[Federal Register Volume 75, Number 110 (Wednesday, June 9, 2010)]
[Proposed Rules]
[Pages 32692-32699]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-12931]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 54
[CC Docket No. 02-6; FCC 09-105]
Schools and Libraries Universal Service Support Mechanism
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
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SUMMARY: In this document, the Federal Communications Commission
(Commission) addresses matters related to the eligibility of products
and services under the schools and libraries universal service support
mechanism, also known as the E-rate program. Specifically, in this
Further Notice of Proposed Rulemaking (FNPRM), we propose that the
following services should not be eligible for funding under the E-rate
program--separately priced firewall services, anti-virus/anti-spam
software, scheduling services, wireless Internet access applications,
and web hosting. We propose to revise the Commission's rules to
establish that the Commission should not be required to list individual
products and services (e.g., voice mail) in the rules, but that such
products and services will be listed in the Eligible Services List
(ESL). We propose to require the Universal Service Administrative
Company (USAC) to submit any proposed changes to the ESL to the
Commission no later than March 30th of each year. Finally, we propose
to eliminate the requirement that the ESL be released by public notice.
DATES: Comments on the proposed rules are due on or before July 9, 2010
and reply comments are due on or before July 26, 2010. Written comments
on the Paperwork Reduction Act proposed information collection
requirements should be submitted on or before August 9, 2010. If you
anticipate that you will be submitting comments, but find it difficult
to do so within the period of time allowed by this notice, you should
advise the contact listed below as soon as possible.
ADDRESSES: You may submit comments, identified by CC Docket No. 02-6,
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://fjallfoss.fcc.gov/ecfs2/. 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.
In addition to filing comments with the Secretary, a copy
of any comments on the Paperwork Reduction Act information collection
requirements contained herein should be submitted to the Federal
Communications Commission via e-mail to [email protected] and to Nicholas A.
Fraser, Office of Management and Budget, via e-mail to [email protected] or via fax at 202-395-5167.
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: Cara Voth, Wireline Competition
Bureau, Telecommunications Access Policy Division, (202) 418-7400 or
TTY: (202) 418-0484.
SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's
Notice of Proposed Rulemaking in CC Docket No. 02-6, FCC 09-105,
adopted December 1, 2009, and released December 2, 2009. The complete
text of this document is available for inspection and copying during
normal business hours in the FCC Reference Information Center, Portals
II, 445 12th Street, SW., Room CY-A257, Washington, DC 20554. The
document may also be purchased from the Commission's duplicating
contractor, Best Copy and Printing, Inc., 445 12th Street, SW., Room
CY-B402, Washington, DC 20554, telephone (800) 378-3160 or (202) 863-
2893, facsimile (202) 863-2898, or via the Internet at http://www.bcpiweb.com. It is also available on the Commission's Web site at
http://www.fcc.gov.
Synopsis of the Notice of Proposed Rulemaking
I. Introduction
1. In this FNPRM, we seek comment on whether particular services
should be designated as eligible for E-rate support. Specifically, we
tentatively conclude that the Eligible Services List (ESL) should not
include separately priced firewall services, anti-virus/anti-spam
software, scheduling services, wireless Internet access applications,
and web hosting should not be eligible for funding under the E-rate
program. Alternatively, we propose that web hosting should be eligible
for E-rate program funds as a Priority 2 service. We also propose to
change our rules to establish that the Commission no longer needs to
list individual products and services in the rules, but that such
products and services will be listed in the ESL. We propose to change
our rules to require the Universal Service Administrative Company
(USAC) to submit any proposed changes to the ESL
[[Page 32693]]
to the Commission no later than March 30th of each year. Finally, we
tentatively conclude to revise our rules to eliminate the requirement
that the ESL be released by public notice.
II. Background
2. Under the E-rate program, eligible schools, libraries, and
consortia that include eligible schools and libraries may receive
discounts for eligible telecommunications services, Internet access,
and internal connections. Section 254 of the Communications Act of
1934, as amended (the Act), gives the Commission the authority to
designate ``telecommunications services'' and certain additional
services eligible for support under the E-rate program. The Commission
may also designate services eligible for E-rate support as part of its
authority to enhance, to the extent technically feasible and
economically reasonable, access to advanced telecommunications and
information services for all public and non-profit elementary and
secondary school classrooms and libraries.
3. Since the initial implementation of the E-rate program in 1998,
and consistent with the Commission's rules and requirements, USAC has
developed procedures and guidelines to ensure that E-rate funding is
provided only for eligible services. Initially, the Commission directed
USAC, in consultation with the Commission, to determine whether
particular services fell within the eligibility criteria established
under the Act and the Commission's rules and policies. USAC began to
update and post to its Web site on an annual basis a list of services
and products eligible to receive discounts under the E-rate program,
now known as the ESL. In consultation with the Wireline Competition
Bureau (Bureau), USAC updated the list to reflect any changes in rules
that had occurred during the previous year and to address issues that
arose in the application review process.
4. On December 23, 2003, the Commission adopted section 54.522 of
its rules, formalizing the process for updating the ESL for the E-rate
program. Specifically, under section 54.522 of the Commission's rules,
the Commission must seek comment on USAC's proposed ESL and issue a
public notice attaching the final ESL for the upcoming funding year at
least 60 days prior to the opening of the application funding window
for the E-rate program. In its current form, the ESL is divided into
five main categories--telecommunications service, Internet access,
internal connections, basic maintenance of internal connections, and
miscellaneous.
5. In the ESL NPRM (73 FR 48352, August 19, 2008), released in July
2008, the Commission sought comment on issues related to eligible
services that had been raised by commenters but had not yet been
resolved through the ESL public notice and revision process. The
Commission also sought comment on which rules, if any, would need to be
amended to implement any changes made as a result of the ESL NPRM.
Comments on the ESL NPRM were due on September 18, 2008, and reply
comments were due on October 3, 2008.
III. Discussion
A. Services
6. In this FNPRM, we seek comment on the tentative conclusions we
make regarding services discussed in the ESL NPRM that have not been
addressed already. We tentatively conclude that separately priced
firewall services, anti-virus and anti-spam software, teleconferencing
scheduling services, and wireless Internet access applications, should
not be added to the ESL. Additionally, we tentatively conclude that web
hosting should not be eligible for funding under the E-rate program,
or, alternatively, should only be eligible for E-rate program funds as
a Priority 2 service.
7. Firewall. We tentatively conclude that we should decline to add
separately priced firewall services to the ESL. In the 2007 ESL, the
Commission clarified that only basic firewall services that are
provided as a standard component of a vendor's Internet access service
are eligible for E-rate program discounts. The E-rate program already
funds basic firewall services, giving applicants a basic level of
protection. We tentatively conclude that the inclusion of separately
priced firewall services is not essential and may have an adverse
effect on funds available for other already eligible services. We seek
comment on this tentative conclusion and also ask that commenters
provide examples of how separately priced firewalls are used by schools
and libraries so that we can determine whether we should reexamine our
tentative conclusion. We also seek comment on a suggested updated
definition of basic firewall services and whether that would provide
better guidance to applicants on what types of basic firewall services
are eligible for E-rate funding.
8. Anti-Virus/Anti-Spam Software. We tentatively conclude that we
should not add anti-virus and anti-spam software to the ESL and seek
comment on this tentative conclusion. Anti-virus and anti-spam software
is not an Internet access service itself but is a separate software
application designed to enhance the operation of Internet access
service. Only a few categories of software are eligible for E-rate
funding, however, including operating system software, e-mail software,
and software for a server-based, shared voice mail system. We
tentatively conclude that anti-virus and anti-spam software should not
be added to the list of eligible software under internal connections
because this software does not fit into the categories of software that
are currently on the ESL. Even if anti-virus and anti-spam software are
generally considered necessary for the operation of e-mail, we believe
that such products should not be funded because their addition to the
ESL may have an adverse affect on the funds available for other
services. We seek comment on these tentative conclusions.
9. Scheduling Services. We tentatively conclude that we should not
adopt scheduling services as eligible for E-rate funding. As explained
above, only operating system software, e-mail software, and software
for a server-based, shared voice mail system have been approved for E-
rate funding. Scheduling software allows schools and libraries to use
video teleconferencing for distance learning by coordinating between
locations. We believe that scheduling services, while potentially
useful for schools and libraries, does not fit into the categories of
software that are currently on the ESL. We also find that schools and
libraries are able to use video teleconferencing for distance learning
without scheduling services and therefore such services are not
essential. The E-rate program is operated with a finite amount of
funding and we tentatively conclude that funds should not be shifted
from necessary components to add scheduling services to the program. We
seek comment on this tentative conclusion.
10. Web Hosting. Web hosting, as an unbundled Internet access
service, was added to the ESL in October 2003, for funding year 2004.
In funding year 2004, Web hosting was described as an Internet service
provided by an Internet service provider that will host a school or
library's Web site (http://www.schoolname.org) as part of a bundled
service offering, or as an optional service. Because Web hosting is
listed in the ESL as Internet access, it is funded under the E-rate
program as a Priority 1 service. Although Web hosting has been included
as part of Internet access, we now seek comment on whether Web hosting
should
[[Page 32694]]
continue to be eligible for funding under the category of Priority 1
Internet access. We tentatively conclude that Web hosting should not be
eligible for funding under the E-rate program, or, alternatively,
should only be eligible for E-rate program funds as a Priority 2
service. We tentatively conclude that we should remove Web hosting from
the ESL because, while many school districts find Web hosting to be a
useful way to post information for parents and the community, we do not
believe it is essential to the educational purposes of schools and
libraries. We seek comment on this tentative conclusion.
11. If we decide to retain Web hosting on the ESL, we tentatively
conclude that Web hosting is not Internet access or an information
service and it should move to Priority 2. In funding year 2004, there
was a presumption in the ESL description of Web hosting that Web
hosting was to be provided by an Internet service provider. In today's
marketplace, Web hosting vendors are not necessarily Internet service
providers, and although a basic Web hosting service is comprised of the
physical rental of space on a vendor's server for the hosting of an
applicant's Web site, Web hosting service has greatly evolved with a
variety of optional features. To the extent the Commission adopts the
tentative conclusion that Web hosting service is eligible as a Priority
2 service, what aspects of this service should be eligible and how
should an eligible Priority 2 Web hosting service be described in the
ESL? Also, should contracts between Web hosting vendors and applicants
be itemized to show the pricing of E-rate eligible features and
elements of Web hosting?
12. Wireless Internet Access Applications. We tentatively conclude
that certain wireless Internet access applications including, but not
limited to, services that could be used on school buses to transmit
emergency information, track students, and locate buses with GPS
technology, are ineligible for E-rate support. We seek comment on this
tentative conclusion. To the extent commenters support E-rate funding
on these services we seek comment on how or why these applications
would serve an educational purpose. Like scheduling software, we find
that wireless Internet access applications are non-essential services
and we tentatively conclude that we should not add them to the ESL at
this time. We seek comment on this tentative conclusion.
B. Administrative Matters Related to the ESL
13. Commission's Rules Regarding Eligible Services. Currently,
sections 54.502 and 54.503 of the Commission's rules state that
telecommunications carriers may provide telecommunications, Internet
access, and internal connections; section 54.506 defines internal
connections; section 54.517 provides that non-telecommunications
carriers may provide voice mail, Internet access, and internal
connections; and section 54.518 describes the wide area network
services that will be supported. We tentatively conclude that the rules
should be restructured so that all of the provisions relating to
eligible services be located in the same place and seek comment on this
tentative conclusion. We seek comment on the proposed restructure of
these rules.
14. The Commission rules that address the services that are
eligible for E-rate support generally provide that telecommunications,
Internet access, internal connections, and basic maintenance are
eligible for E-rate support. They also, however, refer to specific
services such as voice mail or wide area network. The ESL also lists
specific services that are eligible for E-rate support, e.g., Centrex
is listed as a supported service under the telecommunications services
category. Applicants may be confused by the differences between the
Commission's rules and the ESL. Thus, we propose that the rules
regarding eligible services should make clear that the specific
services eligible for support under the general categories of
telecommunications, Internet access, and internal connections will be
listed in the ESL and not specifically named in the Commission's rules.
We tentatively conclude that any reference to specific services or
products in the rules should be removed and instead the rules should
state that all products and services eligible for E-rate support will
be listed in the ESL. We seek comment on this tentative conclusion.
15. Section 54.522 of the Commission's rules provides a process by
which the ESL can be changed from funding year to funding year. The
process requires USAC to submit any proposed changes to the ESL for the
following funding year by June 30th of each year to the Commission so
that the Commission can release such proposals by public notice for
comment. Any final changes to the ESL for the following funding year
are voted on and released after this comment period. We find that this
process provides the public with ample notice of any potential changes
to the eligibility status of certain products and services. Requiring
the Commission to change its rules with the addition of each new
service or change to the ESL does not enable USAC and Commission to
keep up with the rapidly changing needs of schools and libraries to
access telecommunications and advanced services. We find that our
tentative conclusion to remove from our rules all references to
specific services eligible for support will provide the Commission with
the flexibility to make E-rate discounts available on new and improved
products and services in a fluid yet predictable environment. We seek
comment on the reasons we have provided for our tentative conclusion.
We also seek comment on any alternative proposals or ideas that would
better inform the public of the services that are eligible for E-rate
support.
16. Because we tentatively conclude that reference to specific
services should not be made in the rules, we propose to remove section
54.518 from our rules. Section 54.518 states that applicants cannot
receive E-rate support to build or purchase a WAN. Instead, the
program's requirements pertaining to WANs will be included in the ESL.
We emphasize that this proposal will not change the current eligibility
of WANs. We seek comment on our tentative conclusion to delete this
rule.
17. In addition, we tentatively conclude that we should change the
name of the category of supported services currently called ``Internet
access'' to ``Internet access and information services'' in the ESL. We
have defined Internet access as ``basic conduit access to the
Internet.'' The current ESL, however, also includes e-mail under the
category of ``Internet access.'' While e-mail uses the Internet, it is
not, itself, Internet access. As such, we believe including
``information services'' in the descriptive title of the category would
more accurately reflect the type of services eligible. We seek comment
on this proposed change.
18. Commission's Rules Regarding the ESL Process. We tentatively
conclude that we should change the process by which the Commission
adopts changes to the ESL. First, we tentatively conclude that USAC
should file its proposed ESL with the Commission no later than March
30th each year. Section 54.522 of the Commission's rules requires USAC
to submit a draft ESL with any proposed changes to the Commission by
June 30th of each year. The Commission then releases a public notice
seeking comment on USAC's proposed ESL. Section 54.522 of the
[[Page 32695]]
Commission's rules requires the Commission to release the final ESL at
least 60 days prior to the opening of the application filing window for
the next E-rate funding year. For the last two years, USAC has opened
the application filing window in early November for funding year 2008
and early December for funding year 2009. The current rule, therefore,
allows approximately three months for the Commission to release the
proposed draft of the ESL, for the public to review and comment on the
draft, and for the Commission to release the final ESL. We have found
that we have not had enough time to complete all of the steps required
by the rule and release the final ESL 60 days prior to the opening of
the application filing window. Indeed, on at least three prior
occasions, as we have done this year, we have waived section 54.522 to
allow USAC to open the application filing window without having to wait
60 days from the release of the final ESL. We find that requiring USAC
to submit the proposed ESL earlier will allow additional time for the
Commission to review the proposal and to review and analyze public
comment on the proposed ESL. In the alternative, we seek comment from
the public on any other methods by which we can streamline this process
and keep it one that allows for ample public notice and opportunities
for public participation.
19. We also tentatively conclude that we should change the
provision in section 54.522 of the Commission's rules that requires the
Commission to issue a public notice seeking comment on USAC's proposed
annual changes to the ESL and another public notice announcing the
release of the final ESL for the upcoming funding year. Specifically,
we believe the rules should be changed to remove the requirement that
the ESL be released as a public notice by the Commission. This will
provide the Commission with flexibility to provide, for example, more
detailed explanations regarding changes to the ESL in an order when it
deems necessary. We seek comment on this tentative conclusion.
Procedural Matters
Initial Regulatory Flexibility Act Analysis
20. The Regulatory Flexibility Act (RFA), see 5 U.S.C. 603,
requires that an agency prepare a regulatory flexibility analysis for
notice-and-comment rulemaking proceedings, unless the agency certifies
that ``the rule will not, if promulgated, have a significant economic
impact on a substantial number of small entities.'' See 5 U.S.C.
605(b). The RFA generally defines ``small entity'' as having the same
meaning as the terms ``small business,'' ``small organization,'' and
``small governmental jurisdiction.'' 5 U.S.C. 601(6). In addition, the
term ``small business'' has the same meaning as the term ``small
business concern'' under the Small Business Act. 5 U.S.C. 601(3). A
``small business concern'' is one which: (1) Is independently owned and
operated; (2) is not dominant in its field of operation; and (3)
satisfies any additional criteria established by the Small Business
Administration (SBA). 15 U.S.C. 632.
21. As required by the Regulatory Flexibility Act (RFA), 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 FNPRM. 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.
The Commission will send a copy of this FNPRM, including this IRFA, to
the Chief Counsel for Advocacy of the Small Business Administration
(SBA). In addition, the FNPRM (or summary thereof) will be published in
the Federal Register.
1. Need for, and Objectives of, the Proposed Rules
22. The Commission is required by section 254 of the Act to
promulgate rules to implement the universal service provisions of
section 254. On May 8, 1997, the Commission adopted rules to reform its
system of universal service support mechanisms so that universal
service is preserved and advanced as markets move toward competition.
Specifically, under the schools and libraries universal service support
mechanism, also known as the E-rate program, eligible schools,
libraries, and consortia that include eligible schools and libraries
may receive discounts for eligible telecommunications services,
Internet access, and internal connections. Since the initial
implementation of the E-rate program, USAC has developed various
procedures and guidelines, consistent with the Commission's rules and
requirements, to ensure that funding is provided only for eligible
services.
23. Pursuant to the Commission's rules, the Commission released the
Public Notice seeking comment on USAC's proposed ESL for Funding Year
2010. The ESL indicates whether specific products or services are
eligible for discounts under the E-rate program. In 2009 ESL Public
Notice, we noted that this proceeding is limited to determining what
services are eligible under the Commission's current rules and is
generally not intended to be a vehicle for changing any eligibility
rules. We also noted, however, that the Commission sought comment on
various issues including the eligibility of specific services in the
ESL NPRM released last year and invited parties that wanted their ESL
NPRM comments considered in response to the public notice to refile
those comments.
24. In the FNPRM, we seek comment on the Commission's tentative
conclusion that the ESL should not add separately-priced firewall
services, anti-virus/anti-spam software, scheduling services, and
wireless Internet access applications. The Commission agrees with
commenters that these services are either not eligible under the Act or
are not essential to furthering the goals and purposes of the E-rate
program. Further, we agree with commenters that paying for the discount
on these services would have an adverse effect on services that are
already being funded. We also seek comment on the Commission's
tentative conclusion that Web hosting should not be eligible for
funding under the E-rate program, or, alternatively, should only be
eligible for E-rate program funds as a Priority 2 service. The
Commission does not believe that Web hosting is essential to the
educational purposes of schools and libraries. We also seek comment on
changes to our rules to establish that specific eligible products and
services should be listed in the ESL as opposed to being listed
individually in the rules. We seek comment on our tentative conclusions
on the process for developing the ESL, including requiring the
Universal Service Administrative Company (USAC) to submit any proposed
changes to the ESL to the Commission no later than March 30th of each
year. Finally, we seek comment on the Commission's tentative conclusion
to revise our rules to eliminate the requirement that the ESL be
released by public notice, which would provide the Commission the
flexibility to release the ESL by order. All of these administrative
changes would bring clarity and transparency to the ESL process and
would benefit all participants in the program.
2. Legal Basis
25. The legal basis for the FNPRM is contained in sections 1
through 4, 201 through 205, 254, 303(r), and 403 of the Communications
Act of 1934, as amended by the Telecommunications Act of 1996, 47
U.S.C. 151 through 154, 201 through 205, 254, 303(r), and 403,
[[Page 32696]]
and section 1.411 of the Commission's rules, 47 CFR 1.411.
3. Description and Estimate of the Number of Small Entities to Which
Rules May Apply
26. 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 proposed rules, if adopted. The RFA generally defines
the term ``small entity'' as having the same meaning as the terms
``small business,'' ``small organization,'' and ``small governmental
jurisdiction.'' In addition, the term ``small business'' has the same
meaning as the term ``small business concern'' under the Small Business
Act. A small business concern is one that: (1) Is independently owned
and operated; (2) is not dominant in its field of operation; and (3)
satisfies any additional criteria established by the SBA. 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. ``Small governmental
jurisdiction'' generally means ``governments of cities, counties,
towns, townships, villages, school districts, or special districts,
with a population of less than 50,000.'' Census Bureau data for 2002
indicate that there were 87,525 local governmental jurisdictions in the
United States. We estimate that, of this total, 84,377 entities were
``small governmental jurisdictions.'' Thus, we estimate that most
governmental jurisdictions are small.
27. Small entities potentially affected by the proposals herein
include eligible schools and libraries and the eligible service
providers offering them discounted services, including
telecommunications service providers, Internet Service Providers
(ISPs), and vendors of the services and equipment used for internal
connections.
28. Schools. As noted, ``small entity'' includes non-profit and
small government entities. Under the schools and libraries universal
service support mechanism, which provides support for elementary and
secondary schools, an elementary school is generally ``a non-profit
institutional day or residential school that provides elementary
education, as determined under state law.'' A secondary school is
generally defined as ``a non-profit institutional day or residential
school that provides secondary education, as determined under state
law,'' and not offering education beyond grade 12. For-profit schools,
and schools and libraries with endowments in excess of $50,000,000, are
not eligible to receive discounts under the program. Certain other
statutory definitions apply as well. The SBA has defined for-profit,
elementary and secondary schools having $7 million or less in annual
receipts as small entities. In funding year 2007 approximately 105,500
schools received funding under the schools and libraries universal
service mechanism. Although we are unable to estimate with precision
the number of these entities that would qualify as small entities under
SBA's size standard, we estimate that fewer than 105,500 schools might
be affected annually by our action, under current operation of the
program.
29. Libraries. As noted, ``small entity'' includes non-profit and
small government entities. Under the schools and libraries universal
service support mechanism, which provides support for libraries, the
definition of library includes public libraries, public elementary
school or secondary school libraries, academic libraries, certain
research libraries and private libraries where the state has determined
that the library should be considered a library for purposes of this
definition. For-profit libraries are not eligible to receive discounts
under the program, nor are libraries whose budgets are not completely
separate from any schools. Certain other statutory definitions apply as
well. The SBA has defined for-profit libraries having $7 million or
less in annual receipts as small entities. In funding year 2007
approximately 10,950 libraries received funding under the schools and
libraries universal service mechanism. Although we are unable to
estimate with precision the number of these entities that would qualify
as small entities under SBA's size standard, we estimate that fewer
than 10,950 libraries might be affected annually by our action, under
current operation of the program.
30. Incumbent Local Exchange Carriers (LECs). Neither the
Commission nor the SBA has developed a size standard for small
incumbent local exchange services. The closest 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, 1,311 incumbent carriers reported that
they were engaged in the provision of local exchange services. Of these
1,311 carriers, an estimated 1,024 have 1,500 or fewer employees and
287 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 the rules and policies adopted
herein.
31. We have included small incumbent local exchange carriers in
this RFA analysis. 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 local
exchange carriers are not dominant in their field of operation because
any such dominance is not ``national'' in scope. We have therefore
included small incumbent carriers in this RFA analysis, although we
emphasize that this RFA action has no effect on the Commission's
analyses and determinations in other, non-RFA contexts.
32. Interexchange Carriers. Neither the Commission nor the SBA has
developed a definition of small entities specifically applicable to
providers of interexchange services (IXCs). The closest applicable
definition under the SBA rules is for wired telecommunications
carriers. This provides that a wired telecommunications carrier is a
small entity if it employs no more than 1,500 employees. According to
the Commission's 2008 Trends Report, 300 companies reported that they
were engaged in the provision of interexchange services. Of these 300
IXCs, an estimated 268 have 1,500 or few employees and 32 have more
than 1,500 employees. Consequently, the Commission estimates that most
providers of interexchange services are small businesses that may be
affected by the rules and policies adopted herein.
33. Competitive Access Providers. Neither the Commission nor the
SBA has developed a definition of small entities specifically
applicable to competitive access services providers (CAPs). The closest
applicable definition under the SBA rules is for wired
telecommunications carriers. This provides that a wired
telecommunications carrier is a small entity if it employs no more than
1,500 employees. According to the 2008 Trends Report, 1,005 CAPs and
competitive local exchange carriers (competitive LECs) reported that
they were engaged in the provision of competitive local exchange
services. Of these 1,005 CAPs and competitive LECs, an estimated 918
have 1,500 or few employees and 87 have more than 1,500 employees.
Consequently, the
[[Page 32697]]
Commission estimates that most providers of competitive exchange
services are small businesses that may be affected by the rules and
policies adopted herein.
34. Wireless Telecommunications. Neither the Commission nor the SBA
has developed a definition of small entities specifically for wireless
telephony. The closest definition is the SBA definition for wireless
telecommunications (except satellite). Under this definition, a
cellular licensee is a small entity if it employs no more than 1,500
employees. According to the 2008 Trends Report, 434 providers
classified themselves as providers of wireless telephony, including
cellular telecommunications, Personal Communications Service, and
Specialized Mobile Radio (SMR) Telephony Carriers. Of these 437
wireless telephony providers, an estimated 222 have 1,500 or few
employees and 212 have more than 1,500 employees. Consequently, the
Commission estimates that more than half of the providers of wireless
telephony services are small businesses that may be affected by the
rules and policies adopted herein.
35. Other Wireless Services. Neither the Commission nor the SBA has
developed a definition of small entities specifically applicable to
wireless services other than wireless telephony. The closest applicable
definition under the SBA rules is again that of wireless
telecommunications (except satellite), under which a service provider
is a small entity if it employs no more than 1,500 employees. According
to the 2008 Trends Report, 69 providers classified themselves as
wireless data carriers or other mobile service providers. Of these 69
providers, an estimated 65 have 1,500 or few employees and 4 have more
than 1,500 employees. Consequently, the Commission estimates that most
providers of wireless services other than wireless telephony are small
businesses that may be affected by the rules and policies adopted
herein.
36. Paging and Messaging Service Providers. In the Paging Third
Report and Order, we developed a small business size standard for
``small businesses'' and ``very small businesses'' for purposes of
determining their eligibility for special provisions such as bidding
credits and installment payments. A ``small business'' is an entity
that, together with its affiliates and controlling principals, has
average gross revenues not exceeding $15 million for the preceding
three years. Additionally, a ``very small business'' is an entity that,
together with its affiliates and controlling principals, has average
gross revenues that are not more than $3 million for the preceding
three years. An auction of Metropolitan Economic Area licenses
commenced on February 24, 2000, and closed on March 2, 2000. Of the 985
licenses auctioned, 440 were sold. Fifty-seven companies claiming small
business status won. At present, there are approximately 24,000
Private-Paging site-specific licenses and 74,000 Common Carrier Paging
licenses. According to Commission data, 281 carriers reported that they
were engaged in the provision of paging services, messaging services,
or other mobile services. Of those, the Commission estimates that 279
are small, under the SBA approved small business size standard.
37. Internet Service Providers. Under the category of Internet
service provider, a small business is one having annual receipts of $23
million or less. According to SBA data, there are a total of 2,829
firms with annual receipts of less than $10 million, and an additional
111 firms with annual receipts of $10 million or more. Thus, the number
of On-line Information Services firms that are small under the SBA's
$18 million size standard is between 2,829 and 2,940. Further, some of
these Internet Service Providers (ISPs) might not be independently
owned and operated. Consequently, we estimate that there are fewer than
2,940 small entity ISPs that may be affected by the decisions and rules
of the present action.
38. Vendors of Internal Connections--Communications Equipment
Manufacturers. The Commission has not developed a definition of small
entities applicable to the manufacturers of internal network
connections. The most applicable definitions of a small entity are the
definitions under the SBA rules applicable to manufacturers of ``Radio
and Television Broadcasting and Wireless Communications Equipment
Manufacturing'' and ``Other Communications Equipment Manufacturing.''
According to the SBA's regulations, manufacturers of these types of
communications equipment must have 750 or fewer employees in order to
qualify as a small business. The most recent available Census Bureau
data indicates that there are 1,187 companies with fewer than 1,000
employees in the United States that manufacture radio and television
broadcasting and communications equipment, and 271 companies with less
than 1,000 employees that manufacture other communications equipment.
Some of these manufacturers might not be independently owned and
operated. Consequently, we estimate that there are fewer than 1,458
small entity internal connections manufacturers that may be affected by
the decisions and rules of the present action.
39. Vendors of Internal Connections--Wireless Communications
Equipment Manufacturers. The SBA has established a small business size
standard for radio and television broadcasting and wireless
communications equipment manufacturing. Under this standard, firms are
considered small if they have 750 or fewer employees. Census Bureau
data for 1997 indicate that, for that year, there were a total of 1,215
establishments in this category. Of those, there were 1,150 that had
employment under 500, and an additional 37 that had employment of 500
to 999. The percentage of wireless equipment manufacturers in this
category is approximately 61 percent, so the Commission estimates that
the number of wireless equipment manufacturers with employment under
500 was actually closer to 706, with an additional 23 establishments
having employment of between 500 and 999. Given the above, the
Commission estimates that the majority of wireless communications
equipment manufacturers are small businesses.
4. Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements
40. The FNPRM does not result in additional recordkeeping
requirements for small businesses. To the extent that new items are
added to the ESL, schools, libraries and service providers will merely
have additional choices of services eligible for discount when they
voluntarily participate in the E-rate program. Likewise, removing or
not adding a service to the ESL would have no additional impact on
recordkeeping requirements.
5. Steps Taken To Minimize Significant Economic Impact on Small
Entities, and Significant Alternatives Considered
41. 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
[[Page 32698]]
coverage of the rule, or part thereof, for small entities.
42. In the FNPRM, we seek comment on a number of issues related to
services eligible for E-rate discounts, including issues raised by the
commenters that may not have been addressed as part of prior ESL
proceedings. Specifically, we determine that anti-virus and anti-spam
software and other services should not be added to the ESL. We believe
that keeping these services off the ESL will not have an adverse impact
on small entities since the services were never funded in the first
place. Applicants and service providers have never had an expectation
that E-rate discounts would apply to these services and will therefore
not be harmed by a decision to maintain the status quo. We seek comment
on this tentative conclusion.
43. We also make the tentative conclusion that web hosting be
removed from the ESL. We propose, however, that this change should be
implemented in the funding year following the rule change. This will
give applicants affected by the removal of web hosting time to find
alternative funds for the service, if necessary. Delaying the removal
of web hosting will also mitigate any economic impact on those small
entities providing the service. In addition, we propose additional
outreach from USAC to inform and educate applicants and service
providers on the change. We seek comment on these proposals to mitigate
the impact of removing web hosting and seek comment generally on the
economic impact of this tentative decision.
44. We also make tentative conclusions regarding administrative
matters such as restructuring the eligible services rules, requiring
USAC to submit a proposed draft ESL to the Commission on March 30th of
each year, and revising our rules to state that all products and
services eligible for E-rate support will be named in the ESL. We
believe these changes will have no economic impact on entities
participating in the E-rate program and, indeed, will benefit
participants by making the rules and application process easier to
understand and administer. We welcome, however, comments from parties
that have opinions different from those reached in this analysis.
6. Federal Rules That May Duplicate, Overlap, or Conflict With the
Proposed Rules
45. None.
Paperwork Reduction
46. This FNPRM does not contain proposed information collection(s)
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).
Ex Parte Presentations
47. These matters shall be treated as a ``permit-but-disclose''
proceeding in accordance with the Commission's ex parte rules. 47 CFR
1.1200 through 1.1216. 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.
47 CFR 1.1206(b)(2). Other requirements pertaining to oral and written
presentations are set forth in section 1.1206(b) of the Commission's
rules. 47 CFR 1.1206(b).
C. Comment Filing Procedures
48. Pursuant to sections 1.415 and 1.419 of the Commission's rules,
47 CFR 1.415, 1.419, interested parties may file comments and reply
comments on or before the dates indicated on the first page of this
document. 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://fjallfoss.fcc.gov/ecfs2/ or the Federal eRulemaking Portal: http://www.regulations.gov.
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. All filings must be addressed to the Commission's
Secretary, Office of the Secretary, Federal Communications Commission.
Effective December 28, 2009, all hand-delivered or
messenger-delivered paper filings for the Commission's Secretary must
be delivered to FCC Headquarters at 445 12th St., SW., Room TW-A325,
Washington, DC 20554. 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.
In addition, one copy of each comment or reply comment
must be sent to Charles Tyler, Telecommunications Access Policy
Division, Wireline Competition Bureau, 445 12th Street, SW., Room 5-
A452, Washington, DC 20554; e-mail: [email protected].
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).
Ordering Clauses
49. Accordingly, it is ordered that, pursuant to the authority
contained in sections 1 through 4, 201-205, 254, 303(r), and 403 of the
Communications Act of 1934, as amended, 47 U.S.C. 151 through 154, 201
through 205, 254, 303(r), and 403, this further notice of proposed
rulemaking is adopted.
50. It is further ordered that the Commission's Consumer and
Governmental Affairs Bureau, Reference Information Center, shall send a
copy of this further notice of proposed rulemaking, including the
Initial Regulatory Flexibility Analysis, to the Chief Counsel for
Advocacy of the Small Business Administration.
List of Subjects in 47 CFR Part 54
Communications common carriers, Health facilities, Infants and
children, Libraries, Reporting and recordkeeping requirements, Schools,
Telecommunications, Telephone.
[[Page 32699]]
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
Proposed Rules
For the reasons discussed in the preamble, the Federal
Communications Commission proposes to amend 47 CFR part 54 to read as
follows:
PART 54--UNIVERSAL SERVICE
1. The authority citation continues to read as follows:
Authority: 47 U.S.C. 151, 154(i), 201, 205, 214, and 254 unless
otherwise noted.
Subpart F--Universal Service Support for Schools and Libraries
2. Section 54.502 is revised to read as follows:
Sec. 54.502 Supported services.
(a) Telecommunications services. For purposes of this subpart,
supported telecommunications services provided by telecommunications
carriers include all commercially available telecommunications services
in addition to all reasonable charges that are incurred by taking such
services, such as state and federal taxes. Charges for termination
liability, penalty surcharges, and other charges not included in the
cost of taking such service shall not be covered by the universal
service support mechanisms. All supported telecommunications services
are defined and listed in the Eligible Services List as updated
annually in accordance with Sec. 54.503 of the Commission's rules.
(b) Internet access and information services. For purposes of this
subpart, supported Internet access and information services include
basic conduit access to the Internet and all the services defined in
Sec. 54.5 of the Commission's rules as Internet access. All supported
Internet access and information services are defined and listed in the
Eligible Services List as updated annually in accordance with Sec.
54.503 of the Commission's rules.
(c) Internal connections.
(1) For purposes of this subpart, a service is eligible for support
as a component of an institution's internal connections if such service
is necessary to transport information within one or more instructional
buildings of a single school campus or within one or more non-
administrative buildings that comprise a single library branch.
Discounts are not available for internal connections in non-
instructional buildings of a school or school district, or in
administrative buildings of a library, to the extent that a library
system has separate administrative buildings, unless those internal
connections are essential for the effective transport of information to
an instructional building of a school or to a non-administrative
building of a library. Internal connections do not include connections
that extend beyond a single school campus or single library branch.
There is a rebuttable presumption that a connection does not constitute
an internal connection if it crosses a public right-of-way. All
supported internal connections are defined and listed in the Eligible
Services List as updated annually in accordance with Sec. 54.503 of
the Commission's rules.
(2) Basic maintenance services. For purposes of this subpart, basic
maintenance services shall be eligible as an internal connections
service if, but for the maintenance at issue, the internal connection
would not function and serve its intended purpose with the degree of
reliability ordinarily provided in the marketplace to entities
receiving such services. Basic maintenance services do not include
services that maintain equipment that is not supported or that enhance
the utility of equipment beyond the transport of information, or
diagnostic services in excess of those necessary to maintain the
equipment's ability to transport information. All supported basic
maintenance is defined and listed in the Eligible Services List as
updated annually in accordance with Sec. 54.503 of the Commission's
rules.
(3) Frequency of discounts for internal connections services. Each
eligible school or library shall be eligible for support for internal
connections services, except basic maintenance services, no more than
twice every five funding years. For the purpose of determining
eligibility, the five-year period begins in any funding year in which
the school or library receives discounted internal connections services
other than basic maintenance services. If a school or library receives
internal connections services other than basic maintenance services
that are shared with other schools or libraries (for example, as part
of a consortium), the shared services will be attributed to the school
or library in determining whether it is eligible for support.
(d) Non-telecommunications carriers shall be eligible for universal
service support under this subpart for providing the supported services
described in paragraph (b) and (c) of this section for eligible
schools, libraries, and consortia including those entities. Such
services provided by non-telecommunications carriers shall be subject
to all the provisions of this subpart, except Sec. Sec. 54.501(a),
54.502(a), and 54.515.
3. Section 54.503 is revised to read as follows:
Sec. 54.503 Eligible services list.
(a) The Administrator shall submit by March 30 of each year a draft
list of services eligible for support, based on the Commission's rules,
in the following funding year. The Wireline Competition Bureau will
issue a Public Notice seeking comment on the Administrator's proposed
eligible services list. At least 60 days prior to the opening of the
window for the following funding year, the final list of services
eligible for support will be released.
(b) All supported services are defined and listed in the Eligible
Services List as updated annually in accordance with paragraph (a) of
this section.
Sec. 54.506 [Removed and Reserved]
4. Remove and reserve Sec. 54.506.
Sec. Sec. 54.517 and 54.518 [Removed and Reserved]
5. Remove and reserve Sec. Sec. 54.517 and 54.518.
Sec. 54.522 [Removed and Reserved]
6. Remove and reserve Sec. 54.522.
[FR Doc. 2010-12931 Filed 6-8-10; 8:45 am]
BILLING CODE 6712-01-P