[Federal Register Volume 72, Number 99 (Wednesday, May 23, 2007)]
[Proposed Rules]
[Pages 28936-28939]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-9837]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[WC Docket No. 05-337, CC Docket No. 96-45, FCC 07-88]


High-Cost Universal Service Support; Federal-State Joint Board on 
Universal Service

AGENCY: Federal Communications Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: In this document, the Commission seeks comment on the Federal-
State Joint Board on Universal Service's recommendation that the 
Commission adopt an interim cap on support for competitive Eligible 
Telecommunications Carriers.

DATES: Comments are due on or before June 6, 2007. Reply Comments are 
due on or before June 13, 2007.

ADDRESSES: You may submit comments, identified by WC Docket No. 05-337 
and CC Docket No. 96-45, by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Federal Communications Commission's Web Site: http://www.fcc.gov/cgb/ecfs/. Follow the instructions for submitting comments.
     People with Disabilities: Contact the FCC to request 
reasonable accommodations (accessible format documents, sign language 
interpreters, CART, etc.) by e-mail: [email protected] or phone: 202-418-
0530 or TTY: 202-418-0432.

    For detailed instructions for submitting comments and additional 
information on the rulemaking process, see the SUPPLEMENTARY 
INFORMATION section of this document.

FOR FURTHER INFORMATION CONTACT: Ted Burmeister, Attorney, Wireline 
Competition Bureau, Telecommunications Access Policy Division, (202) 
418-7400, TTY (202) 418-0484.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice 
of

[[Page 28937]]

Proposed Rulemaking, in WC Docket No. 05-337 and CC Docket No. 96-45, 
released May 14, 2007. 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

    In this Notice of Proposed Rulemaking (NPRM), we seek comment on 
the recommendation of the Federal-State Joint Board on Universal 
Service (Joint Board) that the Commission takes immediate action to 
rein in the explosive growth in high-cost universal service support 
disbursements. Specifically, we seek comment on the Joint Board's 
recommendation that the Commission impose an interim, emergency cap on 
the amount of high-cost support that competitive eligible 
telecommunications carriers (ETCs) may receive. The Joint Board also 
recommended that both it and the Commission further explore 
comprehensive high-cost distribution reform, and sought comment on 
various reform proposals in a Public Notice released on the same day as 
the Recommended Decision, in WC Docket No. 05-337, CC Docket No. 96-45 
released on May 1, 2007.

II. Procedural Matters

A. Initial Regulatory Flexibility Analysis

    1. As required by the Regulatory Flexibility Act (RFA), see 5 
U.S.C. 603, the Commission has prepared this Initial Regulatory 
Flexibility Analysis (IRFA) of the possible significant economic impact 
on small entities by the policies and rules proposed in the NPRM. 
Written public comments are requested on this IRFA. Comments must be 
identified as responses to the IRFA and must be filed by the deadlines 
for comments on the NPRM provided in paragraph 9 of the item. The 
Commission will send a copy of the NPRM, including this IRFA, to the 
Chief Counsel for Advocacy of the Small Business Administration (SBA). 
See 5 U.S.C. 603(a). In addition, the NPRM and IRFA (or summaries 
thereof) will be published in the Federal Register.
a. Need for, and Objectives of, the Proposed Rules
    2. Section 254(a)(2) of the Communications Act of 1934, as amended 
(the Act), requires that the Commission implement within one year 
recommendations from the Joint Board based on the universal service 
requirements provided in section 254 of the Act, which establishes a 
number of principles for the preservation and advancement of universal 
service in a competitive telecommunications environment. On May 1, 
2007, the Joint Board recommended that the Commission adopt an interim 
cap on high-cost universal service support for competitive ETCs to rein 
in the explosive growth in universal service. In this NPRM, the 
Commission seeks comment on the Joint Board recommendation that the 
Commission cap competitive ETC support at the amount of support 
received by competitive ETCs in 2006. The objective of the NPRM is to 
explore whether the Commission should take action to cap the high-cost 
universal service support in the manner that the Joint Board 
recommends, and whether there are other issues related to the interim 
cap that should be considered.
b. Legal Basis
    3. The legal basis for any action that may be taken pursuant to the 
NPRM is contained in sections 1, 2, 4(i), 4(j), 201, 202, 205, 214, 
254, 403 and 410 of the Communications Act of 1934, as amended, 47 
U.S.C. 151, 152, 154(i)-(j), 201, 202, 205, 254, 410 and sections 1.1, 
1.411, 1.412, 1.415, 1.419, and 1.1200-1.1216, of the Commission's 
rules, 47 C.F.R. 1.1, 1.411, 1.412, 1.415, 1.419, 1.1200-1.1216.
c. Description and Estimate of the Number of Small Entities to Which 
Rules Will Apply
    4. 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, if adopted. 5 U.S.C. 604(b)(3). The RFA 
generally defines the term ``small entity,'' 5 U.S.C. 601(6), as having 
the same meaning as the terms ``small business,'' 5 U.S.C. 601(3), 
``small organization,'' 5 U.S.C 601(4), and ``small governmental 
jurisdiction.'' 5 U.S.C. 601(5). In addition, the term ``small 
business'' has the same meaning as the term ``small business concern'' 
under the Small Business Act, unless the Commission has developed one 
or more definitions that are U.S.C. 601(3). Under the Small Business 
Act, a ``small business concern'' is one that: (1) Is independently 
owned and operated; (2) is not dominant in its field of operation; and 
(3) meets any additional criteria established by the Small Business 
Administration (SBA). 15 U.S.C. 632. Nationwide, there are a total of 
approximately 22.4 million small businesses, according to SBA data. A 
small organization is generally ``any not-for-profit enterprise which 
is independently owned and operated and is not dominant in its field.'' 
Nationwide, as of 2002, there were approximately 1.6 million small 
organizations.
    5. The most reliable source of information regarding the total 
numbers of certain common carrier and related providers nationwide, as 
well as the number of commercial wireless entities, is the data that 
the Commission publishes in its Trends in Telephone Service report. The 
SBA has developed small business size standards for wireline and 
wireless small businesses within the three commercial census categories 
of Wired Telecommunications Carriers, Paging, and Cellular and Other 
Wireless Telecommunications. Under these categories, a business is 
small if it has 1,500 or fewer employees. Below, using the above size 
standards and others, we discuss the total estimated numbers of small 
businesses that might be affected by our actions.
d. Wireline Carriers and Service Providers
    6. We have included small incumbent local exchange carriers (LECs) 
in this present RFA analysis. As noted above, a ``small business'' 
under the RFA is one that, inter alia, meets the pertinent small 
business size standard (e.g., a telephone communications business 
having 1,500 or fewer employees), and ``is not dominant in its field of 
operation.'' The SBA's Office of Advocacy contends that, for RFA 
purposes, small incumbent LECs are not dominant in their field of 
operation because any such dominance is not ``national'' in scope. We 
have therefore included small incumbent LECs in this RFA analysis, 
although we emphasize that this RFA action has no effect on Commission 
analyses and determinations in other, non-RFA contexts.
    7. Incumbent LECs. Neither the Commission nor the SBA has developed 
a size standard for small businesses specifically applicable to 
incumbent LECs. The closest applicable size standard under SBA rules is 
for Wired Telecommunications Carriers. Under that size standard, such a 
business is small if it has 1,500 or fewer employees. According to 
Commission data, 1,307 carriers reported that they were engaged in the 
provision of local exchange services. Of these 1,307 carriers, an 
estimated 1,019 have 1,500 or fewer employees, and 288 have more than 
1,500 employees. Consequently, the Commission estimates that most 
providers of incumbent local exchange service are small businesses that 
may be affected by our action.

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    8. Competitive LECs, Competitive Access Providers (CAPs), ``Shared-
Tenant Service Providers,'' and ``Other Local Service Providers.'' 
Neither the Commission nor the SBA has developed a small business size 
standard specifically for these service providers. The appropriate size 
standard under SBA rules is for the category Wired Telecommunications 
Carriers. Under that size standard, such a business is small if it has 
1,500 or fewer employees. According to Commission data, 859 carriers 
reported that they were engaged in the provision of either competitive 
LEC or CAP services. Of these 859 carriers, an estimated 741 have 1,500 
or fewer employees, and 118 have more than 1,500 employees. In 
addition, 16 carriers have reported that they are ``Shared-Tenant 
Service Providers,'' and all 16 are estimated to have 1,500 or fewer 
employees. In addition, 44 carriers have reported that they are ``Other 
Local Service Providers.'' Of the 44, an estimated 43 have 1,500 or 
fewer employees, and one has more than 1,500 employees. Consequently, 
the Commission estimates that most competitive LECs, CAPs, ``Shared-
Tenant Service Providers,'' and ``Other Local Service Providers'' are 
small entities that may be affected by our action.
e. Wireless Carriers and Service Providers
    9. Wireless Service Providers. The SBA has developed a small 
business size standard for wireless firms within the two broad economic 
census categories of ``Paging'' and ``Cellular and Other Wireless 
Telecommunications.'' Under both categories, the SBA deems a wireless 
business to be small if it has 1,500 or fewer employees. For the census 
category of Paging, Census Bureau data for 2002 show that there were 
807 firms in this category that operated for the entire year. Of this 
total, 804 firms had employment of 999 or fewer employees, and three 
firms had employment of 1,000 employees or more. Thus, under this 
category and associated small business size standard, the majority of 
firms can be considered small. For the census category of Cellular and 
Other Wireless Telecommunications, Census Bureau data for 2002 show 
that there were 1,397 firms in this category that operated for the 
entire year. Of this total, 1,378 firms had employment of 999 or fewer 
employees, and 19 firms had employment of 1,000 employees or more. 
Thus, under this second category and size standard, the majority of 
firms can, again, be considered small.
    10. Wireless Telephony. Wireless telephony includes cellular, 
personal communications services (PCS), and specialized mobile radio 
(SMR) telephony carriers. As noted earlier, the SBA has developed a 
small business size standard for ``Cellular and Other Wireless 
Telecommunications'' services. Under that SBA small business size 
standard, a business is small if it has 1,500 or fewer employees. 
According to Commission data, 432 carriers reported that they were 
engaged in the provision of wireless telephony. We have estimated that 
221 of these are small under the SBA small business size standard.
f. Satellite Service Providers
    11. Satellite Telecommunications and Other Telecommunications. 
There is no small business size standard developed specifically for 
providers of international service. The appropriate size standards 
under SBA rules are for the two broad census categories of ``Satellite 
Telecommunications'' and ``Other Telecommunications.'' Under both 
categories, such a business is small if it has $13.5 million or less in 
average annual receipts.
    12. The first category of Satellite Telecommunications ``comprises 
establishments primarily engaged in providing point-to-point 
telecommunications services to other establishments in the 
telecommunications and broadcasting industries by forwarding and 
receiving communications signals via a system of satellites or 
reselling satellite telecommunications.'' For this category, Census 
Bureau data for 2002 show that there were a total of 371 firms that 
operated for the entire year. Of this total, 307 firms had annual 
receipts of under $10 million, and 26 firms had receipts of $10 million 
to $24,999,999. Consequently, we estimate that the majority of 
Satellite Telecommunications firms are small entities that might be 
affected by our action.
    13. The second category of Other Telecommunications ``comprises 
establishments primarily engaged in (1) Providing specialized 
telecommunications applications, such as satellite tracking, 
communications telemetry, and radar station operations; or (2) 
providing satellite terminal stations and associated facilities 
operationally connected with one or more terrestrial communications 
systems and capable of transmitting telecommunications to or receiving 
telecommunications from satellite systems.'' For this category, Census 
Bureau data for 2002 show that there were a total of 332 firms that 
operated for the entire year. Of this total, 259 firms had annual 
receipts of under $10 million and 15 firms had annual receipts of $10 
million to $24,999,999. Consequently, we estimate that the majority of 
Other Telecommunications firms are small entities that might be 
affected by our action.
2. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements
    14. The specific proposals under consideration in the NPRM would 
not, if adopted, result in additional recordkeeping requirements for 
small businesses.
3. Steps Taken To Minimize Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered
    15. The RFA requires an agency to describe any significant 
alternatives that it has considered in reaching its proposed approach, 
which may include the following four alternatives (among others): (1) 
The establishment of differing compliance and reporting requirements or 
timetables that take into account the resources available to small 
entities; (2) the clarification, consolidation, or simplification of 
compliance or reporting requirements under the rule for small entities; 
(3) the use of performance, rather than design, standards; and (4) an 
exemption from coverage of the rule, or part thereof, for small 
entities. See 5 U.S.C. 603(c).
    16. This IRFA seeks comment on how the Joint Board's recommendation 
could be implemented in a manner that reduces the potential burden and 
cost of compliance for small entities. We also seek comment on the 
potential impact of the proposed recommendations related to the interim 
cap proposal on high-cost universal support for competitive ETCs. In 
the NPRM, the Commission has offered several alternatives and that 
might avoid or mitigate reductions in the amount of high-cost support 
flowing to competitive ETCs, some of which might be small entities. For 
instance, the Commission inquires into other methods, besides a cap, to 
control the growth of high-cost support; asks about the length of time 
the interim cap should be in place; seeks comment on the level that the 
cap should be set at; and asks whether other operational, 
administrative, or implementation issues might have an impact on 
implementing an interim cap.

[[Page 28939]]

4. Federal Rules That May Duplicate, Overlap, or Conflict With the 
Proposed Rules
    17. None.

B. Paperwork Reduction Act Analysis

    18. This NPRM does not contain proposed information collections 
subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-
13. In addition, therefore, it does not contain any new or modified 
``information collection burden for small business concerns with fewer 
than 25 employees,'' pursuant to the Small Business Paperwork Relief 
Act of 2002, Public Law 107-198. See 44 U.S.C. 3506(c)(4).

C. Ex Parte Presentations

    19. These matters shall be treated as a ``permit-but-disclose'' 
proceeding in accordance with the Commission's ex parte rules. Persons 
making oral ex parte presentations are reminded that memoranda 
summarizing the presentations must contain summaries of the substance 
of the presentations and not merely a listing of the subjects 
discussed. More than a one or two sentence description of the views and 
arguments presented is generally required. Other requirements 
pertaining to oral and written presentations are set forth in section 
1.1206(b) of the Commission's rules.

D. Comment Filing Procedures

    20. Pursuant to sections 1.415 and 1.419 of the Commission's rules, 
47 CFR 1.415, 1.419, interested parties may file comments on or before 
June 6, 2007, and reply comments June 13, 2007. Comments may be filed 
using: (1) The Commission's Electronic Comment Filing System (ECFS), 
(2) the Federal Government's eRulemaking Portal, or (3) by filing paper 
copies. See Electronic Filing of Documents in Rulemaking Proceedings, 
63 FR 24121 (1998).
     Electronic Filers: Comments may be filed electronically 
using the Internet by accessing the ECFS: http://www.fcc.gov/cgb/ecfs/ 
or the Federal eRulemaking Portal: http://www.regulations.gov. Filers 
should follow the instructions provided on the Web site for submitting 
comments.
     For ECFS filers, if multiple docket or rulemaking numbers 
appear in the caption of this proceeding, filers must transmit one 
electronic copy of the comments for each docket or rulemaking number 
referenced in the caption. In completing the transmittal screen, filers 
should include their full name, U.S. Postal Service mailing address, 
and the applicable docket or rulemaking number. Parties may also submit 
an electronic comment by Internet e-mail. To get filing instructions, 
filers should send an e-mail to [email protected], and include the following 
words in the body of the message, ``get form.'' A sample form and 
directions will be sent in response.
     Paper Filers: Parties who choose to file by paper must 
file an original and four copies of each filing. If more than one 
docket or rulemaking number appears in the caption of this proceeding, 
filers must submit two additional copies for each additional docket or 
rulemaking number. Filings can be sent by hand or messenger delivery, 
by commercial overnight courier, or by first-class or overnight U.S. 
Postal Service mail (although we continue to experience delays in 
receiving U.S. Postal Service mail). All filings must be addressed to 
the Commission's Secretary, Office of the Secretary, Federal 
Communications Commission.
     The Commission's contractor will receive hand-delivered or 
messenger-delivered paper filings for the Commission's Secretary at 236 
Massachusetts Avenue, NE., Suite 110, Washington, DC 20002. The filing 
hours at this location are 8 a.m. to 7 p.m. All hand deliveries must be 
held together with rubber bands or fasteners. Any envelopes must be 
disposed of before entering the building.
     Commercial overnight mail (other than U.S. Postal Service 
Express Mail and Priority Mail) must be sent to 9300 East Hampton 
Drive, Capitol Heights, MD 20743.
     U.S. Postal Service first-class, Express, and Priority 
mail must be addressed to 445 12th Street, SW., Washington, DC 20554.
     People with Disabilities: To request materials in 
accessible formats for people with disabilities (braille, large print, 
electronic files, audio format), send an e-mail to [email protected] or 
call the Consumer & Governmental Affairs Bureau at 202-418-0530 
(voice), 202-418-0432 (tty). In addition, one copy of each pleading 
must be sent to each of the following:
    (1) The Commission's duplicating contractor, Best Copy and 
Printing, Inc, 445 12th Street, SW., Room CY-B402, Washington, DC 
20554; Web site: http://www.bcpiweb.com; phone: 1-800-378-3160;
    (2) Antoinette Stevens, Telecommunications Access Policy Division, 
Wireline Competition Bureau, 445 12th Street, SW., Room 5-B540, 
Washington, DC 20554; e-mail: [email protected].
    21. For further information regarding this proceeding, contact Ted 
Burmeister, Attorney Advisor, Telecommunications Access Policy 
Division, Wireline Competition Bureau at (202) 418-7389, or 
[email protected], or Katie King, Telecommunications Access 
Policy Division, Wireline Competition Bureau, (202) 418-7491, or 
[email protected].

III. Ordering Clauses

    22. Pursuant to the authority contained in sections 1, 4(i), 201-
205, 214, 254, and 403 of the Communications Act of 1934, as amended, 
47 U.S.C. 151, 154(i), 201-205, 214, 254, and 403, this Notice of 
Proposed Rulemaking is adopted.
    23. The Commission's Consumer and Governmental Affairs Bureau, 
Reference Information Center, shall send a copy of this Notice of 
Proposed Rulemaking, including the Initial Regulatory Flexibility 
Analysis, to the Chief Counsel for Advocacy of the Small Business 
Administration.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. E7-9837 Filed 5-22-07; 8:45 am]
BILLING CODE 6712-01-P