this formula could have a 
significant effect on the amount of prospective ICLS received by 
average schedule carriers. Second, NECA, as tariff agent on behalf of 
pooling carriers, continues to update projected cost and revenue data 
until its June 15th deadline for filing a common line tariff with the 
Commission. The new deadline the Commission adopts here will enable 
carriers to incorporate these updates into their ICLS filings, will 
permit calculation of more accurate ICLS amounts for the coming funding 
year, and will reduce the size of the true-ups required when actual 
cost and revenue data is available.
    5. The Commission also concludes that permitting carriers, at their 
option, to update on June 30th their projected data for the past 
funding year will promote the Commission's goals of minimizing 
administrative burdens while promoting accuracy of ICLS payments. This 
update will provide carriers an additional opportunity, in advance of 
the true-up process, to recognize changed circumstances that may have 
affected their projections. This will have the effect of minimizing the 
size of the final true-up adjustments that will occur after actual cost 
and revenue data is filed. The Administrator shall reflect both the 
corrections to projections for the upcoming funding year and updates to 
projections for the past funding year through adjustments to ICLS 
payments made during the first two quarters of the following calendar 
year.
    6. In light of the modifications the Commission adopts here, we 
eliminate the optional quarterly update of actual data adopted in the 
MAG Order. The quarterly update of actual data was intended to permit 
carriers to accelerate the true-up process by recognizing actual costs 
and revenues earlier than would otherwise be possible. However, based 
on further consideration, the Commission finds that the ability to 
update actual data on a quarterly basis will not be useful for most 
carriers. In addition, the quarterly update of actual data creates 
potential administrative costs that the measures the Commission adopts 
herein make unnecessary.
    7. The Commission denies the Petition for Reconsideration's request 
to move the deadline for carriers to file projected data with USAC from 
March 31st to July 15th. At the time the Petition was filed, the Joint 
Petitioners contended that these changes were necessary because data 
used to develop projections were not available on March 31st. The 
Petition for Reconsideration further suggested that carriers instead be 
allowed to rely on NECA to submit aggregate projections for the common 
line pool on March 31st. NECA later indicated, however, that it had 
made changes to its own procedures that would ensure that carriers 
could make projections by March 31st, rendering unnecessary the request 
for the Commission to change the March 31st filing date. In addition, 
consistent with USAC's administrative obligations and the necessity of 
calculating per-line support amounts, ICLS payments for the coming 
funding year must be based on individual carrier data, not aggregate 
data. For these reasons, the Commission denies the Joint Petitioners' 
request. The Commission notes that, under the rules adopted in the MAG 
Order, a rate-of-return carrier may elect to rely on NECA, as its 
agent, to submit ICLS data to USAC on its behalf.
    8. Collection of Projected and Actual Revenue Data. As requested by 
the Joint Petitioners, the Commission also amends our rules to clarify 
that carriers must file common line revenue data to permit calculation 
of ICLS. The Joint Petitioners correctly note that Sec.  54.903(a)(3) 
and (a)(4) of the Commission's rules do not explicitly state that 
carriers must file revenue data in addition to cost data, even though 
revenue data is clearly necessary to calculate ICLS. The MAG Order 
unambiguously granted USAC authority to collect any data necessary to 
administer the ICLS mechanism, including revenue data, and the 
Commission does nothing here to change that. The Commission revises the 
rules only to more clearly state certain types of data that will be 
required. Accordingly, the Commission amends Sec.  54.903(a)(3) and 
(a)(4) to clarify that the types of data that carriers must file 
thereunder include common line revenue data.
    9. Apportionment of NECA Costs. The Commission denies the Joint 
Petitioners' request to amend Sec.  69.603 to specify how NECA, as 
common line pool administrator, should apportion its administrative 
expenses among pooling carriers for the purposes of calculating 
individual study area common line revenue requirements. In the MAG 
Order, the Commission amended its rules to ensure that NECA's 
administrative costs are appropriately allocated after the 
implementation of the MAG Order's reforms. The Joint Petitioners 
request that the Commission further amend Sec.  69.603(h)(2) of its 
rules to specify how NECA should apportion its Category I.B. costs--
those costs assigned to the common line pool--among members of the 
common line pool. No comments were received on this issue, and, 
subsequently, NECA filed projected cost and revenue data with USAC 
which apportioned NECA Category I.B. expenses among its members. The 
Commission finds that NECA has appropriate discretion under the 
Commission's existing rules to determine how to apportion expenses 
among members of the common line pool in an equitable manner, and we 
see no need to amend our rules to prescribe a specific apportionment 
method at this time.
    10. Miscellaneous issues. On our own motion, the Commission further 
amends our rules to correct three errors. First, the Commission amends 
Sec.  54.902 to correct erroneous cross-references. Second, in order to 
conform our rules to the Commission's intent in the MAG Order, we amend 
Sec.  54.307(a)(2) to include a reference to ICLS. Third, the 
Commission amends Sec.  54.903(b)(3) to clarify that the reconciliation 
performed by USAC as part of its true-up process applies to the support 
amounts received by carriers, not their common line revenue 
requirements.

III. Procedural Matters

A. Supplemental Final Regulatory Flexibility Analysis

    11. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was 
included in the MAG Notice. Additionally, a Final Regulatory 
Flexibility Analysis (FRFA) was included in the MAG Order. In 
compliance with the RFA, this Supplemental Final Regulatory Flexibility 
Analysis (Supplemental FRFA) supplements the 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.
1. Need for, and Objective of, the Third Order on Reconsideration
    12. This Third Order on Reconsideration addresses a Petition for 
Reconsideration filed jointly by the National Exchange Carrier 
Association, the National Rural Telecom Association, the Organization 
for the Promotion and Advancement of Small Telecommunications 
Companies, and the United State Telecom Association (collectively, the 
Joint Petitioners). 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

[[Page 31622]]

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 the ICLS mechanism to 
provide explicit universal service support and adopted rules governing 
its administration. The Commission now concludes that certain changes 
to the rules governing ICLS's administration will promote more accurate 
and efficient distribution of ICLS while minimizing administrative 
burdens on rate-of-return carriers. In response to the concerns raised 
by the Joint Petitioners, the Commission grants their request to amend 
Sec.  54.903(a)(4) of our rules to move the deadline for filing actual 
common line cost and revenue data from July 31st to December 31st of 
each year. The Commission also amends Sec.  54.903(a)(3) of our rules 
to permit rate-of-return carriers to file updates of projected common 
line cost and revenue data on June 30th of each year. As discussed, 
these changes will promote more accurate and efficient distribution of 
ICLS while minimizing administrative burdens on rate-of-return 
carriers. Additionally, the Commission adopts several minor amendments 
to Sec. Sec.  54.307, 54.902, and 54.903 of our rules in response to 
issues raised by the Joint Petitioners and on our own motion.
2. Summary of Significant Issues Raised by Public Comments
    13. In response to the Joint Petitioners' Petition for 
Reconsideration, the Commission received one comment. However, after 
careful consideration, the Commission concludes that this comment does 
not raise significant small business-related issues.
3. Description and Estimate of the Number of Small Entities to Which 
This Order on Reconsideration Will Apply
    14. The RFA directs agencies to provide a description of, and, 
where feasible, an estimate of, the number of small entities that may 
be affected by the rules adopted herein. The RFA generally defines the 
term ``small entity'' as having the same meaning as the terms ``small 
business,'' ``small organization,'' and ``small governmental 
jurisdiction.'' In addition, the term ``small business'' has the same 
meaning as the term ``small business concern'' under the Small Business 
Act. A ``small business concern'' is one which: (1) Is independently 
owned and operated; (2) is not dominant in its field of operation; and 
(3) satisfies any additional criteria established by the Small Business 
Administration (SBA).
    15. In the previous FRFA at paragraphs 289-300 of the MAG Order, 
the Commission 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. The Commission therefore 
incorporates by reference paragraphs 289-300 of the MAG Order.
4. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements
    16. This Third Order on Reconsideration makes several changes to 
the reporting requirements for rate-of-return carriers receiving ICLS, 
but creates few additional burdens. First, this Third Order on 
Reconsideration changes the existing annual filing date for actual 
common line cost and revenue data from July 31st to December 31st, but 
adds no new requirements with respect to that filing. Second, this 
Third Order on Reconsideration changes the existing deadline for filing 
voluntary corrections to projected common line cost and revenue data 
from April 10th to June 30th, but adds no new requirements with respect 
to that filing. The Commission also creates an opportunity for each 
carrier to voluntarily file an annual update to its projected data, but 
do not require a carrier to perform the update. In connection with 
these changes, the Commission also eliminates an existing opportunity 
for voluntary update of actual common line cost and revenue data on a 
quarterly basis. Third, the Commission amends our rules to clarify the 
data required for certain existing filing requirements, but do not 
require the reporting of any additional data beyond that already filed 
by carriers. These amendments apply equally to all entities affected, 
and therefore impose no different burdens on smaller entities.
5. Steps Taken To Minimize the Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered
    17. The RFA requires an agency to describe any significant 
alternatives that it has considered in developing its approach, which 
may include the following four alternatives (among others): ``(1) The 
establishment of differing compliance or reporting requirements or 
timetables that take into account the resources available to small 
entities; (2) the clarification, consolidation, or simplification of 
compliance and reporting requirements under the rule for such small 
entities; (3) the use of performance rather than design standards; and 
(4) an exemption from coverage of the rule, or any part thereof, for 
such small entities.''
    18. The Commission notes that we do not find that this Third Order 
on Reconsideration creates a significant economic impact on small 
entities. The Commission 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. The Commission nonetheless 
includes this Supplemental FRFA to demonstrate that we have considered 
the impact of our action on small entities in adopting this Third Order 
on Reconsideration.
    19. As noted, the amendment to our rules adopted in this Third 
Order on Reconsideration does not have a significant impact on small 
entities. Our actions are intended primarily to reduce administrative 
burdens on small carriers associated with the ICLS mechanism, while 
also promoting the accurate and efficient distribution of ICLS. Our 
actions respond to concerns raised by representatives of small 
carriers. The Commission does consider alternatives to the actions 
adopted herein but concluded that these alternatives would not reduce 
administrative burdens or increase the accuracy of ICLS as effectively 
as the measures we adopt. These alternatives include retaining the 
filing requirements currently codified in the Commission's rules, 
extending the current March 31st date for filing projected cost and 
revenue data to July 15th, and permitting carriers to update their 
projected data on a quarterly basis.
6. Report to Congress
    20. The Commission will send a copy of this Third Order on 
Reconsideration, including this Supplemental FRFA, in a report to be 
sent to Congress pursuant to the Congressional Review Act. In addition, 
the Commission will send a copy of this Third Order on Reconsideration, 
including this Supplemental FRFA, to the Chief Counsel for Advocacy of 
the Small Business Administration. A copy of the Third Order on 
Reconsideration and Supplemental FRFA (or summaries thereof) will also 
be published in the Federal Register.

B. Paperwork Reduction Act

    21. The action contained herein has been analyzed with respect to 
the Paperwork Reduction Act of 1995 (PRA)

[[Page 31623]]

and found to impose new or modified reporting or recordkeeping 
requirements or burdens to the public. Implementation of these new or 
modified reporting and recordkeeping requirements will be subject to 
approval by the Office of Management and Budget (OMB) as prescribed by 
the Act, and will go into effect upon announcement in the Federal 
Register of OMB approval.

IV. Ordering Clauses

    22. It is ordered that, pursuant to the authority contained in 
sections 1-4, 10, 201-202, and 254 of the Communications Act of 1934 as 
amended, and Sec. Sec.  1.3 and 1.103 of the Commission's rules, this 
Third Order on Reconsideration is adopted.
    23. It is further ordered that part 54 of the Commission's rules, 
is amended as set forth, effective June 27, 2003. The collections of 
information are contingent upon approval by the Office of Management 
and Budget as necessary.
    24. It is further ordered that the Commission's Consumer and 
Governmental Affairs Bureau, Reference Information Center, shall send a 
copy of this Third Order on Reconsideration, including the Supplemental 
Final Regulatory Flexibility Analysis, to the Chief Counsel for 
Advocacy of the Small Business Administration.

List of Subjects in 47 CFR Part 54

    Communications common carriers, Reporting and recordkeeping 
requirements, Telecommunications, Telephone.

    Federal Communications Commission.
Marlene H. Dortch,
Secretary.

Final Rules

0
For the reason discussed in the preamble, the Federal Communications 
Commission amends 47 CFR part 54 as follows:

PART 54--UNIVERSAL SERVICE

0
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.


0
2. Amend Sec.  54.307(a)(2) by revising the second sentence to read as 
follows:


Sec.  54.307  Support to a competitive eligible telecommunications 
carrier.

    (a) * * *
    (2) * * * A competitive eligible telecommunications carrier that 
uses loops purchased as unbundled network elements pursuant to Sec.  
51.307 of this chapter to provide the supported services shall receive 
the lesser of the unbundled network element price for the loop or the 
incumbent LEC's per-line payment from the high-cost loop support, LTS, 
and Interstate Common Line Support mechanisms, if any. * * *
* * * * *

0
3. Amend Sec.  54.902 by revising the first sentence of paragraph 
(a)(1), by revising paragraphs (a)(2), and (a)(3), by revising the 
first sentence of paragraph (b)(1), by revising paragraphs (b)(2), and 
(b)(3), (c)(2), and paragraph (c)(3) to read as follows:


Sec.  54.902  Calculation of Interstate Common Line Support for 
transferred exchanges.

    (a) * * *
    (1) Each carrier may report its updated line counts to reflect the 
transfer in the next quarterly line count filing pursuant to Sec.  
54.903(a)(1) that applies to the period in which the transfer occurred. 
* * *
    (2) Each carriers' projected data for the following funding year 
filed pursuant to Sec.  54.903(a)(3) shall reflect the transfer of 
exchanges.
    (3) Each carriers' actual data filed pursuant to Sec.  54.903(a)(4) 
shall reflect the transfer of exchanges. All post-transaction 
Interstate Common Line Support shall be subject to true up by the 
Administrator pursuant to Sec.  54.903(b)(3).
    (b) * * *
    (1) The acquiring carrier may report its updated line counts for 
the study area into which the acquired lines are incorporated in the 
next quarterly line count filing pursuant to Sec.  54.903(a)(1) that 
applies to the period in which the transfer occurred. * * *
    (2) The acquiring carrier's projected data for the following 
funding year filed pursuant to Sec.  54.903(a)(3) shall reflect the 
transfer of exchanges.
    (3) The acquiring carrier's actual data filed pursuant to Sec.  
54.903(a)(4) shall reflect the transfer of exchanges. All post-
transaction Interstate Common Line Support shall be subject to true up 
by the Administrator pursuant to Sec.  54.903(b)(3).
    (c) * * *
    (2) The acquiring carrier's projected data for the following 
funding year filed pursuant to Sec.  54.903(a)(3) shall reflect the 
transfer of exchanges.
    (3) The acquiring carrier's actual data filed pursuant to Sec.  
54.903(a)(4) shall reflect the transfer of exchanges. All post-
transaction Interstate Common Line Support shall be subject to true up 
by the Administrator pursuant to Sec.  54.903(b)(3)
* * * * *.

0
4. Amend Sec.  54.903 by revising paragraphs (a)(3), (a)(4), and (b)(3) 
to read as follows:


Sec.  54.903  Obligations of rate-of-return carriers and the 
Administrator.

    (a) * * *
    (3) Each rate-of-return carrier shall submit to the Administrator 
annually on March 31st projected data necessary to calculate the 
carrier's prospective Interstate Common Line Support, including common 
line cost and revenue data, for each of its study areas in the upcoming 
funding year. The funding year shall be July 1st of the current year 
through June 30th of the next year. Each rate-of-return carrier will be 
permitted to submit a correction to the projected data filed on March 
31st until June 30th for the upcoming funding year. On June 30th each 
rate-of-return carrier will be permitted to submit to the Administrator 
an update to the projected data for the funding year ending on that 
date.
    (4) Each rate-of-return carrier shall submit to the Administrator 
on December 31st of each year the data necessary to calculate a 
carrier's Interstate Common Line Support, including common line cost 
and revenue data, for the prior calendar year. Such data shall be used 
by the Administrator to make adjustments to monthly per-line Interstate 
Common Line Support amounts in the final two quarters of the following 
calendar year to the extent of any differences between the carrier's 
ICLS received based on projected common line cost and revenue data and 
the ICLS for which the carrier is ultimately eligible based on its 
actual common line cost and revenue data during the relevant period.
    (b) * * *
    (3) Perform periodic reconciliation of the Interstate Common Line 
Support provided to each carrier based on projected data filed pursuant 
to paragraph (a)(3) of this section and the Interstate Common Line 
Support for which each carrier is eligible based on actual data filed 
pursuant to paragraph (a)(4) of this section.
* * * * *
[FR Doc. 03-13232 Filed 5-27-03; 8:45 am]
BILLING CODE 6712-01-P