[Federal Register Volume 69, Number 38 (Thursday, February 26, 2004)]
[Notices]
[Pages 8958-8965]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-4266]


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FEDERAL COMMUNICATIONS COMMISSION

[CC Docket No. 96-45; FCC 03-338]


Federal-State Joint Board on Universal Service

AGENCY: Federal Communications Commission.

ACTION: Notice.

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SUMMARY: In this document, the Commission grants in part and denies in 
part, subject to enumerated conditions, the petition of Virginia 
Cellular, LLC to be designated as an eligible telecommunications 
carrier throughout its licensed service area in the Commonwealth of 
Virginia, pursuant to the Communications Act of 1934, as amended. The 
Commission concludes that Virginia Cellular, LLC has demonstrated that 
it will offer and advertise the services supported by the federal 
universal service support mechanisms throughout the designated service 
area. The Commission also finds that the designation of Virginia 
Cellular as an ETC in two non-rural study areas serves the public 
interest.

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

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's 
Memorandum Opinion and Order in CC Docket No. 96-45; FCC 03-338 
released on January 22, 2004. 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 grant in part and deny in part, subject to 
enumerated conditions, the petition of Virginia Cellular, LLC (Virginia 
Cellular) to be designated as an eligible telecommunications carrier 
(ETC) throughout its licensed service area in the Commonwealth of 
Virginia pursuant to section 214(e)(6) of the Communications Act of 
1934, as amended (the Act). In so doing, we conclude that Virginia 
Cellular, a commercial mobile radio service (CMRS) carrier, has 
satisfied the statutory eligibility requirements of section 214(e)(1). 
Specifically, we conclude that Virginia Cellular has demonstrated that 
it will offer and advertise the services supported by the federal 
universal service support mechanisms throughout the designated service 
area. We find that the designation of Virginia Cellular as an ETC in 
two non-rural study areas serves the public interest. We also find that 
the designation of Virginia Cellular as an ETC in areas served by five 
of the six rural telephone companies serves the public interest and 
furthers the goals of universal service. As explained, with regard to 
the study area of NTELOS Telephone Inc. (NTELOS), we do not find that 
ETC designation would be in the public interest.
    2. Because Virginia Cellular is licensed to serve only part of the 
study area of three of six incumbent rural telephone companies affected 
by this designation, Virginia Cellular has requested that the 
Commission redefine the service area of each of these rural telephone 
companies for ETC designation purposes, in accordance with section 
214(e)(5) of the Act. We agree to the service area redefinition 
proposed by Virginia Cellular for the service areas of Shenandoah 
Telephone Company (Shenandoah) and MGW Telephone Company (MGW), subject 
to the agreement of the Virginia State Corporation Commission (Virginia 
Commission) in accordance with applicable Virginia Commission 
requirements. We find that the Virginia Commission's first-hand 
knowledge of the rural areas in question uniquely qualifies it to 
examine the redefinition proposal and determine whether it should be 
approved. Because we do not designate Virginia Cellular as an ETC in 
NTELOS' study area, we do not redefine this service area.
    3. In response to a request from the Commission, the Federal-State 
Joint Board on Universal Service (Joint Board) is currently reviewing: 
(1) The Commission's rules relating to the calculation of high-cost 
universal service support in areas where a competitive ETC is providing 
service; (2) the Commission's rules regarding support for non-primary 
lines; and (3) the process for designating ETCs. Some commenters in 
that proceeding have raised concerns about the rapid growth of high-
cost universal service support and the impact of such growth on 
consumers in rural areas. The outcome of that proceeding could 
potentially impact, among other things, the support that Virginia 
Cellular and other competitive ETCs may receive in the future and the 
criteria used for continued eligibility to receive universal service 
support.
    4. While we await a recommended decision from the Joint Board, we 
acknowledge the need for a more stringent public interest analysis for 
ETC designations in rural telephone company service areas. The 
framework enunciated in this Order shall apply to all ETC designations 
for rural areas pending further action by the Commission. We conclude 
that the value of increased competition, by itself, is not sufficient 
to satisfy the public interest test in rural areas. Instead, in 
determining whether designation of a competitive ETC in a rural 
telephone company's service area is in the public interest, we weigh 
numerous factors, including the benefits of increased competitive 
choice, the impact of multiple designations on the universal service 
fund, the unique advantages and disadvantages of the competitor's 
service offering, any commitments made regarding quality of telephone 
service provided by competing providers, and the competitive ETC's 
ability to provide

[[Page 8959]]

the supported services throughout the designated service area within a 
reasonable time frame. Further, in this Order, we impose as ongoing 
conditions the commitments Virginia Cellular has made on the record in 
this proceeding. These conditions will ensure that Virginia Cellular 
satisfies its obligations under section 214 of the Act. We conclude 
that these steps are appropriate in light of the increased frequency of 
petitions for competitive ETC designations and the potential impact of 
such designations on consumers in rural areas.

II. Discussion

    5. After careful review of the record before us, we find that 
Virginia Cellular has met all the requirements set forth in section 
214(e)(1) and (e)(6) to be designated as an ETC by this Commission for 
portions of its licensed service area. First, we find that Virginia 
Cellular has demonstrated that the Virginia Commission lacks the 
jurisdiction to perform the designation and that the Commission 
therefore may consider Virginia Cellular's petition under section 
214(e)(6). Second, we conclude that Virginia Cellular has demonstrated 
that it will offer and advertise the services supported by the federal 
universal service support mechanisms throughout the designated service 
area upon designation as an ETC in accordance with section 214(e)(1). 
In addition, we find that the designation of Virginia Cellular as an 
ETC in certain areas served by rural telephone companies serves the 
public interest and furthers the goals of universal service by 
providing greater mobility and a choice of service providers to 
consumers in high-cost and rural areas of Virginia. Pursuant to our 
authority under section 214(e)(6), we therefore designate Virginia 
Cellular as an ETC for parts of its licensed service area in the 
Commonwealth of Virginia, as set forth. As explained, however, we do 
not designate Virginia Cellular as an ETC in the study area of NTELOS. 
In areas where Virginia Cellular's proposed service areas do not cover 
the entire study area of a rural telephone company, Virginia Cellular's 
ETC designation shall be subject to the Virginia Commission's agreement 
with our new definition for the rural telephone company service areas. 
In all other areas, as described herein, Virginia Cellular's ETC 
designation is effective immediately. Finally, we note that the outcome 
of the Commission's pending proceeding before the Joint Board examining 
the rules relating to high-cost universal service support in 
competitive areas could potentially impact the support that Virginia 
Cellular and other ETCs may receive in the future. This Order is not 
intended to prejudge the outcome of that proceeding. We also note that 
Virginia Cellular always has the option of relinquishing its ETC 
designation and its corresponding benefits and obligations to the 
extent that it is concerned about its long-term ability to provide 
supported services in the affected rural study areas.

A. Commission Authority To Perform the ETC Designation

    6. We find that Virginia Cellular has demonstrated that the 
Virginia Commission lacks the jurisdiction to perform the requested ETC 
designation and that the Commission has authority to consider Virginia 
Cellular's petition under section 214(e)(6) of the Act. Specifically, 
Virginia Cellular states that it submitted an application for 
designation as an ETC with the Virginia Commission, and on April 9, 
2002, the Virginia Commission issued an order stating that it had not 
asserted jurisdiction over CMRS carriers. In its order, the Virginia 
Commission directed Virginia Cellular to file for ETC designation with 
the FCC. Based on this statement by the Virginia Commission, we find 
that the Virginia Commission lacks jurisdiction to designate Virginia 
Cellular as an ETC and that this Commission has authority to perform 
the requested ETC designation in the Commonwealth of Virginia pursuant 
to section 214(e)(6).

B. Offering and Advertising the Supported Services

    7. Offering the Services Designated for Support. We find that 
Virginia Cellular has demonstrated through the required certifications 
and related filings, that it now offers, or will offer upon designation 
as an ETC, the services supported by the federal universal service 
support mechanism. As noted in its petition, Virginia Cellular is an 
``A-Band'' cellular carrier for the Virginia 6 Rural Service Area, 
serving the counties of Rockingham, Augusta, Nelson, and Highland, as 
well as the cities of Harrisonburg, Staunton, and Waynesboro. Virginia 
Cellular states that it currently provides all of the services and 
functionalities enumerated in Sec.  54.101(a) of the Commission's rules 
throughout its cellular service area in Virginia. Virginia Cellular 
certifies that it has the capability to offer voice-grade access to the 
public switched network, and the functional equivalents to DTMF 
signaling, single-party service, access to operator services, access to 
interexchange services, access to directory assistance, and toll 
limitation for qualifying low-income consumers. Virginia Cellular also 
complies with applicable law and Commission directives on providing 
access to emergency services. In addition, although the Commission has 
not set a minimum local usage requirement, Virginia Cellular certifies 
it will comply with ``any and all minimum local usage requirements 
adopted by the FCC'' and it intends to offer a number of local calling 
plans as part of its universal service offering. As discussed, Virginia 
Cellular has committed to report annually its progress in achieving its 
build-out plans at the same time it submits its annual certification 
required under Sec. Sec.  54.313 and 54.314 of the Commission's rules.
    8. Virginia Cellular has also made specific commitments to provide 
service to requesting customers in the service areas that it is 
designated as an ETC. Virginia Cellular states that if a request is 
made by a potential customer within its existing network, Virginia 
Cellular will provide service immediately using its standard customer 
equipment. In instances where a request comes from a potential customer 
within Virginia Cellular's licensed service area but outside its 
existing network coverage, it will take a number of steps to provide 
service that include determining whether: (1) The requesting customer's 
equipment can be modified or replaced to provide service; (2) a roof-
mounted antenna or other equipment can be deployed to provide service; 
(3) adjustments can be made to the nearest cell tower to provide 
service; (4) there are any other adjustments that can be made to 
network or customer facilities to provide service; (5) it can offer 
resold services from another carrier's facilities to provide service; 
and (6) an additional cell site, cell extender, or repeater can be 
employed or can be constructed to provide service. In addition, if 
after following these steps, Virginia Cellular still cannot provide 
service, it will notify the requesting party and include that 
information in an annual report filed with the Commission detailing how 
many requests for service were unfulfilled for the past year.
    9. Virginia Cellular has further committed to use universal service 
support to further improve its universal service offering by 
constructing several new cellular sites in sparsely populated areas 
within its licensed service area but outside its existing network 
coverage. Virginia Cellular estimates that it will construct 11 cell 
sites over the first year and a half following ETC designation. These 
11 cell sites will serve a population of 157,060. Virginia Cellular

[[Page 8960]]

notes that the parameters of its build-out plans may evolve over time 
as it responds to consumer demand.
    10. The Virginia Rural Telephone Companies raise several concerns 
about Virginia Cellular's service offerings. We address each of these 
concerns, and in so doing, we conclude that Virginia Cellular has 
demonstrated that it will offer the services supported by the federal 
universal service support mechanism upon designation as an ETC. 
Initially, we note that the Commission has held that to require a 
carrier to actually provide the supported services before it is 
designated an ETC has the effect of prohibiting the ability of 
prospective entrants from providing telecommunications service. 
Instead, ``a new entrant can make a reasonable demonstration * * * of 
its capability and commitment to provide universal service without the 
actual provision of the proposed service.''
    11. We also reject the argument of the Virginia Rural Telephone 
Companies that Virginia Cellular does not offer all of the services 
supported by the federal universal service support mechanisms as 
required by section 214(e)(1)(A). Specifically, the Virginia Rural 
Telephone Companies claim that Virginia Cellular: (1) Has not yet 
upgraded from analog to digital and until this happens, Virginia 
Cellular cannot effectively implement E-911 or the Communications 
Assistance for Law Enforcement Act (CALEA); (2) offers no local usage; 
(3) has stated that its customers will not have equal access to 
interexchange carriers; (4) states only that it will participate ``as 
required'' with respect to Lifeline service; and (5) has wireless 
signals that are sporadic or unavailable in some of the mountainous 
regions that Virginia Cellular proposes to serve.
    12. We find that Virginia Cellular's commitment to provide access 
to emergency services is sufficient. Virginia Cellular states that it 
is in compliance with state and federal 911 and E-911 mandates and is 
upgrading from analog to digital technology. Virginia Cellular states 
that it is implementing Phase I E-911 services in those areas where 
local governments have developed E-911 functionality and that upon 
designation as an ETC, it will be able to effectively implement E-911.
    13. We find sufficient Virginia Cellular's showing that it will 
offer minimum local usage as part of its universal service offering. 
Therefore, we reject the Virginia Rural Telephone Companies' claim that 
Virginia Cellular should be denied ETC designation because it does not 
currently offer any local usage. Although the Commission did not set a 
minimum local usage requirement, in the Universal Service Order, 62 FR 
32862, June 17, 1997, it determined that ETCs should provide some 
minimum amount of local usage as part of their ``basic service'' 
package of supported services. Virginia Cellular states that it will 
comply with any and all minimum local usage requirements adopted by the 
FCC. It adds that it will meet the local usage requirements by 
including a variety of local usage plans as part of a universal service 
offering. In addition, Virginia Cellular states that its current rate 
plans include access to the local exchange network, and that many plans 
include a large volume of minutes. Accordingly, we find that Virginia 
Cellular's commitment to provide local usage is sufficient.
    14. We reject the Virginia Rural Telephone Companies' claim that 
ETC designation should be denied because Virginia Cellular's customers 
will not have equal access to interexchange carriers. Section 
54.101(a)(7) of the rules states that one of the supported services is 
access to interexchange services, not equal access to those services. 
Virginia Cellular states that it provides access to interexchange 
services. Accordingly, we find sufficient Virginia Cellular's showing 
that it will offer access to interexchange services.
    15. We find that Virginia Cellular's commitment to participate in 
the Lifeline and Linkup programs is sufficient. In its petition, 
Virginia Cellular states that it currently has no Lifeline customers, 
and upon designation as an ETC, it will participate in Lifeline as 
required. Virginia Cellular also states that it will advertise the 
availability of Lifeline service to its customers. Although Virginia 
Cellular does not currently advertise Lifeline to its customers, we 
note that the advertising rules for Lifeline and Linkup services apply 
only to already-designated ETCs. Thus, we find sufficient Virginia 
Cellular's commitment to participate in Lifeline and Linkup.
    16. Although the Virginia Rural Telephone Companies claim that 
Virginia Cellular's wireless signals are sporadic in certain areas, we 
find that the existence of so-called ``dead spots'' in Virginia 
Cellular's network does not preclude us from designating Virginia 
Cellular as an ETC. The Commission has already determined that a 
telecommunications carrier's inability to demonstrate that it can 
provide ubiquitous service at the time of its request for designation 
as an ETC should not preclude its designation as an ETC. Moreover, as 
stated, Virginia Cellular has committed to improve its network. In 
addition, the Commission's rules acknowledge the existence of dead 
spots. ``Dead spots'' are defined as ``[s]mall areas within a service 
area where the field strength is lower than the minimum level for 
reliable service.'' Section 22.99 of the Commission's rules states that 
``[s]ervice within dead spots is presumed.'' Additionally, the 
Commission's rules provide that ``cellular service is considered to be 
provided in all areas, including dead spots * * * .'' Because ``dead 
spots'' are acknowledged by the Commission's rules, we are not 
persuaded by the Virginia Rural LECs that the possibility of dead spots 
demonstrates that Virginia Cellular is not willing or capable of 
providing acceptable levels of service throughout its service area.
    17. Offering the Supported Services Using a Carrier's Own 
Facilities. Virginia Cellular has demonstrated that it satisfies the 
requirement of section 214(e)(1)(A) that it offer the supported 
services using either its own facilities or a combination of its own 
facilities and resale of another carrier's services. Virginia Cellular 
states that it intends to provide the supported services using its 
cellular network infrastructure, which includes ``the same antenna, 
cell-site, tower, trunking, mobile switching, and interconnection 
facilities used by the company to serve its existing conventional 
mobile cellular service customers.'' We find that this certification is 
sufficient to satisfy the facilities requirement of section 
214(e)(1)(A).
    18. Advertising the Supported Services. We conclude that Virginia 
Cellular has demonstrated that it satisfies the requirement of section 
214(e)(1)(B) to advertise the availability of the supported services 
and the charges therefor using media of general distribution. Virginia 
Cellular certifies that it ``will use media of general distribution 
that it currently employs to advertise its universal service offerings 
throughout the service areas designated by the Commission.'' In 
addition, Virginia Cellular details alternative methods that it will 
employ to advertise the availability of its services. For example, 
Virginia Cellular will provide notices at local unemployment, social 
security, and welfare offices so that unserved consumers can learn 
about Virginia Cellular's service offerings and learn about Lifeline 
and Linkup discounts. Virginia Cellular also commits to publicize 
locally the construction of all new facilities in unserved or 
underserved areas so customers are made aware of improved service. We 
find that Virginia Cellular's certification and its additional

[[Page 8961]]

commitments to advertising its service offerings satisfy section 
214(e)(1)(B). In addition, as the Commission has stated in prior 
decisions, because an ETC receives universal service support only to 
the extent that it serves customers, we believe that strong economic 
incentives exist, in addition to the statutory obligation, for an ETC 
to advertise its universal service offering in its designated service 
area.

C. Public Interest Analysis

    19. We conclude that it is ``consistent with the public interest, 
convenience, and necessity'' to designate Virginia Cellular as an ETC 
for the portion of its requested service area that is served by the 
non-rural telephone companies Bell Atlantic and GTE South, Inc. We also 
conclude that it is in the public interest to designate Virginia 
Cellular as an ETC in Virginia in the study areas served by five of the 
six affected rural telephone companies. In determining whether the 
public interest is served, the Commission places the burden of proof 
upon the ETC applicant. We conclude that Virginia Cellular has 
satisfied the burden of proof in establishing that its universal 
service offering in these areas will provide benefits to rural 
consumers. We do not designate Virginia Cellular as an ETC, however, 
for the study area of NTELOS because we find that Virginia Cellular has 
not satisfied its burden of proof in this instance.
    20. Non-Rural Study Areas. We conclude that it is ``consistent with 
the public interest, convenience, and necessity'' to designate Virginia 
Cellular as an ETC for the portion of its requested service area that 
is served by the non-rural telephone companies of Bell Atlantic and GTE 
South. We note that the Bureau previously has found designation of 
additional ETCs in areas served by non-rural telephone companies to be 
per se in the public interest based upon a demonstration that the 
requesting carrier complies with the statutory eligibility obligations 
of section 214(e)(1) of the Act. We do not believe that designation of 
an additional ETC in a non-rural telephone company's study area based 
merely upon a showing that the requesting carrier complies with section 
214(e)(1) of the Act will necessarily be consistent with the public 
interest in every instance. We nevertheless conclude that Virginia 
Cellular's public interest showing here is sufficient based on the 
detailed commitments Virginia Cellular made to ensure that it provides 
high quality service throughout the proposed rural and non-rural 
service areas; indeed, given our finding that Virginia Cellular has 
satisfied the more rigorous public interest analysis for the rural 
study areas, it follows that its commitments satisfy the public 
interest requirements for non-rural areas. We also note that no parties 
oppose Virginia Cellular's request for ETC designation in the study 
areas of these non-rural telephone companies. We therefore conclude 
that Virginia Cellular has demonstrated that its designation as an ETC 
in the study areas of these non-rural telephone companies, is 
consistent with the public interest, as required by section 214(e)(6). 
We further note that the Joint Board is reviewing whether to modify the 
public interest analysis used to designate ETCs in both rural and non-
rural carrier study areas under section 214(e) of the Act. The outcome 
of that proceeding could impact the Commission's public interest 
analysis for future ETC designations in non-rural telephone company 
service areas.
    21. Rural Study Areas. Based on the record before us, we conclude 
that grant of this ETC designation for the requested rural study areas, 
in part, is consistent with the public interest. In considering whether 
designation of Virginia Cellular as an ETC will serve the public 
interest, we have considered whether the benefits of an additional ETC 
in the wire centers for which Virginia Cellular seeks designation 
outweigh any potential harms. We note that this balancing of benefits 
and costs is a fact-specific exercise. In determining whether 
designation of a competitive ETC in a rural telephone company's service 
area is in the public interest, we weigh the benefits of increased 
competitive choice, the impact of the designation on the universal 
service fund, the unique advantages and disadvantages of the 
competitor's service offering, any commitments made regarding quality 
of telephone service, and the competitive ETC's ability to satisfy its 
obligation to serve the designated service areas within a reasonable 
time frame. We recognize that as part of its review of the ETC 
designation process in the pending proceeding examining the rules 
relating to high-cost support in competitive areas, the Commission may 
adopt a different framework for the public interest analysis of ETC 
applications. This Order does not prejudge the Joint Board's 
deliberations in that proceeding and any other public interest 
framework that the Commission might ultimately adopt.
    22. Virginia Cellular's universal service offering will provide 
benefits to customers in situations where they do not have access to a 
wireline telephone. For instance, Virginia Cellular has committed to 
serve residences to the extent that they do not have access to the 
public switched network through the incumbent telephone company. Also, 
the mobility of Virginia Cellular's wireless service will provide other 
benefits to consumers. For example, the mobility of telecommunications 
assists consumers in rural areas who often must drive significant 
distances to places of employment, stores, schools, and other critical 
community locations. In addition, the availability of a wireless 
universal service offering provides access to emergency services that 
can mitigate the unique risks of geographic isolation associated with 
living in rural communities. Virginia Cellular also submits that, 
because its local calling area is larger than those of the incumbent 
local exchange carriers it competes against, Virginia Cellular's 
customers will be subject to fewer toll charges.
    23. We acknowledge arguments made in the record that wireless 
telecommunications offerings may be subject to dropped calls and poor 
coverage. Parties also have noted that wireless carriers often are not 
subject to mandatory service quality standards. Virginia Cellular has 
committed to mitigate these concerns. Virginia Cellular assures the 
Commission that it will alleviate dropped calls by using universal 
service support to build new towers and facilities to offer better 
coverage. As evidence of its commitment to high service quality, 
Virginia Cellular has also committed to comply with the Cellular 
Telecommunications Industry Association Consumer Code for Wireless 
Service, which sets out certain principles, disclosures, and practices 
for the provision of wireless service. In addition, Virginia Cellular 
has committed to provide the Commission with the number of consumer 
complaints per 1,000 handsets on an annual basis. Therefore, we find 
that Virginia Cellular's commitment to provide better coverage to 
unserved areas and its other commitments discussed herein adequately 
address any concerns about the quality of its wireless service.
    24. Although we find that grant of this ETC designation will not 
dramatically burden the universal service fund, we are increasingly 
concerned about the impact on the universal service fund due to the 
rapid growth in high-cost support distributed to competitive ETCs. 
Specifically, although competitive ETCs only receive a small percentage 
of all high-cost universal service support, the amount of high-cost 
support distributed to competitive ETCs

[[Page 8962]]

is growing at a dramatic pace. For example, in the first quarter of 
2001, three competitive ETCs received approximately $2 million or 0.4 
percent of high-cost support. In the fourth quarter of 2003, 112 
competitive ETCs are projected to receive approximately $32 million or 
3.7 percent of high-cost support. This concern has been raised by 
parties in this proceeding, especially as it relates to the long-term 
sustainability of universal service high-cost support. Specifically, 
commenters argue that designation of competitive ETCs will place 
significant burdens on the federal universal service fund without any 
corresponding benefits. We recognize these commenters raise important 
issues regarding universal service support. As discussed, the 
Commission has asked the Joint Board to examine, among other things, 
the Commission's rules relating to high-cost universal service support 
in service areas in which a competitive ETC is providing service, as 
well as the Commission's rules regarding support for second lines. We 
note that the outcome of the Commission's pending proceeding examining 
the rules relating to high-cost support in competitive areas could 
potentially impact, among other things, the support that Virginia 
Cellular and other competitive ETCs may receive in the future. It is 
our hope that the Commission's pending rulemaking proceeding also will 
provide a framework for assessing the overall impact of competitive ETC 
designations on the universal service mechanisms.
    25. Additionally, we conclude that, for most of the rural areas in 
which Virginia Cellular seeks ETC designation, such designation does 
not raise the rural creamskimming and related concerns alleged by 
commenters. Rural creamskimming occurs when competitors seek to serve 
only the low-cost, high revenue customers in a rural telephone 
company's study area. In this case, because the contour of its CMRS 
licensed area differs from the existing rural telephone companies' 
study areas, Virginia Cellular will be unable to provide facilities-
based service to the entirety of the study areas of three of the six 
affected rural telephone companies--Shenandoah, MGW, and NTELOS. 
Generally, a request for ETC designation for an area less than the 
entire study area of a rural telephone company might raise concerns 
that the petitioner intends to creamskim in the rural study area. In 
this case, however, Virginia Cellular commits to provide universal 
service throughout its licensed service area. It therefore does not 
appear that Virginia Cellular is deliberately seeking to enter only 
certain portions of these companies' study areas in order to creamskim.
    26. At the same time, we recognize that, for reasons beyond a 
competitive carrier's control, the lowest cost portion of a rural study 
area may be the only portion of the study area that a wireless 
carrier's license covers. Under these circumstances, granting a carrier 
ETC designation for only its licensed portion of the rural study area 
may have the same effect on the ILEC as rural creamskimming.
    27. We have analyzed the record before us in this matter and find 
that, for the study areas of Shenandoah and MGW, Virginia Cellular's 
designation as an ETC is unlikely to undercut the incumbents' ability 
to serve the entire study area. Our analysis of the population density 
of each of the affected wire centers reveals that, for the study areas 
of MGW and Shenandoah, Virginia Cellular will not be serving only low-
cost areas to the exclusion of high-cost areas. Although there are 
other factors that define high-cost areas, a low population density 
typically indicates a high-cost area. Our analysis of population 
density reveals that Virginia Cellular is serving not only the lower 
cost, higher density wire centers in the study areas of MGW and 
Shenandoah. The population density for the Shenandoah wire center for 
which Virginia Cellular seeks ETC designation is approximately 4.64 
persons per square mile and the average population density for 
Shenandoah's remaining wire centers is approximately 53.62 persons per 
square mile. The average population density for the MGW wire centers 
for which Virginia Cellular seeks ETC designation is approximately 2.30 
persons per square mile and the average population density for MGW's 
remaining wire centers is approximately 2.18 persons per square mile.
    28. We conclude, however, for the following reasons, that it would 
not be in the public interest to designate Virginia Cellular as an ETC 
in the study area of NTELOS. Virginia Cellular's licensed CMRS area 
covers only the Waynesboro wire center in NTELOS' study area. Based on 
our examination of the population densities of the wire centers in 
NTELOS' study area, we find that Waynesboro is the lowest-cost, 
highest-density wire center in the study area of NTELOS, and that there 
is a great disparity in density between the Waynesboro wire center and 
the NTELOS wire centers outside Virginia Cellular's service area. The 
population density in the Waynesboro wire center is approximately 273 
persons per square mile, while the average population density of the 
remaining wire centers in NTELOS' study area is approximately 33 
persons per square mile. Universal service support is calculated on a 
study-area-wide basis. Although NTELOS did not take advantage of the 
Commission's disaggregation options to protect against possible 
uneconomic entry in its lower-cost area, we find on the facts here that 
designating Virginia Cellular as an ETC only for the Waynesboro wire 
center could potentially significantly undermine NTELOS' ability to 
serve its entire study area. The widely disparate population densities 
in NTELOS' study area and the status of Waynesboro as NTELOS' sole low-
cost, high-density wire center could result in such an ETC designation 
placing NTELOS at a sizeable unfair competitive disadvantage. In 
addition, we believe that, if NTELOS had disaggregated, the low costs 
of service in the Waynesboro wire center would have resulted in little 
or no universal service support targeted to those lines. Therefore, our 
decision not to designate Virginia Cellular as an ETC in the study area 
of NTELOS is unlikely to impact consumers in the Waynesboro wire center 
because Virginia Cellular will make a business decision on whether to 
provide service in that area without regard to the potential receipt of 
universal service support.

D. Designated Service Area

    29. Virginia Cellular is designated an ETC in the areas served by 
the non-rural carriers Bell Atlantic and GTE South, as listed in 
Appendix A. We designate Virginia Cellular as an ETC throughout most of 
its CMRS licensed service area in the Virginia 6 Rural Service Area. 
Virginia Cellular is designated an ETC in the areas served by the three 
rural telephone companies whose study areas Virginia Cellular is able 
to serve completely, as listed in Appendix B. As discussed, and subject 
to the Virginia Commission's agreement on redefining the service areas 
of MGW and Shenandoah, we also designate Virginia Cellular as an ETC 
for the entire Bergton, McDowell, Williamsville, and Deerfield wire 
centers.
    30. We designate Virginia Cellular as an ETC in the entire 
Deerfield, McDowell, and Williamsville wire centers in the study area 
of MGW. We note that, although the boundaries of its CMRS licensed 
service area in Virginia exclude a small part of MGW's Williamsville 
wire center, Virginia Cellular has committed nevertheless to offer 
service to customers in the entirety of the Williamsville wire center 
through a combination of its own facilities and

[[Page 8963]]

resale of either wireless or wireline services.
    31. We also designate Virginia Cellular as an ETC for the Bergton 
wire center in Shenandoah's study area. We note that the study area of 
Shenandoah is composed of two non-contiguous areas. One such area is 
composed solely of the Bergton wire center, which falls within Virginia 
Cellular's licensed service area, and the other area is composed of 
eight remaining wire centers, which fall outside of Virginia Cellular's 
licensed service area. We find that, because the Bergton wire center is 
a low-density, high-cost wire center, concerns about undermining 
Shenandoah's ability to serve the entire study area are substantially 
minimized. We further note that the Commission has previously expressed 
concern about requiring competitive ETCs to serve non-contiguous areas. 
In the Universal Service Order, the Commission concluded that requiring 
a carrier to serve a non-contiguous service area as a prerequisite of 
eligibility might impose a serious barrier to entry, particularly to 
wireless carriers. The Commission further concluded that ``imposing 
additional burdens on wireless entrants would be particularly harmful 
in rural areas * * *.'' Accordingly, we find that denying Virginia 
Cellular ETC status for Shenandoah's Bergton wire center simply because 
Virginia Cellular is not licensed to serve the eight remaining wire 
centers would be inappropriate. Thus, we conclude that it is 
appropriate to designate Virginia Cellular as an ETC for the Bergton 
wire center within Shenandoah's study area.
    32. Finally, for the reasons described, we do not designate 
Virginia Cellular as an ETC in any portion of NTELOS' service area.

E. Redefining Rural Telephone Company Service Areas

    33. We redefine the service areas of MGW and Shenandoah pursuant to 
section 214(e)(5). Consistent with prior rural service area 
redefinitions, we redefine each wire center in the MGW and Shenandoah 
study areas as a separate service area. Our decision to redefine the 
service areas of these telephone companies is subject to the review and 
final agreement of the Virginia Commission in accordance with 
applicable Virginia Commission requirements. Accordingly, we submit our 
redefinition proposal to the Virginia Commission and request that it 
examine such proposal based on its unique familiarity with the rural 
areas in question.
    34. In order to designate Virginia Cellular as an ETC in a service 
area that is smaller than the affected rural telephone company study 
areas, we must redefine the service areas of the rural telephone 
companies in accordance with section 214(e)(5) of the Act. We define 
the affected service areas only to determine the portions of rural 
service areas in which to designate Virginia Cellular and future 
competitive carriers seeking ETC designation in the same rural service 
areas. Any future competitive carrier seeking ETC designation in these 
redefined rural service areas will be required to demonstrate that such 
designation will be in the public interest. In defining the rural 
telephone companies' service areas to be different than their study 
areas, we are required to act in concert with the relevant state 
commission, ``taking into account the recommendations'' of the Joint 
Board. The Joint Board's concerns regarding rural telephone company 
service areas as discussed in the 1996 Recommended Decision are as 
follows: (1) Minimizing creamskimming; (2) recognizing that the 1996 
Act places rural telephone companies on a different competitive footing 
from other LECs; and (3) recognizing the administrative burden of 
requiring rural telephone companies to calculate costs at something 
other than a study area level. We find that the proposed redefinition 
properly addresses these concerns.
    35. First, we conclude that redefining the affected rural telephone 
company service areas at the wire center level for MGW and Shenandoah 
should not result in opportunities for creamskimming. Because Virginia 
Cellular is limited to providing facilities-based service only where it 
is licensed by the Commission and because Virginia Cellular commits to 
providing universal service throughout its licensed territory in 
Virginia, concerns regarding creamskimming are minimized. In addition, 
we have analyzed the population densities of the wire centers Virginia 
Cellular can and cannot serve to determine whether the effects of 
creamskimming would occur. We note that we do not propose redefinition 
in areas where ETC designation would potentially undermine the 
incumbent's ability to serve its entire study area. Therefore, we 
conclude, based on the particular facts of this case, that there is 
little likelihood of rural creamskimming effects in redefining the 
service areas of MGW and Shenandoah as proposed.
    36. Second, our decision to redefine the service areas of the 
affected rural telephone companies includes special consideration for 
the affected rural carriers. Nothing in the record convinces us that 
the proposed redefinition will harm the incumbent rural carriers. The 
high-cost universal service mechanisms support all lines served by ETCs 
in rural areas. Under the Commission's rules, receipt of high-cost 
support by Virginia Cellular will not affect the total amount of high-
cost support that the incumbent rural telephone company receives. 
Therefore, to the extent that Virginia Cellular or any future 
competitive ETC captures incumbent rural telephone company lines, 
provides new lines to currently unserved customers, or provides second 
lines to existing wireline subscribers, it will have no impact on the 
amount of universal service support available to the incumbent rural 
telephone companies for those lines they continue to serve. Similarly, 
redefining the service areas of the affected rural telephone companies 
will not change the amount of universal service support that is 
available to these incumbents.
    37. Third, we find that redefining the rural telephone company 
service areas as proposed will not require the rural telephone 
companies to determine their costs on a basis other than the study area 
level. Rather, the redefinition merely enables competitive ETCs to 
serve areas that are smaller than the entire ILEC study area. Our 
decision to redefine the service areas does not modify the existing 
rules applicable to rural telephone companies for calculating costs on 
a study area basis, nor, as a practical matter, the manner in which 
they will comply with these rules. Therefore, we find that the concern 
of the Joint Board that redefining rural service areas would impose 
additional administrative burdens on affected rural telephone companies 
is not at issue here.
    38. In accordance with Sec.  54.207(d) of the Commission's rules, 
we submit this order to the Virginia Commission. We request that the 
Virginia Commission treat this Order as a petition to redefine a 
service area under Sec.  54.207(d)(1) of the Commission's rules. 
Virginia Cellular's ETC designation in the service areas of Shenandoah 
and MGW is subject to the Virginia Commission's review and agreement 
with the redefinition proposal herein. We find that the Virginia 
Commission is uniquely qualified to examine the redefinition proposal 
because of its familiarity with the rural service areas in question. 
Upon the effective date of the agreement of the Virginia Commission 
with our redefinition of the service areas of Shenandoah and MGW, our 
designation of Virginia Cellular as an ETC for these areas as set forth 
herein shall also take effect. In all other areas for which this

[[Page 8964]]

Order grants ETC status to Virginia Cellular, as described herein, such 
designation is effective immediately. If, after its review, the 
Virginia Commission determines that it does not agree with the 
redefinition proposal herein, we will reexamine Virginia Cellular's 
petition with regard to redefining the affected rural service areas.

F. Regulatory Oversight

    39. We note that Virginia Cellular is obligated under section 
254(e) of the Act to use high-cost support ``only for the provision, 
maintenance, and upgrading of facilities and services for which support 
is intended'' and is required under Sec. Sec.  54.313 and 54.314 of the 
Commission's rules to certify annually that it is in compliance with 
this requirement. Separate and in addition to its annual certification 
filing under Sec. Sec.  54.313 and 54.314 of our rules, Virginia 
Cellular has committed to submit records and documentation on an annual 
basis detailing its progress towards meeting its build-out plans in the 
service areas it is designated as an ETC. Virginia Cellular also has 
committed to become a signatory to the Cellular Telecommunications 
Industry Association's Consumer Code for Wireless Service and provide 
the number of consumer complaints per 1,000 mobile handsets on an 
annual basis. In addition, Virginia Cellular will annually submit 
information detailing how many requests for service from potential 
customers in the designated service areas were unfulfilled for the past 
year. We require that Virginia Cellular submit these additional data to 
the Commission and USAC on October 1 of each year beginning October 1, 
2004. We find that reliance on Virginia Cellular's commitments is 
reasonable and consistent with the public interest and the Act and the 
Fifth Circuit decision in Texas Office of Public Utility Counsel v. 
FCC. We conclude that fulfillment of these additional reporting 
requirements will further the Commission's goal of ensuring Virginia 
Cellular satisfies its obligation under section 214(e) of the Act to 
provide supported services throughout its designated service area. We 
adopt the commitments that Virginia Cellular has made as conditions on 
our approval of its ETC designation for the Commonwealth of Virginia. 
We note that the Commission may institute an inquiry on its own motion 
to examine any ETC's records and documentation to ensure that the high-
cost support it receives is being used ``only for the provision, 
maintenance, and upgrading of facilities and services'' in the areas 
where it is designated as an ETC. Virginia Cellular will be required to 
provide such records and documentation to the Commission and USAC upon 
request. We further emphasize that if Virginia Cellular fails to 
fulfill the requirements of the statute, our rules, and the terms of 
this Order after it begins receiving universal service support, the 
Commission has authority to revoke its ETC designation. The Commission 
also may assess forfeitures for violations of Commission rules and 
orders.

III. Anti-Drug Abuse Act Certification

    40. Pursuant to section 5301 of the Anti-Drug Abuse Act of 1988, no 
applicant is eligible for any new, modified, or renewed instrument of 
authorization from the Commission, including authorizations issued 
pursuant to section 214 of the Act, unless the applicant certifies that 
neither it, nor any party to its application, is subject to a denial of 
federal benefits, including Commission benefits. Virginia Cellular has 
provided a certification consistent with the requirements of the Anti-
Drug Abuse Act of 1988. We find that Virginia Cellular has satisfied 
the requirements of the Anti-Drug Abuse Act of 1988, as codified in 
Sec. Sec.  1.2001-1.2003 of the Commission's rules.

IV. Ordering Clauses

    41. Pursuant to the authority contained in section 214(e)(6) of the 
Communications Act, Virginia Cellular, LLC is designated an eligible 
telecommunications carrier for specified portions of its licensed 
service area in the Commonwealth of Virginia subject to the conditions 
described herein.
    42. Pursuant to the authority contained in section 214(e)(5) of the 
Communications Act, Sec.  54.207(d) and (e) of the Commission's rules, 
the request of Virginia Cellular, LLC to redefine the service areas of 
Shenandoah Telephone Company and MGW Telephone Company in Virginia is 
granted, subject to the agreement of the Virginia State Corporation 
Commission with the Commission's redefinition of the service areas for 
these rural telephone companies. Upon the effective date of the 
agreement of the Virginia State Corporation Commission with the 
Commission's redefinition of the service areas for those rural 
telephone companies, this designation of Virginia Cellular, LLC as an 
ETC for such areas as set forth herein shall also take effect.
    43. Pursuant to the authority contained in section 214(e)(5) of the 
Communications Act, and Sec.  54.207(d) and (e) of the Commission's 
rules, the request of Virginia Cellular, LLC to redefine the service 
area of NTELOS Telephone Inc. in Virginia is denied.
    44. A copy of this Memorandum Opinion and Order shall be 
transmitted by the Office of the Secretary to the Virginia State 
Corporation Commission and the Universal Service Administrative 
Company.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.

Appendix A

Virginia Non-Rural Wire Centers for Inclusion in Virginia Cellular's 
ETC Service Area

------------------------------------------------------------------------
          Bell Atlantic (Verizon)             GTE South, Inc. (Verizon)
------------------------------------------------------------------------
Staunton (STDRVASD) *.....................  Broadway.
Staunton (STTNVAST).......................  Edom.
Staunton (STTNVAVE).......................  Hinton.
Craigsville...............................  Dayton.
Lovingston (NLFRVANF).....................  Keezletown.
Lovingston (LVTNVALN).....................  Harrisonburg.
Lovingston (WNTRVAWG).....................  McGaheysville.
Greenwood.................................  Bridgewater.
Pine River................................  Weyerscave.
                                            Grottoes.
                                            Elkton.
                                            Amherst.
                                            Gladstone.
------------------------------------------------------------------------
* Because the wire center locality names are the same in some instances,
  the Wire Center Codes are listed in parentheses.

Appendix B

Virginia Rural Telephone Company Study Areas for Inclusion in Virginia 
Cellular's ETC Service Area

New Hope Telephone Company
North River Telephone Company
Highland Telephone Cooperative

Appendix C

Virginia Rural Telephone Company Wire Centers for Inclusion in Virginia 
Cellular's Etc. Service Area

Shenandoah Telephone Company
Bergton
MGW Telephone Company
McDowell
Williamsville
Deerfield
[FR Doc. 04-4266 Filed 2-25-04; 8:45 am]
BILLING CODE 6712-01-P