[Federal Register Volume 77, Number 169 (Thursday, August 30, 2012)]
[Rules and Regulations]
[Pages 52616-52619]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-21314]


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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; DA 12-1155]


Connect America Fund

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this Order, the Wireline Competition Bureau (Bureau) 
clarifies certain rules relating to Phase I of the Connect America 
Fund. Commission staff have received informal inquiries from price cap 
companies on certain implementation aspects of the rules governing 
Connect America Fund Phase I. The Bureau also makes an amendment to one 
of the Commission's rules to fix a clerical error relating to the 
support for carriers serving remote areas of Alaska.

DATES: Effective October 1, 2012.

FOR FURTHER INFORMATION CONTACT: Joseph Cavender, Wireline Competition 
Bureau, (202) 418-7400 or TTY: (202) 418-0484.

SUPPLEMENTARY INFORMATION: This is a summary of the Wireline 
Competition Bureau Order in 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; DA 12-1155, released on July 18, 2012. The full text

[[Page 52617]]

of this document is available for public inspection during regular 
business hours in the FCC Reference Center, Room CY-A257, 445 12th 
Street SW., Washington, DC 20554. Or at the following Internet address: 
http://transition.fcc.gov/Daily_Releases/Daily_Business/2012/db0718/DA-12-1155A1.pdf.

I. Introduction

    1. In this Order, the Wireline Competition Bureau (Bureau) 
clarifies certain rules relating to Phase I of the Connect America 
Fund. Commission staff have received informal inquiries from price cap 
companies on certain implementation aspects of the rules governing 
Connect America Fund Phase I. The Bureau also makes an amendment to one 
of the Commission's rules to fix a clerical error relating to the 
support for carriers serving remote areas of Alaska.

II. Background

    2. In the USF/ICC Transformation Order, 76 FR 73830 (November 29, 
2011), the Commission adopted a framework for the Connect America Fund 
to provide support in the territories of price cap carriers and their 
rate-of-return affiliates based on a combination of competitive bidding 
and a forward-looking cost model. The Commission observed that 
developing a new cost model and bidding mechanism could be expected to 
take some time. To spur broadband deployment even as those mechanisms 
are being developed, the Commission established Phase I of the Connect 
America Fund, a transition mechanism from the old high-cost support 
mechanisms for price cap carriers to the new Connect America Fund. In 
Phase I, the Commission froze current high-cost support for price cap 
carriers and their affiliates, and, in addition, committed up to $300 
million in incremental support to promote broadband deployment. The 
$300 million in incremental support was allocated among price cap 
carriers using a formula to estimate wire center costs that was based 
on the prior high-cost proxy model.
    3. Participation in the Connect America Fund Phase I incremental 
support program is optional. But carriers that accept funding are 
required to deploy broadband to a number of locations, currently 
unserved by fixed broadband, equal to the amount of incremental support 
the carrier accepts divided by $775. Each carrier accepting funding 
must identify the areas, by wire center and census block, in which it 
intends to deploy broadband to meet its obligation, when it files its 
notice of acceptance. Carriers are required to complete deployment to 
no fewer than two-thirds of the required number of locations within two 
years and all required locations within three years, and they must 
certify that they have done so as part of their annual certifications 
under Sec.  54.313 of the Commission's rules. The Commission also 
provided that ``[c]arriers failing to meet a deployment milestone will 
be required to return the incremental support distributed in connection 
with that deployment obligation and will be potentially subject to 
other penalties, including additional forfeitures, as the Commission 
deems appropriate.'' However, the Commission continued, ``[i]f a 
carrier fails to meet the two-thirds deployment milestone within two 
years and returns the incremental support provided, and then meets its 
full deployment obligation associated with that support by the third 
year, it will be eligible to have support it returned restored to it.''

III. Discussion

    4. First, the Bureau clarifies how to calculate the amount of 
support a carrier must return for failing to meet its deployment 
requirements. Specifically, if a carrier fails to meet its deployment 
obligations, it will be required to return to the Commission an amount 
equal to $775 multiplied by the number of locations to which the 
carrier was required to deploy to but did not, but a carrier will not 
be required to ``pay twice'' for any failure to meet a requirement. For 
example, if a carrier accepted $6,975,000 and committed to deploying to 
9,000 locations over three years, but only deployed to 5,800 by the end 
of two years, rather than the 6,000 required at that milestone, the 
carrier would be required to return $155,000 of its incremental support 
(200 locations times $775). Similarly, a carrier that accepted the same 
amount and deployed to all 6,000 locations by the second year but 
deployed to only 8,900 by the end of the third year would be required 
to return $77,500 (100 locations times $775). However, if the same 
carrier deployed to 5,800 of its required 6,000 locations by the second 
year, returned the $155,000 required, and then continued its 
deployment, reaching 8,900 by the end of the third year, it would have 
$77,500 of its returned support restored. The Bureau notes that this 
discussion does not address any additional penalties that the 
Commission may choose to impose on any carrier that fails to meet its 
deployment obligation, as stated in the Order.
    5. Second, the Bureau clarifies that when a carrier files its 
notice of acceptance of funding, identifying the wire centers and 
census blocks in which it intends to deploy, it is not binding itself 
to deploy only in those areas, nor is it committing to deploy to every 
unserved location in those areas. The Bureau clarifies that carriers 
are expected to make a good faith effort to identify where they will 
deploy when they file their notices of acceptance. The Bureau observes, 
in this regard, that there are a number of practical obstacles that may 
make it difficult for carriers to commit irrevocably to a particular 
deployment plan by July 24th. For example, carriers may not have 
perfect information now about the number of locations in every 
potential area, the number of locations in an area may change over 
time, and the aggressive schedule for identifying intended buildout 
locations may make it difficult for carriers to gain complete 
information about potential deployments prior to filing their notices 
of acceptance. Accordingly, the Bureau clarifies that carriers may, in 
satisfaction of their deployment requirement, deploy to eligible 
locations not identified in their notices of acceptance, but will be 
required to identify subsequently where deployment actually occurred. 
Similarly, if a carrier finds that deploying to an area it intended to 
deploy to would be impractical, it will not be subject to penalties on 
account of its failure to deploy broadband to that particular area.
    6. Third, the Bureau clarifies that the certification associated 
with carriers' two- and three-year deployment milestones, which 
carriers must include as part of their annual filings under Sec.  
54.313(b) of the Commission's rules, must specify the number of 
locations in a census block-wire center combination to which they have 
actually built. Carriers must identify the precise number of locations 
so that appropriate adjustments, if any, can be made to support 
previously provided, if a carrier fails to meet its deployment 
obligation. To facilitate the ability of USAC and the Commission to 
validate that carriers have, in fact, met their deployment obligations, 
carriers must be prepared, upon request, to provide sufficient 
information regarding the location of actual deployment to confirm the 
availability of service at that location.
    7. Fourth, the Bureau clarifies that the certifications each 
carrier makes when it accepts incremental support--that the locations 
to be deployed to are shown on the National Broadband Map as unserved 
by fixed broadband by any provider other than the certifying entity

[[Page 52618]]

itself or an affiliate; that, to the best of the carrier's knowledge, 
the locations are, in fact, unserved by fixed broadband; that the 
carrier's capital improvement plan did not already include plans to 
complete broadband deployment within the next three years to the 
locations to be counted to satisfy the deployment obligation; and that 
incremental support will not be used to satisfy any merger commitment 
or similar regulatory obligation--are certifications that apply to all 
locations that in fact the carrier extends broadband to, using Connect 
America Phase I incremental support. That is, if a carrier finds it 
necessary to deploy to locations other than the locations identified in 
its initial acceptance filing, those other locations may not be in 
areas, for example, that were shown on the National Broadband Map, at 
the time of acceptance, as served.
    8. Fifth, the Bureau clarifies that when a carrier certifies that 
the locations to which it will deploy are shown as unserved by fixed 
broadband on the ``current'' version of the National Broadband Map, the 
``current'' version of the National Broadband Map is the version that 
was publicly available on the National Broadband Map Web site on the 
date eligible support amounts were announced. The Commission intended 
for carriers to have 90 days to determine how much incremental support 
they would accept and which wire centers and census blocks they would 
deploy to in order to meet their Connect America Phase I commitments. 
To the extent the National Broadband Map data is updated during the 90-
day period in which carriers are evaluating how much incremental 
support they will accept, that could leave carriers with less time to 
evaluate the updated version of the map. Potentially altering Connect 
America Phase I incremental support deployment plans before the 
deadline for them to accept funding would be unreasonable and contrary 
to the Commission's framework for Connect America Phase I funding, and 
we clarify the requirement to ensure that carriers have a full 90 days 
to make their Connect America I Phase plans.
    9. Sixth, the Bureau further clarifies that the term ``fixed 
broadband'' for the purposes of Connect America Phase I includes any 
technology identified on the then-current version of the National 
Broadband map that is not identified as a mobile technology or a 
satellite-based technology. In this regard, the Bureau observes that 
the technologies reported on the National Broadband Map at the time the 
Order was issued varied from the technologies listed on the Broadband 
Map currently. The Commission in the Order distinguished fixed 
terrestrial broadband technologies from mobile and satellite broadband 
technologies, determining that only fixed terrestrial broadband 
technologies are relevant to the determination of whether an area is 
served for the purposes of Connect America Phase I; the clarification 
the Bureau provides here reflects this distinction.
    10. Finally, the Bureau corrects Sec.  54.307(e)(5) of the 
Commission's rules. Paragraph 180 of the first erratum to the USF/ICC 
Transformation Order corrected Sec.  54.307(e)(5) to replace 
``described in paragraph (e)(2)(iv) of this section'' with ``described 
in paragraph (e)(2)(iii) of this section.'' The text to be replaced 
appeared twice in Sec.  54.307(e)(5), but, through a clerical error, 
only the second instance of that text in the rule was corrected. We now 
correct the rule to replace the remaining instance of that text.

IV. Procedural Matters

A. Paperwork Reduction Act

    11. This document does not contain new or modified information 
collection requirements subject to the Paperwork Reduction Act of 1995 
(PRA), Public Law 104-13. 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

    12. The Regulatory Flexibility Act of 1980, as amended (RFA), 
requires that a regulatory flexibility analysis be prepared for 
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).
    13. This Order clarifies, but does not otherwise modify, the USF/
ICC Transformation Order. These clarifications do not create any 
burdens, benefits, or requirements that were not addressed by the Final 
Regulatory Flexibility Analysis attached to USF/ICC Transformation 
Order. Therefore, the Bureau certifies that the requirements of this 
Order will not have a significant economic impact on a substantial 
number of small entities. The Commission will send a copy of the Order 
including a copy of this final certification in a report to Congress 
pursuant to the Small Business Regulatory Enforcement Fairness Act of 
1996. In addition, the Order and this certification will be sent to the 
Chief Counsel for Advocacy of the Small Business Administration, and 
will be published in the Federal Register.

C. Congressional Review Act

    14. The Commission will send a copy of this Order to Congress and 
the Government Accountability Office pursuant to the Congressional 
Review Act.

V. Ordering Clauses

    15. Accordingly, it is ordered, pursuant to the authority contained 
in sections 1, 2, 4(i), 201-206, 214, 218-220, 251, 252, 254, 256, 
303(r), 332, and 403 of the Communications Act of 1934, as amended, and 
section 706 of the Telecommunications Act of 1996, 47 U.S.C. 151, 152, 
154(i), 201-206, 214, 218-220, 251, 252, 254, 256, 303(r), 332, 403, 
1302, and pursuant to Sec. Sec.  0.91, 0.201(d), 0.291, 1.3, and 1.427 
of the Commission's rules, 47 CFR 0.91, 0.201(d), 0.291, 1.3, 1.427 and 
pursuant to the delegation of authority in paragraph 1404 of FCC 11-161 
(rel. Nov. 18, 2011), that this Order is adopted, effective October 1, 
2012.

    Federal Communications Commission.
Trent Harkrader,
Division Chief, Telecommunications Access Policy Division, Wireline 
Competition Bureau.

Final Rules

    For the reasons discussed in the preamble, the Federal 
Communications Commission amends 47 CFR part 54 to read as follows:

PART 54--UNIVERSAL SERVICE

0
1. The authority citation for part 54 continues to read as follows:

    Authority: 47 U.S.C. 151, 154(i), 201, 205, 214, 219, 220, 254, 
303(r), 403, and 1302 unless otherwise noted.


0
2. Amend Sec.  54.307 by revising paragraph (e)(5) to read as follows:


Sec.  54.307  Support to a competitive eligible telecommunications 
carrier.

* * * * *
    (e) * * *

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    (5) Implementation of Mobility Fund Phase II Required. In the event 
that the implementation of Mobility Fund Phase II has not occurred by 
June 30, 2014, competitive eligible telecommunications carriers will 
continue to receive support at the level described in paragraph 
(e)(2)(iii) of this section until Mobility Fund Phase II is 
implemented. In the event that Mobility Fund Phase II for Tribal lands 
is not implemented by June 30, 2014, competitive eligible 
telecommunications carriers serving Tribal lands shall continue to 
receive support at the level described in paragraph (e)(2)(iii) of this 
section until Mobility Fund Phase II for Tribal lands is implemented, 
except that competitive eligible telecommunications carriers serving 
remote areas in Alaska and subject to paragraph (e)(3) of this section 
shall continue to receive support at the level described in paragraph 
(e)(3)(v) of this section.
* * * * *
[FR Doc. 2012-21314 Filed 8-29-12; 8:45 am]
BILLING CODE 6712-01-P