[Federal Register Volume 78, Number 78 (Tuesday, April 23, 2013)]
[Proposed Rules]
[Pages 23877-23882]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-09421]



[[Page 23877]]

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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[CC Docket No. 02-6, GN Docket No. 09-51; DA 13-592]


Schools and Libraries Universal Service Support Mechanism and A 
National Broadband Plan for Our Future

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In this document, the Federal Communications Commission 
(Commission) seeks comment on a proposal to clarify the schools and 
libraries universal service support program (E-rate program) 
requirements for bundling devices, equipment and services that are 
ineligible for E-rate support. Under this proposal, beginning in 
funding year 2014, service providers may no longer offer bundled 
ineligible components as E-rate eligible even if they determine the 
bundled offering falls within the scope of the Gift Rule Clarification 
Order.

DATES: Comments are due on or before May 23, 2013 and reply comments 
are due on June 7, 2013.

ADDRESSES: You may submit comments, identified by CC Docket No. 02-6, 
GN Docket No. 09-51; DA 13-592, 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: Bryan Boyle or Cara Voth, Wireline 
Competition Bureau, (202) 418-7400 or TTY: (202) 418-0484.

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's 
Public Notice in CC Docket No. 02-6, GN Docket No. 09-51, and DA 13-
592, released April 9, 2013. 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, 
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 (1998).
     Electronic Filers: Comments may be filed electronically 
using the Internet by accessing the ECFS: http://fjallfoss.fcc.gov/ecfs2/.
     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.
     All hand-delivered or messenger-delivered paper filings 
for the 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.
     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.
     U.S. Postal Service first-class, Express, and Priority 
mail must be addressed to 445 12th Street SW., Washington DC 20554.
    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).
    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 Bryan P. Boyle, 
Telecommunications Access Policy Division, Wireline Competition Bureau, 
445 12th Street SW., Room 6-A100, Washington, DC 20554; email: 
[email protected].

I. Introduction

    1. In the Public Notice, the Wireline Competition Bureau (Bureau) 
seeks comment on a proposal to clarify the schools and libraries 
universal service support program (informally known as the E-rate 
program) requirements for bundling devices, equipment and services that 
are ineligible for E-rate support (``ineligible components'') with E-
rate eligible services and products. In 2012, the Bureau sought comment 
on a petition filed by the State E-rate Coordinators Alliance (SECA) 
seeking clarification of how the Commission's rules requiring cost 
allocation of ineligible components aligns with language in the 
Bureau's 2010 Gift Rule Clarification Order (Order) (DA 10-2355) that 
allowed, under limited circumstances, the bundling of ineligible end-
user devices and equipment without cost allocation. Having considered 
the comments filed in response to the SECA Petition Public Notice, the 
Bureau now proposes and seeks comment on additional clarifications to 
remove any potential uncertainty regarding the Commission's requirement 
for applicants to cost allocate ineligible components when those 
ineligible components are bundled with eligible services.

II. Discussion

    2. Based on several unexpected issues that have arisen since the 
Order was released, we have determined that it may be in the best 
interest of E-rate applicants, service providers, and the public, for 
the Bureau to interpret the Commission's rules regarding bundled 
ineligible components differently than was reflected in the Order. 
Specifically, we propose to clarify that beginning with applications 
seeking discounts for E-rate funding year 2014, any ineligible 
components must be cost allocated, even if bundled with E-rate eligible 
services and offered to the public or some class of users. As further 
described

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herein, we seek comment on this proposal.

A. Requirements for Bundled Ineligible Components

    3. We propose that, beginning in funding year 2014, service 
providers may no longer offer bundled ineligible components as E-rate 
eligible even if they determine the bundled offering falls within the 
scope of the Order. E-rate applicants may seek E-rate funding for the 
eligible services portion of any bundled offering but must provide a 
cost allocation for any ineligible components including, but not 
limited to, telephone handsets, computers, cell phones, and other 
components. We make this proposal out of our concern that the Order 
language that allowed, under limited circumstances, an exemption of our 
cost allocation requirements, may lead to unintended consequences. We 
are persuaded by those interested parties who have expressed concern 
that an open-ended interpretation and widespread use and expansion of 
this exception could lead to further strain on the E-rate fund, which 
is capped and already over-subscribed. Moreover, the out-of-pocket 
expenses at issue are for ineligible components that recipients have 
always understood to be ineligible for E-rate support. Additionally, to 
the extent that the real cost to the provider of the ``free'' or 
reduced price ineligible component results in a more expensive bundle, 
the money saved by not paying for the entire bundle will result in more 
funds being available to other E-rate recipients for E-rate eligible 
services. We seek further comment on these concerns and related 
matters.
    4. We make this proposal primarily because the record developed on 
this issue thus far demonstrates a lack of clarity about the rules 
regarding cost allocation for bundled ineligible components. We are 
also not persuaded that the clarifications suggested by stakeholders 
would be effective because those suggestions could result in 
excessively burdensome procedures for applicants, service providers and 
the administrator of the E-rate program, USAC. For example, SECA's 
proposals and other potential outcomes that include procedures to 
determine which bundled offerings qualify for an exemption from cost 
allocation are likely to be administratively unworkable and ultimately 
costly for the E-rate program. Also, assigning a specific measurement 
as a maximum threshold for a bundled ineligible component, such as a 
percentage of a contract price or a specific dollar amount, as at least 
one commenter recommends, could in turn encourage recipients to set 
that dollar amount as a goal for spending or might prompt service 
providers to price equipment just under that maximum. This could 
further deplete funds, and could have other unintended negative 
consequences on participant purchasing decisions. Finally, determining 
whether a bundled service offering is a commercially common practice 
within the industry, and not a unique offering of an individual service 
provider, and that the bundled arrangement is currently available to 
the public and not just to a designated class of subscribers, would 
require both USAC and ultimately the Commission to perform analysis of 
individual service provider offerings on a case-by-case basis. We agree 
that it would be difficult to administer this exemption on a consistent 
basis without posing a drain on E-rate resources, because it could 
require additional personnel and market trend analysis that USAC is not 
prepared for or structured to perform. We seek comment on whether 
putting measurements and procedures in place to implement the bundling 
exemption in the Order will cost more to the program than any savings 
that might be gained by some applicants if we continue to allow the 
exemption.
    5. We also seek comment on any alternatives to our proposal. We ask 
commenters that support our proposal to provide a specific rationale 
for their position. To the extent commenters believe that other 
interpretations would better serve the Commission's goals, including 
other proposals that might improve program efficiency while protecting 
E-rate funds, commenters should provide detailed descriptions of their 
proposals in their comments. We also welcome suggested alternatives 
that minimize the impact of these proposals on small businesses as well 
as comments regarding the cost and benefits of implementing our 
proposal.

B. Cost Allocation Procedures

    6. We considered as part of this proposal the likely impact on 
applicants and we do not anticipate it will cause an unreasonable 
burden. E-rate program participants have always been required to detail 
the costs of ineligible components and our proposal would merely 
require them to apply this requirement to any bundled ineligible 
components they may have believed to fall within the purview of the 
Order. Although this may increase the amount of time applicants spend 
on their applications, we do not believe that this increase will be 
significant. We recognize, however, that applicants may desire 
additional guidance on how to best derive the costs of ineligible end-
user devices. For example, for situations where component costs are not 
easily obtained and applicants must rely on their service providers for 
cost allocation percentages, how can applicants confirm such 
percentages? We seek comment on whether we should further clarify our 
current standard for cost allocations to provide additional guidance 
concerning end-user equipment. We also seek comment whether there are 
additional ways the Commission could reduce the burden on E-rate 
recipients that are required to cost allocate bundled components that 
they may have believed to be exempt from cost allocation in more recent 
funding years.

C. Ancillary Components

    7. Finally, our proposal addresses only the cost allocation 
language in the Order pertaining to the treatment of ineligible 
components and does not purport to alter the Commission's cost 
allocation rule, 47 CFR 54.504(e). Other than the Order language, the 
only existing exception to the cost allocation rules is the exception 
for ancillary components. An insignificant and strictly ``ancillary'' 
component can be bundled into a much broader product or service without 
cost allocation if the ineligible component is ancillary to the 
principle use of the eligible component, and is the most cost-effective 
means of receiving the eligible component functionality. In order for 
an ineligible component to be ancillary, however, its price cannot be 
determined separately and independently from the price of the eligible 
components. SECA asserts that in addition to the Order language, the 
rules concerning ancillary components may lack clarity and should be 
addressed by the Bureau. Therefore, we seek comment on whether it is 
necessary to make changes and, if so, what clarifications could be made 
to ensure that ineligible components are not bundled under the guise of 
being ancillary to a much broader product or service. For example, 
under what circumstances would it be appropriate for an applicant or 
service provider to assert that a separate piece of equipment, such as 
a telephone handset, cell phone or tablet, is ancillary to the eligible 
service it is paired with? Because their prices can almost always be 
determined independent of any eligible components, we do not think end-
user devices could ever be considered ancillary to the services with 
which they are paired. We seek comment on this position.

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III. Procedural Matters

A. Initial Regulatory Flexibility Analysis

    8. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), the Commission has prepared its Initial Regulatory 
Flexibility Analysis (IRFA) of the possible significant economic impact 
on a substantial number of small entities by the 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).

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

    9. The public notice seeks comment on requirements that apply when 
service providers seek to bundle devices, equipment and services that 
are ineligible for E-rate support with E-rate eligible services and 
products. In the public notice, we propose to clarify that beginning 
with applications seeking discounts for E-rate fund year 2014, any 
ineligible components must be cost allocated, even if bundled with E-
rate eligible services and offered to the public or some class of 
users. The Bureau's objective for the proposed rule is to provide 
clarity to E-rate recipients and service providers and stabilize fund 
expenditures. The current requirement as interpreted in the Order could 
further strain the E-rate program because it permits E-rate funding to 
pay for ineligible components and also lacks sufficient clarity to be 
interpreted on a consistent and fair basis in the marketplace. This 
Public Notice seeks comment on the Commission's definition of ancillary 
services and its relation to E-rate offerings with bundled ineligible 
components.
    10. The prudent use of limited E-rate funding and clarity about E-
rate rules are important to the long-term efficacy of the fund. The 
proposal contained in this public notice will help to achieve the 
Commission's goal of maintaining fund solvency and providing clear 
rules to E-rate recipients.

C. Legal Basis

    11. The legal basis for any action that may be taken pursuant to 
the public notice is contained in sections 1 through 4, 201-205, 254, 
303(r), and 403 of the Communications Act of 1934, 47 U.S.C. 151 
through 154, 201 through 205, 254, 303(r), and 403.

D. Description and Estimate of the Number of Small Entities To Which 
the Proposed Rules May Apply

    12. 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 that: (1) Is independently owned 
and operated; (2) is not dominant in its field of operation; and (3) 
satisfies any additional criteria established by the Small Business 
Administration (SBA). Nationwide, there are a total of approximately 
27.5 million small businesses, according to the SBA. A ``small 
organization'' is generally ``any not-for-profit enterprise which is 
independently owned and operated and is not dominant in its field.''
    13. Nationwide, as of 2002, there were approximately 1.6 million 
small organizations. The term ``small governmental jurisdiction'' is 
defined generally as ``governments of cities, towns, townships, 
villages, school districts, or special districts, with a population of 
less than fifty thousand.'' Census Bureau data for 2002 indicate that 
there were 87,525 local governmental jurisdictions in the United 
States. We estimate that, of this total, 84,377 entities were ``small 
governmental jurisdictions.'' Thus, we estimate that most governmental 
jurisdictions are small.
    14. Small entities potentially affected by the proposals herein 
include eligible schools and libraries and the eligible service 
providers offering them discounted services.
    15. Schools and Libraries. As noted, ``small entity'' includes non-
profit and small government entities. Under the schools and libraries 
universal service support mechanism, which provides support for 
elementary and secondary schools and libraries, an elementary school is 
generally ``a non-profit institutional day or residential school that 
provides elementary education, as determined under state law.'' A 
secondary school is generally defined as ``a non-profit institutional 
day or residential school that provides secondary education, as 
determined under state law,'' and not offering education beyond grade 
12. For-profit schools and libraries, and schools and libraries with 
endowments in excess of $50,000,000, are not eligible to receive 
discounts under the program, nor are libraries whose budgets are not 
completely separate from any schools. Certain other statutory 
definitions apply as well. The SBA has defined for-profit, elementary 
and secondary schools and libraries having $6 million or less in annual 
receipts as small entities. In funding year 2007 approximately 105,500 
schools and 10,950 libraries received funding under the schools and 
libraries universal service mechanism. Although we are unable to 
estimate with precision the number of these entities that would qualify 
as small entities under SBA's size standard, we estimate that fewer 
than 105,500 schools and 10,950 libraries might be affected annually by 
our action, under current operation of the program.
    16. Telecommunications Service Providers. First, neither the 
Commission nor the SBA has developed a size standard for small 
incumbent local exchange services. The closest 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 incumbent carriers reported that 
they were engaged in the provision of local exchange services. Of these 
1,307 carriers, an estimated 1,006 have 1,500 or fewer employees and 
301 have more than 1,500 employees. Thus, under this category and 
associated small business size standard, we estimate that the majority 
of entities are small. We have included small incumbent local exchange 
carriers in this RFA analysis. A ``small business'' under the RFA is 
one that, inter alia, meets the pertinent small business size standard 
(e.g., a telephone communications business having 1,500 or fewer 
employees), and ``is not dominant in its field of operation.'' The 
SBA's Office of Advocacy contends that, for RFA purposes, small 
incumbent local exchange carriers are not dominant in their field of 
operation because any such dominance is not ``national'' in scope. We 
have therefore included small incumbent carriers in this RFA analysis, 
although we emphasize that this RFA action has no effect on the 
Commission's analyses and determinations in other, non-RFA contexts.
    17. Second, neither the Commission nor the SBA has developed a 
definition of small entities specifically applicable to providers of 
interexchange services (IXCs). The closest applicable definition under 
the SBA rules is for wired telecommunications carriers. This

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provides that a wired telecommunications carrier is a small entity if 
it employs no more than 1,500 employees. According to the Commission's 
2010 Trends Report, rel. Sept. 2012, 359 companies reported that they 
were engaged in the provision of interexchange services. Of these 300 
IXCs, an estimated 317 have 1,500 or few employees and 42 have more 
than 1,500 employees. Consequently, the Commission estimates that most 
providers of interexchange services are small businesses.
    18. Third, neither the Commission nor the SBA has developed a 
definition of small entities specifically applicable to competitive 
access services providers (CAPs). The closest applicable definition 
under the SBA rules is for wired telecommunications carriers. This 
provides that a wired telecommunications carrier is a small entity if 
it employs no more than 1,500 employees. According to the 2010 Trends 
Report, 1,442 CAPs and competitive local exchange carriers (competitive 
LECs) reported that they were engaged in the provision of competitive 
local exchange services. Of these 1,442 CAPs and competitive LECs, an 
estimated 1,256 have 1,500 or fewer employees and 186 have more than 
1,500 employees. Consequently, the Commission estimates that most 
providers of competitive exchange services are small businesses.
    19. Wireless Telecommunications Carriers (except Satellite). Since 
2007, the Census Bureau has placed wireless firms within this new, 
broad, economic census category. Prior to that time, such firms were 
within the now-superseded categories of ``Paging'' and ``Cellular and 
Other Wireless Telecommunications.'' Under the present and prior 
categories, the SBA has deemed a wireless business to be small if it 
has 1,500 or fewer employees. Because Census Bureau data are not yet 
available for the new category, we will estimate small business 
prevalence using the prior categories and associated data. For the 
category of Paging, data for 2002 show that there were 807 firms that 
operated for the entire year. Of this total, 804 firms had employment 
of 999 or fewer employees, and three firms had employment of 1,000 
employees or more. For the category of Cellular and Other Wireless 
Telecommunications, data for 2002 show that there were 1,397 firms that 
operated for the entire year. Of this total, 1,378 firms had employment 
of 999 or fewer employees, and 19 firms had employment of 1,000 
employees or more. Thus, we estimate that the majority of wireless 
firms are small.
    20. Wireless telephony includes cellular, personal communications 
services, and specialized mobile radio telephony carriers. As noted, 
the SBA has developed a small business size standard for Wireless 
Telecommunications Carriers (except Satellite). Under the SBA small 
business size standard, a business is small if it has 1,500 or fewer 
employees. According to the 2010 Trends Report, 413 carriers reported 
that they were engaged in wireless telephony. Of these, an estimated 
261 have 1,500 or fewer employees and 152 have more than 1,500 
employees. We have estimated that 261 of these are small under the SBA 
small business size standard.
    21. Common Carrier Paging. As noted, since 2007 the Census Bureau 
has placed paging providers within the broad economic census category 
of Wireless Telecommunications Carriers (except Satellite). Prior to 
that time, such firms were within the now-superseded category of 
``Paging.'' Under the present and prior categories, the SBA has deemed 
a wireless business to be small if it has 1,500 or fewer employees. 
Because Census Bureau data are not yet available for the new category, 
we will estimate small business prevalence using the prior category and 
associated data. The data for 2002 show that there were 807 firms that 
operated for the entire year. Of this total, 804 firms had employment 
of 999 or fewer employees, and three firms had employment of 1,000 
employees or more. Thus, we estimate that the majority of paging firms 
are small.
    22. In addition, in the Paging Second Report and Order, 12 FCC Rcd 
2732, rel. Feb. 24, 1997, the Commission adopted a size standard for 
``small businesses'' for purposes of determining their eligibility for 
special provisions such as bidding credits and installment payments. A 
small business is an entity that, together with its affiliates and 
controlling principals, has average gross revenues not exceeding $15 
million for the preceding three years. The SBA has approved this 
definition. An initial auction of Metropolitan Economic Area (``MEA'') 
licenses was conducted in the year 2000. Of the 2,499 licenses 
auctioned, 985 were sold. Fifty-seven companies claiming small business 
status won 440 licenses. A subsequent auction of MEA and Economic Area 
(``EA'') licenses was held in the year 2001. Of the 15,514 licenses 
auctioned, 5,323 were sold. One hundred thirty-two companies claiming 
small business status purchased 3,724 licenses. A third auction, 
consisting of 8,874 licenses in each of 175 EAs and 1,328 licenses in 
all but three of the 51 MEAs, was held in 2003. Seventy-seven bidders 
claiming small or very small business status won 2,093 licenses.
    23. Currently, there are approximately 74,000 Common Carrier Paging 
licenses. According to the most recent Trends in Telephone Service, 
rel. Sept. 2012, 291 carriers reported that they were engaged in the 
provision of ``paging and messaging'' services. Of these, an estimated 
289 have 1,500 or fewer employees and two have more than 1,500 
employees. We estimate that the majority of common carrier paging 
providers would qualify as small entities under the SBA definition.
    24. Internet Service Providers. The 2007 Economic Census places 
these firms, whose services might include voice over Internet protocol 
(VoIP), in either of two categories, depending on whether the service 
is provided over the provider's own telecommunications facilities 
(e.g., cable and DSL ISPs), or over client-supplied telecommunications 
connections (e.g., dial-up ISPs). The former are within the category of 
Wired Telecommunications Carriers, which has an SBA small business size 
standard of 1,500 or fewer employees. The latter are within the 
category of All Other Telecommunications, which has a size standard of 
annual receipts of $25 million or less. The most current Census Bureau 
data for all such firms, however, are the 2002 data for the previous 
census category called Internet Service Providers. That category had a 
small business size standard of $21 million or less in annual receipts, 
which was revised in late 2005 to $23 million. The 2002 data show that 
there were 2,529 such firms that operated for the entire year. Of 
those, 2,437 firms had annual receipts of under $10 million, and an 
additional 47 firms had receipts of between $10 million and 
$24,999,999. Consequently, we estimate that the majority of ISP firms 
are small entities.
    25. Vendors of Internal Connections: Telephone Apparatus 
Manufacturing. The Census Bureau defines this category as follows: 
``This industry comprises establishments primarily engaged in 
manufacturing wire telephone and data communications equipment. These 
products may be standalone or board-level components of a larger 
system. Examples of products made by these establishments are central 
office switching equipment, cordless telephones (except cellular), PBX 
equipment, telephones, telephone answering machines, LAN modems, multi-
user modems, and other data communications equipment, such as bridges, 
routers, and gateways.'' The SBA has developed a small business

[[Page 23881]]

size standard for Telephone Apparatus Manufacturing, which is: all such 
firms having 1,000 or fewer employees. According to Census Bureau data 
for 2002, there were a total of 518 establishments in this category 
that operated for the entire year. Of this total, 511 had employment of 
under 1,000, and an additional seven had employment of 1,000 to 2,499. 
Thus, under this size standard, the majority of firms can be considered 
small.
    26. Vendors of Internal Connections: Radio and Television 
Broadcasting and Wireless Communications Equipment Manufacturing. The 
Census Bureau defines this category as follows: ``This industry 
comprises establishments primarily engaged in manufacturing radio and 
television broadcast and wireless communications equipment. Examples of 
products made by these establishments are: transmitting and receiving 
antennas, cable television equipment, GPS equipment, pagers, cellular 
phones, mobile communications equipment, and radio and television 
studio and broadcasting equipment.'' The SBA has developed a small 
business size standard for firms in this category, which is: all such 
firms having 750 or fewer employees. According to Census Bureau data 
for 2002, there were a total of 1,041 establishments in this category 
that operated for the entire year. Of this total, 1,010 had employment 
of under 500, and an additional 13 had employment of 500 to 999. Thus, 
under this size standard, the majority of firms can be considered 
small.
    27. Vendors of Internal Connections: Other Communications Equipment 
Manufacturing. The Census Bureau defines this category as follows: 
``This industry comprises establishments primarily engaged in 
manufacturing communications equipment (except telephone apparatus, and 
radio and television broadcast, and wireless communications 
equipment).'' The SBA has developed a small business size standard for 
Other Communications Equipment Manufacturing, which is having 750 or 
fewer employees. According to Census Bureau data for 2002, there were a 
total of 503 establishments in this category that operated for the 
entire year. Of this total, 493 had employment of under 500, and an 
additional 7 had employment of 500 to 999. Thus, under this size 
standard, the majority of firms can be considered small.

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

    28. In the Public Notice, the Bureau seeks public comment on 
proposals for cost allocating bundled ineligible components. The 
proposed rule could result in minimal additional reporting 
requirements.
    29. These requirements are already part of 47 CFR 54.504(e) which 
require a clear delineation of eligible and ineligible services that 
are included on an application requesting E-rate discounts. The result 
of the Public Notice could be that small entities that had not been 
cost allocating certain bundled ineligible components per the Order 
would again be required to comply with 47 CFR 54.504(e) requirements 
for cost allocating these components. Small entities that are service 
providers and vendors in the E-rate program would also be required to 
reexamine offerings in accordance to any changed requirements.

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

    30. 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 rule 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.''
    31. The proposed rulemaking could impose minimal additional burden 
on small entities. The only additional administrative burden the 
proposed rulemaking could impose on small entities, however, would be 
requiring them to cost allocate ineligible components that they may 
have presumed were exempted from the cost allocation requirements per 
the Order. Cost allocation requires determining the costs of eligible 
and ineligible components and reporting the delineation of those costs 
in a request for E-rate discounts on the FCC Form 471. E-rate 
recipients had been required to cost allocate ineligible components 
bundled with eligible services prior to the Order, and are already 
generally required to cost allocate all ineligible components. Thus, 
this rulemaking merely removes a short-term exemption that may have 
been applicable to certain equipment that met the limited 
qualifications outlined in the Order.

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

    32. None.

H. Initial Paperwork Reduction Act of 1995 Analysis

    33. This document seeks comment on a potential new or revised 
information collection requirement. If the Commission adopts any new or 
revised information collection requirement, the Commission will publish 
a separate notice in the Federal Register inviting the public to 
comment on the requirement, as required by the Paperwork Reduction Act 
of 1995, Public Law 104-13 (44 U.S.C. 3501-3520). In addition, pursuant 
to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, 
see 44 U.S.C. 3506(c)(4), the Commission seeks specific comment on how 
it might ``further reduce the information collection burden for small 
business concerns with fewer than 25 employees.''

I. Ex Parte Presentations

    34. 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, 47 CFR 1.1200 through 
1.1216. 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

[[Page 23882]]

shown or given to Commission staff during ex parte meetings are deemed 
to be written ex parte presentations and must be filed consistent with 
Sec.  1.1206(b) of the Commission's rules. In proceedings governed by 
Sec.  1.49(f) of the Commission's rules 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.
Kimberly Scardino,
Division Chief, Telecommunications Access Policy Division, Wireline 
Competition Bureau.
[FR Doc. 2013-09421 Filed 4-22-13; 8:45 am]
BILLING CODE 6712-01-P