[Federal Register Volume 69, Number 240 (Wednesday, December 15, 2004)]
[Rules and Regulations]
[Pages 74985-74988]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-27438]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[CC Docket No. 96-45; FCC 04-237]


Federal-State Joint Board on Universal Service

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this document, the Commission addresses various petitions 
for reconsideration filed in response to the rules adopted in the First 
Report and Order and the Fourth Order on Reconsideration. We grant, in 
part, a petition filed by American Public Communications Council (APCC) 
and deny petitions filed by APCC and others. We make minor 
clarifications to our rules based on the issues raised in these 
petitions as needed.

FOR FURTHER INFORMATION CONTACT: Cathy Carpino, Deputy Chief, Wireline 
Competition Bureau, Telecommunications Access Policy Division, (202) 
418-7400, TTY (202) 418-0484.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Order 
on Reconsideration, in CC Docket No. 96-45, FCC 04-237, released 
November 29, 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 12th Street, SW., Washington, DC 20554.

I. Introduction

    1. In this Order on Reconsideration, we address various petitions 
for reconsideration filed in response to the rules adopted in the First 
Report and Order, 62 FR 32862, June 17, 1997, in CC Docket No. 96-45 
and the Fourth Order on Reconsideration, 63 FR 02093, January 13, 1998, 
in CC Docket Nos. 96-45, 96-262, 94-1, 91-213, 95-72. We grant, in 
part, a petition filed by American Public Communications Council 
(APCC). Based on the record before us, we deny petitions filed by APCC, 
AT&T, Cellular Telecommunications and Internet Association (CTIA), Lan 
Neugent and Greg Weisiger (LN/GW), Mobile Satellite Ventures (MSV), 
National Public Radio (NPR), Puerto Rico Telephone Company

[[Page 74986]]

(PRTC), Rural Telephone Coalition (RTC), Southern Educational 
Communications Association (SECA), United States Telecommunications 
Association (USTA), Wireless Cable Association (WCA), and Wyoming 
Public Service Commission (Wyoming Commission); these petitions either 
raise no facts which have not previously been presented to the Federal 
Communications Commission (Commission) or are moot. We make minor 
clarifications to our rules based on the issues raised in these 
petitions as needed.

II. Discussion

    2. In this Order on Reconsideration, the Commission addresses 
petitions for reconsideration of the Commission's First Report and 
Order and Fourth Order on Reconsideration to the extent described 
below.

A. Eligible Telecommunications Carrier

    3. We deny MSV's petition for reconsideration of our determination 
regarding the eligibility of pure resellers to receive universal 
service support. MSV's petition does not rely on facts that have not 
previously been presented to the Commission. Rather, MSV merely wishes 
to argue its different interpretation of the statute. As the Commission 
already concluded, the statute expressly mandates that, in order to be 
eligible for universal service subsidies, a carrier must use its ``own 
facilities'' or a combination of its own facilities and another 
carrier's services in the provision of supported services. Resellers 
providing resold services from facilities-based carriers do not use 
their ``own facilities'' to provide the supported services. As such, 
pure resellers cannot receive support consistent with this statutory 
requirement.
    4. Moreover, we decline to adopt MSV's request to conclude that 
advertising in a nationally circulated publication satisfies, per se, 
the statutory requirement to advertise the availability of supported 
services under section 214(e)(1)(B). In the First Report and Order, the 
Commission declined to adopt nationwide standards for interpreting 
section 214(e)(1)(B), because it agreed with the Joint Board that 
states are in a better position to evaluate local conditions and 
establish advertising guidelines appropriate for the state. MSV has 
presented no facts that were not previously considered by the 
Commission at that time. Accordingly, we deny MSV's petition for 
reconsideration.

B. Rural, Insular, and High Cost Support

1. Indexed Cap on High-Cost Loop Fund
    5. We deny RTC's petition for reconsideration. RTC has presented no 
facts that have not already been presented to the Commission or that 
warrant reconsideration of the Commission's earlier determinations.
2. Sale of Exchanges
    6. We conclude that the issues raised in RTC's supplemental 
comments concerning Sec.  54.305 of the Commission's rules have already 
been addressed in the Rural Task Force Order, 66 FR 30080, June 5, 
2001. RTC has presented no facts that were not already considered at 
that time. Moreover, RTC's assertion that the rule ignores the need for 
rural carriers to upgrade facilities they have acquired from non-rural 
carriers disregards the Commission's amendment of Sec.  54.305 to 
provide additional funds in such instances. Finally, we note that the 
Commission recently asked the Joint Board to review whether to retain 
or modify Sec.  54.305 and we expect that the Joint Board and the 
Commission will address this issue in that proceeding based on a fresh 
record. We therefore deny RTC's request.
3. Sufficiency of Support
    7. We conclude that PRTC has presented no facts that were not 
previously considered by the Commission or would lead us to reconsider 
the Commission's decision in the First Report and Order not to treat 
PRTC as a rural carrier. PRTC simply reiterated previous arguments 
rejected by the Commission. We also note that PRTC raised similar 
arguments requesting to be treated as a rural carrier in response to 
the Ninth Report and Order, 64 FR 67416, December 1, 1999, which the 
Commission denied. We therefore deny PRTC's request for reconsideration 
of this issue. We note that we do not address at this time PRTC's 
petition for clarification and/or reconsideration of the Remand Order, 
68 FR 69622, December 15, 2003, or its request in an ex parte letter, 
filed on June 6, 2003, that the Commission create a separate category 
of ``non-rural insular'' carriers for purposes of intrastate high-cost 
support.
    8. As the Wyoming Commission acknowledged in its supplemental 
comments, its specific concerns with the Commission's First Report and 
Order (i.e., the 25 percent limit for non-rural carriers described 
above and the decision to limit funding for the federal high-cost 
support mechanism to interstate revenues) have been subsequently 
addressed. In these supplemental comments, the Wyoming Commission makes 
only general assertions about the continued insufficiency of the 
federal high-cost support mechanism for non-rural carriers and the 
affordability of the total bill to be paid by Wyoming consumers. We 
find that the Wyoming Commission fails to state with particularity the 
respects in which it believes the action taken should be changed and, 
therefore, we deny its petition for reconsideration of First Report and 
Order.
    9. We note that since the Wyoming Commission filed its supplemental 
comments, the Commission has revisited how non-rural carriers receive 
high-cost support. In the Remand Order, the Commission modified the 
cost benchmark used to calculate support for non-rural carriers, 
established a rate review process to assess whether rates in rural 
areas served by non-rural carriers are reasonably comparable to urban 
rates nationwide, and concluded that states should be permitted to 
request further federal action, if necessary, based on a showing that 
federal and state action together are not sufficient to achieve 
reasonable comparability. The Commission sought further comment on the 
procedures for filing and processing state requests for further federal 
action, as well as additional inducements for state action, including 
additional targeted federal support. In the Remand Order, the 
Commission also denied the Wyoming Commission's petition for 
reconsideration of the Ninth Report and Order, in which the Wyoming 
Commission raised similar arguments regarding the sufficiency of 
support for non-rural carriers.

C. Schools, Libraries, and Rural Health Care Providers

1. Wide Area Networks
    10. We deny SECA's petition for reconsideration of the Fourth Order 
on Reconsideration. We conclude that SECA failed to present facts that 
were not previously considered by the Commission or would lead us to 
reconsider the Commission's findings. Moreover, we note that, 
subsequent to the filing of SECA's petition for reconsideration, the 
Commission held that support may be provided under telecommunications 
service or Internet access for service provider charges for capital 
investments for WANs. This subsequent action effectively provided SECA 
an avenue to obtain support for the functionality provided by either a 
WAN or ITFS technology, thereby largely mooting its petition for

[[Page 74987]]

reconsideration. Therefore, we deny SECA's request to provide discounts 
to schools and libraries for either the purchase of WANs or ITSF 
systems. We note that pursuant to the Third Schools Order and Second 
Further Notice, 69 FR 6181, February 10, 2004, the issue of WAN's 
eligibility is currently under consideration by the Commission. SECA's 
concerns regarding this issue will be considered in that open 
proceeding.
2. Accounting and Reporting Requirements
    11. We clarify requirements as set forth herein and otherwise deny 
USTA's petition for reconsideration in this area. With regard to USTA's 
request concerning record-keeping responsibility under the schools and 
libraries program, we note that Sec.  54.501(d)(3) of the Commission's 
rules provides that service providers shall keep and retain records of 
rates charged to and discounts allowed for eligible schools and 
libraries--on their own or as part of a consortium. In the Fifth 
Schools Order, 69 FR 55097, September 13, 2004, the Commission amended 
Sec.  54.516 of its rules to require both beneficiaries and service 
providers to retain all records related to the application for, receipt 
and delivery of discounted services for a period of five years after 
the last day of service delivered for a particular Funding Year. As a 
result, USTA's arguments in its petition concerning record-keeping are 
now moot.
    12. As for the proper allocation of benefits, we note that as part 
of the application process for the schools and libraries program, an 
applicant is required to provide specific information on its FCC Form 
471 about the eligible services that it has ordered, its cost, and the 
discount that it is requesting for such services. If the applicant is 
representing a consortium, the applicant is required to calculate 
either the specific discount for each member of the consortium or the 
shared discount for the consortium as a whole. The allocation 
methodology should be set forth in the contract for services executed 
with the service provider. If there is no contract for services, as 
might be the case with some tariffed services, the applicant should 
provide the service provider with a copy of its allocation methodology. 
After the applicant has received approval of its request for universal 
service support, it may notify the provider to begin service. Once the 
applicant receives service from the provider, the applicant must notify 
the Administrator to approve the flow of universal service funds to the 
provider as set forth on its FCC Form 471.
3. Support for Advanced Services
    13. We conclude that LN/GW raise no facts that have not previously 
been considered by the Commission or would warrant expanding the 
services eligible for discounts under the schools and libraries program 
at this time. In the First Report and Order, the Commission found that 
the broad purposes of section 254(h)(2) supported its decision to 
provide discounts for internal connections and Internet access. After 
analyzing the statute and the record, the Commission determined that 
the public interest would not be served at that time by providing 
discounts for additional non-telecommunications services. We find no 
reason to depart from the Commission's previous decisions in this area 
based on the current record. Accordingly, we deny LN/GW's request to 
redefine or expand the list of services that may be eligible for 
support under the schools and libraries program at this time. We note, 
however, that in the Third Schools Order and Second Further Notice the 
Commission formalized the process for updating the eligible services 
list, beginning with Funding Year 2005, in order to promote greater 
transparency of what is eligible for support under the schools and 
libraries support mechanism. Under the new rule, the eligible services 
list is open to comment on an annual basis, allowing any party to 
provide comments concerning the content and application of the eligible 
services list. As stated above, the issue of the eligibility of WANs is 
currently under consideration by the Commission, and LN/GW's concerns 
regarding this issue will be considered in that open proceeding.

D. Administration of Support Mechanisms

1. Contribution Methodology
    14. We deny AT&T's petition to reconsider the universal service 
contribution methodology. The Commission released an order adopting 
interim modifications to the contribution methodology in December 2002. 
In that order, the Commission, among other things, eliminated the lag 
between the accrual and assessment of universal service contribution 
obligations as of April 1, 2003, by basing contributions on projected 
collected end-user telecommunications revenues. The Commission also 
explicitly rejected a collect-and-remit system. We note, however, that 
the Commission requested further comment on three specific connection-
based proposals. We find that AT&T raises no facts that were not 
considered and addressed in the Contribution Methodology Order, 67 FR 
79525, December 30, 2002. Therefore, we dismiss AT&T's request to 
eliminate the lag as moot and deny the remainder of its petition.
2. Payphone Service Providers
    15. We deny APCC's petition to reconsider the Commission's decision 
to require payphone service providers to contribute to universal 
service. APCC's petition does not rely on facts that have not 
previously been presented to the Commission. APCC merely disagrees with 
the Commission's policy decision.
    16. We clarify, however, that to the extent an independent payphone 
service provider purchases telecommunications for resale in a payphone 
service and contributes directly to universal service, it should not be 
considered an end user for purposes of reporting assessable interstate 
telecommunications revenues and therefore should not be subject to 
federal universal service pass-through charges. Allowing such a 
practice results in a double burden for payphone providers that use 
resold telecommunications services. As described in more detail in the 
instructions to the Telecommunications Reporting Worksheet, FCC Form 
499, such revenues are considered ``carrier's carrier revenues'' or 
``revenues from resellers.'' For example, if an independent payphone 
service provider purchased a payphone line from a local exchange 
carrier to provide payphone service and contributed directly to 
universal service for that line, that local exchange carrier should 
report the payphone line revenues on Line 115, ``Telecommunications 
provided to other universal service contributors for resale'' on the 
FCC Form 499-Q. Accordingly, that local exchange carrier would not be 
directly assessed on the basis of those payphone line revenues and 
should not pass through universal service charges for that payphone 
line to the independent payphone service provider. We, therefore, grant 
APCC's request for clarification as provided herein.
3. Broadcasters
    17. We deny the petitions filed by NPR and WCA, to the extent 
described herein. Our rules already make clear that all broadcasters, 
including NPR and ITFS licensees, are not required to contribute to the 
universal service fund to the extent they provide interstate 
telecommunications on a non-common carrier basis. Since the release of 
the Fourth Order on Reconsideration and subsequent Errata, Sec.  
54.706(d) has

[[Page 74988]]

remained unchanged. To reiterate, the Commission found that the public 
interest would not be served if the Commission were to require 
broadcasters, including NPR, to contribute to universal service based 
on the provision of non-common carrier telecommunications. In addition, 
by specifically mentioning ITFS licensees in its discussion for why 
broadcasters should not have to contribute to universal service, the 
Commission intended to treat ITFS licensees in the same manner as other 
broadcasters for universal service purposes. As such, modification of 
Sec.  54.706(d) is unnecessary.
4. Multipoint Distribution Service
    18. Although we deny WCA's petition and do not revise our rules to 
include MDS licensees that lease capacity to wireless cable operators 
on the list of those entities exempt from universal service 
obligations, we clarify that MDS licensees are not required to 
contribute to the universal service fund on the basis of revenues 
derived from broadcasting services. We further clarify that MDS 
licensees providing interstate telecommunications to others for a fee 
on a non-common carrier basis will not be exempt from contribution 
requirements. Such a result is consistent with section 254(d) of the 
1996 Act and Sec. Sec.  54.706(b) and (c) of the Commission's rules. We 
find WCA has raised no facts that would prompt us to exempt an MDS 
licensee that chooses a non-common carrier status but provides services 
identical to a common carrier licensee, and thus competes with the 
common carrier, from universal service contribution obligations.
5. De Minimis Exemption
    19. We conclude that CTIA has presented no facts that were not 
previously considered by the Commission or that warrant reconsideration 
of the Commission's determination that underlying carriers should 
account for revenues from resellers that fall under the de minimis 
exemption. Section 254(d) explicitly allows the Commission to exempt 
carriers or classes of carriers from contribution requirements if their 
contributions would be de minimis. Moreover, contrary to CTIA's 
assertions, directing underlying carriers to exclude revenues from de 
minimis resellers would reduce, rather then enlarge, the total 
contribution base. We therefore deny CTIA's request for reconsideration 
of this matter.
    20. We clarify, however, that CMRS carriers are required to report 
revenues derived from providing telecommunications to entities 
qualifying for the de minimis exemption as end-user revenues on the 
appropriate lines of the Telecommunications Reporting Worksheet. 
Nothing in the Commission's rules or implementing orders relieves CMRS 
carriers of this obligation. We further clarify that our current rules 
do not require underlying facilities-based carriers or CMRS carriers to 
identify specifically on the Telecommunications Reporting Worksheet 
their resale customers qualifying for the de minimis exemption.
    21. The Commission will not send a copy of this Order on 
Reconsideration, in CC Docket No. 96-45, FCC 04-237, released November 
29, 2004, pursuant to the Congressional Review Act, see 5 U.S.C. 
801(a)(1)(A).

III. Ordering Clauses

    22. Pursuant to the authority contained in sections 1-4, 201-205, 
218-220, 214, 254, 303(r), 403, and 410 of the Communications Act of 
1934, as amended, 47 U.S.C. 151-154, 201-205, 218-220, 214, 254, 
303(r), 403, and 410, this Order on Reconsideration is adopted. 
Pursuant to the authority contained in section 405 of the 
Communications Act of 1934, as amended, 47 U.S.C. 405, and 0.291 and 
1.429 of the Commission's rules, 47 CFR 0.291 and 1.429, the petitions 
for reconsideration and supplemental notices of the petitions for 
reconsideration of the First Report and Order filed by the American 
Public Communications Council in CC Docket No. 96-45 is granted, in 
part, and denied, in part.
    23. Pursuant to the authority contained in section 405 of the 
Communications Act of 1934, as amended, 47 U.S.C. 405, and sections 
0.291 and 1.429 of the Commission's rules, 47 CFR 0.291 and 1.429, the 
petitions for reconsideration and supplemental notices of the petitions 
for reconsideration of the First Report and Order filed by the AMSC/
Mobile Satellite Ventures Subsidiary LLC, AT&T, Puerto Rico Telephone 
Company, Rural Telephone Coalition, United States Telephone 
Association, and Wyoming Public Service Commission in CC Docket No. 96-
45 are denied.
    24. Pursuant to the authority contained in section 405 of the 
Communications Act of 1934, as amended, 47 U.S.C. 405, and sections 
0.291 and 1.429 of the Commission's rules, 47 CFR 0.291 and 1.429, the 
petitions for reconsideration of the Fourth Order on Reconsideration 
filed by the Cellular Telecommunications and Internet Association, Lan 
Neugent and Greg Weisiger, National Public Radio, Southern Education 
Communications Association, and Wireless Cable Association in CC Docket 
No. 96-45 are denied.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 04-27438 Filed 12-14-04; 8:45 am]
BILLING CODE 6712-01-P