[Federal Register Volume 77, Number 249 (Friday, December 28, 2012)]
[Proposed Rules]
[Pages 76435-76446]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-31084]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[WC Docket No. 10-90; FCC 12-138]


Connect America Fund

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In this document, the Federal Communications Commission seeks 
comment in this Further Notice of Proposed Rulemaking on potential 
modifications to the rules governing Connect America Phase I 
incremental support to further accelerate the deployment of broadband 
facilities to

[[Page 76436]]

consumers who lack access to robust broadband.

DATES: Comments are due on or before January 28, 2013 and reply 
comments are due on or before February 11, 2013. 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 WC Docket No. 10-90, 
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 email: [email protected] or phone: (202) 418-
0530 or TTY: (202) 418-0432.
    For detailed instructions for submitting comments and additional 
information on the rulemaking process, see the SUPPLEMENTARY 
INFORMATION section of this document.

FOR FURTHER INFORMATION CONTACT: Ryan Yates, Wireline Competition 
Bureau, (202) 418-0886 or TTY: (202) 418-0484.

SUPPLEMENTARY INFORMATION: This is a synopsis of the Federal 
Communications Commission's (Commission) Further Notice of Proposed 
Rulemaking (NPRM) in WC Docket No. 10-90, and FCC 12-138, adopted 
November 14, 2012, and released November 19, 2012. 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. (BCPI), 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.
    Pursuant to Sec. Sec.  1.415 and 1.419 of the Commission's rules, 
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, May 1, 1998.

 Electronic Filers: Comments may be filed electronically using 
the Internet by accessing the ECFS: http://www.fcc.gov/cgb/ecfs/or the 
Federal eRulemaking Portal: http://www.regulations.gov. Filers should 
follow the instructions provided on the Web site for submitting 
comments.
[cir] For ECFS filers, if multiple docket or rulemaking numbers appear 
in the caption of this proceeding, filers must transmit one electronic 
copy of the comments for each docket or rulemaking number referenced in 
the caption. In completing the transmittal screen, filers should 
include their full name, U.S. Postal Service mailing address, and the 
applicable docket or rulemaking number. Parties may also submit an 
electronic comment by Internet email. To get filing instructions, 
filers should send an email to [email protected], and include the following 
words in the body of the message, ``get form.'' A sample form and 
directions will be sent in response.
[cir] Paper Filers: Parties who choose to file by paper must file an 
original and four copies of each filing. If more than one docket or 
rulemaking number appears in the caption of this proceeding, filers 
must submit two additional copies for each additional docket or 
rulemaking number.

 Filings can be sent by hand or messenger delivery, by 
commercial overnight courier, or by first-class or overnight U.S. 
Postal Service mail (although we continue to experience delays in 
receiving U.S. Postal Service mail). All filings must be addressed to 
the Commission's Secretary, Office of the Secretary, Federal 
Communications Commission.
[cir] The Commission's contractor will receive hand-delivered or 
messenger-delivered paper filings for the Commission's Secretary at 236 
Massachusetts Avenue NE, Suite 110, Washington, DC 20002. The filing 
hours at this location are 8:00 a.m. to 7:00 p.m. All hand deliveries 
must be held together with rubber bands or fasteners. Any envelopes 
must be disposed of before entering the building.
[cir] 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.
[cir] U.S. Postal Service first-class, Express, and Priority mail 
should be addressed to 445 12th Street SW., Washington, DC 20554.

    In addition, one copy of each pleading must be sent to the 
Commission's duplicating contractor, Best Copy and Printing, Inc, 445 
12th Street SW., Room CY-B402, Washington, DC 20554; Web site: 
www.bcpiweb.com; phone: 1-800-378-3160. Furthermore, two copies of each 
pleading must be sent to Charles Tyler, Telecommunications Access 
Policy Division, Wireline Competition Bureau, 445 12th Street SW., Room 
5-A452, Washington, DC 20554; email: [email protected] and one copy 
to Ryan Yates, Telecommunications Access Policy Division, Wireline 
Competition Bureau, 445 12th Street SW., Room 5-B441A, Washington, DC 
20554; email: [email protected].
    Filings and comments are also available for public inspection and 
copying during regular business hours at the FCC Reference Information 
Center, Portals II, 445 12th Street SW., Room CY-A257, Washington, DC 
20554. Copies may also be purchased from the Commission's duplicating 
contractor, BCPI, 445 12th Street SW., Room CY-B402, Washington, DC 
20554. Customers may contact BCPI through its Web site: 
www.bcpiweb.com, by email at [email protected], by telephone at (202) 
488-5300 or (800) 378-3160 (voice), (202) 488-5562 (tty), or by 
facsimile at (202) 488-5563.
    To request materials in accessible formats for people with 
disabilities (Braille, large print, electronic files, audio format), 
send an email to [email protected] or call the Consumer & Governmental 
Affairs Bureau at (202) 418-0530 (voice) or (202) 418-0432 (TTY). 
Contact the FCC to request reasonable accommodations for filing 
comments (accessible format documents, sign language interpreters, 
CART, etc.) by email: [email protected]; phone: (202) 418-0530 or TTY: 
(202) 418-0432.

I. Introduction

    1. On November 18, 2011, the Commission released the USF/ICC 
Transformation Order and FNPRM, 76 FR 73830, November 29, 2011 and 76 
FR 78384, December 16, 2011, which comprehensively reforms and 
modernizes the high-cost universal service and intercarrier 
compensation systems. Recognizing, among other facts, that over 80 
percent of the more than 18 million Americans unserved by broadband 
live in price cap territories,

[[Page 76437]]

the Commission provided for two phases of funding to make broadband-
capable networks available to as many unserved locations as possible in 
those areas. In Connect America Phase I, the Commission froze existing 
high-cost support for price cap carriers and provided up to $300 
million of additional, incremental support in 2012 in order to advance 
deployment of broadband-capable infrastructure while it implements 
Phase II. In Phase II, the Commission provided for up to $1.8 billion 
to be spent each year, over a period of five years, to further advance 
deployment of broadband-capable infrastructure and sustain services in 
price cap territories through ``a combination of a forward-looking cost 
model and competitive bidding.''
    2. Of the initial $300 million in Phase I incremental support 
allocated to price cap carriers to support the deployment of broadband-
capable networks to currently unserved locations, approximately $115 
million was accepted. Because the USF/ICC Transformation Order, 76 FR 
73830, November 29, 2001, calls for making the additional incremental 
support available in the coming months, we now seek comment in this 
Further Notice of Proposed Rulemaking (FNPRM) on potential 
modifications to the rules governing Connect America Phase I 
incremental support to further accelerate the deployment of broadband 
facilities to consumers who lack access to robust broadband. These 
changes would expand on the steps already taken in Phase I earlier this 
year, while we continue to implement Phase II.

II. Discussion

    3. Building on the success of the first round of Phase I, we now 
seek comment on rule changes that would provide further opportunities 
to advance our overarching goal to use available funds to rapidly and 
efficiently deploy broadband networks throughout America. Given our 
interest in disbursing the available funds to bring robust broadband-
capable networks to consumers and businesses as soon as possible, we 
intend to proceed expeditiously with this rulemaking.

A. Options for Utilizing Remaining 2012 Connect America Phase I Funding

    4. Of the $300 million in Connect America Phase I incremental 
support initially allocated in 2012 to promote broadband deployment, 
approximately $185 million remains. We seek comment on whether to 
modify our rules for Phase I incremental support or instead use such 
funding in Phase II. Under either option, we propose to use these 
remaining funds to support further broadband deployment in the areas 
those funds were originally targeted to support--areas served by price 
cap carriers and their rate-of-return affiliates that are costly for 
the private sector to serve.
1. Modifications for a New Round of Connect America Phase I
    5. We propose several changes to Connect America Phase I that build 
on the success of the first round of funding and use the remaining $185 
million of incremental support and any future Phase I funding with 
maximum impact. First, we propose to expand the definition of unserved 
areas to include any census block lacking access to broadband with 
speeds of 4 Mbps downstream and 1 Mbps upstream, which would be 
consistent with the minimum standard for broadband service required 
from carriers receiving Connect America Phase I incremental support and 
would be in line with the Commission's broadband speed benchmark for 
Connect America Phase II recipients. Second, we propose to conduct a 
challenge process, to be completed before carriers have the opportunity 
to elect to receive additional funding, to develop a list of census 
blocks eligible for funding. Third, we seek comment on several 
proposals to distribute the next round of Phase I funding, including 
tying funding to the construction of second-mile fiber, tying funding 
to the estimated costs of deployment in an area, and maintaining the 
$775 per unserved location metric. Finally, we propose that the 
remaining 2012 funds be made available under these revised rules to 
further expand access to broadband-capable networks. We seek comment on 
the costs and benefits of each proposal, and how those approaches might 
impact small businesses and whether there are alternatives that would 
minimize impacts on small businesses. We also seek comment on 
alternatives in the event we do not adopt these rule changes.
    6. Expanding the Areas Eligible for Phase I. Under our current 
rules, carriers accepting Phase I incremental support are required to 
deploy broadband to one unserved location for each $775 in incremental 
support they accept. For these purposes, the Commission specified that 
locations would be eligible if, according to the then-current version 
of the National Broadband Map, those locations were in areas that did 
not have access to fixed terrestrial broadband with a minimum speed of 
768 kbps downstream and 200 kbps upstream. As the Commission explained, 
Phase I was initially targeted to bring high-speed Internet access to 
consumers who lacked any broadband access at all, even though there are 
many other consumers who did not have broadband that meets our standard 
of 4 Mbps downstream and 1 Mbps upstream.
    7. Given the success of the first round of Phase I in targeting 
support to those areas lacking any form of high-speed Internet access, 
we now propose to broaden Phase I by permitting carriers to accept 
additional funds to target consumers and businesses that are in areas 
unserved by broadband that meets our 4 Mbps downstream and 1 Mbps 
upstream standard. We seek comment on this proposal.
    8. Such an approach would further the objective of ensuring that 
all Americans can, at a minimum, take advantage of modern Internet 
applications, such as voice over Internet protocol and streaming video. 
If we were to take such an approach, we propose to designate an area as 
unserved by broadband with speeds of 4 Mbps downstream and 1 Mbps 
upstream if it is shown on the National Broadband Map as unserved by 
fixed terrestrial broadband with an advertised speed of at least 3 Mbps 
downstream and 768 kbps upstream. Using 3 Mbps downstream and 768 kbps 
upstream as a proxy for 4 Mbps downstream and 1 Mbps upstream is 
consistent with the Commission's prior approach in the USF/ICC 
Transformation Order and uses the best data currently available on the 
National Broadband Map. This baseline would be the starting point for 
the challenge process discussed below. The 4 Mbps downstream and 1 Mbps 
upstream standard is consistent with what is required from carriers 
receiving Connect America Phase I incremental support and is also in 
line with the Commission's broadband speed benchmark for Phase II. Is a 
different standard for initially determining what locations are 
unserved by 4 Mbps upstream and 1 Mbps downstream broadband more 
appropriate?
    9. Challenge Process. The Commission relies on the National 
Broadband Map in many contexts, including as a tool to target funding 
appropriately in Phase I of the Connect America Fund. Some commenters, 
however, have suggested the National Broadband Map may contain 
inaccuracies that materially impact the targeting of support as the 
Commission intended.
    10. As an alternative to having carriers rely exclusively on the 
National Broadband Map to determine eligible areas, we propose to 
utilize a limited

[[Page 76438]]

challenge process to allow interested parties to provide updates to the 
National Broadband Map for purposes of any additional round of Phase I 
funding. We seek comment on this proposal.
    11. Within 15 days of release of this FNPRM, we direct the Bureau 
to publish a list of eligible census blocks shown on the current 
version of the National Broadband Map as unserved by fixed terrestrial 
broadband with an advertised speed of 3 Mbps downstream and 768 kbps 
upstream. The Bureau will solicit public input on updates, revisions, 
and other potential corrections to the National Broadband Map data. In 
particular, the Bureau should seek comment on areas where coverage is 
either overstated (i.e., census blocks are listed as served where they 
are in fact unserved) or understated (i.e., census blocks are listed as 
unserved when they are in fact served). The Bureau also should seek 
comment on areas listed as unserved on the map that are served through 
the Broadband Initiatives Program or the Broadband Technology 
Opportunities Program. The most useful comments will be those that list 
specific census blocks that are inaccurately reported on the map, along 
with a detailed explanation of why the commenter believes the areas are 
inaccurately reported. Comments are also sought on steps parties have 
taken to bring the alleged errors to the attention of the relevant 
state mapping entity or any other entity, and, if they have, the 
outcome of any of those discussions. Finally, commenters claiming that 
an entity does not provide service as reflected on the National 
Broadband Map are encouraged to serve a copy of their comments on the 
entity whose service area the commenter is challenging.
    12. Where the Bureau finds that the evidence demonstrates that it 
is more probable than not that the National Broadband Map inaccurately 
portrays coverage of a particular area, we propose that the Bureau deem 
that census block as served or unserved, as appropriate, for purposes 
of Phase I incremental support. We propose that the Bureau would give 
more weight to comments supported by tests (with the testing 
methodology described and the underlying data provided) and/or 
engineering certifications where appropriate. We propose that the 
Bureau publish a revised list, after the public comment described 
above, which will then become the list of areas eligible for Phase I 
support going forward. The census blocks on this list would be deemed 
unserved, and carriers would meet buildout obligations by deploying to 
unserved locations in those areas. We seek comment as to whether this 
is a workable approach that can be implemented quickly so that a 
finalized list of eligible census blocks would become available shortly 
after adoption of the revised rules under consideration in this FNPRM.
    13. Alternative Proposals for Distributing Phase I Funding. We seek 
comment on several proposals to distribute the next round of Phase I 
funding, including tying funding to the construction of second-mile 
fiber, tying funding to the estimated costs of deployment in an area, 
and maintaining the $775 per location metric.
    14. The first proposal would require carriers to satisfy their 
buildout obligations for incremental support based on a metric that 
measures the number of miles of fiber deployed for a defined dollar 
amount, with a requirement to connect to a minimum number of unserved 
locations per mile. Under this proposal, carriers accepting Phase I 
incremental support would be required to meet their buildout 
obligations by building a certain number of miles of fiber for a 
specified amount of support accepted. We propose that a carrier would 
be permitted to count any fiber it builds between its central office 
and an unserved location, where that location is unserved by the 
carrier with 4 Mbps downstream and 1 Mbps upstream broadband, and that 
location is within a census block not served by any other provider, 
which would be determined as proposed above. This would allow carriers 
maximum flexibility in determining how to invest Phase I support to 
deploy new fiber. We seek comment on this proposal.
    15. We seek comment on the specific metric that would be adopted to 
implement this approach. We note that Windstream, in its July 2012 
request for a waiver of the Phase I incremental support deployment 
requirement, has suggested that it could deploy fiber to high-cost 
rural areas with a subsidy of $35,784 per mile. Is there any 
significant variation in the cost per fiber mile among price cap 
carriers? If we were to adopt this proposal, should we adopt a uniform 
metric for all recipients of Phase I support and what should that 
dollar value per miles of fiber deployed be? Is the figure Windstream 
suggests appropriate? We note that the Commission has structured the 
Connect America Phase I program in a way that would enable recipients 
to seek a ruling from the Internal Revenue Service that such Phase I 
incremental support is a contribution to capital under section 118 of 
the U.S. Internal Revenue Code. The funding is a governmental payment 
to private parties for the express purpose of their making capital 
investments--the deployment of fiber and related broadband facilities--
to achieve the Commission's public policy purpose of extending 
broadband-capable infrastructure to unserved Americans. Should we 
establish the dollar amount based on a pre-tax or post-tax figure?
    16. If we were to require carriers to satisfy buildout requirements 
by reporting on miles of fiber deployed, we propose also to require 
that a minimum average number of unserved locations per route mile of 
fiber be served, averaged over the entirety of the fiber the carrier 
seeks credit for under Connect America Phase I. In this context, we 
note that Windstream indicated that, if its waiver petition were 
granted, it would deploy broadband, on average, to approximately ten 
locations defined as unserved, under our existing definition, per mile 
of fiber deployed. We note that requiring service to an average minimum 
number of unserved locations would be one way to prevent a carrier from 
deploying Connect America fiber almost entirely in areas already served 
by an unsubsidized competitor, with just a small number of unserved 
customers. It would also support our goal of bringing broadband-capable 
infrastructure to as many unserved homes and businesses as possible. Is 
requiring deployment to a minimum number of unserved locations per 
route mile an appropriate requirement for Phase I support, given the 
goal of quickly maximizing the number of locations that become served 
with this finite amount of support? How many locations per mile should 
be required, and should that figure be altered depending on whether we 
update our definition of eligible areas to be those that do not have 4 
Mbps downstream and 1 Mbps upstream broadband, as proposed above? Are 
there other factors or exceptions to this approach that should be 
considered by the Commission?
    17. As an alternative or in addition to a predefined requirement to 
deploy to a number of unserved locations per mile of fiber deployed, 
should we require carriers to certify that they have ranked potential 
fiber deployments by the number of unserved locations that would be 
served by each route deployment and have selected the fiber routes with 
the highest number of unserved locations per mile? If we were to adopt 
such a requirement, would we need to adopt additional measures in order 
to monitor and enforce the accuracy of such certifications?

[[Page 76439]]

    18. We also seek input on any additional rule modifications we 
should adopt to prevent subsidizing fiber in areas served by 
unsubsidized competitors. Although we wish to avoid providing support 
to carriers in areas where an unsubsidized competitor provides service 
without support, we are at the same time mindful that if we prohibit 
support to any fiber construction that could theoretically benefit a 
geographic area with an unsubsidized competitor, such a restriction 
could unreasonably deprive many unserved consumers from obtaining 
broadband, to the extent the fiber to connect those customers would 
need to traverse a geographic area that is served. Given the tradeoff 
between encouraging fiber construction and not wanting to provide 
subsidies that unfairly skew competition, we seek comment on how to 
design a workable standard to meet our policy objectives that could be 
implemented quickly and efficiently. For example, should we require 
that no more than a specified percentage of the fiber route miles 
traverse census blocks where there is an unsubsidized competitor? 
Should the carrier be required to build more miles of fiber to meet its 
buildout obligations if that fiber could potentially serve areas with 
unsubsidized competitors? Should support be reduced on a prorated basis 
if a length of fiber serves locations that are both served and unserved 
by an unsubsidized competitor?
    19. We also invite comment on whether to impose any other 
restrictions on where a carrier may build fiber that it wishes to count 
toward its buildout obligations.
    20. Under our existing rules, carriers are required to deploy 
broadband to two-thirds of the required number of locations within two 
years, and all required locations within three years. We seek comment 
on what deployment milestones would be appropriate if we were to 
provide support for fiber deployment with or without a per-location 
requirement. Should, for instance, we require that two-thirds of the 
route miles be deployed within two years, and all of the route miles be 
deployed within three years?
    21. We seek comment on what information carriers should be required 
to provide about their deployments at the time of acceptance and after 
meeting any deployment milestones, if we were to require carriers to 
meet buildout obligations based on a metric of miles of fiber deployed. 
Should carriers be required at the time of acceptance to specify the 
census blocks where the fiber would be deployed, consistent with our 
current Phase I incremental support requirements? Should they be 
required at the time of acceptance to provide fiber route maps? Should 
such maps be required as they reach the two-year and three-year 
deployment milestones? Should they be required, either the time of 
initial acceptance or the two- or three-year deployment milestones, to 
provide geocoded location information for unserved locations that gain 
service as a result of Phase I incremental support? We seek comment on 
whether we should require that any such information be made available 
to the public or whether carriers should be permitted to provide that 
information on a confidential basis.
    22. In an ex parte letter filed in the spring, before Phase I 
acceptances were submitted, Windstream suggested that before a carrier 
would be eligible to meet buildout obligations by deploying fiber 
facilities, it should first be required to provide broadband to any 
unserved location in its territory that could be connected at a cost 
below a fixed benchmark. Only after all those locations had been served 
could the carrier then meet buildout requirements based on the metric 
of miles of fiber deployed. Should we adopt this two-step approach as 
an alternative to the single-step proposal, which would require 
carriers to meet buildout obligations through a combination of a miles 
of fiber metric and a fixed-cost per location metric, similar or the 
same as that used in the first round of Connect America Phase I 
funding?
    23. In order to be eligible for funding under this option, should 
carriers be required to provide some level of matching funding for each 
mile of fiber they seek to count toward buildout obligations? If so, 
how much matching funding should be required? Should carriers be 
required to disclose the amount of matching funding either they or 
third parties provide for Phase I buildout?
    24. If the Bureau adopts a greenfield model for Phase II, should 
fiber built to meet obligations in Phase I be excluded from support 
under any Phase II model we develop? Excluding Phase I fiber would 
avoid the issue of providing double support for fiber construction 
(i.e., providing support to construct a mile of fiber in Phase I, then 
providing support to construct that same mile again in Phase II). How 
would such an exclusion work in practice? One obstacle to excluding 
Phase I fiber from Phase II support is that the Bureau would not likely 
receive information regarding actual fiber deployments in a time frame 
needed before finalizing a cost model to determine support amounts to 
be offered to price cap carriers. What rule changes would need to be 
adopted to address this timing issue? Finally, if carriers accept Phase 
I funding for fiber builds, what is the likely impact on their 
willingness to accept Phase II funding for the remainder of their 
qualifying areas? Does it serve the public interest to advance 
broadband deployment in Phase I even if carriers may be less likely to 
accept the funding and service obligations in Phase II?
    25. The second proposal would tie funding to the estimated costs of 
deployment in an area. As the Commission recognized in the USF/ICC 
Transformation Order, distributing universal service support through a 
forward-looking cost model--and scaling the amount of support to the 
costs of serving a particular area--incentivizes providers to deploy 
service efficiently, while advancing our goals to provide universal 
access. Because ``CAF Phase I incremental support is designed to 
provide an immediate boost to broadband deployment in areas that are 
unserved by any broadband provider,'' the Commission declined to await 
the development of the more complete Phase II cost model and instead 
relied on the existing high-cost proxy model to distribute support. The 
Commission relied on that model to estimate the forward-looking costs 
of serving a location in each wire center served by price cap carriers 
and their affiliates. Under this proposal, the $775-per-location-metric 
would be adjusted based on the estimated cost to serve a location in a 
particular wire center.
    26. Using the existing high-cost proxy model, the Bureau can 
estimate the average cost per location of deploying broadband-capable 
infrastructure for a given wire center. By analyzing this data in 
aggregate, the Bureau could determine the mean and median estimated 
cost for all wire centers (i.e., determine what would be the average 
nationwide cost per location of deploying to locations, at the wire 
center level).
    27. Under this approach, how should we determine what is the 
baseline cost that would be used to anchor the upward or downward 
adjustments in support per location? In USF/ICC Transformation Order, 
the Commission examined cost estimates from the National Broadband Plan 
and the ABC Plan in determining that $775 per location was sufficient 
to cover the ``median cost of a brownfield deployment of broadband to 
low-cost unserved census blocks.'' Should we set $775 per location as 
the baseline support amounts for wire centers whose already estimated 
costs are at or near the

[[Page 76440]]

median (i.e., setting the baseline by looking at all wire centers)? If 
we were to use the median wire center cost figure as the baseline, a 
carrier extending service to unserved locations in a wire center where 
the average cost equal to that baseline would receive $775 in support 
per location. A carrier extending service to locations in a wire center 
with below baseline costs would receive less than $775 of support per 
location, while a carrier extending service to locations in a wire 
center with above baseline costs would receive greater than $775 of 
support per location.
    28. We already have some data that may shed some insights into the 
estimated costs of deployment given the acceptances of $775 per 
location by many carriers. Should we instead correlate the locations 
where carriers accepted $775 of support with the already estimated 
costs to establish the baseline (i.e., setting the baseline by looking 
at the wire centers that carriers actually deployed to in the first 
round of Phase I)?
    29. Once we have established a baseline per-location amount, should 
we scale the per-location support amounts for other wire centers 
proportionately (so that an area expected to cost twice as much as the 
baseline would receive twice the support) or dollar for dollar (so that 
an area expected to cost $100 more per year than the baseline would 
receive $875 per location)? Should we establish minimum and maximum 
support amounts per location to ensure that we adequately incentivize 
deployment in an efficient manner? We are also mindful that costs could 
vary greatly between locations within a single wire center: Some 
locations within a wire center could cost considerably more to deploy 
to than the wire center average, while other locations could cost 
considerably less. We seek comment on how we should handle this 
variability. Is there a more granular metric than wire center average 
costs that we could use to set support amounts?
    30. We expect that determining the per-location support amounts for 
each wire center would be relatively trivial once we have determined a 
baseline and scaling mechanism because we have already estimated the 
costs of deploying infrastructure in each price cap wire center. As 
such, we would delegate to the Bureau authority to create a list of the 
per-location support amount for each wire center, based on each wire 
center's average deployment cost, within fifteen days of adopting an 
order if we adopted this proposal. We also expect that buildout 
obligations of carriers would remain the same under this proposal, with 
two small changes. First, the two-year and three-year commitments would 
be premised on serving a sufficient number of locations to justify two-
thirds of the total support claimed by a carrier. Second, as with 2012 
Phase I support, carriers would not be bound by the initial list of 
locations to be served, but the locations actually served after two 
years and three years would be compared to the support amounts in each 
wire center for purposes of fulfilling the buildout obligations.
    31. The third proposal would allow carriers to accept support based 
on our current metric of one unserved location per $775 accepted. We 
note that carriers that accepted funds in the first round of Phase I 
incremental support likely will use those funds to build to the lower-
cost locations in their territories, leaving generally higher-cost 
locations remaining, which would raise the average cost to connect to a 
location in the next round of funding and militate in favor of using a 
figure higher than $775. However, we also note that if we expand our 
definition of eligible areas, it could reduce the average cost per 
location. We accordingly seek comment on whether we now should modify 
the $775 per location metric.
    32. Adding Remaining 2012 Phase I Incremental Support into Phase I 
Support for 2013. We propose to combine the remaining $185 million in 
2012 Phase I incremental support with whatever funding is made 
available for Phase I in 2013, employing any revised rules we adopt in 
response to this FNPRM. Our rules currently provide that if Connect 
America Phase II is not implemented to be effective by January 1, 2013, 
the Bureau would follow the same rules to conduct a second round of 
Phase I support. The amount of support available would be determined 
based on the length of the term the Bureau establishes for the second 
round--set based on the Bureau's expectation of when Phase II will 
begin--but ordinarily would not exceed the annual budget of $300 
million. Augmenting any 2013 Phase I support with the remaining Phase I 
funds, however, could dramatically increase the impact of the next 
round of Phase I incremental support. If the Bureau were, for example, 
to set a term of six months for Phase I in 2013, the amount of money 
available would, under existing rules, be $150 million. Combining the 
$185 million remaining from the first round of Phase I with such an 
amount would more than double the scope of a second round of Phase I. 
We seek comment on this approach.
    33. We seek comment on how funding should be allocated in the event 
we add the remaining funds from the first round of Phase I into a 
future round of Phase I. One approach would be to allocate any funding 
a carrier previously declined to that carrier, in addition to the 
funding it would otherwise be allocated for the future round. An 
alternative approach would be to allocate support to carriers based on 
carriers' original allocations, regardless of the amount of funding a 
carrier took 2012. Under such an approach, all carriers would have 
their 2013 allocations increased by a fixed percentage. A third 
approach would recalculate the per-carrier support amounts using the 
same distribution process used for the initial round of Phase I set 
forth in section 54.312(b)(1) of our rules, but recalculating the 
funding threshold so that the total amount of incremental support 
available in Phase I would be distributed. Under such an approach, the 
support available to a carrier in 2013 would be the recalculated amount 
minus the amount accepted in 2012 Phase I support. We seek comment on 
these potential approaches.
    34. We also propose to allow carriers to accept additional funding 
if other carriers choose not to accept their full allocation. Under 
existing rules, the allocation to each carrier serves two functions: It 
guarantees a set amount of funding for each carrier (regardless of the 
choices of other carriers) and sets the upper limit on how much each 
carrier may accept. We propose to modify our rules to eliminate that 
upper limit and permit carriers to seek support up to the entire amount 
of available Phase I funding. Under such an approach, each carrier 
would still be guaranteed funding up to their allocation as described 
in the previous paragraph. If the total requested funding from all 
carriers is less than the amount available, each carrier would receive 
the amount it requested; if carriers collectively request support in 
excess of the amount available, support above each carrier's allocation 
would be distributed in proportion to the relative allocations between 
carriers requesting additional support. Such an approach should enable 
us to maximize the benefit to consumers of the limited funds that are 
available. We seek comment on how specifically such an allocation 
process should work, particularly in the case where carriers request 
more funding than has been made available. Should we, for example, 
permit carriers to revise their original proposed acceptances downward 
once

[[Page 76441]]

allocations have been set, in order to ensure that carriers will be 
able to use the amounts of support they receive?
    35. Timing Issues for Any Future Round of Support. We anticipate 
that we will act promptly in this proceeding. We recognize, however, 
that the effective date of any modifications we might adopt in this 
rulemaking would be after the December 15 deadline by which the Bureau 
is currently required to issue a Public Notice for the next round of 
Phase I incremental support funding. We therefore acknowledge we need 
to modify the timing of the December 15, 2012 announcement regarding 
Phase I allocations for 2013. We hereby waive the current deadline and 
postpone such announcement until after we have had the opportunity to 
act on the record developed in response to this notice.
    36. We propose to permit the Bureau to establish the deadlines for 
all necessary announcements and elections so as to manage efficiently 
any future funding opportunities involving Phase I incremental support. 
In the USF/ICC Transformation Order, the Commission delegated authority 
to the Bureau to establish the term lengths of any future round of 
incremental support. We propose to permit the Bureau to schedule any 
necessary future round of Phase I incremental support in its 
discretion, provided that: (i) The term of any round of incremental 
support should not exceed a year; (ii) the Bureau should set the term 
of rounds so that Phase I incremental support continues no later than 
when Phase II begins actual disbursements of support; and (iii) the 
Bureau shall offer any future round of Phase I incremental support 
subject to the previously established overall limitation that funding 
for Phase I incremental support should not exceed $300 million per 
year, excluding any amounts carried forward from the previous round 
consistent with any direction the Commission provides in this 
proceeding. We seek comment on this proposal.
2. Adding Remaining Phase I Incremental Support Into Phase II
    37. An alternative approach would be to apply any funding remaining 
from Phase I to our overall budget for Connect America Phase II. In the 
USF/ICC Transformation Order, the Commission established a budget for 
Phase II in price cap areas of up to $1.8 billion annually. Increasing 
that budgeted amount might allow more locations to be supported in 
Phase II and also potentially encourage carriers to deploy broadband-
capable networks more rapidly.
    38. Phase I incremental support was designed to be an interim 
measure until Phase II can be implemented. Adding any remaining funds 
from Phase I into the budget for Phase II could help to achieve the 
longer term goals of Connect America Phase II. Moreover, as Connect 
America Phase I is scheduled to transition to Phase II in 2013, 
expanding the Phase II budget provides a mechanism to begin 
distributing the remaining Phase I funds in a prompt and seamless 
manner.
    39. We seek comment on whether we should apply these funds to Phase 
II, and, if we were to do so, what adjustments to Phase II would be 
appropriate. Should the public interest obligations in Phase II should 
be altered if additional funding were provided? Should we use the money 
to accelerate deployment milestones, or should we expand the overall 
scope of Phase II? How might different levels of funding affect these 
obligations?
    40. As another alternative approach, we also seek comment as to 
whether the remaining Phase I incremental support should be used to 
reduce high-cost demand below the $4.5 billion budget established by 
the Commission in the USF-ICC Transformation Order, thereby reducing 
the amount contributors need to pay into the Universal Service Fund.

B. Oversight and Accountability for Phase I Incremental Support

    41. Above, we seek comment on potential modifications to the rules 
that will govern any future incremental support. In this section, we 
seek comment on several issues that have arisen in the initial 
implementation of Phase I. In particular, we seek comment on measures 
to ensure we have the tools to monitor compliance with existing 
obligations for support that has already been accepted, whether certain 
reporting requirements should be modified for recipients of second 
round incremental support, and whether certain Phase I data should be 
afforded confidential treatment.
    42. Incremental Support Reporting Requirements. As noted above, 
under existing rules, carriers accepting Phase I incremental support 
are required to deploy broadband to a number of unserved locations 
equal to the amount of support they accept, divided by $775. Carriers 
are required to deploy to two-thirds of the total number of required 
locations within two years, and they must complete deployment within 
three years. The acceptance of Connect America Phase I incremental 
support comes with a number of reporting requirements designed to 
ensure that support is targeted appropriately and that carriers meet 
the obligations they take on when they accept support. First, when 
carriers accept support, they are required to identify, by census block 
and wire center, where they intend to deploy broadband to satisfy their 
obligation. Those initial filings, however, do not bind the carriers to 
deploy only to in those areas, or to every location in those areas. 
Rather, the initial filings are only good faith statements of the 
carriers' initial intentions--carriers may deploy broadband to other 
eligible locations instead, though, if they do so, they are required to 
identify where they in fact deployed. In addition, as part of their 
annual filings under section 54.313 of our rules, carriers are required 
to certify that they have met any two- or three-year deployment 
milestone that passed in the year covered by that filing. Along with 
their certifications, carriers are required to specify the number of 
locations in each census block and wire center to which they have 
deployed broadband. And, to assist the Commission and the Administrator 
in validating carriers' deployments, carriers are required to provide, 
upon request, sufficient information about the location of actual 
deployments to allow confirmation of the availability of service and 
the eligibility of each location for support.
    43. We propose a minor modification to the Phase I reporting 
obligations to strengthen our ability to monitor compliance with our 
rules for carriers that have already accepted Phase I incremental 
support as well as for any future rounds of funding. Specifically, we 
propose that each carrier, with its two- and three-year milestone 
certifications, would provide geocoded latitude and longitude location 
information, along with census block and wire center information, for 
each location the carrier intends to count toward its deployment 
requirement. Specific location information would assist the Commission 
and the Administrator in comparing actual deployed locations against 
the National Broadband Map that was current as of the date the carrier 
accepted funding, confirming that all deployed locations were eligible 
for support. We also propose to clarify that in the event a carrier 
intends to deploy to areas other than those identified in the carrier's 
initial acceptance, it is permitted (but not required) to make a 
supplemental filing providing updated deployment plans at any time. 
Compliance with our rules will be determined based on the carrier's 
final deployment certification, which would identify where the carrier

[[Page 76442]]

did, in fact, deploy. These changes should improve accountability in 
the program. We do not expect that these requirements would impose a 
significant or unexpected burden on any carrier that has accepted 
incremental support. We seek comment on these proposals.
    44. Confidentiality of Phase I Elections. Of the seven carriers 
that accepted Connect America Phase I support, four made claims of 
confidentiality for the location information they submitted along with 
their election of funding. The carriers claiming confidentiality 
alleged that public disclosure could give competitors insight into the 
carriers' network buildout plans, which the competitors could then 
exploit for operational and marketing purposes. We note that public 
disclosure is generally the preferred option, as it promotes oversight 
and accountability of the parties involved. This is especially true 
where public funds are being employed. We therefore seek comment on 
whether to grant or deny the requests for confidentiality that carriers 
have made regarding location data in their Connect America Phase I 
incremental support elections. If we grant these requests for 
confidentiality, should such confidentiality end in two or three years, 
when the buildout plans of these carriers will have been completed 
according to the buildout obligations of Phase I? Additionally, 
independent of how we handle the currently pending requests for 
confidentiality, we seek comment as to whether and to what extent 
carriers should be permitted to request confidential treatment of 
future Connect America Phase I funding elections.

III. Procedural Matters

A. Initial Regulatory Flexibility Act Analysis

    45. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), the Commission has prepared this Initial Regulatory 
Flexibility Analysis (IRFA) of the possible significant economic impact 
on a substantial number of small entities by the policies and rules 
proposed in this FNPRM. Written 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 FNPRM. The Commission will send a 
copy of the FNPRM, including this IRFA, to the Chief Counsel for 
Advocacy of the Small Business Administration (SBA).

B. Need for, and Objectives of, the Proposed Rules

    46. The FNPRM seeks comment on a variety of issues relating to 
modifications of Connect America. As discussed in this FNPRM, the 
Commission believes that making these modifications will aid in 
efficiently achieving the goals of Connect America and broadband 
deployment generally. Bringing robust, affordable broadband to all 
Americans is the infrastructure challenge of the 21st century. To allow 
the Commission to help meet this challenge, the FNPRM asks for comment 
in a number of specific areas.
Modifications for a New Round of Connect America Phase I
    47. In this FNPRM, the Commission seeks comments on several 
alternatives that would allow the remaining funds to be used in Phase 
I.
    48. The Commission proposes to expand the definition of unserved 
location to include locations that, while having some access to high-
speed broadband, do not have service meeting the Connect America goal 
of 4 Mbps downstream and 1 Mbps upstream. The Wireline Competition 
Bureau would generate a list of eligible areas that lack 4 Mbps 
downstream and 1 Mbps upstream broadband service, and the public would 
be invited to bring challenges to that list.
    49. The Commission seeks comment on three alternatives to 
satisfying Connect America Phase I buildout obligations. First, the 
Commission also seeks comment on allowing carriers to meet buildout 
obligations based on the number of miles of fiber deployed. Comment is 
sought on how fiber should be credited toward buildout obligations, how 
much fiber must be built for every dollar of support received, whether 
a minimum number of homes should per served per mile of fiber, where 
carriers should be restricted in building fiber, what information 
carriers should be required to provide, whether carriers should be 
required to provide matching funds, and whether fiber built with these 
funds should be excluded from future Connect America funding 
opportunities. Second, the Commission alternatively seeks comment on 
scaling the $775 based on the average deployment cost for a wire 
center, such that costlier wire centers would receive support per 
location above $775, while cheaper wire centers would receive support 
per location below $775. Third, the Commission seeks comment on 
changing the requirement that carriers connect to one unserved location 
for every $775 of support receive without regard to the costs of a 
particular wire center.
    50. The FNPRM proposes that the remaining funds from the first 
round of Connect America Phase I would be combined with any Phase I 
support for 2013, and all the funds would be distributed through a 
single round of funding. Comment is sought on how such funds should be 
distributed, especially in light of the fact that carriers accepted 
different amounts of funding for the first round of Phase I. In the 
proposed 2013 round of Phase I, carriers would be allowed to accept 
above their originally allocated amount of funding. Comment is sought 
on how funding should be allocated, particularly in the event that 
carriers accept more funds in total than have been made available.
    51. The existing December 15, 2012 deadline for the Wireline 
Competition Bureau to announce the 2013 round of Phase I is waived to 
allow time for the rule changes discussed in this FNPRM to go into 
effect.
Adding Remaining Phase I Incremental Support Into Phase II
    52. As an alternative to the approach discussed above, this FNPRM 
seeks comment on adding the remaining funds from Phase I into Connect 
America Phase II. Commenters are encouraged to provide input on how the 
obligations for Phase II should be adjusted in light of this additional 
funding. Rather than placing funds into Phase II, this FNPRM also seeks 
comment on using the remaining incremental support to reduce the budget 
for high-cost universal service, which would reduce the amount of 
universal service contribution required from carriers.
Oversight and Accountability for Phase I Incremental Support
    53. This FNPRM also seeks comment on modifying the reporting 
requirements for carriers accepting Connect America Phase I incremental 
support. A carrier would be required to provide specific geocoded 
latitude and longitude information for locations the carrier wishes to 
count toward buildout obligations. The FNPRM also requests comment on 
the extent to which carriers should be granted confidentiality on these 
and other reports.

C. Legal Basis

    54. The legal basis for any action that may be taken pursuant to 
the FNPRM is contained in sections 1, 4(i), 4(j), 214, 218-220, of the 
Communications Act of 1934, as amended, and section 706 of the 
Telecommunications Act of 1996.

[[Page 76443]]

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

    55. 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 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.
    56. Small Businesses. Nationwide, there are a total of 
approximately 27.5 million small businesses, according to the SBA.
    57. Wired Telecommunications Carriers. The SBA has developed a 
small business size standard for Wired Telecommunications Carriers, 
which consists of all such companies having 1,500 or fewer employees. 
According to Census Bureau data for 2007, there were 3,188 firms in 
this category, total, that operated for the entire year. Of this total, 
3,144 firms had employment of 999 or fewer employees, and 44 firms had 
employment of 1,000 employees or more. Thus, under this size standard, 
the majority of firms can be considered small.
    58. Local Exchange Carriers (LECs). Neither the Commission nor the 
SBA has developed a size standard for small businesses specifically 
applicable to local exchange services. The closest applicable size 
standard under SBA rules is for Wired Telecommunications Carriers. 
Under that size standard, such a business is small if it has 1,500 or 
fewer employees. According to Commission data, 1,307 carriers reported 
that they were incumbent local exchange service providers. Of these 
1,307 carriers, an estimated 1,006 have 1,500 or fewer employees and 
301 have more than 1,500 employees. Consequently, the Commission 
estimates that most providers of local exchange service are small 
entities that may be affected by the rules and policies proposed in the 
FNPRM.
    59. Incumbent Local Exchange Carriers (incumbent LECs). Neither the 
Commission nor the SBA has developed a size standard for small 
businesses specifically applicable to incumbent local exchange 
services. The closest applicable size standard under SBA rules is for 
Wired Telecommunications Carriers. Under that size standard, such a 
business is small if it has 1,500 or fewer employees. According to 
Commission data, 1,307 carriers reported that they were incumbent local 
exchange service providers. Of these 1,307 carriers, an estimated 1,006 
have 1,500 or fewer employees and 301 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 
rules adopted pursuant to the FNPRM.
    60. We have included small incumbent LECs in this present RFA 
analysis. As noted above, a ``small business'' under the RFA is one 
that, inter alia, meets the pertinent small business size standard 
(e.g., a telephone communications business having 1,500 or fewer 
employees), and ``is not dominant in its field of operation.'' The 
SBA's Office of Advocacy contends that, for RFA purposes, small 
incumbent LECs are not dominant in their field of operation because any 
such dominance is not ``national'' in scope. We have therefore included 
small incumbent LECs in this RFA analysis, although we emphasize that 
this RFA action has no effect on Commission analyses and determinations 
in other, non-RFA contexts.
    61. Competitive Local Exchange Carriers (competitive LECs), 
Competitive Access Providers (CAPs), Shared-Tenant Service Providers, 
and Other Local Service Providers. Neither the Commission nor the SBA 
has developed a small business size standard specifically for these 
service providers. The appropriate size standard under SBA rules is for 
the category Wired Telecommunications Carriers. Under that size 
standard, such a business is small if it has 1,500 or fewer employees. 
According to Commission data, 1,442 carriers reported that they were 
engaged in the provision of either competitive local exchange services 
or competitive access provider services. Of these 1,442 carriers, an 
estimated 1,256 have 1,500 or fewer employees and 186 have more than 
1,500 employees. In addition, 17 carriers have reported that they are 
Shared-Tenant Service Providers, and all 17 are estimated to have 1,500 
or fewer employees. In addition, 72 carriers have reported that they 
are Other Local Service Providers. Of the 72, seventy have 1,500 or 
fewer employees and two have more than 1,500 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 rules adopted pursuant to the FNPRM.
    62. Internet Service Providers. Since 2007, these services have 
been defined within the broad economic census category of Wired 
Telecommunications Carriers; that category is defined as follows: 
``This industry comprises establishments primarily engaged in operating 
and/or providing access to transmission facilities and infrastructure 
that they own and/or lease for the transmission of voice, data, text, 
sound, and video using wired telecommunications networks. Transmission 
facilities may be based on a single technology or a combination of 
technologies.'' The SBA has developed a small business size standard 
for this category, which is: All such firms having 1,500 or fewer 
employees. According to Census Bureau data for 2007, there were 3,188 
firms in this category, total, that operated for the entire year. Of 
this total, 3,144 firms had employment of 999 or fewer employees, and 
44 firms had employment of 1,000 employees or more. Thus, under this 
size standard, the majority of firms can be considered small. In 
addition, according to Census Bureau data for 2007, there were a total 
of 396 firms in the category Internet Service Providers (broadband) 
that operated for the entire year. Of this total, 394 firms had 
employment of 999 or fewer employees, and two firms had employment of 
1,000 employees or more. Consequently, we estimate that the majority of 
these firms are small entities that may be affected by rules adopted 
pursuant to the FNPRM.
    63. All Other Information Services. The Census Bureau defines this 
industry as including ``establishments primarily engaged in providing 
other information services (except news syndicates, libraries, 
archives, Internet publishing and broadcasting, and Web search 
portals).'' Our action pertains to interconnected VoIP services, which 
could be provided by entities that provide other services such as 
email, online gaming, web browsing, video conferencing, instant 
messaging, and other, similar IP-enabled services. The SBA has 
developed a small business size standard for this category; that size 
standard is $7.0 million or less in average annual receipts. According 
to Census Bureau data for 2007, there were 367 firms in this category 
that operated for the entire year. Of these, 334 had annual receipts of 
under $5.0 million, and an additional 11 firms had receipts of between 
$5 million and $9,999,999. Consequently, we estimate that the

[[Page 76444]]

majority of these firms are small entities that may be affected by our 
action.

E. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements for Small Entities

    64. In this FNPRM, the Commission seeks public comment on 
modifications to Phase I of Connect America. Depending on which 
modifications the Commission adopts could be subject to additional 
compliance requirements.
    65. If the Commission puts in place a system whereby price cap 
carriers may meet buildout requirements through fiber deployment, 
carriers will likely be required to report where they intend to build 
fiber they wish to count toward their obligations. This reporting 
requirement would affect any small entities that are also price cap 
carriers. Those carriers would also be subject to compliance 
requirements in meeting their buildout obligations.

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

    66. The RFA requires an agency to describe any significant, 
specifically small business, 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 or reporting requirements or timetables that take into 
account the resources available to small entities; (2) the 
clarification, consolidation, or simplification of compliance and 
reporting requirements under the rules for such 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 such small 
entities.''
    67. The FNPRM seeks comment from all interested parties. The 
Commission is aware that some of the proposals under consideration may 
impact small entities. Small entities are encouraged to bring to the 
Commission's attention any specific concerns they may have with the 
proposals outlined in the FNPRM, and the Commission will consider 
alternatives that reduce the burden on small entities.
    68. The Commission expects to consider the economic impact on small 
entities, as identified in comments filed in response to the FNPRM, in 
reaching its final conclusions and taking action in this proceeding. 
The reporting, recordkeeping, and other compliance requirements in the 
FNPRM could have an impact on both small and large entities. The 
Commission believes that any impact of such requirements is outweighed 
by the accompanying public benefits. Further, these requirements are 
necessary to ensure that the statutory goals of Section 254 of the Act 
are met without waste, fraud, or abuse.
    69. In the FNPRM, the Commission seeks comment on several issues 
and measures that may apply to small entities in a unique fashion. If 
price cap carriers are permitted to use Connect America funds to build 
fiber facilities, any small businesses accepting funding would be 
required to report where they intend to build such fiber. This is only 
a minor burden in addition to the current requirement of reporting what 
unserved locations a carrier plans to connect to, and that burden is 
outweighed by the benefit of funding to build such facilities.

G. Federal Rules that May Duplicate, Overlap, or Conflict with the 
Proposed Rules

    70. None.

H. Initial Paperwork Reduction Act of 1995 Analysis

    71. This document contains proposed modified information collection 
requirements. The Commission, as part of its continuing effort to 
reduce paperwork burdens, invites the general public and the Office of 
Management and Budget (OMB) to comment on the information collection 
requirements contained in this document, as required by the Paperwork 
Reduction Act of 1995, Public Law 104-13. In addition, pursuant to the 
Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 
U.S.C. 3506(c)(4), we seek specific comment on how we might further 
reduce the information collection burden for small business concerns 
with fewer than 25 employees.

I. Ex Parte Presentations

    72. Permit-But-Disclose. The proceeding this Notice initiates shall 
be treated as a ``permit-but-disclose'' proceeding in accordance with 
the Commission's ex parte rules. Persons making ex parte presentations 
must file a copy of any written presentation or a memorandum 
summarizing any oral presentation within two business days after the 
presentation (unless a different deadline applicable to the Sunshine 
period applies). Persons making oral ex parte presentations are 
reminded that memoranda summarizing the presentation must (1) list all 
persons attending or otherwise participating in the meeting at which 
the ex parte presentation was made, and (2) summarize all data 
presented and arguments made during the presentation. If the 
presentation consisted in whole or in part of the presentation of data 
or arguments already reflected in the presenter's written comments, 
memoranda or other filings in the proceeding, the presenter may provide 
citations to such data or arguments in his or her prior comments, 
memoranda, or other filings (specifying the relevant page and/or 
paragraph numbers where such data or arguments can be found) in lieu of 
summarizing them in the memorandum. Documents shown or given to 
Commission staff during ex parte meetings are deemed to be written ex 
parte presentations and must be filed consistent with rule 1.1206(b). 
In proceedings governed by rule 1.49(f) or for which the Commission has 
made available a method of electronic filing, written ex parte 
presentations and memoranda summarizing oral ex parte presentations, 
and all attachments thereto, must be filed through the electronic 
comment filing system available for that proceeding, and must be filed 
in their native format (e.g., .doc, .xml, .ppt, searchable .pdf). 
Participants in this proceeding should familiarize themselves with the 
Commission's ex parte rules.

J. Filing Requirements

    73. Comments and Replies. Pursuant to Sec. Sec.  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 the 
Commission's Electronic Comment Filing System (ECFS). See Electronic 
Filing of Documents in Rulemaking Proceedings, 63 FR 24121, May 1, 
1998.

[ssquf] Electronic Filers: Comments may be filed electronically using 
the Internet by accessing the ECFS: http://fjallfoss.fcc.gov/ecfs2/.

[ssquf] Paper Filers: Parties who choose to file by paper must file an 
original and one copy 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.
    [ssquf] All hand-delivered or messenger-delivered paper filings for 
the

[[Page 76445]]

Commission's Secretary must be delivered to FCC Headquarters at 445 
12th St. SW., Room TW-A325, Washington, DC 20554. The filing hours are 
8:00 a.m. to 7:00 p.m. All hand deliveries must be held together with 
rubber bands or fasteners. Any envelopes and boxes must be disposed of 
before entering the building.
    [ssquf] 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.
    [ssquf] U.S. Postal Service first-class, Express, and Priority mail 
must be addressed to 445 12th Street SW., Washington DC 20554.

    74. People with Disabilities. To request materials in accessible 
formats for people with disabilities (braille, large print, electronic 
files, audio format), send an email to [email protected] or call the 
Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-
418-0432 (tty).
    75. Availability of Documents. Comments, reply comments, and ex 
parte submissions will be publically available online via ECFS. These 
documents will also be available for public inspection during regular 
business hours in the FCC Reference Information Center, which is 
located in Room CY-A257 at FCC Headquarters, 445 12th Street SW., 
Washington, DC 20554. The Reference Information Center is open to the 
public Monday through Thursday from 8:00 a.m. to 4:30 p.m. and Friday 
from 8:00 a.m. to 11:30 a.m.
    76. Additional Information. For additional information on this 
proceeding, contact Ryan Yates of the Wireline Competition Bureau, 
Telecommunications Access Policy Division, [email protected], (202) 
418-0886.

IV. Ordering Clauses

    77. Accordingly, it is ordered that, pursuant to the authority 
contained in sections 1, 4(i), 4(j), 214, and 218-220 of the 
Communications Act of 1934, as amended, and section 706 of the 
Telecommunications Act of 1996, 47 U.S.C. 151, 154(i), 154(j), 214, 
218-220, and 1302, notice is hereby given of the proposals and 
tentative conclusions described in this Notice of Proposed Rulemaking.
    78. It is further ordered that the December 15, 2012 deadline for 
the Wireline Competition Bureau to announce future rounds of Phase I 
incremental support is waived.
    79. It is further ordered that the authority necessary to perform 
the functions described in paragraphs 15 and 16 of this document is 
delegated to the Wireline Competition Bureau.
    80. It is further ordered that the Reference Information Center, 
Consumer and Governmental Affairs Bureau, shall send a copy of this 
Notice of Proposed Rulemaking, including the Initial Regulatory 
Flexibility Analysis, to the Chief Counsel for Advocacy of the Small 
Business Administration.

List of Subjects in 47 CFR Part 54

    Communications common carriers, reporting and record keeping 
requirements, telecommunications, telephone.

    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, as follows:

PART 54--UNIVERSAL SERVICE

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

    Authority: Secs. 5, 48 Stat. 1068, as amended; 47 U.S.C. 155.

    2. Amend Sec.  54.312 by revising introductory paragraph (b) and by 
adding paragraph (c) to read as follows:


Sec.  54.312  Connect America Fund for Price Cap Territories--Phase I.

* * * * *
    (b) Incremental Support Accepted in 2012. Beginning January 1, 
2012, support in addition to baseline support defined in paragraph (a) 
of this section will be available for certain price cap local exchange 
carriers and rate-of-return carriers affiliated with price cap local 
exchange carriers as follows. This paragraph applies only to support 
accepted before January 1, 2013.
* * * * *
    (c) Incremental Support After 2012. Support in addition to baseline 
support defined in paragraph (a) of this section will be available for 
certain price cap local exchange carriers and rate-of-return carriers 
affiliated with price cap local exchange carriers as follows. This 
paragraph applies only to support accepted after December 31, 2012.
    (1) A carrier may initially accept any amount of funding up to the 
total amount of funding available, regardless of the carrier's initial 
allocation under paragraph (b)(1) of this section.
    (2) A carrier accepting incremental support must deploy a mile of 
fiber for every $[[X]] in support it accepts, providing broadband to 
[[Y]] locations unserved by broadband with speeds of 4 Mbps downstream 
and 1 Mbps upstream per mile of fiber.
    (3) A carrier may elect to accept or decline incremental support. A 
holding company may do so on a holding-company basis on behalf of its 
operating companies that are eligible telecommunications carriers, 
whose eligibility for incremental support, for these purposes, shall be 
considered on an aggregated basis. A carrier must provide notice to the 
Commission, relevant state commissions, and any affected Tribal 
government, stating the amount of incremental support it wishes to 
accept and identifying the areas by wire center and census block in 
which the designated eligible telecommunications carrier will deploy 
fiber to meet its deployment obligation, along with a fiber route map 
of planned deployments, or stating that it declines incremental 
support. Such notification must be made within 90 days of being 
notified of any incremental support for which it would be eligible. 
Along with its notification, a carrier accepting incremental support 
must also submit a certification that the locations to be served to 
satisfy the deployment obligation are within census blocks that are 
deemed unserved areas in a public notice to be published by the 
Wireline Competition Bureau; that, to the best of the carrier's 
knowledge, the locations are, in fact, unserved by fixed broadband; 
that the carrier's current 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.
    3. Amend Sec.  54.313 by adding paragraphs (b)(3) and (b)(4) to 
read as follows:


Sec.  54.313  Annual Reporting Requirements for High-Cost Recipients.

* * * * *
    (b) * * *
    (3) For a carrier meeting deployment obligations under Sec.  
54.312(c), in its next annual report due after two years after filing a 
notice of acceptance of funding pursuant to Sec.  54.312(c), a 
certification that the company has deployed no fewer than two-thirds of 
the required miles of fiber and connected to no fewer than two-thirds 
of the required number of locations, accompanied by a list of all 
locations deployed to, including census block, wire center, and 
geocoded latitude and longitude location

[[Page 76446]]

information for each location, and a fiber route map for any fiber 
deployed to reach those locations; and
    (4) In its next annual report due after three years after filing a 
notice of acceptance of funding pursuant to Sec.  54.312(c), a 
certification that the company has deployed all required miles of fiber 
and connected to the required number of locations, accompanied by a 
list of all locations deployed to, including census block, wire center, 
and geocoded latitude and longitude location information for each 
location, and a fiber route map for any fiber deployed to reach those 
locations, and a certification that the company is offering broadband 
service of at least 4 Mbps downstream and 1 Mbps upstream, with latency 
sufficiently low to enable the use of real-time communications, 
including Voice over Internet Protocol, and with usage caps, if any, 
that are reasonably comparable to those in urban areas.
* * * * *
[FR Doc. 2012-31084 Filed 12-27-12; 8:45 am]
BILLING CODE 6712-01-P