[Federal Register Volume 76, Number 18 (Thursday, January 27, 2011)]
[Rules and Regulations]
[Pages 4827-4832]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-1166]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[WC Docket No. 05-337, CC Docket No. 96-45; FCC 10-205]


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

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this document, the Federal Communications Commission takes 
action to reclaim high-cost universal service support surrendered by a 
competitive eligible telecommunications carrier (ETC) when it 
relinquishes ETC status in a particular state. This change would reduce 
the overall cap on competitive ETC support in a state when a 
competitive ETC relinquishes its designation in the state, rather than 
redistributing the excess funding to other competitive ETCs in the 
state.

DATES: Effective January 27, 2011.

FOR FURTHER INFORMATION CONTACT: Kenneth Burnley, 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 Order 
in WC Docket No. 05-337, CC Docket No. 96-45, FCC 10-205, adopted 
December 30, 2010, and released December 30, 2010. 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.
    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 and Governmental Affairs Bureau at 202-418-0530 (voice), 202-
418-0432 (tty).

I. Introduction

    1. In this Order, we take action to reclaim high-cost universal 
service support surrendered by a competitive eligible 
telecommunications carrier (ETC) when it relinquishes ETC status in a 
particular state.

II. Discussion

    2. We adopt the proposal to amend the interim cap rule (WC Docket 
No. 05-337, CC Docket No. 96-45, 23 FCC Rcd 8834 (2008)) so that a 
state's interim cap amount will be adjusted if a competitive ETC 
serving the state relinquishes its ETC status. As discussed in the 
September 2010 NPRM, 75 FR 56494, September 16, 2010, the goal of the 
Interim Cap Order, 73 FR 37882, July 2, 2008, is to rein in high-cost 
universal service disbursements for potentially duplicative voice 
services. We find that the proposal is consistent with that goal. It 
would reduce the overall cap on competitive ETC support in a state when 
a competitive ETC relinquishes its designation in the state, rather 
than redistributing the excess funding to other competitive ETCs in the 
state. Providing the excess support to other competitive ETCs in a 
state would not necessarily result in future deployment of expanded 
voice service, much less broadband service. It could simply subsidize 
duplicative voice service. On the other hand, reducing the pool of 
support in a state could enable excess funds from the legacy high-cost 
program to be used more effectively to advance

[[Page 4828]]

universal service broadband initiatives, as recommended by the National 
Broadband Plan. We conclude, on balance, that the public interest would 
be better served by taking this interim step to reclaim such support 
rather than redistributing it, particularly as we proceed with broader 
reforms to transition to a universal service system that promotes 
broadband deployment more directly.
    3. Accordingly, if a competitive ETC relinquishes its ETC status in 
a state, the cap amount for that state will be reduced by the amount of 
capped support that the competitive ETC was eligible to receive in its 
final month of eligibility, annualized. When a carrier relinquishes its 
ETC designation, USAC shall calculate the new annual interim cap amount 
for the state in which the carrier had been a competitive ETC. The cap 
shall be reduced by the amount of support that the ETC was eligible to 
receive for the last full month during which the ETC retained its 
designation, annualized. The new cap will be effective beginning the 
first full month following the effective date of the relinquishment. 
When a carrier relinquishes its ETC designation in the middle of a 
funding year, the new cap will be applied only to the remainder of the 
year on a pro rata basis. We recognize that the ultimate amount that a 
carrier is eligible to receive during a particular month may not be 
finalized immediately due to the effect of true-ups on certain high-
cost support mechanisms. We instruct USAC to implement the revised 
interim cap provisionally as of the effective date of the 
relinquishment and to revise the support amounts for the remaining 
competitive ETCs as necessary, subject to true-up.
    4. We further conclude that there is good cause for this rule 
change to be effective upon release. The primary purpose of the 30-day 
effectiveness rule--to allow affected parties sufficient time to take 
action to comply--does not come into play in this case since ETCs do 
not have to act to comply with the new rule. Sprint has notified us 
that it plans to relinquish its ETC designations in a number of states 
effective December 31, 2010. If the change to the interim cap rule is 
not effective before then, the high-cost support that Sprint would have 
been eligible to receive--approximately $5.4 million--will be 
redistributed to other competitive ETCs, frustrating the very purpose 
of this rule change.

III. Procedural Matters

A. Paperwork Reduction Act

    5. This order does not contain new, modified, or proposed 
information collections subject to the Paperwork Reduction Act of 1995. 
In addition, therefore, it does not contain any new, modified, or 
proposed ``information collection burden for small business concerns 
with fewer than 25 employees'' pursuant to the Small Business Paperwork 
Relief Act of 2002.

B. Final Regulatory Flexibility Analysis

    6. As required by the Regulatory Flexibility Act (RFA), an Initial 
Regulatory Flexibility Analysis (IRFA) was incorporated in the Order 
and Notice of Proposed Rulemaking in WC Docket No. 05-337. The 
Commission sought comment on the possible significant economic impact 
on small entities by the policies and rules proposed in the Order and 
Notice of Proposed Rulemaking (NPRM), including comment on the IRFA. We 
received IRFA-specific comments from MTPCS, LLC d/b/a Cellular One and 
its affiliates (MTPCS), and reply comments from Verizon and Verizon 
Wireless (Verizon). These comments are discussed below. This present 
Final Regulatory Flexibility Analysis (FRFA) conforms to the RFA.

I. Need for, and Objectives of, the Order

    7. In this Order, the Commission amends its rule to reclaim high-
cost universal service support surrendered by a competitive eligible 
telecommunications carrier (ETC) when it relinquishes ETC status in a 
particular state.
    8. We note that the rule would reduce the overall cap on 
competitive ETC support in a state when a competitive ETC relinquishes 
its designation in the state, rather than redistributing the excess 
funding to other competitive ETCs in the state. Providing the excess 
support to other competitive ETCs in a state would not necessarily 
result in future deployment of expanded voice service. It could simply 
subsidize duplicative voice service. On the other hand, reducing the 
pool of support in a state could enable excess funds from the legacy 
high-cost program to be used more effectively to advance universal 
service broadband initiatives. We conclude, on balance, that the public 
interest would be better served by taking this interim step to reclaim 
such support rather than redistributing it, particularly as we proceed 
with broader reforms to transition to a universal service system that 
promotes broadband deployment more directly.

II. Summary of Significant Issues Raised by Public Comments in Response 
to the IRFA

    9. In the IRFA, we stated that, under certain circumstances, our 
proposed action, if adopted, may have a significant economic impact on 
other competitive ETCs that are small entities. For example, as 
described in footnote 31 of the NPRM, the reduction in size of a state 
interim cap amount could negatively affect a competitive ETC that is a 
small entity if another competitive ETC is later designated and 
receives a share of the smaller interim cap amount. While the 
designation of another competitive ETC would have an impact on the 
support received by the small entity even without the adoption of the 
proposed rule, the proposed rule could magnify that impact. We sought 
comment on our proposal, in part to consider its necessity and any 
alternatives. In its comments, MTPCS contends that, in accordance to 
the Small Business Act, the Commission should not harm the interests of 
small business concerns and the customers who seek their services. 
MTPCS contends the reduction in competitive ETC support under the cap 
has limited the effectiveness of companies in their efforts to meet the 
goals of the universal service provisions, and the proposed changes 
would exacerbate this situation. MTPCS further contends that, in 
violation of the Small Business Act, the Commission failed to consider 
significant alternatives to the proposals which might minimize the 
significant economic impact of the rule on small entities. Verizon 
disagrees. As set forth more fully below in Section V, we believe that 
our actions in the Order are consistent with the RFA.

III. Description and Estimate of the Number of Small Entities to Which 
the Rules Will Apply

    10. 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 and policies, 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 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 
SBA.

[[Page 4829]]

    11. Small Businesses. Nationwide, there are a total of 
approximately 29.6 million small businesses, according to the SBA.
    12. Small Organizations. Nationwide, as of 2002, there are 
approximately 1.6 million small organizations. A ``small organization'' 
is generally ``any not-for-profit enterprise which is independently 
owned and operated and is not dominant in its field.''
    13. Small Governmental Jurisdictions. The term ``small governmental 
jurisdiction'' is defined generally as ``governments of cities, towns, 
townships, villages, school districts, or special districts, with a 
population of less than fifty thousand.'' 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.
    14. We have included small incumbent local exchange carriers 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 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 local exchange carriers in this 
RFA analysis, although we emphasize that this RFA action has no effect 
on Commission analyses and determinations in other, non-RFA contexts.
    15. Competitive Local Exchange Carriers (``CLECs''), 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, 1005 carriers have reported that they are 
engaged in the provision of either competitive access provider services 
or competitive local exchange carrier services. Of these 1005 carriers, 
an estimated 918 have 1,500 or fewer employees and 87 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, 89 carriers have reported that 
they are ``Other Local Service Providers.'' Of the 89, all have 1,500 
or fewer employees. Consequently, the Commission estimates that most 
providers of competitive local exchange service, competitive access 
providers, ``Shared-Tenant Service Providers,'' and ``Other Local 
Service Providers'' are small entities that may be affected by our 
action.
    16. Wireless Telecommunications Carriers (except Satellite). Since 
2007, the Census Bureau has placed wireless firms within this new, 
broad, economic census category. Prior to that time, such firms were 
within the now-superseded categories of ``Paging'' and ``Cellular and 
Other Wireless Telecommunications.'' Under the present and prior 
categories, the SBA has deemed a wireless business to be small if it 
has 1,500 or fewer employees. Because Census Bureau data are not yet 
available for the new category, we will estimate small business 
prevalence using the prior categories and associated data. For the 
category of Paging, data for 2002 show that there were 807 firms 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. For the category of Cellular and Other Wireless 
Telecommunications, data for 2002 show that there were 1,397 firms 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, we estimate that the majority of wireless 
firms are small.
    17. 2.3 GHz Wireless Communications Services. This service can be 
used for fixed, mobile, radiolocation, and digital audio broadcasting 
satellite uses. The Commission defined ``small business'' for the 
wireless communications services (``WCS'') auction as an entity with 
average gross revenues of $40 million for each of the three preceding 
years, and a ``very small business'' as an entity with average gross 
revenues of $15 million for each of the three preceding years. The SBA 
has approved these definitions. The Commission auctioned geographic 
area licenses in the WCS service. In the auction, which was conducted 
in 1997, there were seven bidders that won 31 licenses that qualified 
as very small business entities, and one bidder that won one license 
that qualified as a small business entity.
    18. 1670-1675 MHz Services. An auction for one license in the 1670-
1675 MHz band was conducted in 2003. One license was awarded. The 
winning bidder was not a small entity.
    19. Wireless Telephony. Wireless telephony includes cellular, 
personal communications services, and specialized mobile radio 
telephony carriers. As noted, the SBA has developed a small business 
size standard for Wireless Telecommunications Carriers (except 
Satellite). Under the SBA small business size standard, a business is 
small if it has 1,500 or fewer employees. According to Trends in 
Telephone Service data, 434 carriers reported that they were engaged in 
wireless telephony. Of these, an estimated 222 have 1,500 or fewer 
employees and 212 have more than 1,500 employees. We have estimated 
that 222 of these are small under the SBA small business size standard.
    20. Broadband Personal Communications Service. The broadband 
personal communications services (``PCS'') spectrum is divided into six 
frequency blocks designated A through F, and the Commission has held 
auctions for each block. The Commission has created a small business 
size standard for Blocks C and F as an entity that has average gross 
revenues of less than $40 million in the three previous calendar years. 
For Block F, an additional small business size standard for ``very 
small business'' was added and is defined as an entity that, together 
with its affiliates, has average gross revenues of not more than $15 
million for the preceding three calendar years. These small business 
size standards, in the context of broadband PCS auctions, have been 
approved by the SBA. No small businesses within the SBA-approved small 
business size standards bid successfully for licenses in Blocks A and 
B. There were 90 winning bidders that qualified as small entities in 
the Block C auctions. A total of 93 ``small'' and ``very small'' 
business bidders won approximately 40 percent of the 1,479 licenses for 
Blocks D, E, and F. In 1999, the Commission reauctioned 155 C, D, E, 
and F Block licenses; there were 113 small business winning bidders.
    21. In 2001, the Commission completed the auction of 422 C and F 
Broadband PCS licenses in Auction 35. Of the 35 winning bidders in this 
auction, 29 qualified as ``small'' or ``very small'' businesses. 
Subsequent events, concerning Auction 35, including judicial and agency 
determinations, resulted in a total of 163 C and F Block licenses being 
available for grant. In

[[Page 4830]]

2005, the Commission completed an auction of 188 C block licenses and 
21 F block licenses in Auction 58. There were 24 winning bidders for 
217 licenses. Of the 24 winning bidders, 16 claimed small business 
status and won 156 licenses. In 2007, the Commission completed an 
auction of 33 licenses in the A, C, and F Blocks in Auction 71. Of the 
14 winning bidders, six were designated entities. In 2008, the 
Commission completed an auction of 20 Broadband PCS licenses in the C, 
D, E and F block licenses in Auction 78.
    22. Advanced Wireless Services. In 2008, the Commission conducted 
the auction of Advanced Wireless Services (``AWS'') licenses. This 
auction, which was designated as Auction 78, offered 35 licenses in the 
AWS 1710-1755 MHz and 2110-2155 MHz bands (``AWS-1''). The AWS-1 
licenses were licenses for which there were no winning bids in Auction 
66. That same year, the Commission completed Auction 78. A bidder with 
attributed average annual gross revenues that exceeded $15 million and 
did not exceed $40 million for the preceding three years (``small 
business'') received a 15 percent discount on its winning bid. A bidder 
with attributed average annual gross revenues that did not exceed $15 
million for the preceding three years (``very small business'') 
received a 25 percent discount on its winning bid. A bidder that had 
combined total assets of less than $500 million and combined gross 
revenues of less than $125 million in each of the last two years 
qualified for entrepreneur status. Four winning bidders that identified 
themselves as very small businesses won 17 licenses. Three of the 
winning bidders that identified themselves as a small business won five 
licenses. Additionally, one other winning bidder that qualified for 
entrepreneur status won 2 licenses.
    23. 700 MHz Band Licenses. The Commission previously adopted 
criteria for defining three groups of small businesses for purposes of 
determining their eligibility for special provisions such as bidding 
credits. The Commission defined a ``small business'' as an entity that, 
together with its affiliates and controlling principals, has average 
gross revenues not exceeding $40 million for the preceding three years. 
A ``very small business'' is defined as an entity that, together with 
its affiliates and controlling principals, has average gross revenues 
that are not more than $15 million for the preceding three years. 
Additionally, the lower 700 MHz Service had a third category of small 
business status for Metropolitan/Rural Service Area (``MSA/RSA'') 
licenses. The third category is ``entrepreneur,'' which is defined as 
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. The SBA approved these small 
size standards. The Commission conducted an auction in 2002 of 740 
licenses (one license in each of the 734 MSAs/RSAs and one license in 
each of the six Economic Area Groupings (EAGs)). Of the 740 licenses 
available for auction, 484 licenses were sold to 102 winning bidders. 
Seventy-two of the winning bidders claimed small business, very small 
business or entrepreneur status and won a total of 329 licenses. The 
Commission conducted a second auction in 2003 that included 256 
licenses: 5 EAG licenses and 476 Cellular Market Area licenses. 
Seventeen winning bidders claimed small or very small business status 
and won 60 licenses, and nine winning bidders claimed entrepreneur 
status and won 154 licenses. In 2005, the Commission completed an 
auction of 5 licenses in the lower 700 MHz band (Auction 60). There 
were three winning bidders for five licenses. All three winning bidders 
claimed small business status.
    24. In 2007, the Commission adopted the 700 MHz Second Report and 
Order, 72 FR 48814, August 24, 2007. The Order revised the band plan 
for the commercial (including Guard Band) and public safety spectrum, 
adopted services rules, including stringent build-out requirements, an 
open platform requirement on the C Block, and a requirement on the D 
Block licensee to construct and operate a nationwide, interoperable 
wireless broadband network for public safety users. In 2008, the 
Commission commenced Auction 73 which offered all available, commercial 
700 MHz Band licenses (1,099 licenses) for bidding using the 
Commission's standard simultaneous multiple-round (``SMR'') auction 
format for the A, B, D, and E block licenses and an SMR auction design 
with hierarchical package bidding (``HPB'') for the C Block licenses. 
Later in 2008, the Commission concluded Auction 73. A bidder with 
attributed average annual gross revenues that did not exceed $15 
million for the preceding three years (very small business) qualified 
for a 25 percent discount on its winning bids. A bidder with attributed 
average annual gross revenues that exceeded $15 million, but did not 
exceed $40 million for the preceding three years, qualified for a 15 
percent discount on its winning bids. There were 36 winning bidders 
(who won 330 of the 1,090 licenses won) that identified themselves as 
very small businesses. There were 20 winning bidders that identified 
themselves as a small business that won 49 of the 1,090 licenses won. 
The provisionally winning bids for the A, B, C, and E Block licenses 
exceeded the aggregate reserve prices for those blocks. However, the 
provisionally winning bid for the D Block license did not meet the 
applicable reserve price and thus did not become a winning bid.
    25. 700 MHz Guard Band Licenses. In the 700 MHz Guard Band Order, 
the Commission adopted size standards 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 in this service is an entity that, together 
with its affiliates and controlling principals, has average gross 
revenues not exceeding $40 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 $15 million for the preceding three years. SBA 
approval of these definitions is not required. In 2000, the Commission 
conducted an auction of 52 Major Economic Area (``MEA'') licenses. Of 
the 104 licenses auctioned, 96 licenses were sold to nine bidders. Five 
of these bidders were small businesses that won a total of 26 licenses. 
A second auction of 700 MHz Guard Band licenses commenced and closed in 
2001. All eight of the licenses auctioned were sold to three bidders. 
One of these bidders was a small business that won a total of two 
licenses.
    26. Specialized Mobile Radio. The Commission awards ``small 
entity'' bidding credits in auctions for Specialized Mobile Radio (SMR) 
geographic area licenses in the 800 MHz and 900 MHz bands to firms that 
had revenues of no more than $15 million in each of the three previous 
calendar years. The Commission awards ``very small entity'' bidding 
credits to firms that had revenues of no more than $3 million in each 
of the three previous calendar years. The SBA has approved these small 
business size standards for the 900 MHz Service. The Commission has 
held auctions for geographic area licenses in the 800 MHz and 900 MHz 
bands. The 900 MHz SMR auction was completed in 1996. Sixty bidders 
claiming that they qualified as small businesses under the $15 million 
size standard won 263 geographic area licenses in the 900 MHz SMR band. 
The 800 MHz SMR auction for the upper 200 channels was conducted in 
1997. Ten bidders claiming that they qualified as

[[Page 4831]]

small businesses under the $15 million size standard won 38 geographic 
area licenses for the upper 200 channels in the 800 MHz SMR band. A 
second auction for the 800 MHz band was conducted in 2002 and included 
23 BEA licenses. One bidder claiming small business status won five 
licenses.
    27. The auction of the 1,053 800 MHz SMR geographic area licenses 
for the General Category channels was conducted in 2000. Eleven bidders 
won 108 geographic area licenses for the General Category channels in 
the 800 MHz SMR band qualified as small businesses under the $15 
million size standard. In an auction completed in 2000, a total of 
2,800 Economic Area licenses in the lower 80 channels of the 800 MHz 
SMR service were awarded. Of the 22 winning bidders, 19 claimed small 
business status and won 129 licenses. Thus, combining all three 
auctions, 40 winning bidders for geographic licenses in the 800 MHz SMR 
band claimed status as small business.
    28. In addition, there are numerous incumbent site-by-site SMR 
licensees and licensees with extended implementation authorizations in 
the 800 and 900 MHz bands. We do not know how many firms provide 800 
MHz or 900 MHz geographic area SMR pursuant to extended implementation 
authorizations, nor how many of these providers have annual revenues of 
no more than $15 million. One firm has over $15 million in revenues. In 
addition, we do not know how many of these firms have 1,500 or fewer 
employees. We assume, for purposes of this analysis, that all of the 
remaining existing extended implementation authorizations are held by 
small entities, as that small business size standard is approved by the 
SBA.
    29. Cellular Radiotelephone Service. Auction 77 was held to resolve 
one group of mutually exclusive applications for Cellular 
Radiotelephone Service licenses for unserved areas in New Mexico. 
Bidding credits for designated entities were not available in Auction 
77. In 2008, the Commission completed the closed auction of one 
unserved service area in the Cellular Radiotelephone Service, 
designated as Auction 77. Auction 77 concluded with one provisionally 
winning bid for the unserved area totaling $25,002.
    30. Private Land Mobile Radio (``PLMR''). PLMR systems serve an 
essential role in a range of industrial, business, land transportation, 
and public safety activities. These radios are used by companies of all 
sizes operating in all U.S. business categories, and are often used in 
support of the licensee's primary (non-telecommunications) business 
operations. For the purpose of determining whether a licensee of a PLMR 
system is a small business as defined by the SBA, we use the broad 
census category, Wireless Telecommunications Carriers (except 
Satellite). This definition provides that a small entity is any such 
entity employing no more than 1,500 persons. The Commission does not 
require PLMR licensees to disclose information about number of 
employees, so the Commission does not have information that could be 
used to determine how many PLMR licensees constitute small entities 
under this definition. We note that PLMR licensees generally use the 
licensed facilities in support of other business activities, and 
therefore, it would also be helpful to assess PLMR licensees under the 
standards applied to the particular industry subsector to which the 
licensee belongs.
    31. As of March 2010, there were 424,162 PLMR licensees operating 
921,909 transmitters in the PLMR bands below 512 MHz. We note that any 
entity engaged in a commercial activity is eligible to hold a PLMR 
license, and that any revised rules in this context could therefore 
potentially impact small entities covering a great variety of 
industries.
    32. Rural Radiotelephone Service. The Commission has not adopted a 
size standard for small businesses specific to the Rural Radiotelephone 
Service. A significant subset of the Rural Radiotelephone Service is 
the Basic Exchange Telephone Radio System (``BETRS''). In the present 
context, we will use the SBA's small business size standard applicable 
to Wireless Telecommunications Carriers (except Satellite), i.e., an 
entity employing no more than 1,500 persons. There are approximately 
1,000 licensees in the Rural Radiotelephone Service, and the Commission 
estimates that there are 1,000 or fewer small entity licensees in the 
Rural Radiotelephone Service that may be affected by the rules and 
policies proposed herein.
    33. 1.4 GHz Band Licensees. The Commission conducted an auction of 
64 1.4 GHz band licenses in 2007. In that auction, the Commission 
defined ``small business'' as an entity that, together with its 
affiliates and controlling interests, had average gross revenues that 
exceed $15 million but do not exceed $40 million for the preceding 
three years, and a ``very small business'' as an entity that, together 
with its affiliates and controlling interests, has had average annual 
gross revenues not exceeding $15 million for the preceding three years. 
Neither of the two winning bidders sought such designated entity 
status.

IV. Description of Projected Reporting, Recordkeeping and Other 
Compliance Requirements

    34. The Order does not propose any reporting, recordkeeping, or 
other compliance requirements.

V. Steps Taken To Minimize Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered

    35. The RFA requires an agency to describe any significant 
alternatives that it has considered in reaching its approach, which may 
include the following four alternatives, among others: (1) The 
establishment of differing compliance or reporting requirements or 
timetables that take into account the resources available to small 
entities; (2) the clarification, consolidation, or simplification of 
compliance 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 any part thereof, for small 
entities.
    36. In this Order, we amend our rule to reclaim high-cost universal 
service support surrendered by a competitive ETC when it relinquishes 
ETC status in a particular state. We note that the rule would reduce 
the overall cap on competitive ETC support in a state when a 
competitive ETC relinquishes its designation in the state, rather than 
redistributing the excess funding to other competitive ETCs in the 
state. Providing the excess support to other competitive ETCs in a 
state would not necessarily result in future deployment of expanded 
voice service but it may subsidize duplicative voice service. Reducing 
the pool of support in a state would enable excess funds from the 
legacy high-cost program to be used more effectively to advance 
universal service broadband initiatives. We believe, on balance, that 
the public interest would be better served by taking this interim step 
to reclaim such support rather than redistributing it, particularly as 
we proceed with broader reforms to transition to a universal service 
system that more directly promotes broadband deployment.
    37. MTPCS contends that the Commission is adopting the proposed 
rule without considering any significant alternative to minimize its 
effect on small entities. In addition, MTPCS contends that reining in 
high-cost disbursements need not be accomplished at the expense of 
competitive ETCs. Verizon disagrees. Verizon argues that adjusting a 
state's

[[Page 4832]]

existing competitive ETC cap when a carrier relinquishes its ETC status 
does not in any way impact the amount of existing support paid to other 
competitive ETCs, small businesses or otherwise, in the state. Verizon 
explains that, in such circumstances, the relinquished support is 
simply returned to the USF. Verizon indicates that the Commission is 
merely required by the Regulatory Flexibility Act to describe any 
significant alternatives that it considered. Verizon reasons that, as a 
practical matter, there is no alternative that the Commission need 
consider. The proposal does not reduce existing funding to any 
competitive ETC. Verizon argues that, even if it did, the universal 
service program was never intended to fund competition anyway. We 
conclude that, because the purpose of the adopted rule is to reduce the 
amount of high-cost universal service support received by competitive 
ETCs, no significant alternative could be chosen that would minimize 
the effect of the adopted rule.

VI. Report to Congress

    38. The Commission will send a copy of the Order, including this 
FRFA, in a report to be sent to Congress and the Government 
Accountability Office, pursuant to the Congressional Review Act. In 
addition, the Commission will send a copy of the Order, including this 
FRFA, to the Chief Counsel for Advocacy of the SBA. A copy of the Order 
and FRFA (or summaries thereof) will also be published in the Federal 
Register.

Federal Communications Commission.

Marlene H. Dortch,
Secretary.
[FR Doc. 2011-1166 Filed 1-26-11; 8:45 am]
BILLING CODE 6712-01-P