[Federal Register Volume 78, Number 109 (Thursday, June 6, 2013)]
[Proposed Rules]
[Pages 34016-34020]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-13361]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 54
[WC Docket No. 10-90; DA 13-1112]
Wireline Competition Bureau Seeks Comment on Options To Promote
Rural Broadband in Rate-Of-Return Areas
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
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SUMMARY: In this document, the Wireline Competition Bureau seeks
comment on options to promote the availability of modern voice and
broadband-capable networks in rural areas served by rate-of-return
carriers. In particular, the Bureau seeks comment on two possible
frameworks that could provide rate-of-return carriers with additional
incentives to efficiently advance broadband deployment.
DATES: Comments are due on or before June 17, 2013 and reply comments
are due on or before July 15, 2013.
ADDRESSES: Interested parties may file comments on or before June 17,
2013 and reply comments on or before July 15, 2013. All pleadings are
to reference WC Docket No. 10-90. Comments may be filed using the
Commission's Electronic Comment Filing System (ECFS) or by filing paper
copies, by any of the following methods:
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.
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).
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: Ted Burmeister, Wireline Competition
Bureau at (202) 418-7389 or TTY (202) 418-0484.
[[Page 34017]]
SUPPLEMENTARY INFORMATION: This is a synopsis of the Wireline
Competition Bureau's Public Notice (Notice) in WC Docket No. 10-90; DA
13-1112, released May 16, 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., 445 12th Street SW., Room CY-B402, Washington, DC 20554,
telephone (800) 378-3160 or (202) 863-2893, facsimile (202) 863-2898,
or via Internet at http://www.bcpiweb.com.
1. By this Public Notice, the Wireline Competition Bureau (Bureau)
seeks comment on options to promote the availability of modern voice
and broadband-capable networks in rural areas served by rate-of-return
carriers. In particular, we seek comment on two possible frameworks
that could provide rate-of-return carriers with additional incentives
to efficiently advance broadband deployment. First, rate-of-return
carriers have urged the Commission to take steps to make universal
service fund support available to support broadband lines even where
their consumers choose not to purchase voice telephony service. To that
end, we seek additional targeted comment on several aspects of a
proposal made by the rural carrier associations regarding changes to
the existing framework set forth in the Commission's rules to make
support available for network infrastructure that provides standalone
broadband service. Second, we seek comment on facilitating rate-of-
return carriers' voluntary participation in Connect America Phase II.
Connect America Phase II will feature clearly defined support amounts
for a defined period of time along with specific service deployment
obligations. Certain rate-of-return carriers may find advantages to
participating in Connect America Phase II and seek to opt in to this
support mechanism. Recognizing that rate of return carriers already
have the option of voluntary conversion to price cap regulation, we
seek comment what steps we could take to facilitate such conversions
and other issues related to the provision of Connect America Fund Phase
II support to rate-of-return carriers.
A. Rural Association Proposal for Standalone Broadband Lines
2. The rural carrier associations have advocated for a ``Connect
America Fund that supports broadband-capable networks that enable
advanced communications and enhanced consumer choice in all rural
areas.'' Of course, as the rural carrier associations have acknowledged
in other contexts, existing universal service support for rate-of-
return carriers supports such networks, and indeed, under the USF/ICC
Transformation Order, 76 FR 73830, November 29, 2011, carriers are
required to deploy broadband-capable infrastructure as a condition of
receiving such support. The rural carrier associations have noted that
``[t]he Order adopts a number of broadband-related public interest
obligations for ETCs, including RLECs[,] . . . [including a]
requirement[] that RLECs offer broadband services meeting minimum speed
and latency requirements upon `reasonable request'.'' The rural carrier
associations suggest that the Commission should provide high-cost
support for standalone broadband loops provided by rate-of-return
carriers to further advance this goal.
3. Today, a rate-of-return carrier may provide broadband
transmission in one of two ways: over a loop that provides both voice
and broadband, or over a standalone broadband transmission loop.
However, universal service support--in the form of High-Cost Loop
Support (``HCLS'') and Interstate Common Line Support (``ICLS'')--is
available for a broadband-capable loop provided by a rate-of-return
carrier only if the end user customer purchases voice service. When the
loop is used to deliver both voice and broadband transmission services
on a Title II basis, the loop is considered a ``joint use'' loop. Under
current Commission rules, the costs of that loop are considered
regulated costs, with most of those costs allocated to the intrastate
jurisdiction. HCLS and ICLS provide support for interstate and
intrastate loop costs. The costs of a loop are only recovered once
under the Commission's cost allocation and pricing procedures. Loop
costs associated with joint-use facilities are allocated between the
state and federal jurisdictions on a 75/25 percent basis. These joint-
use loops may receive HCLS and ICLS. The costs of these joint-use
facilities, therefore, are recovered through a combination of
intrastate end user charges for voice service, interstate charges (such
as the subscriber line charge) and universal service support.
Typically, the only costs recovered through the special access tariff
for the broadband transmission service are the incremental costs
associated with making the loop broadband-capable. In contrast, if the
loop only is used to deliver Title II broadband transmission service,
and not voice, all of the costs associated with that loop are
jurisdictionally interstate and are allocated to special access, and
the underlying broadband transmission is tariffed as special access.
Broadly speaking, 100 percent of line costs associated with special
access services are directly assigned to either the interstate or
intrastate jurisdiction, dependent on the jurisdictional usage of the
line. Special access costs (loop and other incremental costs) are
recovered in the appropriate jurisdiction through tariffed rates for
the involved services without the benefit of any universal service
support. See generally 47 CFR parts 36 and 69. There is no universal
service support mechanism for costs associated with special access
provided by rate-of-return carriers. The rural carrier associations
contend this lack of support for standalone broadband transmission
service in high cost areas contributes to a significant variance in the
rates consumers pay for broadband bundled with voice service compared
to standalone broadband.
4. The Commission originally sought comment on this proposal in the
USF/ICC Transformation Order FNPRM, 76 FR 73830, November 29, 2011 and
76 FR 78384, December 16, 2011, where it inquired about the legal and
policy implications to providing USF support for lines where the end
user customer does not subscribe to voice service from the eligible
telecommunications carrier (ETC), including the monetary impact on the
Connect America Fund if the Commission were to provide support for
standalone broadband provided by rate-of-return carriers. The
Commission also inquired about what rule changes would help provide
appropriate incentives for investment in broadband-capable networks,
while limiting unrestrained growth in support provided to rate-of-
return carriers.
5. Since that time, the rural associations have made additional
filings regarding this matter, arguing, among other things, that
providing support for standalone broadband would promote broadband
adoption and competition in voice services. First, the rural
associations suggest that the Commission should ``consider technical
fixes to its rules that would permit loop costs to remain in the Common
Line pool (and thus eligible for USF cost recovery) even where a
consumer declines to take an offer of voice telephony and instead
elects only to take broadband service from an RLEC.'' The rural
associations argue that ``[s]uch simple part 69 rule changes are needed
to fulfill the express and plainly stated intent of the Commission's
reform order,
[[Page 34018]]
and . . . allow consumers in rural areas to have the same choices as
those in urban areas with respect to their communications services.''
What specific part 69 rule changes would be required? Are any other
rule changes necessary? What is the near-term impact to the HCLS and
ICLS mechanisms? Would making these modifications to the Commission's
rules change the HCLS allocation among carriers? Would such changes
increase ICLS support?
6. We also invite interested parties to comment on several issues
related to establishing separate loop categories to account for joint-
use lines and standalone broadband lines. First, we invite parties to
comment on whether there are definitional issues relating to Part 69
implementation that would need to be addressed to define rate elements
necessary to offer standalone broadband service. Parties should address
whether a loop element and a port element structure similar to the
structure currently used for joint-use loops should be used and, if so,
how different speeds should be handled within the rate structure. For
example, can speed differences be addressed through a circuit
equipment/port charge while having a line rate that is uniform for all
speeds? Parties should also address whether the Commission should
create classes of standalone broadband, with the costs of certain
standalone broadband transmission services remaining in the Common Line
pool, while the costs associated with other broadband transmission
services would not. If the Commission were to do so, how should it
define the characteristics of the different classes? For example,
should the Commission maintain a class of special access broadband
transmission? As noted above, standalone broadband service is currently
in the special access category. And, carriers have had significant
flexibility in establishing special access rates. The pricing
principles for the new loop Common Line service must be clear to avoid
potential misuse, such as supporting special access services. We invite
parties to comment on the need for cost allocation procedures to be
used to establish the price of a standalone broadband loop offering.
Commenters should address procedures for allocating direct, indirect,
and overhead costs. Commenters should also discuss any revisions to the
Commission's rules required to implement any cost allocation
procedures.
7. Second, the rural associations suggest that ``[w]hile some of
these issues require further analysis'' a standalone broadband funding
mechanism is ultimately necessary to ``ensure that broadband is
available at affordable, reasonably comparable rates for consumers in
high-cost areas.'' We seek comment on how such a mechanism would impact
providers' investment plans and service offerings, as well as consumer
choices and rates. We invite commenters to provide data on the specific
percentages of residential end users that currently purchase retail
broadband Internet access without landline service in rural areas
served by rate-of-return carriers and in rural areas served by price
cap carriers. We also invite comment on how a standalone broadband
funding mechanism could be structured. If implemented, how would a
transition to such a mechanism work, and would there be an impact on
the total amount of support received by rate-of-return carriers? How
would such a mechanism be implemented within the overall high-cost
Connect America Fund framework, which established a budget of ``up to
$2 billion'' annually for rate-of-return territories, including
intercarrier compensation recovery? Would it make sense to limit
support provided through such a mechanism, or to adopt such a mechanism
in conjunction with overall limits on support?
B. Voluntary Election of Connect America Phase II Model-Based Support
8. Facilitating a path for carriers to opt in to Connect America
Phase II, including through the existing process to convert to price
cap regulation, is consistent with the Commission's longstanding goal
of providing support to all carriers through incentive-based
mechanisms. We seek comment on whether creating a more explicit
voluntary pathway to model-based support would be an additional way to
promote efficient new broadband deployment in rural rate-of-return
areas.
9. In the USF/ICC Transformation Order, the Commission adopted the
framework for the Connect America Fund Phase II, which will provide
support in areas served by price cap carriers. While price cap
conversion is generally available to carriers, the Commission did not
specifically address the circumstance in which a rate-of-return carrier
that is not affiliated with a price cap holding company would seek to
participate in Connect America Phase II. The Commission decided that
Phase II support should be based on the forward-looking costs of
deploying voice and broadband-capable networks in high-cost areas, with
support calculated at a granular area. The Commission delegated to the
Bureau the authority to develop a model and establish support
thresholds. Based on the support amounts derived from the model, the
Commission will offer each price cap carrier, and any rate-of-return
LEC affiliates of a price cap carrier, annual support for the five-year
period in exchange for a commitment to offer a specified level of
service within that service territory. For all territories for which
price cap LECs decline to make that commitment, the Commission will
award ongoing support through a competitive bidding mechanism. At the
end of the five-year Connect America Fund Phase II period, the
Commission expects to distribute all Connect America Fund support in
price cap areas pursuant to a market-based mechanism.
10. In adopting the framework for the Connect America Fund Phase
II, the Commission did not explicitly address how this model might be
applied to determine support amounts in non-price cap territories. We
now seek to further develop the record on how Connect America Fund
Phase II could be provided in areas that currently are served by rate-
of-return carriers to provide additional incentives for deployment of
broadband-capable networks.
11. We invite parties to comment on the advantages and
disadvantages of this pathway, both from the perspective of potential
recipients of support and for achievement of the Commission's overall
goals for reform. In particular, parties should address the extent to
which rate-of-return carriers would find it beneficial to receive Phase
II support rather than the support provided by the current HCLS and
ICLS programs. Would individual carriers conclude the potential
benefits of receiving a steady, model-derived support amount for a
multi-year period, combined with an incentive-based structure that
allows carriers to capture the benefits of efficiency, are sufficient
to pursue this option? We seek comment on how facilitating a transition
for rate-of-return carriers to model-based support would impact
providers' investment plans and service offerings, as well as consumer
choices and rates.
12. Timing. Nothing in the USF/ICC Transformation Order precludes
current rate-of-return carriers from electing to convert to price cap
regulation in order to receive Connect America Phase II model-based
support. Given that significant progress has been made on Phase II
implementation, however, it may be unlikely that a rate-of-return
carrier could complete the process of converting to price cap
regulation before the Bureau adopts a cost model and specifies the
amount of model-based support that will be offered to price cap
[[Page 34019]]
carriers. We therefore focus on how a rate-of-return carrier might
convert to price cap regulation and receive model-based support after
Phase II is offered to the price cap carriers. Should there be a
deadline for rate-of-return carriers to file for such a voluntary
conversion to price caps in order to receive model-based support?
13. Amount of Support. We seek comment on the amount of support to
be offered to future converts to price cap regulation under Connect
America Fund Phase II. Because the funding threshold and ``extremely
high-cost'' threshold will have been determined and model cost
estimates for the converting carriers will be available at the time of
the conversion, one option would be to provide the converting carrier
with the level of support calculated by the model. We seek comment on
this method for determining support for price cap converts.
14. Budgetary Impact. We seek comment on the monetary impact on the
Connect America Fund of providing a voluntary path for current rate-of-
return carriers to opt-in to model-based support, and how this might
impact the Commission's budget for price cap territories versus rate-
of-return territories. To what extent would this option only be elected
by carriers for whom model-based support is equal to or greater than
their current support? How likely is it that some rate-of-return
carriers may choose this voluntary path even if they would receive less
support in the near term, for the advantage of having a steady
universal service revenue stream for a defined period of years?
15. We also seek comment on the effect of a price cap conversion on
high-cost loop support. We note that, in the USF/ICC Transformation
Order, the Commission rebased the cap on HCLS to reflect that price cap
carriers and their rate-of-return affiliates would be receiving support
pursuant to Connect America and would no longer be eligible for HCLS.
Consistent with this precedent, the Bureau proposes that HCLS should be
similarly rebased if a rate-of-return carrier converts to price cap
regulation in the future. The Bureau seeks comment on this proposal.
16. Commitment to Accept Model-Based Support. Existing price cap
carriers will be provided an opportunity to make a state-level
commitment for model-based support after the Bureau releases a public
notice indicating the census blocks eligible for funding and how much
Connect America Phase II support will be offered to them. We seek
comment regarding whether new price cap regulated carriers should
similarly be provided an opportunity to accept or decline model-based
support, or if the act of becoming a price cap carrier effectively
should be deemed an acceptance of support for the relevant census
blocks. Would there be any instance in which a price cap conversion
could be granted, and the converting carrier could be permitted to
decline the support, which then could be assigned through competitive
bidding? Should rate-of-return carriers be permitted to decline model-
determined support if that occurs before the time to finalize the
census blocks that will be subject to bidding in the competitive
process following the offer of state-level support to price cap
carriers? Should carriers in this situation be required to elect
support on a state-wide basis, if they have multiple study areas within
a state, or should they be permitted to elect support on a study area
basis? Are there any other issues relating to the process of accepting
model-based support that would need to be resolved for new price cap
converts?
17. Term for Connect America Phase II Support. The USF/ICC
Transformation Order specifies that Connect America Phase II will last
five years. We seek comment regarding whether carriers converting to
price cap regulation after Connect America Phase II commences should
receive Connect America Phase II support on the same time table as
other price cap carriers. One option would be that the Commission would
determine successor mechanisms for all carriers receiving Connect
America Phase II support, regardless of when the carrier began
receiving support. For example, if a rate-of-return carrier converted
to price cap regulation at the end of year 3 of the Connect America
Phase II, the carrier would only participate in Connect America Phase
II for years 4 and 5. Transitioning from Connect America Phase II to
any subsequent mechanisms for all areas at the same time will ensure
that the market-based mechanisms anticipated by the Commission will
have the widest applicable area, which in turn could maximize
efficiencies. We seek comment on this proposal. Alternatively, should
carriers that voluntarily elect to receive model-based support receive
such support for a term of five years, commencing with the date they
first receive such support? Or, should current rate-of-return carriers
that voluntarily elect to receive model-based support be provided
support for a period longer than five years, such as a period of time
to coincide with the intercarrier compensation transition for rate-of-
return carriers. We seek comment on these alternatives, as well as any
other proposals for Connect America Phase II terms that parties may put
forth in the record.
18. Service Obligations. Carriers receiving support pursuant to
Connect America Fund Phase II will be subject to specific service
obligations and reporting requirements to demonstrate compliance with
those obligations. We seek comment on whether or how those obligations
should be modified for carriers that convert to price cap regulation
after the implementation of model-based support for current price cap
carriers and their rate-of-return affiliates. One option would be for
all service obligations to remain the same for price cap converts as
for current price cap carriers, except that the number of locations
served with broadband could be adjusted on a sliding scale to reflect
the shorter time for buildout. We seek comment on this proposal, and
also invite commenters to suggest alternatives that would be consistent
with the Commission's goals in establishing service obligations for
Connect America Fund Phase II.
19. Alternatives to Price Cap Conversion. We also seek comment on
an alternative to providing Phase II model-based support only to
carriers who convert to price cap regulation, as discussed above. We
ask parties to comment on whether the Commission should allow rate-of-
return carriers to elect to receive model-based support in lieu of HCLS
and ICLS, but otherwise remain regulated under rate-of-return
regulation. Parties should address the extent to which this alternative
would encourage or allow carriers to shift costs from the common line
category to the special access category and the ability of, and the
measures needed for, the Commission to monitor such activities. Parties
should identify any rules that would need to be revised to implement
this alternative, including any rule changes necessary to ensure that a
carrier does not receive both Phase II support and support under the
existing mechanisms for rate-of-return companies (i.e., HCLS and ICLS).
We also ask parties to address the matters discussed in the preceding
paragraphs as they relate to this alternative approach.
C. Procedural Matters
1. Initial Regulatory Flexibility Act Analysis
20. The USF/ICC Transformation Order and FNPRM included an Initial
Regulatory Flexibility Analysis (IRFA) pursuant to 5 U.S.C. 603,
exploring the
[[Page 34020]]
potential impact on small entities of the Commission's proposal. We
invite parties to file comments on the IRFA in light of this additional
notice.
2. Initial Paperwork Reduction Act of 1995 Analysis
21. 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.''
3. Filing Requirements
22. Pursuant to sections 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.
(1) 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.
(2) 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.
(3) U.S. Postal Service first-class, Express, and Priority mail
must be addressed to 445 12th Street SW., Washington, DC 20554.
23. 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).
24. This matter 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 Sec. 1.1206(b). In proceedings governed by
Sec. 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.
Kimberly A. Scardino,
Division Chief, Telecommunications Access Policy Division, Wireline
Competition Bureau.
[FR Doc. 2013-13361 Filed 6-5-13; 8:45 am]
BILLING CODE 6712-01-P