[Federal Register Volume 83, Number 84 (Tuesday, May 1, 2018)]
[Rules and Regulations]
[Pages 18948-18950]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-09066]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 54
[WC Docket Nos. 10-90; FCC 18-37]
Connect America Fund
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: In this document, the Federal Communications Commission
(Commission) for the period beginning January 1, 2017, increases the
amount of operating costs that carriers that predominantly serve Tribal
lands can recover from the universal service fund (USF) in recognition
that they are likely to have higher costs than carriers not serving
Tribal lands. This action will provide additional funding to these
carriers to provide both voice and broadband services to their
customers.
DATES: Effective May 31, 2018.
FOR FURTHER INFORMATION CONTACT: Suzanne Yelen, Wireline Competition
Bureau, (202) 418-7400 or TTY: (202) 418-0484.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Report
and Order in WC Docket Nos. 10-90; FCC 18-37, adopted on March 27, 2018
and released on April 5, 2018. 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 Street SW, Washington, DC
20554 or at the following internet address: https://transition.fcc.gov/Daily_Releases/Daily_Business/2018/db0405/FCC-18-37A1.pdf.
Synopsis
I. Introduction
1. In this Report and Order (Order), for the period beginning
January 1, 2017, the Commission increases the amount of operating costs
that carriers that predominantly serve Tribal lands can recover from
the universal service fund (USF) in recognition that they are likely to
have higher costs than carriers not serving Tribal lands. This action
will provide additional funding to these carriers to provide both voice
and broadband services to their customers.
2. In March 2016, the Commission adopted the Rate-of-Return Reform
Order and FNPRM establishing a new mechanism for the distribution of
Connect America Fund support in rate-of-return areas. In the March 2016
Rate-of-Return Reform Order and Further Notice of Proposed Rulemaking
(FNPRM), 81 FR 24282, April 25, 2016
[[Page 18949]]
and 81 FR 21511, April 12, 2016, the Commission adopted a limitation on
the amount of operating expenses (opex) for which rate-of-return
carriers may receive high-cost support, such that each carrier's opex
eligible for high-cost support is limited to a regression model-
generated opex per location plus 1.5 standard deviations. In the FNPRM,
the Commission asked whether the opex limitations should be modified
for carriers serving Tribal lands.
3. The Commission is persuaded based on the record before us that
there is good reason to increase the opex limitation for carriers
receiving legacy high-cost support that primarily serve Tribal lands
because of the increased costs of providing service on Tribal lands.
Both the National Tribal Telecommunications Association (NTTA) and Gila
River Telecommunications, Inc. (GRTI) cite a number of unique costs
faced by carriers serving Tribal lands. They explain that carriers
generally must invest significant time and financial resources in
securing rights-of-way and easements to install new broadband
facilities on Tribal lands due to the number of permissions that must
be obtained. Such permissions include the consent of multiple owners of
allotted lands, as well as the consent of Tribal authorities, the
Bureau of Indian Affairs (BIA), and other administrators and managers
of Native trust lands. In some cases, letters of support from Tribal
villages in or near the construction areas are also required. NTTA and
GRTI represent that the process of obtaining Tribal cultural
clearances, as well as the cost of compliance with the Archeological
Resources Protection Act of 1979 and the National Historic Preservation
Act of 1966, and coordination of National Environmental Protection Act
compliance with BIA, are often significant. Commenters also point out
that Tribal sovereignty issues require additional negotiation and legal
review, that many Tribes require that qualified members of the Tribe be
given preference in hiring and promotion, and that some Tribal
authorities require construction observation by a Tribal member. In
sum, the Commission is persuaded based on the record before us that
there are unique costs associated with serving Tribal lands that
warrant revisiting the opex limit adopted by us for this subset of
carriers. Therefore, the Commission relaxes the opex limit for those
study areas most in need where a majority of the housing units are on
Tribal lands, as determined by the Bureau using U.S. Census data.
4. The Commission declines at this time to remove the opex
limitation altogether and instead raise the limitation to 2.5 standard
deviations above the regression-determined amount for those carriers
that qualify subject to the criteria set out below. All carriers,
including those that predominantly serve Tribal lands, should have
incentives to prudently manage their operating expenditures. Although
the Commission finds that carriers serving Tribal lands have expenses
that are significantly greater than those serving non-Tribal lands,
commenters have failed to show in this circumstance that there is no
need for any opex limitation. Taking into account that factor, and
mindful of the generally higher costs of serving Tribal lands, the
Commission therefore decides that carriers whose opex limit will be
relaxed will have their opex limitation raised to 2.5 standard
deviations above the regression-determined amount. For example, as
shown below, a carrier with $20,000 in opex costs and 58 percent of its
opex eligible for support will now have 89 percent of its opex eligible
for support. Moreover, when other carrier costs, such as taxes and
capital expenses are considered, the opex limitation has a small effect
on a carrier's revenue requirement.
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Allowed opex
OPEX cost costs (opex
Opex costs percent costs * Other carrier Revenue
eligible for eligible costs requirement
support percent)
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No Opex Limitation.............. $20,000 100 $20,000 $15,000 $35,000
1.5 Standard Deviations......... 20,000 58 11,600 15,000 26,600
2.5 Standard Deviations......... 20,000 89 17,712 15,000 32,712
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5. In addition, the Commission limits this relief to those carriers
meeting the following conditions. First, the carrier has not deployed
broadband service of 10 Mbps download/1 Mbps upload to 90 percent or
more of the housing units on the Tribal lands in its study area.
Second, unsubsidized competitors have not deployed broadband service of
10 Mbps download/1 Mbps upload to 85 percent or more of the housing
units on the Tribal lands in its study area. The Commission believes
that these conditions will limit this relief to those carriers with the
greatest need to accelerate broadband deployment.
6. All universal service support must be necessary and reasonable
for the provision, maintenance, and upgrading of facilities and
services for which the support is intended. The Commission understands
that some carriers serving Tribal lands may have significant sources of
telecommunications-associated revenue which is passed through to a
tribe or may have particular costs imposed by a tribe. The Commission
expects Tribal carriers to be able to demonstrate in the event such
revenue or costs are questioned that in fact the revenues or cost are
necessary and reasonable for the provision, maintenance, and upgrading
of facilities and services for which the support is intended.
7. Bureau staff estimates in 2017 and/or 2018 that five carriers
that have been affected by the opex cap are eligible for the relief.
The Commission concludes that a 2.5 standard deviation limit will still
provide an incentive for eligible carriers to avoid imprudent or
unnecessary expenses, while recognizing the higher costs associated
with providing service on Tribal lands. Because we determine that an
opex limit of 2.5 standard deviations is appropriate for those study
areas where a majority of the housing units are on Tribal lands and
that meet our other conditions, we direct the Universal Service
Administrative Company (USAC) to use the 2.5 standard deviation metric
for these study areas for support calculations for the period beginning
January 1, 2017, when the opex limitation was implemented.
II. Procedural Matters
A. Paperwork Reduction Act
8. This document does not contain new information collection
requirements subject to the Paperwork Reduction Act of 1995 (PRA),
Public Law 104-13. In addition, therefore, it does not contain any new
or information collection burden for small business concerns with fewer
than 25 employees, pursuant to the Small
[[Page 18950]]
Business Paperwork Relief Act of 2002, Public Law 107-198, see 44
U.S.C. 3506(c)(4).
B. Congressional Review Act
9. The Commission will send a copy of this Report and Order to
Congress and the Government Accountability Office pursuant to the
Congressional Review Act, see 5 U.S.C. 801(a)(1)(A).
10. As required by the Regulatory Flexibility Act of 1980 (RFA), as
amended, an Initial Regulatory Flexibility Analyses (IRFA) was
incorporated in the Rate-of-Return Reform Order and/or FNPRM. The
Commission sought written public comment on the proposals in the Rate-
of-Return Reform FNPRM, including comment on the IRFA. The Commission
did not receive any relevant comments in response to this IRFA. This
Final Regulatory Flexibility Analysis (FRFA) conforms to the RFA.
11. The Report and Order increases the amount of operating expenses
that rate-of-return carriers predominantly serving Tribal lands can
recover from the universal service fund (USF). This increase recognizes
that carriers serving Tribal lands are likely to have higher operating
costs than carriers serving non-Tribal areas.
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 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 Small Business
Administration (SBA).
13. There are three comprehensive, statutory small entity size
standards. First, nationwide, there are a total of approximately 28.2
million small businesses, according to the SBA, which represents 99.7%
of all businesses in the United States. In addition, a ``small
organization'' is generally ``any not-for-profit enterprise which is
independently owned and operated and is not dominant in its field.''
Nationwide, as of 2007, there were approximately 1,621,215 small
organizations. Finally, 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 2011 indicate that
there were 90,056 local governmental jurisdictions in the United
States. The Commission estimates that, of this total, as many as 89,327
entities may qualify as ``small governmental jurisdictions.''
14. The action taken in this Report and Order would affect a
maximum of approximately 50 small entities and will likely only affect
approximately seven or eight entities per year.
15. No additional reporting, recordkeeping, or other compliance
requirements are required by this Report and Order.
16. The RFA requires an agency to describe any significant
alternatives that it has considered in reaching its proposed approach,
which may include (among others) the following four alternatives: (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 or reporting requirements under the rule for 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 small
entities. The Commission has considered all of these factors subsequent
to receiving substantive comments from the public and potentially
affected entities. The Commission has considered the economic impact on
small entities, as identified in comments filed in response to the
Rate-of-Return Reform FNPRM and its IRFA, in reaching its final
conclusions and taking action in this proceeding.
17. The Commission has, at the request of the carriers, increased
the amount of operating expenses that rate-of-return carriers
predominantly serving Tribal lands can recover from the universal
service fund (USF). By raising this limitation, we recognize the higher
costs of these small carriers in serving Tribal areas. The higher
operating expense limit does not involve additional reporting or
recordkeeping requirements.
III. Ordering Clauses
18. Accordingly, it is ordered, pursuant to the authority contained
in sections 1, 2, 4(i), 5, 201-206, 214, 218-220, 251, 252, 254, 256,
303(r), 332, 403, and 405 of the Communications Act of 1934, as
amended, and section 706 of the Telecommunications Act of 1996, 47
U.S.C. 151, 152, 154(i), 155, 201-206, 214, 218-220, 251, 252, 254,
256, 303(r), 332, 403, and 1302 that this Report and Order is adopted.
19. It is further ordered that part 54, of the Commission's rules,
47 CFR part 54, is amended as set forth in the following.
20. It is further ordered that the rules adopted herein will become
effective May 31, 2018.
21. It is further ordered that USAC implement the rule adopted
herein for support calculations beginning January 1, 2017.
List of Subjects in 47 CFR Part 54
Communications common carriers, Health facilities, Infants and
children, Internet, Libraries, Reporting and recordkeeping
requirements, Schools, Telecommunications, Telephone.
Federal Communications Commission.
Marlene Dortch,
Secretary, Office of the Secretary.
Final Rules
For the reasons discussed in the preamble, the Federal
Communications Commission amends 47 CFR part 54 as follows:
PART 54--UNIVERSAL SERVICE
0
1. The authority citation for part 54 continues to read as follows:
Authority: 47 U.S.C. 151, 154(i), 155, 201, 205, 214, 219, 220,
254, 303(r), 403, and 1302 unless otherwise noted.
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2. Amend Sec. 54.303 by adding paragraph (a)(6) to read as follows:
Sec. 54.303 Eligible Capital Investment and Operating Expenses.
(a) * * *
(6) For those study areas where a majority of the housing units are
on Tribal lands, as determined by the Wireline Competition Bureau, and
meet the following conditions, total eligible annual operating expenses
per location shall be limited by calculating Exp ([Ycirc] + 2.5 * mean
square error of the regression): The carrier serving the study area has
not deployed broadband service of 10 Mbps download/1 Mbps upload to 90
percent or more of the housing units on the Tribal lands in its study
area and unsubsidized competitors have not deployed broadband service
of 10 Mbps download/1 Mbps upload to 85 percent or more of the housing
units on the Tribal lands in its study area.
* * * * *
[FR Doc. 2018-09066 Filed 4-30-18; 8:45 am]
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