[Federal Register Volume 82, Number 109 (Thursday, June 8, 2017)]
[Proposed Rules]
[Pages 26653-26656]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-11848]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[WC Docket No. 10-90; FCC 17-61]


Connect America Fund

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In this document, the Federal Communications Commission 
(Commission) seeks comment on whether the Commission should change the 
current rate floor methodology or eliminate the rate floor and its 
accompanying reporting obligation.

DATES: Comments are due on or before July 10, 2017 and reply comments 
are due on or before July 24, 2017. If you anticipate that you will be 
submitting comments, but find it difficult to do so within the period 
of time allowed by this document, you should advise the contact listed 
below as soon as possible.

ADDRESSES: You may submit comments, identified by WC Docket No. 10-90, 
by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Federal Communications Commission's Web site: http://fjallfoss.fcc.gov/ecfs2/. Electronic Filers: Comments may be filed 
electronically using the Internet by accessing the ECFS: http://fjallfoss.fcc.gov/ecfs2/.

[[Page 26654]]

    [ssquf] Paper Filers: Parties who choose to file by paper must file 
an original and one copy of each filing.
     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.
    [cir] 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.
    [ssquf] Commercial overnight mail (other than U.S. Postal Service 
Express Mail and Priority Mail) must be sent to 9300 East Hampton 
Drive, Capitol Heights, MD 20743.
    [ssquf] U.S. Postal Service first-class, Express, and Priority mail 
must be addressed to 445 12th St. SW., Washington, DC 20554.
     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 FURTHER INFORMATION CONTACT: Alexander Minard, Wireline Competition 
Bureau, (202) 418-7400 or TTY: (202) 418-0484.

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's 
Notice of Proposed Rulemaking (NPRM) in WC Docket No. 10-90; FCC 17-61, 
adopted on May 18, 2017 and released on May 19, 2017. The full text of 
this document is available for public inspection during regular 
business hours in the FCC Reference Center, Room CY-A257, 445 12th St. 
SW., Washington, DC 20554 or at the following Internet address: https://www.fcc.gov/document/voice-rate-floor-nprm-and-order.

I. Introduction

    1. In 2011, the Commission adopted a rule intended to ensure that 
consumers across the country are not subsidizing the cost of voice 
service to rural customers whose rates are below a set minimum rate. 
This requirement is known as the ``rate floor.'' If a carrier chooses 
to charge its customers less than the rate floor amount for voice 
service, the difference between the amount charged and the rate floor 
is deducted from the amount of support that carrier receives through 
the Universal Service Fund (USF). Since July 1, 2016, this minimum 
amount has been $18, and the Commission previously scheduled increases 
to $20 on July 1, 2017 and $22 on July 1, 2018. After several years of 
experience with it, the Commission now revisits it to ensure the 
Commission's policies continue to further its statutory obligation to 
ensure ``[q]uality services . . . available at just, reasonable, and 
affordable rates.'' The Commission accordingly seeks comment on whether 
it should make any changes to the current methodology or eliminate the 
rate floor and its accompanying reporting obligation.

II. Discussion

    2. The Commission seeks comment on whether it should change the 
current methodology or eliminate the rate floor and its accompanying 
reporting obligation.
    3. In adopting the rate floor, the Commission determined that it is 
``inappropriate to provide federal high-cost support to subsidize local 
rates beyond what is necessary to ensure reasonable comparability.'' 
The Commission further stated that ``[d]oing so places an undue burden 
on the Fund and consumers that pay into it'' and expressed the view 
that it would not be equitable ``for consumers across the country to 
subsidize the cost of service for some consumers that pay local service 
rates that are significantly lower than the national urban average.''
    4. On the other hand, stakeholders ranging from the AARP to the 
National Tribal Telecommunications Association, from the National 
Consumer Law Center to small, medium, and large rural telephone 
companies, have raised concerns that the rate floor is inconsistent 
with the direction of section 254(b) of the Communications Act to 
advance universal service in rural, insular, and high cost areas of the 
country while ensuring that rates are just, reasonable, and affordable. 
These parties have argued that the rule makes basic voice service in 
rural areas less affordable, does not make voice service available at 
reasonably comparable rates to urban areas, and does not further the 
Commission's objective to ``minimize the universal service contribution 
burden on consumers and businesses.'' In that same vein, no one 
disputes that the rate floor has increased rates for voice service in 
rural areas, despite the Commission's goal to ``preserve and advance 
universal availability of voice service.'' Some parties have also 
asserted that price increases negatively affect rural consumers and 
``could lead to some customers losing affordable access to basic 
service entirely.'' Others have noted that the increases caused by the 
rate floor rule could have a particularly deleterious effect on older 
Americans on fixed incomes and customers in Tribal areas.
    5. In addition, some parties have raised concerns about the use of 
a single, national rate floor. Some have argued that incomes are often 
lower in rural areas and the rate floor incorrectly ``assumes that 
what's affordable in our country's largest cities must be affordable in 
our small towns.'' Others have suggested that the Commission should 
consider ``whether more localized survey data would better serve the 
goal of ensuring reasonably comparable service at reasonably comparable 
rates, and what flexibility the states need to serve users under the 
particular circumstances of each state.'' The Commission observes that 
nothing in the statute requires adoption of a single, national rate 
floor.
    6. Accordingly, the Commission seeks comment on whether changes to 
the current methodology are needed to address these concerns. If so, 
what changes should be made? Should the Commission allow carriers to 
charge a rate that is one standard deviation below the average urban 
rate? Should the Commission replace the single, national rate floor 
with state or regional rate floors? Are there other ideas the 
Commission should consider? Alternatively, should the Commission 
eliminate the rate floor altogether?
    7. As part of the Commission's consideration of possible changes to 
the methodology or elimination of the rate floor, it seeks comment on 
the intersection of the rate floor with state ratemaking and state 
universal service funds. The Commission also notes that states have 
historically regulated rates for local telephone service. Indeed, the 
Communications Act makes clear that ``nothing in this [Act] shall be 
construed to apply, or to give the Commission jurisdiction,'' over 
rates for ``telephone exchange service,'' i.e., local service. States 
have historically relied on a variety of regulating methods (including 
the use of state universal service funds) to ensure just and reasonable 
rates for that service--and those methods already by law must not 
``rely on or burden Federal universal service support mechanisms.'' The 
Commission seeks comment on these arguments. The Commission also seeks 
comment on the Tenth Circuit's suggestion that ``the FCC `remains 
obligated to create some inducement . . . for the states to assist in 
implementing the goals of universal

[[Page 26655]]

service,' i.e., in this case to ensure that rural rates are not 
artificially low.''
    8. More generally, the Commission seeks comment on whether the rate 
floor is meeting the intended purposes. One party has argued that ``an 
increase in the local rate floor does not impact payment into the 
Universal Service Fund or the budget of the fund, but it does affect 
consumer choice, penalizes incumbent wireline providers and ultimately 
broadband deployment.'' On the other hand, the Commission notes that 
the Commission last year adopted a budget control mechanism for 
carriers within the legacy rate-of-return system, including those 
receiving high-cost loop support. As such, any funding reductions from 
the rate floor are generally redistributed to other carriers to 
mitigate the impact of the budget control mechanism, not returned to 
ratepayers as contributions relief. The Commission notes that the rate 
floor both reduces total high-cost loop support (HCLS) support and 
reduces the budget impact on all rate-of-return carriers for HCLS and 
Connect America Fund--Broadband Loop Support (CAF-BLS). Specifically, 
based on the data used to calculate the recently published rate-of-
return budget control mechanism, the Commission estimates that the rate 
floor effectively reduced total HCLS by 1.3 percent and effectively 
increased CAF-BLS by 0.9 percent. The Commission seeks comment on the 
impact of this redistribution on broadband deployment, both with 
respect to carriers receiving higher total USF support and those 
impacted directly by the rate floor and thus receiving lower total USF 
support. The Commission also seeks comment on these arguments 
generally.
    9. Finally, the Commission seeks comment on ways to reduce ongoing 
administrative and compliance costs on rural telephone companies, state 
commissions, the Commission, the National Exchange Carrier Association, 
and the Universal Service Administrative Company. Each year, federal 
staff must calculate a new rate floor, which rural telephone companies 
must then seek permission from their state commissions to implement, 
with oversight by several entities to ensure that rural rates are 
sufficiently high and universal service payments are appropriately 
withheld. Incumbent local exchange carriers (ILECs) subject to the rate 
floor must complete yet another form specifying each of the carrier's 
rates that fall below the rate floor and the number of lines for each 
rate specified. Stakeholders have previously detailed impediments to 
implementation in a number of states and have explained that carriers 
require time after a rate floor increase to pursue and implement rate 
increases. The Commission seeks comment on these arguments and whether 
modifying or eliminating the rate floor and the accompanying reporting 
obligations would reduce the complexity of the high-cost program and 
minimize the associated administrative and compliance costs that have 
stemmed from implementation of the rate floor. Alternatively, the 
Commission seeks comment on whether updating the rate floor on a 
biennial or triennial basis would accomplish similar goals while 
decreasing administrative burdens. More generally, the Commission seeks 
comment on the costs and benefits of the rate floor, and specifically 
on a cost-benefit analysis of the rule.

III. Procedural Matters

    10. This document proposes modified information collection 
requirements subject to the PRA. It will be submitted to the Office of 
Management and Budget (OMB) for review under section 3507(d) of the 
PRA. As part of the Commission's continuing effort to reduce paperwork 
burdens, the Commission invites the general public and OMB to comment 
on the proposed information collection requirements contained in this 
document, as required by the PRA. In addition, pursuant to the Small 
Business Paperwork Relief Act, the Commission seeks specific comment on 
how it might further reduce the information collection burden for small 
business concerns with fewer than 25 employees. The Commission 
describes impacts that might affect small businesses, which includes 
most businesses with fewer than 25 employees, in the Initial Regulatory 
Flexibility Analysis (IRFA) below.
    11. In the NPRM, the Commission seeks comment on whether to modify 
or eliminate two rules: sections 54.313(h) and 54.318 of the 
Commission's rules. The Commission is seeking comment on whether it 
should modify or eliminate section 54.318, the rate floor rule, to 
better advance section 254 of the Commission's Act and the goals of the 
Commission's universal service reforms. Section 54.313(h) requires 
carriers to report on the number lines it serves with rates that fall 
below the rate floor. If the Commission modifies or eliminates the rate 
floor rule, there may be no need to for carriers report on rates that 
fall below the rate floor.
    12. The legal basis for any action that may be taken pursuant to 
this NPRM is contained in sections 201, 219, 220 and 254 of the 
Communications Act of 1934, as amended, 47 U.S.C. 201, 219, 220 and 
254.
    13. 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 (SBA). 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.
    14. This NPRM seeks comment on changes to the Commission's rules, 
which, if adopted, will result in reduced information collection and 
reporting requirements for ILECs.
    15. In this NPRM, the Commission seeks public comment on modifying 
or eliminating sections 54.313(h) and 54.318 of the Commission's rules. 
Because the Commission actions here will likely result in reduced 
regulatory burdens, the Commission concludes that the changes on which 
it seeks comment will not result in any additional recordkeeping 
requirements for small entities.
    16. Permit-But-Disclose. The proceeding this NPRM 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

[[Page 26656]]

them in the memorandum. Documents shown or given to Commission staff 
during ex parte meetings are deemed to be written ex parte 
presentations and must be filed consistent with rule 1.1206(b). In 
proceedings governed by rule 1.49(f) or for which the Commission has 
made available a method of electronic filing, written ex parte 
presentations and memoranda summarizing oral ex parte presentations, 
and all attachments thereto, must be filed through the electronic 
comment filing system available for that proceeding, and must be filed 
in their native format (e.g., .doc, .xml, .ppt, searchable .pdf). 
Participants in this proceeding should familiarize themselves with the 
Commission's ex parte rules.
    17. 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).

IV. Ordering Clauses

    18. Accordingly, it is ordered, pursuant to the authority contained 
in sections 201, 219, 220 and 254 of the Communications Act of 1934, as 
amended, 47 U.S.C. 201, 219, 220, 254, this Notice of Proposed 
Rulemaking and Order is adopted.

Federal Communications Commission.
Katura Jackson,
Federal Register Liaison Officer, Office of the Secretary.
[FR Doc. 2017-11848 Filed 6-7-17; 8:45 am]
 BILLING CODE 6712-01-P