[Federal Register Volume 83, Number 130 (Friday, July 6, 2018)]
[Rules and Regulations]
[Pages 31458-31460]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-14148]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[WC Docket Nos. 10-90; FCC 18-53]


Connect America Fund

AGENCY: Federal Communications Commission.

ACTION: Denial of petition for reconsideration.

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SUMMARY: In this document, the Federal Communications Commission 
(Commission) addresses the petition for reconsideration filed by Alaska 
Communications Systems (ACS) of the October 31, 2016 Commission's ACS 
Connect America Fund (CAF) Phase II Order. The Commission denies the 
petition.

DATES: The denial of the petition for reconsideration is effective 
August 6, 2018.

FOR FURTHER INFORMATION CONTACT: Alexander Minard, Wireline Competition 
Bureau, (202) 418-7400 or TTY: (202) 418-0484.

[[Page 31459]]


SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Order 
on Reconsideration in WC Docket Nos. 10-90; FCC 18-53, adopted on April 
25, 2018 and released on April 26, 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://www.fcc.gov/document/fcc-addresses-alaska-communications-systems-high-cost-petition.

I. Introduction

    1. In this Order, the Commission addresses the petition for 
reconsideration filed by ACS of the October 31, 2016 Commission ACS CAF 
Phase II Order. The ACS CAF II Order, 81 FR 83706, November 22, 2016, 
established the CAF Phase II voice and broadband service obligations 
for ACS. In its petition, ACS seeks reconsideration of the Commission's 
definition of ``high-cost,'' which the Commission adopted to provide 
ACS flexibility to meet its service commitment by deploying to certain 
locations within census blocks that otherwise have been identified as 
``low cost.'' The Commission required ACS to certify, in order to take 
advantage of that flexibility, that its minimum capital expenditure 
(capex) for each location in the ``low cost'' census block was at least 
$5,000, whereas ACS asks that the threshold be lowered to $2,577.79.
    2. The Commission hereby denies the ACS petition. In denying the 
petition, the Commission determines that it struck an appropriate 
balance in providing ACS some flexibility in meeting its service 
commitment, while ensuring that high-cost support is targeted to areas 
that need it most.

II. Discussion

    3. The Commission denies ACS' petition to reconsider the conditions 
the Commission placed on the flexibility it granted ACS. In structuring 
support, the Commission adopted a tailored approach that reflects the 
unique challenges of serving Alaska, while preserving and adhering to 
its fundamental universal service principles and policies--including 
targeting support to locations that are truly in need of support. In 
its petition, ACS states that it ``objects to none of [the] conditions 
[of substituting high-cost locations in low-cost census blocks], but 
seeks reconsideration only of the meaning of `high-cost' in [that] 
context.''
    4. As a matter of policy, the Commission decided that the minimum 
capex for permitting ACS to substitute a location in a low-cost census 
block for a location in a high-cost census block would be $5,000 as a 
way of prioritizing support going to higher-cost unserved locations 
even when allowing ACS to forego deploying to locations in model-
identified eligible census blocks. Setting the threshold at or near the 
lower bound of what ACS estimates is the capex required to serve a 
location in a high-cost census block would counter the Commission's 
objective in the ACS CAF II Order, because it would allow funding to be 
re-directed to relatively lower cost locations while leaving higher 
cost locations unserved. These relatively lower cost locations that 
would be eligible under the revised threshold are precisely the 
locations that are more likely to be served even in the absence of 
universal service support. Particularly given that ACS does not propose 
that their support levels be adjusted to account for the fact that they 
would be serving relatively lower cost locations, granting the ACS 
request would work against the Commission's efforts to efficiently 
serve the higher cost locations which are least likely to be served 
apart from universal service support. Therefore, the Commission chose 
to set the minimum threshold at the average capex for locations in 
high-cost areas otherwise available to ACS, instead of at the lower 
bound otherwise used for determining funded locations. This decision 
thus made sure such flexibility was available to ACS only in instances 
where the location is among the more costly to serve.
    5. As the steward of the limited Universal Service Fund (USF), the 
Commission has discretion to tailor high-cost support to areas that are 
the most costly to serve. It is reasonable and entirely within the 
Commission's authority to limit the flexibility by prioritizing 
deployment to locations with a greater need for funding, based on the 
amount of capex ACS actually spends. ACS seems to concede this is a 
lawful and proper exercise of the Commission's discretion as it seeks 
even greater flexibility. The $5,000 minimum threshold ensures that ACS 
is meeting its obligation to serve the locations in model-determined 
high-cost areas, while allowing ACS some flexibility to exchange some 
unserved locations in adjacent census blocks for which the cost model 
did not calculate support, but which nevertheless ultimately are among 
the costliest for ACS to serve. As the flexibility to swap locations is 
an exception based on the unique circumstance of ACS in Alaska, the 
Commission finds that establishing this limit is reasonable and 
consistent with its overarching universal service principal and 
policies. The Commission is not persuaded by ACS's arguments that there 
is no reasonable basis for the $5,000 minimum capex certification 
requirement or that this obligation is contrary to the public interest.
    6. ACS is also misguided in arguing that the $5,000 minimum 
threshold will leave certain locations unserved and deny support to 
locations that are otherwise entitled to it. ACS is not required to 
substitute any locations, and regardless of whether it does, must still 
deploy to 31,571 locations by the end of the term of support. The 
Commission made a limited exception in the ACS CAF II Order that allows 
ACS to use high-cost support in model-determined low-cost census blocks 
where the population is lacking service and where it is very costly. 
Although the level of the threshold will affect which specific 
locations are served and counted toward the requirement, the public 
interest is served because the number of locations ACS is required to 
serve remains the same.
    7. ACS has long argued that the CAM does not appropriately account 
for the significantly higher costs required to build and operate in 
Alaska. It is due, in part, to this advocacy that the Commission 
adopted an ACS-specific order. However, accepting ACS's premise that 
the CAM underestimates locations' costs would counsel against 
establishing a threshold at the lower end of what ACS's own analysis of 
the CAM would define as a high-cost location. To use a threshold at 
such a level would imply that the Commission should allow ACS the 
flexibility to substitute locations that may not even require support 
while abandoning locations that are clearly in need of high-cost 
support. This is because accepting the premise that the CAM 
underestimates costs would suggest the lower bound threshold ACS 
proposes is likely too low. By setting the threshold at $5,000 per 
location, the Commission was able to allow for some flexibility while 
also reducing subsidization of lower cost locations. Based on ACS' 
representations regarding capex costs in Alaska and the costs to build 
to these unserved locations, meeting this threshold should not be 
problematic. Therefore, the Commission finds its decision was reasoned 
and serves the public interest. ACS provided nothing in its Petition 
that persuades us to alter this requirement.

[[Page 31460]]

III. 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 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).

IV. Ordering Clauses

    10. Accordingly, it is ordered, pursuant to the authority contained 
in sections 1, 4(j), 214, 254, and 405 of the Communications Act of 
1934, as amended, 47 U.S.C. 151, 154(j), 214, 254, and 405 and Sec.  
1.429 of the Commission's rules, 47 CFR 1.429, that this Order is 
adopted.
    11. It is further ordered that, pursuant to the authority contained 
in sections 1, 4(j), 214, 254, and 405 of the Communications Act of 
1934, as amended, 47 U.S.C. 151, 154(j), 214, 254, and 405, and Sec.  
1.429 of the Commission's rules, 47 CFR 1.429, the Petition for 
Reconsideration of the Commission's Order, filed by Alaska 
Communications, is denied as discussed herein.
    12. It is further ordered that, pursuant to the authority contained 
in Sec.  1.103 of the Commission's rules, 47 CFR 1.103, this Order 
shall be effective August 6, 2018.

Federal Communications Commission.
Marlene Dortch,
Secretary, Office of the Secretary.
[FR Doc. 2018-14148 Filed 7-5-18; 8:45 am]
 BILLING CODE 6712-01-P