[Federal Register Volume 77, Number 128 (Tuesday, July 3, 2012)]
[Rules and Regulations]
[Pages 39435-39439]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-16279]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[WC Docket Nos. 10-90, 07-135, 05-337, 03-109; GN Docket No. 09-51; CC 
Docket Nos. 01-92, 96-45; WT Docket No. 10-208; FCC 12-70]


Connect America Fund, A National Broadband Plan for Our Future, 
Universal Service Reform--Mobility Fund

AGENCY: Federal Communications Commission.

ACTION: Final rule: limited forbearance.

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SUMMARY: In this document, the Federal Communications Commission 
(Commission) adopts a limited forbearance from requiring that the 
service area of an eligible telecommunications carrier (ETC) conform to 
the service area of any rural telephone company serving the same area 
for the Mobility Fund Phase I auction 901. This forbearance applies 
only with respect to conditional ETC designations for participating in 
Auction 901.

DATES: Effective July 3, 2012.

FOR FURTHER INFORMATION CONTACT: Wireless Telecommunications Bureau, 
Auctions and Spectrum Access Division: call Sayuri Rajapakse, Scott 
Mackoul or Stephen Johnson at (202) 418-0660.

SUPPLEMENTARY INFORMATION: This is a summary of the CAF/ICC Second 
Report and Order released on June 27, 2012. The CAF/ICC Second Report 
and Order and related Commission documents may be purchased from the 
Commission's duplicating contractor, Best Copy and Printing, Inc. 
(BCPI), 445 12th Street SW., Room CY-B402, Washington, DC 20554, 
telephone 202-488-5300, fax 202-488-5563, or you may contact BCPI at 
its Web site: http://www.BCPIWEB.com. When ordering documents from 
BCPI, please provide the appropriate FCC document number, for example, 
FCC 12-70. The CAF/ICC Second Report and Order and related documents 
also are available on the Internet at the Commission's Web site: http://wireless.fcc.gov or by using the search function for WT Docket No. 10-
208 on the Commission's Electronic Comment Filing System (ECFS) Web 
page at http://www.fcc.gov/cgb/ecfs/.

I. Introduction

    1. The Commission adopts a limited forbearance pursuant to section 
10 of the Communications Act of 1934, as amended (the Act), 47 U.S.C. 
160, from requiring that the service area of an eligible 
telecommunications carrier (ETC) conform to the service area of any 
rural telephone company serving the same area, pursuant to 47 U.S.C. 
214(e)(5) and 47 CFR 54.207(b). In particular, this forbearance applies 
only with respect to conditional ETC designations for participating in 
the Mobility Fund Phase I auction, ETC designations conditioned on 
receipt of Mobility Fund Phase I support. Such conditional ETC 
designations, and thus this forbearance, are also limited to the 
specific areas in which such an ETC becomes authorized to receive 
Mobility Fund Phase I support.
    2. The Commission concludes that forbearance in these limited 
circumstances furthers the public interest, advancing the Act's and the 
Commission's goals of promoting access to mobile service over current 
and next generation wireless networks in areas currently without such 
service by reducing barriers to participation in Phase I of the 
Mobility Fund. The Commission finds that application of the service 
area conformance requirements set forth in 47 U.S.C. 214(e)(5) and 47 
CFR 54.207(b) in these limited circumstances is not necessary to ensure 
that rates remain just and reasonable or to protect consumers. The 
Commission emphasizes that the forbearance it is granting is limited to 
petitioners seeking conditional designation as ETCs in areas eligible 
for Mobility Fund Phase I support in order to participate in the 
Mobility Fund Phase I auction and receive support. Parties petitioning 
for designation as an ETC for this purpose must satisfy all of the 
other statutory requirements applicable to ETCs under the Act. The 
forbearance order does not apply with respect to petitions for 
designation as an ETC for other purposes. In light of the requirement 
that, with one exception for Tribal entities, an applicant for the 
Mobility Fund Phase I auction, Auction 901, must be designated as an 
ETC in every geographic area on which it wishes to bid by the time it 
applies to participate and in light of the short time remaining before 
the July 11, 2012 deadline for filing Auction 901 applications, the 
Commission finds that case-by-case forbearance is not feasible and 
grant blanket forbearance for this limited purpose.

II. Background

    3. In the recent USF/ICC Transformation Order, 76 FR 73830, 
November 29, 2011 and 76 FR 81562, December 28, 2011, the Commission 
comprehensively reformed and modernized the universal service system to 
ensure that robust, affordable voice and broadband service, both fixed

[[Page 39436]]

and mobile, are available to Americans throughout the nation. As part 
of this comprehensive reform effort, the Commission adopted the goal of 
ensuring universal availability of modern networks capable of providing 
advanced mobile voice and broadband service. To further achievement of 
that goal, the Commission created the Mobility Fund to ensure 
availability of mobile broadband networks in areas where a private-
sector business case for those networks is lacking. In particular, the 
Commission provided that in Phase I of the Mobility Fund, it would 
award by reverse auction up to $300 million in one-time support to 
immediately accelerate deployment of current and next generation 
networks providing mobile voice and broadband services in areas not 
presently covered by such networks.
    4. Auction 901 is scheduled to take place on September 27, 2012, 
and those wishing to participate must file an auction application by 
July 11, 2012. The Wireless Telecommunications and the Wireline 
Competition Bureaus (Bureaus) have identified, pursuant to the 
Commission's criteria, particular census blocks that are eligible for 
Mobility Fund Phase I support in Auction 901. In Auction 901, 
applicants will bid for the amount of support they need to meet the 
Mobility Fund Phase I service and other public interest obligations in 
the eligible census blocks covered by the geographic area on which they 
bid. Applicants, except for Tribally-owned and controlled entities, 
must be designated as ETCs in the areas on which they wish to bid prior 
to filing their auction applications. The designation may be 
conditional subject to the receipt of Mobility Fund Phase I support. 
The Commission currently has pending three petitions for conditional 
designation as an ETC for purposes of participating in Auction 901.
    5. Congress directed the Commission to establish policies to help 
ensure that quality services are available at just, reasonable, and 
affordable rates and access to advanced telecommunications and 
information services are provided in all regions of the Nation. The 
Commission's Mobility Fund Phase I will help achieve this goal by 
providing support for the expansion of current and next generation 
wireless networks in areas currently unserved by such networks. 47 
U.S.C. 254(e) provides that only an entity designated as an eligible 
telecommunications carrier shall be eligible for universal service 
high-cost and low-income support. To become an ETC, a carrier must 
offer and advertise the services supported by the federal universal 
service support mechanisms throughout its designated service area.
    6. The Act and the Commission's rules define the term service area 
and how it is established for each ETC. An ETC's service area is a 
geographic area within which an ETC has universal service obligations 
and may receive universal service support. A carrier seeking to become 
an ETC typically requests designation in a specific service area, but 
it is the commission designating that carrier that establishes the 
ETC's service area. When a competitive carrier seeks to serve an area 
already served by a rural telephone company, 47 U.S.C. 214(e)(5) 
requires that the competitive ETC's service area must conform to the 
rural telephone company's service area. Accordingly, if a commission 
wishes to designate a competitive ETC for an area that differs from a 
rural telephone company's existing service area, that rural service 
area must first be redefined under the process set forth under the Act.
    7. The Act defines the service area of each rural telephone 
company's to be that company's study area unless and until the 
Commission and the States, after taking into account recommendations of 
a Federal-State Joint Board establish a different definition of service 
area for such company. The Commission has interpreted this language to 
mean that neither the Commission nor the states may act alone to alter 
the definition of service areas served by rural carriers. In reviewing 
a potential redefinition of a rural service area in evaluating a 
request for ETC designation, the Commission and the states have 
traditionally taken into account the three factors recommended by the 
Federal-State Joint Board on Universal Service: Cream skimming, the 
Act's special treatment of rural telephone companies, and the 
administrative burdens of redefinition. The Commission's rules set 
forth the procedures for considering redefinition petitions and allow 
either the state commission or the Commission to propose to redefine a 
rural telephone company's service area. A proposed redefinition, 
however, does not take effect until the Commission and the appropriate 
state commission agrees upon a new definition.
    8. In the Mobility Fund NPRM, 75 FR 67060, November 1, 2010, the 
Commission sought comment generally on the ETC designation requirements 
of 47 U.S.C. 214(e) and on how best to interpret the provisions of that 
section so as to achieve the objectives of the Mobility Fund. A 
commenter suggested that the Commission should forbear altogether from 
the requirements of 47 U.S.C. 214(e) for purposes of participating in 
the Mobility Fund. The same commenter also noted that the service area 
conformance requirement of 47 U.S.C. 214(e)(5) could create uncertainty 
for potential Mobility Fund applicants and discourage participation, 
and suggested that the Commission take steps to prevent this from 
happening. Another commenter suggested that the Commission streamline 
the process of ETC designation to facilitate participation in the 
Mobility Fund, making the ETC designation process part of the 
application for Mobility Fund support, such that designation would 
occur upon award of support by the Commission. That commenter filed a 
petition for reconsideration of the USF/ICC Transformation Order that 
proposed, for those seeking Mobility Fund Phase I support, blanket 
forbearance from the requirement that a competitive ETC's service area 
conform to any underlying rural telephone carrier's study area.

III. Discussion

    9. The Act allows the Commission to forbear from applying any 
requirement of the Act or of its regulations to a telecommunications 
carrier if the Commission determines that: (1) Enforcement of the 
requirement is not necessary to ensure that the charges, practices, 
classifications, or regulations by, for, or in connection with that 
telecommunications carrier are just and reasonable and are not unjustly 
or unreasonably discriminatory; (2) enforcement of that requirement is 
not necessary for the protection of consumers; and (3) forbearance from 
applying that requirement is consistent with the public interest.
    10. The Commission considers whether it should forbear from 
applying 47 U.S.C. 214(e)(5) service area conformance requirement to 
parties petitioning for ETC conditional designation in areas eligible 
for Mobility Fund Phase I support in order to participate in the 
Mobility Fund Phase I auction and receive such support. The Commission 
concludes that forbearance is appropriate and in the public interest 
under these limited circumstances. Accordingly, for the limited purpose 
of conditional designation as an ETC in areas eligible for Mobility 
Fund Phase I support in order to participate in the Mobility Fund Phase 
I auction, the Commission forbears from applying 47 U.S.C. 214(e)(5) 
and 47 CFR 54.207(b) insofar as those sections require that the service 
area of such an ETC conform to the service area of any rural telephone 
company. The Commission notes that forbearing from the conformance

[[Page 39437]]

requirements eliminates the need for redefinition of any rural 
telephone company service areas in the context of Mobility Fund Phase 
I. The Commission emphasizes that this decision does not change the 
requirements that apply if a party petitions to be an ETC for other 
purposes in part of a service area served by a rural telephone company.
    11. The Commission concludes that blanket forbearance from the 
service area conformance requirement is warranted in these limited 
circumstances. The Mobility Fund Phase I rules require that most 
applicants must be designated as ETCs in every geographic area on which 
they wish to bid for support, prior to filing an Auction 901 
application. Those rules also provide that a conditional designation is 
sufficient to meet the requirement, i.e., a designation effective only 
for the areas, if any, in which the ETC becomes authorized to receive 
Mobility Fund Phase I support. The Commission finds that case-by-case 
forbearance is not feasible in the short time available before the 
filing deadline.
    12. The Commission takes this action after considering the record 
it received in response to the Mobility Fund NPRM, where the Commission 
sought comment on how to assure that the provisions of 47 U.S.C. 214(e) 
would align with the objectives of this new mechanism for providing 
high-cost universal service support. The record identified the 
possibility that the service area provisions of 47 U.S.C. 214(e), 
including the service area conformance requirement of that section 
could discourage participation in the Mobility Fund Phase I auction. By 
granting blanket forbearance of the conformance requirement for the 
limited purpose of petitions for conditional designation to participate 
in the auction, the Commission seeks to prevent that requirement from 
creating an obstacle to participation by any carrier considering it. 
Removing such disincentives to participation may increase competition 
in the auction resulting in lower bids for support and enabling greater 
coverage within the Mobility Fund Phase I budget. The Commission notes 
that by granting forbearance in these limited circumstances, it is 
allowing new ETCs, and those existing ETCs that wish to conditionally 
expand their service areas for Auction 901, to match their specific new 
and additional service areas to the geographic area for which they will 
incur obligations under Mobility Fund Phase I. The Commission does not 
address relinquishment or redefinition with respect to the service 
areas of existing ETCs with respect to new targeted support mechanisms 
other than Mobility Fund Phase I. To the extent that an existing ETC 
seeks Mobility Fund Phase I support for areas within its existing 
service area, the new obligations will apply only to the portion of 
their existing service area for which they win such support and will 
not have any impact on pre-existing obligations and support mechanisms 
with respect to the existing service area.
    13. Just and Reasonable. 47 U.S.C. 10(a)(1) requires that the 
Commission consider whether enforcement of the provisions from which 
forbearance is sought is necessary to ensure that the charges, 
practices, classifications, or regulations are just and reasonable and 
not unjustly or unreasonably discriminatory. The Commission concludes 
that compliance with the service area conformance requirement of 47 
U.S.C. 214(e)(5) and 47 CFR 54.207(b) is not necessary to ensure that 
the charges, practices, and classifications of carriers conditionally 
designated as ETCs in areas eligible for Mobility Fund Phase I support 
for purposes of participation in Mobility Fund Phase I auction and 
receiving such support are just and reasonable and not unjustly or 
unreasonably discriminatory. The Commission finds that the three 
factors traditionally taken into account by the Commission and the 
states when reviewing a potential redefinition of a rural service area 
pursuant to 47 U.S.C. 214(e)(5) no longer apply in the context of 
conditionally designating ETCs in areas eligible for Mobility Fund 
Phase I support for purposes of participation in the Mobility Fund 
Phase I auction. Forbearance from the service area conformance 
requirement would not prevent the Commission from enforcing 47 U.S.C. 
201 or 202, which require all carriers to charge just, reasonable, and 
non-discriminatory rates. Moreover, all ETCs--whether rural ETCs or 
carriers designated as ETCs in areas eligible for Mobility Fund Phase I 
support for purposes of participation in Mobility Fund Phase I auction 
and receiving such support--will continue to be subject to the 
requirements of the Act and of the Commission's rules that consumers 
have access to reasonably comparable services at reasonably comparable 
rates. In fact, the expansion of current and next generation wireless 
networks supported by Mobility Fund Phase I will expand the choice of 
telecommunications services for consumers in the relevant area. The 
resulting competition is likely to help ensure just, reasonable, and 
nondiscriminatory offerings of services. For these reasons, the 
Commission finds that the first prong of 47 U.S.C. 10(a) is met.
    14. Consumer Protection. 47 U.S.C. 10(a)(2) requires that the 
Commission consider whether applying the service area conformance 
requirement to a mobile wireless voice service provider that seeks a 
conditional ETC designation in areas eligible for Mobility Fund Phase I 
support is necessary for the protection of consumers. Forbearance from 
the conformance requirement in these limited circumstances will not 
harm consumers currently served by the rural telephone companies in the 
relevant service areas. To the contrary, these consumers will benefit 
from the use of Mobility Fund Phase I support to expand current and 
next generation mobile services. Indeed, as the Commission has noted, 
the national goal of ubiquitous mobile broadband depends in part on 
offering targeted and efficient support for mobile services through the 
Mobility Fund. Finally, every ETC, including any party receiving 
Mobility Fund Phase I support, must certify that it will satisfy 
applicable consumer protection and service quality standards in its 
service area. For these reasons, the Commission finds that the second 
prong of 47 U.S.C. 10(a) is met.
    15. Public Interest. 47 U.S.C. 10(a)(3) requires that the 
Commission consider whether applying the service area conformance 
requirement to a facilities-based mobile wireless carrier that seeks 
conditional ETC designation in areas eligible for Mobility Fund Phase I 
support in order to participate in Mobility Fund Phase I and receive 
such support is in the public interest. Absent forbearance, the 
Commission finds that parties seeking support may be required to take 
on unsupported ETC obligations in portions of rural carriers' study 
areas--areas that may not be eligible for support or for which they may 
not win support--and that this is likely to discourage participation in 
Mobility Fund Phase I. Geographic eligibility for Mobility Fund Phase I 
support is based on whether specific census blocks are presently served 
by current or next generation wireless networks, a definition that is 
unrelated to the boundaries of rural carrier service areas. Moreover, 
the Commission's current rules to redefine service areas require 
concurring decisions by both the Commission and the related state 
commission, a process not likely to be completed before parties seeking 
Mobility Fund Phase I support will have to apply to participate in 
Auction 901. Hence, the Commission finds that forbearing from the 
conformance requirement will encourage

[[Page 39438]]

participation by assuring that obligations of new ETCs will not extend 
to portions of rural service areas for which a new ETC may not receive 
support. By providing this assurance, the Commission reduces the cost 
of auction participation, encourage lower bids, and improve auction 
outcomes.
    16. Enabling new ETC service areas to be defined in a more targeted 
manner for Mobility Fund Phase I is consistent with the Commission's 
approach of targeting support to areas with a specific need for the 
support, helps preserve those efficiencies, and thus serves the public 
interest. As set out in the USF/ICC Transformation Order, Mobility Fund 
Phase I support will be determined by a competitive bidding process in 
which ETCs will bid for the support they need to serve a specific area, 
rather than any larger area such as an underlying rural telephone 
company study area. This targeted and efficient provision of support is 
critical to furthering the public interest goal of ubiquitous mobile 
service in a fiscally responsible manner. To require Mobility Fund 
Phase I support recipients to serve a wider area runs counter to the 
Commission's recent and ongoing efforts to serve the public interest by 
focusing USF resources on defined areas of need.
    17. The public interest benefits go beyond efficiently expanding 
current and next generation wireless networks to expanding access to 
such services by consumers. An ETC with a conditional designation will 
have the obligations of any other ETC receiving Mobility Fund Phase I 
support for the areas in which the condition is satisfied, including an 
obligation to make available Lifeline service to eligible for low 
income consumers. Thus, an ETC expanding advanced wireless networks to 
new areas as part of the Mobility Fund Phase I also will be making 
their networks available to low-income consumers who may qualify to 
receive reduced charges for these next generation services.
    18. In addition, the Commission finds that in these limited 
circumstances requiring conformance is not essential to protect the 
ability of rural telephone companies to continue to provide service. 
Past concerns that an ETC serving only a relatively low cost portion of 
a rural carrier's service area might cream skim by receiving per line 
support based on the rural carrier's costs of serving the entire area 
do not apply to Mobility Fund Phase I support. Unlike the legacy 
identical support rule, under which a competitive ETC received the same 
per-line support as an incumbent calculated based on the incumbent's 
cost of serving its entire service area, the amount of Mobility Fund 
Phase I support is not linked to the support received by an overlapping 
rural carrier but is determined by the results of competitive bidding 
for support. Consequently, cream skimming concerns that arose under the 
identical support rule are not relevant in considering the conditional 
designation of an ETC for purposes of seeking Mobility Fund Phase I 
support. Moreover, the Commission notes that it decided in the USF/ICC 
Transformation Order that universal service would support both mobile 
and fixed services in a given area. Consequently, the Commission sees 
no inherent conflict between a mobile provider receiving support to 
offer previously unavailable service in a portion of a rural telephone 
company's study area and the rural telephone company continuing to 
provide its pre-existing service.
    19. For similar reasons, the Commission concludes that forbearance 
in these circumstances will not harm competitive market conditions. The 
Commission expects forbearance to enhance competition by introducing 
new service providers and not to eliminate any existing market 
participants or to introduce concerns about cream skimming.
    20. The Commission further notes that forbearance from the 
conformance requirement and redefinition process for these limited 
purposes should not affect rural carriers' abilities to serve the 
entire rural service territories. Moreover, the Act contains safeguards 
to address any such potential concerns. The Act already requires 
designating commissions to affirmatively determine that designating a 
carrier as an ETC within a rural service area is in the public 
interest, and this is not affected by this grant of forbearance.
    21. Finally, forbearance in these limited circumstances preserves 
the role of states in ETC designation. State commissions are still 
required to consider the public interest, convenience and necessity of 
designating an ETC in a rural area already served by a rural telephone 
company. The Commission action does not disturb the roles of state 
commissions and of the Commission in the ETC designation process or in 
the redefinition process in other circumstances when redefinition is 
required.

IV. Procedural Matters

A. Paperwork Reduction Act

    22. The CAF/ICC Second Report and Order does not contain new or 
modified 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).

B. Final Regulatory Flexibility Act Certification

    23. The Regulatory Flexibility Act (RFA) requires that agencies 
prepare a regulatory flexibility analysis for notice-and-comment 
rulemaking proceedings, unless the agency certifies that the rule will 
not have a significant economic impact on a substantial number of small 
entities. The RFA generally defines 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 
Small Business Administration (SBA).
    24. The Commission certifies that forbearance decision in the CAF/
ICC Second Report and Order will not have a significant economic impact 
on a substantial number of small entities. In the CAF/ICC Second Report 
and Order, the Commission eases the regulatory compliance burden on 
ETCs by forbearing from the requirement that the service area of an ETC 
conform to the service area of any rural telephone company serving the 
same area. The CAF/ICC Second Report and Order does not modify any of 
the Commission's reporting requirements. The Commission will send a 
copy of the CAF/ICC Second Report and Order, including the 
certification, to the Chief Counsel for Advocacy of the Small Business 
Administration.

C. Congressional Review Act

    25. The Commission will send a copy of the CAF/ICC Second Report 
and Order to Congress and the Government Accountability Office pursuant 
to the Congressional Review Act.

D. Effective Date

    26. The Commission concludes that good cause exists to make the 
forbearance adopted in the CAF/ICC Second Report and Order effective 
immediately upon publication in the Federal Register pursuant to 47 
U.S.C. 553(d)(3) of the Administrative Procedure Act and 47 CFR 
1.103(a) and

[[Page 39439]]

1.427(b). The grant of forbearance applies only to those seeking 
conditional ETC designation for areas eligible for Mobility Fund Phase 
I support in order to participate in the Mobility Fund Phase I auction, 
and, given the short time remaining before the July 11, 2012, deadline 
for filing an auction application, may promote wider participation and 
generate more competitive bids. In turn, this increases the chances 
that the Mobility Fund Phase I budget will provide greater benefits in 
the form of expanded coverage of mobile voice and broadband service. 
The Commission finds there is good cause to make the changes it 
implements with the CAF/ICC Second Report and Order effective upon 
Federal Register publication, without the usual 30-day period.

V. Ordering Clause

    27. Accordingly, it is ordered that, pursuant to the authority 
contained in 47 U.S.C. 4(i), 4(j), 10, 214, and 254 as well as 47 
U.S.C. 154(i), 154(j), 160, 214, 254, the Commission forbears from 
applying the conformance requirement of 47 U.S.C. 214(e)(5) and 47 CFR 
54.207(b) to petitions for conditional designation as an eligible 
telecommunications carrier in areas eligible for Mobility Fund Phase I 
support in order to participate in the Mobility Fund Phase I auction 
and receive such support to the extent discussed herein.
    28. It is further ordered that, pursuant to 5 U.S.C. 553(d) and 47 
CFR 1.103(a) and 1.427(b) the order shall be effective upon publication 
in the Federal Register.

Federal Communications Commission.
Marlene H. Dortch,
 Secretary.
[FR Doc. 2012-16279 Filed 7-2-12; 8:45 am]
BILLING CODE 6712-01-P