[Federal Register Volume 78, Number 13 (Friday, January 18, 2013)]
[Proposed Rules]
[Pages 4100-4107]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-01048]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[WC Docket No. 10-90; DA 12-2075]


Connect America Fund

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In this document, the Federal Communications Commission seeks 
comment on procedures to determine what areas are eligible for Connect 
America Phase II funding and how carriers may elect to accept or 
decline a statewide commitment in Connect America Phase II.

DATES: Comments are due on or before February 19, 2013 and reply 
comments are due on or before March 4, 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://

[[Page 4101]]

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) Public Notice in WC Docket No. 
10-90, and DA 12-2075, released December 27, 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. The Commission has delegated to the Wireline Competition Bureau 
(Bureau) the task of developing a forward-looking cost model to 
determine support levels to be offered to price cap carriers in Phase 
II of the Connect America Fund. The Bureau recently announced the 
availability of version one of the Connect America Cost Model, which 
provides the ability to calculate costs using a variety of different 
inputs and assumptions.
    2. The Bureau expects to solicit additional public comment on the 
cost model through its ongoing Virtual Workshop, which focuses on 
technical model design and input issues, and public notices, which will 
focus on other issues relating to implementation of Phase II, before 
finalizing the Connect America Cost Model.
    3. In this Public Notice, the Bureau proposes procedures to provide 
an opportunity for parties to challenge whether census blocks that are 
identified as eligible to receive Phase II support are in fact unserved 
by an unsubsidized competitor. We also seek comment on procedures 
relating to the election of price cap carriers to accept Phase II 
support in exchange for making a statewide commitment.

II. Discussion

A. Procedures for Challenging Whether an Area Is Served by an 
Unsubsidized Competitor

    4. The Commission directed the Bureau, after the cost model is 
adopted,

[[Page 4102]]

to ``publish a list of all eligible census blocks'' (specifically, 
those census blocks in price cap territories below the extremely high-
cost threshold but above the funding threshold) and provide an 
opportunity for parties to ``challenge the determination of whether or 
not areas are unserved by an unsubsidized competitor.'' We propose to 
utilize the following procedures to allow interested parties to make 
such challenges when we adopt a final model and seek comment on these 
proposed procedures.
    5. The Commission concluded that ``it would be appropriate to 
exclude any area served by an unsubsidized competitor,'' and it 
delegated to the Bureau ``the task of implementing the specific 
requirements of this rule.'' Consistent with the directive in the USF/
ICC Transformation Order, 76 FR 73830, November 29, 2011, we propose to 
publish a list of eligible census blocks classified by the cost model 
as unserved by an unsubsidized competitor offering service that meets 
the broadband performance obligations for Phase II. For purposes of 
this determination, the Commission has defined an unsubsidized 
competitor as one that is offering terrestrial fixed broadband with an 
advertised speed of 4 Mbps downstream and 1 Mbps upstream. Consistent 
with the approach adopted by the Commission for Connect America Phase 
I, we propose to use 3 Mbps downstream and 768 kbps upstream as a proxy 
for 4 Mbps downstream and 1 Mbps upstream in developing this initial 
list because that information is readily available from other data 
sources. Likewise, for administrative simplicity, we propose that to 
the extent a party is challenging the classification of a particular 
census block, it may present evidence demonstrating the block in 
question is served by service providing 3 Mbps downstream and 768 kbps 
upstream.
    6. We expect the final Connect America Cost Model we adopt will use 
the National Broadband Map reflecting State Broadband Initiative (SBI) 
data as of June 2012, potentially supplemented with other data sources. 
Once we publish the relevant list of unserved census blocks with costs 
between the extremely high-cost threshold and the funding threshold 
shown in the model, we propose that interested parties would then have 
an opportunity to challenge that list. Specifically, challengers would 
submit revisions and other potential corrections to the list of 
eligible census blocks where coverage by unsubsidized competitors 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). We propose that parties 
contending the Bureau's original classification as served or unserved 
is accurate would have an opportunity to submit evidence to rebut the 
challenge.
    7. Commenters seeking to challenge the eligibility of a particular 
area for funding would be required to list specific census blocks that 
are inaccurately classified as served or unserved by an unsubsidized 
competitor, along with a brief statement and supporting evidence 
demonstrating that those census blocks are inaccurately reported. We 
propose not to process any challenge that lacks some evidentiary 
showing regarding the census block in question; a challenge that merely 
asserts the area is or is not served would not be sufficient. 
Challenges to a census block's eligibility may be based on any or all 
of the Commission's broadband performance metrics--speed, latency, and/
or capacity (i.e., minimum usage allowance). Challenges may also be 
based on non-performance metrics that affect the availability of 
broadband in a census block. For example, if the provider of broadband 
in that census block only offers service to business customers and not 
residential customers, the status of that block as served may be 
challenged.
    8. Consistent with our proposal above, we propose that to be deemed 
served, a census block must have access to broadband with speeds of at 
least 3 Mbps downstream and 768 kbps upstream. Proposed examples of 
potential types of probative evidence regarding the availability of 
broadband service meeting the speed requirements established by the 
Commission include, but are not limited to, more recent SBI data than 
that used in version of the model adopted by the Bureau; maps or 
printouts of Web sites indicating coverage for a particular area 
accompanied by an officer certification that such materials reflect 
current conditions; printouts of billing information for customers 
within the particular census block, with identifying customer 
information appropriately masked; engineering analyses or drive tests; 
explanations of methodologies for determining coverage; and 
certifications by one or more individuals as to the veracity of the 
material provided. What other information regarding the speed of 
alleged service offerings would be readily available to potential 
challengers or parties seeking to maintain the classification of an 
area as shown on the National Broadband Map?
    9. The Commission specified in the USF/ICC Transformation Order 
that latency should be sufficiently low as to enable real-time 
applications, such as Voice over Internet Protocol (VoIP). Proposed 
examples of potential types of probative evidence regarding latency 
include, but are not limited to, documentation that a provider is 
actually offering voice service to customers in the relevant area, such 
as a printout of a Web site showing voice service availability at a 
particular address in the census block accompanied by an officer 
certification, or a sworn declaration from one or more customers within 
the census block that they subscribe to voice from that provider. What 
other information regarding the latency of alleged service offerings 
would be readily available to potential challengers or parties seeking 
to maintain the classification of an area as shown on the National 
Broadband Map?
    10. The Commission delegated to the Wireline Competition Bureau and 
Wireless Telecommunications Bureau the task of adopting capacity or 
``minimum usage allowance'' requirements for recipients of Phase II 
support. Proposed examples of potential types of probative evidence 
regarding minimum usage include, but are not limited to, a printout of 
a Web site showing market offerings meeting the minimum usage 
requirement accompanied by an officer certification, or a sworn 
declaration from one or more customers within the census block that 
they subscribe to a service offering meeting the minimum usage 
allowance requirement. What other information regarding the capacity of 
alleged service offerings would be readily available to potential 
challengers or parties seeking to maintain the classification of an 
area as shown on the National Broadband Map? Should we require one or 
more of these evidentiary showings for a challenge to be deemed 
complete as filed?
    11. We propose that all certifications regarding evidence 
supporting or opposing a challenge be signed by an individual with 
relevant knowledge (such as officer of the company making or opposing 
the challenge, or a representative of the state mapping agency) 
certifying that the information presented is accurate to the best of 
his or her knowledge.
    12. To assist in the development of a more complete record, we also 
seek comment on how to ensure that potentially interested parties are 
aware of the opportunity for public input. For instance, should a 
purported unsubsidized competitor challenging the classification of a 
block as unserved (and therefore eligible for funding) be required to 
serve a copy of its challenge

[[Page 4103]]

on the price cap carrier? If a price cap carrier believes a particular 
census block should be on the list of blocks eligible for funding 
(because it is not served), should it be required to serve a copy of 
its challenge by overnight delivery on any entity shown as serving the 
block on the National Broadband Map?
    13. We intend to conduct this challenge process in an expeditious 
fashion. We propose that after the release of the list of census 
blocks, parties would have 45 days to file challenges to the list. 
Parties wishing to rebut such challenges would have an additional 20 
days to submit evidence supporting their contentions. We seek comment 
on whether this proposed time frame adequately serves our goal of 
providing a meaningful opportunity for challenge, while concluding this 
challenge process in a reasonable timeframe. We propose that all 
evidence regarding the status of a particular census block must be 
filed within this timeframe; any evidence filed after these dates will 
be deemed untimely. Strict adherence to these deadlines is necessary to 
provide an adequate opportunity for the party that contends the 
classification as served or unserved is accurate to respond to all 
evidence submitted by the challenger within the reply comment 
timeframe, and in order for this administrative process to be completed 
expeditiously.
    14. At the close of the challenge timeframe, we propose that where 
the Bureau finds that it is more likely than not that a census block is 
inaccurately classified as served or unserved, we would modify the 
classification of that census block for purposes of finalizing the 
census blocks that will be eligible for a price cap carrier statewide 
commitment under the Connect America Phase II program. In the event 
that both the challenger and the opponent provide credible evidence 
regarding the status of a particular block, we propose that the default 
determination will be however the block is classified on the National 
Broadband Map at the time the challenge is resolved. We recognize the 
practical difficulties that may ensue in situations where one party 
says service exists and the other party says service does not exist. 
Because it may be difficult and expensive for the party contending that 
service does not exist to prove a negative, we propose that the most 
expedient solution in such situations is to rely upon the most current 
available map data.
    15. We propose that, in making its determinations, the Bureau would 
consider whether the challenger took steps to bring the alleged errors 
in the National Broadband Map to the attention of the relevant state 
mapping authority and the outcome of any such efforts. It is possible 
that the December 2012 SBI data may become available shortly before or 
after the forward looking cost model is adopted, and therefore 
challengers may wish to present evidence of the more recent 
classification on the National Broadband Map in their challenges. If 
December 2012 SBI data is available at the time the Bureau resolves 
these challenges, we propose to rely upon the December 2012 
classification.
    16. While the Bureau will rely on updates to the available SBI 
data, we propose to focus on evidence regarding current broadband 
availability at the time we resolve the challenge, and not on announced 
market expansion plans that may occur at some future date. We note that 
announced deployment plans may change for business and other reasons, 
and if we were to exclude a census block area based on announced plans 
to extend service to that block, that could provide an opportunity for 
potential competitors to engage in strategic behavior to eliminate 
support for a particular census block, without an assurance that the 
competitor will actually serve the block at a future date.
    17. We also propose that the Bureau only include on the preliminary 
list of blocks eligible for funding those census blocks that are 
completely unserved. We further propose to treat partially served 
census blocks as served and therefore not eligible for funding in Phase 
II. We anticipate that entertaining challenges with respect to 
potentially many thousands of individual census blocks could be a 
significant undertaking by itself, and we are concerned that the 
administrative burden of permitting challenges at the sub-census block 
level would outweigh the potential benefits. We therefore propose to 
conduct the challenge process at the census block level. To the extent 
commenters believe that we should entertain sub-census block 
challenges, they should describe with specificity how their proposed 
process would work, and in particular how we would ensure compliance 
with build out requirements in partially served census blocks.
    18. We seek comment on all these proposals and on any alternatives. 
If commenters believe different procedures would better serve the 
Commission's goal of targeting support to areas without unsubsidized 
competitors, they should provide a detailed description of their 
preferred alternative. We welcome suggested alternatives that minimize 
the impact of these proposals on small businesses, as well as comments 
regarding the cost and benefits of implementing these proposals.

B. Procedures for Implementing the Price Cap Carrier Election To Make a 
Statewide Commitment

    19. We propose that after reviewing any public comment, the Bureau 
will publish a revised list of census blocks and a revised list of 
support amounts associated with each eligible area that will be offered 
to price cap carriers. We seek comment on whether the election period 
should be 90 days from the date of release of the finalized list, which 
would be the same as the time period provided to price cap carriers for 
electing to accept incremental support for Connect America Phase I. In 
the alternative, should the time period for price cap carriers to elect 
to make a statewide commitment in Phase II be longer, such as 120 days, 
due to the complexity of the decisions individual carriers will need to 
make? We also seek comment on requiring the submissions either electing 
or declining support to be submitted on a confidential basis prior to 
the deadline for election. Should carriers be allowed or required to 
make confidential submissions? In the event that such submissions were 
afforded confidentiality, we propose that the Bureau would announce all 
statewide elections on a single date shortly after the close of the 
election period.
    20. We propose that a carrier electing to accept the statewide 
commitment would submit a letter, signed by an officer of the company, 
by the deadline specifying that it agrees to meet the Commission's 
requirements in exchange for receiving support in amounts set forth in 
the final Bureau public notice. To the extent a letter of credit or 
other form of security is required to ensure compliance with these 
obligations, we propose to require its submission within ten days of 
exercising the statewide commitment.
    21. We seek comment on what information carriers should be required 
to submit along with their acceptance notices. Should such carriers be 
required to specify the technology or combination of technologies they 
intend to deploy in a particular state, at the wire center or census 
block level? Should carriers also be required to provide information 
such as geocoded latitude and longitude location information, along 
with census block and wire center information, for the specific 
locations where they intend to provide service meeting the 6 Mbps 
downstream/1.5 Mbps upstream

[[Page 4104]]

requirement, as determined by the Bureau? Should carriers be required 
at the time of acceptance to submit a preliminary plan showing the 
census blocks and/or wire centers, and associated number of locations, 
where they anticipate meeting the third year 85 percent build-out 
milestone? What other information should be required in the initial 
acceptance notices in order to ensure the Commission has the tools it 
needs to monitor compliance with performance obligations? Should the 
Commission afford confidential treatment to any of the information 
required to be submitted after the Bureau announces the acceptance by 
carriers of funding on a statewide level?
    22. We propose that a carrier declining to accept a statewide 
commitment in a particular state would file a letter by the deadline 
specifying that it is declining funding. Alternatively, a carrier 
failing to file a letter by the deadline could be deemed as having 
declined funding.
    23. We seek comment on all these proposals and on any alternatives. 
To the extent commenters believe that other procedures would better 
serve the Commission's goals, they should provide a detailed 
description of their proposal for the statewide commitment process. We 
welcome suggested alternatives that minimize the impact of these 
proposals on small businesses, as well as comments regarding the cost 
and benefits of implementing these proposals.

III. Procedural Matters

A. Initial Regulatory Flexibility Act Analysis

    24. 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 Public Notice. 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 Public Notice. The 
Commission will send a copy of the Public Notice, including this IRFA, 
to the Chief Counsel for Advocacy of the Small Business Administration 
(SBA). In addition, the Public Notice and IRFA (or summaries thereof) 
will be published in the Federal Register.

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

    25. The Public Notice seeks comment on issues related to the 
implementation of Phase II of Connect America. As discussed in the USF/
ICC Transformation Order, the rapid and efficient deployment of 
broadband is crucial for our nation's growth. The proposals contained 
in this public notice will help to achieve the Commission's goal of 
making broadband accessible to all Americans.
    26. The Bureau is currently in the process of developing a cost 
model for Phase II of Connect America. The Commission directed the 
Bureau to publish a list of census blocks that would be eligible for 
support under the cost model, and to provide an opportunity for parties 
to make challenges to that list. This Public Notice seeks comment on 
how to conduct such a challenge process and what data should be used in 
that process. The Bureau plans to publish a list of census blocks that 
are within the cost model's funding threshold but are unserved by 
broadband with speeds of 3 Mbps downstream and 768 kbps upstream. 
Parties could then submit comments challenging the accuracy of that 
list.
    27. The Public Notice proposes that parties could make challenges 
based on the fact that a purported unsubsidized competitor is or is not 
meeting the broadband performance requirements for speed, latency, or 
capacity. The Public Notice also suggests various forms of evidence 
that could be submitted to support these contentions. Assertions that 
are offered without supporting evidence would not be considered. Where 
the Bureau finds its more likely than not that a census block is 
inaccurately classified as served or unserved, that census block's 
status would be altered accordingly for the purposes of Phase II 
eligibility.
    28. Under the system proposed in the Public Notice, parties 
challenging the eligibility of a particular census block would be 
required to serve a copy of their challenge on the entity purportedly 
serving that block. That entity would then have an opportunity to 
respond and provide evidence rebutting that challenge. In the event 
that both the challenger and the respondent provide credible 
information supporting their claims, the census block's status would be 
determined based on its current status on the most recent version of 
National Broadband Map available at the time the list of eligible areas 
is finalized.
    29. The Public Notice also sets limits on the types of challenges 
considered. First, only wholly unserved census blocks would be eligible 
for Phase II support. Therefore, under the proposed system, sub-census 
block challenges would not be considered. Second, challenges and 
rebuttals must be based on current broadband availability, not 
announced deployment plans.
    30. In addition to seeking comment on issues related to the Phase 
II challenge process, the Public Notice also seeks comment on 
procedures for implementing the process of price cap carriers' election 
to receive support in exchange for a commitment to serve all eligible 
areas within a state. Comment is sought on what time period should be 
used in this process. The Public Notice also seeks comment on what 
information a carrier should be required to submit when accepting a 
statewide commitment.

C. Legal Basis

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

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

    32. 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.
    33. Small Businesses. Nationwide, there are a total of 
approximately 27.5 million small businesses, according to the SBA.
    34. 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.

[[Page 4105]]

    35. 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 
Public Notice.
    36. 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 Public Notice.
    37. 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.
    38. 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 Public Notice.
    39. Wireless Telecommunications Carriers (except Satellite). Since 
2007, the SBA has recognized wireless firms within this new, broad, 
economic census category. Prior to that time, such firms were within 
the now-superseded categories of Paging and Cellular and Other Wireless 
Telecommunications. Under the present and prior categories, the SBA has 
deemed a wireless business to be small if it has 1,500 or fewer 
employees. For this category, census data for 2007 show that there were 
1,383 firms that operated for the entire year. Of this total, 1,368 
firms had employment of 999 or fewer employees and 15 had employment of 
1,000 employees or more. Similarly, according to Commission data, 413 
carriers reported that they were engaged in the provision of wireless 
telephony, including cellular service, Personal Communications Service 
(PCS), and Specialized Mobile Radio (SMR) Telephony services. Of these, 
an estimated 261 have 1,500 or fewer employees and 152 have more than 
1,500 employees. Consequently, the Commission estimates that 
approximately half or more of these firms can be considered small. 
Thus, using available data, we estimate that the majority of wireless 
firms can be considered small.
    40. Broadband Personal Communications Service. The broadband 
personal communications service (PCS) spectrum is divided into six 
frequency blocks designated A through F, and the Commission has held 
auctions for each block. The Commission defined ``small entity'' for 
Blocks C and F as an entity that has average gross revenues of $40 
million or less in the three previous calendar years. For Block F, an 
additional classification for ``very small business'' was added and is 
defined as an entity that, together with its affiliates, has average 
gross revenues of not more than $15 million for the preceding three 
calendar years. These standards defining ``small entity'' in the 
context of broadband PCS auctions have been approved by the SBA. No 
small businesses, within the SBA-approved small business size standards 
bid successfully for licenses in Blocks A and B. There were 90 winning 
bidders that qualified as small entities in the Block C auctions. A 
total of 93 small and very small business bidders won approximately 40 
percent of the 1,479 licenses for Blocks D, E, and F. In 1999, the 
Commission re-auctioned 347 C, E, and F Block licenses. There were 48 
small business winning bidders. In 2001, the Commission completed the 
auction of 422 C and F Broadband PCS licenses in Auction 35. Of the 35 
winning bidders in this auction, 29 qualified as ``small'' or ``very 
small'' businesses. Subsequent events, concerning Auction 35, including 
judicial and agency determinations, resulted in a total of 163 C and F 
Block licenses being available for grant. In 2005, the Commission 
completed an auction of 188 C block licenses and 21 F block licenses in 
Auction 58. There were 24 winning bidders for 217 licenses. Of the 24 
winning bidders, 16 claimed small business status and won 156 licenses. 
In 2007, the Commission completed an auction of 33 licenses in the A, 
C, and F Blocks in Auction 71. Of the 14 winning bidders, six were 
designated entities. In 2008, the Commission completed an auction of 20 
Broadband PCS licenses in the C, D, E and F block licenses in Auction 
78.
    41. Fixed Microwave Services. Fixed microwave services include 
common carrier, private operational-fixed, and broadcast auxiliary 
radio services. At present, there are approximately 22,015 common 
carrier fixed licensees and 61,670 private operational-fixed licensees 
and broadcast auxiliary radio licensees in the microwave services. The 
Commission has not created a size standard for a small business 
specifically with respect to fixed microwave services. For purposes of 
this analysis, the Commission uses the

[[Page 4106]]

SBA small business size standard for Wireless Telecommunications 
Carriers (except Satellite), which is 1,500 or fewer employees. The 
Commission does not have data specifying the number of these licensees 
that have more than 1,500 employees, and thus is unable at this time to 
estimate with greater precision the number of fixed microwave service 
licensees that would qualify as small business concerns under the SBA's 
small business size standard. Consequently, the Commission estimates 
that there are up to 22,015 common carrier fixed licensees and up to 
61,670 private operational-fixed licensees and broadcast auxiliary 
radio licensees in the microwave services that may be small and may be 
affected by the rules and policies adopted herein. We note, however, 
that the common carrier microwave fixed licensee category includes some 
large entities.
    42. Satellite Telecommunications. Since 2007, the SBA has 
recognized satellite firms within this revised category, with a small 
business size standard of $15 million. The most current Census Bureau 
data are from the economic census of 2007, and we will use those 
figures to gauge the prevalence of small businesses in this category. 
Those size standards are for the two census categories of ``Satellite 
Telecommunications'' and ``Other Telecommunications.'' Under the 
``Satellite Telecommunications'' category, a business is considered 
small if it had $15 million or less in average annual receipts. Under 
the ``Other Telecommunications'' category, a business is considered 
small if it had $25 million or less in average annual receipts.
    43. The first category of Satellite Telecommunications ``comprises 
establishments primarily engaged in providing telecommunications 
services to other establishments in the telecommunications and 
broadcasting industries by forwarding and receiving communications 
signals via a system of satellites or reselling satellite 
telecommunications.'' For this category, Census Bureau data for 2007 
show that there were a total of 512 firms that operated for the entire 
year. Of this total, 464 firms had annual receipts of under $10 
million, and 18 firms had receipts of $10 million to $24,999,999. 
Consequently, we estimate that the majority of Satellite 
Telecommunications firms are small entities that might be affected by 
rules adopted pursuant to the Public Notice.
    44. The second category of Other Telecommunications ``primarily 
engaged in providing specialized telecommunications services, such as 
satellite tracking, communications telemetry, and radar station 
operation.'' This industry also includes establishments ``primarily 
engaged in providing satellite terminal stations and associated 
facilities connected with one or more terrestrial systems and capable 
of transmitting telecommunications to, and receiving telecommunications 
from, satellite systems; or * * * providing Internet services or voice 
over Internet protocol (VoIP) services via client-supplied 
telecommunications connections.'' For this category, Census Bureau data 
for 2007 show that there were a total of 2,383 firms that operated for 
the entire year. Of this total, 2,346 firms had annual receipts of 
under $25 million. Consequently, we estimate that the majority of Other 
Telecommunications firms are small entities that might be affected by 
our action.
    45. Cable and Other Program Distribution. 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 a total 
of 955 firms in this previous category that operated for the entire 
year. Of this total, 939 firms had employment of 999 or fewer 
employees, and 16 firms had employment of 1,000 employees or more. 
Thus, under this size standard, the majority of firms can be considered 
small and may be affected by rules adopted pursuant to the Public 
Notice.
    46. Cable Companies and Systems. The Commission has developed its 
own small business size standards, for the purpose of cable rate 
regulation. Under the Commission's rules, a ``small cable company'' is 
one serving 400,000 or fewer subscribers, nationwide. Industry data 
indicate that, of 1,076 cable operators nationwide, all but eleven are 
small under this size standard. In addition, under the Commission's 
rules, a ``small system'' is a cable system serving 15,000 or fewer 
subscribers. Industry data indicate that, of 7,208 systems nationwide, 
6,139 systems have under 10,000 subscribers, and an additional 379 
systems have 10,000-19,999 subscribers. Thus, under this second size 
standard, most cable systems are small and may be affected by rules 
adopted pursuant to the Public Notice.
    47. Cable System Operators. The Act also contains a size standard 
for small cable system operators, which is ``a cable operator that, 
directly or through an affiliate, serves in the aggregate fewer than 1 
percent of all subscribers in the United States and is not affiliated 
with any entity or entities whose gross annual revenues in the 
aggregate exceed $250,000,000.'' The Commission has determined that an 
operator serving fewer than 677,000 subscribers shall be deemed a small 
operator, if its annual revenues, when combined with the total annual 
revenues of all its affiliates, do not exceed $250 million in the 
aggregate. Industry data indicate that, of 1,076 cable operators 
nationwide, all but ten are small under this size standard. We note 
that the Commission neither requests nor collects information on 
whether cable system operators are affiliated with entities whose gross 
annual revenues exceed $250 million, and therefore we are unable to 
estimate more accurately the number of cable system operators that 
would qualify as small under this size standard.
    48. 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, 3144 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

[[Page 4107]]

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 Public Notice.
    49. 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 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

    50. In this Public Notice, the Bureau seeks public comment on 
procedures for implementing Connect America Phase II. Certain proposals 
could result in additional reporting requirements.
    51. If the Bureau implements the Phase II challenge process 
articulated above, commenters, including small entities, wishing to 
participate would be required to comply with the listed reporting and 
evidentiary standards. This includes filing a challenge along with 
supporting evidence and serving a copy of the challenge on any 
challenged party within a specified timeframe. Similarly, if the Bureau 
implements the proposed statewide commitment process, any small entity 
that is either accepting or declining a statewide commitment would be 
subject to additional reporting requirements.

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

    52. 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.''
    53. The Public Notice 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 Public Notice, and the Commission will 
consider alternatives that reduce the burden on small entities.
    54. The Commission expects to consider the economic impact on small 
entities, as identified in comments filed in response to the Public 
Notice, in reaching its final conclusions and taking action in this 
proceeding. The reporting requirements in the Public Notice 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.
    55. In the Public Notice, the Commission seeks comment on several 
issues and measures that may apply to small entities in a unique 
fashion. Small entities may be more likely to face challenges to their 
service areas, and thus be required to comply with the reporting 
requirements above in order to have their rebuttals considered. The 
Bureau will consider comments from small entities as to whether a 
different standard should apply.

G. Federal Rules That May Duplicate, Overlap, or Conflict With the 
Proposed Rules

    56. None.

H. Initial Paperwork Reduction Act of 1995 Analysis

    57. This document does not contain proposed information collection 
requirements subject to the Paperwork Reduction Act of 1995, Public Law 
104-13. In addition, therefore, it does not contain any proposed 
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).

I. Ex Parte Presentations

    58. Permit-But-Disclose. The proceeding this Public 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 section 
1.1206(b). In proceedings governed by rule section 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.

Federal Communications Commission.
Trent B. Harkrader,
Division Chief, Telecommunications Access Policy Division, Wireline 
Competition Bureau.
[FR Doc. 2013-01048 Filed 1-17-13; 8:45 am]
BILLING CODE 6712-01-P