[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]


=======================================================================
-----------------------------------------------------------------------

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.

-----------------------------------------------------------------------

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.

----------------------------------------------------------------------------------------------------------------
                                                                   Allowed opex
                                                     OPEX cost     costs  (opex
                                    Opex costs        percent         costs *      Other carrier      Revenue
                                                   eligible for      eligible          costs        requirement
                                                      support        percent)
----------------------------------------------------------------------------------------------------------------
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
----------------------------------------------------------------------------------------------------------------

    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.


0
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]
BILLING CODE 6712-01-P