[Federal Register Volume 84, Number 114 (Thursday, June 13, 2019)]
[Proposed Rules]
[Pages 27570-27576]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-12162]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[WC Docket No. 06-122; FCC 19-46]


Universal Service Contribution Methodology

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In this document, the Federal Communications Commission 
(Commission) seeks comment on establishing a cap on the Universal 
Service Fund (USF or Fund) and ways it could enable the Commission to 
evaluate the financial aspects of the four USF programs in a more 
holistic way, and thereby better achieve the overarching universal 
service principles

[[Page 27571]]

Congress directed the Commission to preserve and advance.

DATES: Comments are due on or before July 15, 2019 and reply comments 
are due on or before August 12, 2019.

ADDRESSES: Pursuant to Sec. Sec.  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 in the DATES section of 
this document. Comments and reply comments may be filed using the 
Commission's Electronic Comment Filing System (ECFS). See Electronic 
Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (1998). 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 in the FOR FURTHER INFORMATION 
CONTACT section as soon as possible.
    [ssquf] Electronic Filers: Comments may be filed electronically 
using the internet by accessing the ECFS: http://apps.fcc.gov/ecfs/.
    [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.
    [ssquf] 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 9050 Junction Drive, 
Annapolis Junction, MD 20701.
    [ssquf] U.S. Postal Service first-class, Express, and Priority mail 
must be addressed to 445 12th Street SW, Washington, DC 20554.
    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 FURTHER INFORMATION CONTACT: Karen Sprung, Wireline Competition 
Bureau, (202) 418-7400 or TTY: (202) 418-0484.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice 
of Proposed Rulemaking (NPRM) in WC Docket No. 06-122; FCC 19-46, 
adopted on May 15, 2019 and released on May 31, 2019. 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/ecfs/filing/05310169808865.

I. Introduction

    1. In the NPRM, the Commission seeks comments on establishing a cap 
on the Universal Service Fund (USF or Fund) and ways it could enable 
the Commission to evaluate the financial aspects of the four USF 
programs in a more holistic way, and thereby better achieve the 
overarching universal service principles Congress directed the 
Commission to preserve and advance. While each of the constituent USF 
programs are capped or operating under a targeted budget, the 
Commission has not examined the programs holistically to determine the 
most efficient and responsible use of these federal funds. A cap could 
promote meaningful consideration of spending decisions by the 
Commission, limit the contribution burden borne by ratepayers, provide 
regulatory and financial certainty, and promote efficiency, fairness, 
accountability, and sustainability of the USF programs.
    2. The Communications Act of 1934 first established the concept of 
universal service, and the Telecommunications Act of 1996 formalized 
and expanded universal service, paving the way for the programs that 
exist today. The Fund provides financial support to recipients through 
four major programs: The High-Cost program (also known as the Connect 
America Fund), the Lifeline program, the schools and libraries program, 
also known as E-Rate, and the Rural Health Care program. Financial 
contributions to the Fund are required to be made by providers of 
telecommunications and telecommunications services, who are assessed 
charges based on their interstate and international revenues. Consumers 
ultimately pay these charges, however, either through higher prices or 
line-item charges on their bills.
    3. The Commission initiates this proceeding mindful of its 
obligation to safeguard the USF funds ultimately paid by ratepayers, 
and to ensure the funds are spent prudently and in a consistent manner 
across all programs. Although the creation of a topline budget will not 
eliminate the Commission's ability to increase funding for a particular 
program, a cap would require it to expressly consider the consequences 
and tradeoffs of spending decisions for the overall fund, and more 
carefully evaluate how to efficiently and responsibly use USF financial 
resources. The Commission takes this action to preserve and advance 
universal service, to increase access to telecommunications services 
for all consumers at just, reasonable, and affordable rates, to meet 
its obligation to protect against Fund waste, and to ensure that the 
universal service programs are funded appropriately.
    4. Section 254(b) of the Telecommunications Act of 1996 directs the 
Commission to base policies for the preservation and advancement of 
universal service on a number of principles. The Commission's statutory 
obligation requires that the Commission's policies result in equitable 
and nondiscriminatory contributions to the Fund, as well as specific 
and predictable support programs. In order to fulfill Congress' 
directive, the Commission must balance the need for fiscal 
responsibility and predictability with the benefits that comes from 
universal service funding. However, as courts and the Commission have 
recognized, too much subsidization could negatively affect the 
affordability of telecommunications services for those consumers who 
ultimately provide the support for universal service. Although the 
Commission has taken steps over the last decade to set caps or funding 
targets for each of the four programs individually, for the first time 
it looks at the Fund and its programs holistically.
    5. High-Cost. The High-Cost program provides support for the 
deployment of broadband-capable networks in rural areas. It helps make 
broadband, both fixed and mobile, available to homes, businesses, and 
community anchor institutions in areas that do not, or would not 
otherwise have broadband. The USF/ICC Transformation Order, 76 FR 
73830, November 29, 2011, comprehensively reformed and modernized the 
High-Cost program and established, for the first time, a budget 
mechanism for the various Connect America Fund (CAF) programs. For 
years 2012-2017, the budget was set at

[[Page 27572]]

no more than $4.5 billion per year, with an automatic review trigger if 
the budget was threatened to be exceeded. The Commission did not 
include an inflationary adjustment in the $4.5 billion budget adopted 
in 2011. The Commission in 2011 also directed the Fund Administrator, 
the Universal Service Administrative Company (USAC), to collect $1.125 
billion per quarter for High-Cost funding, regardless of the projected 
quarterly demand, to avoid dramatic shifts in the contribution factor 
while the CAF was implemented. Any excess money collected is kept in 
reserve for the CAF initiatives. The CAF, which focused on supporting 
different technologies and recipients with different funding amounts, 
disbursed $4.692 billion in 2017, of which approximately $480 million 
came from the CAF reserves.
    6. Schools and Libraries. The schools and libraries universal 
service support mechanism provides discounts to schools and libraries 
to ensure affordable access to high-speed broadband and 
telecommunications necessary for digital learning. Originally capped at 
its inception at $2.25 billion in disbursements per funding year, the 
Commission began indexing the funding cap to inflation in 2010 to 
ensure that E-Rate program funding keeps pace with the changing 
broadband and telecommunications needs of schools and libraries. The 
Commission then increased the cap in funding year 2015 by $1.5 billion. 
In funding year 2018, the E-Rate cap was $4.06 billion and demand for 
actual support was $2.77 billion.
    7. Rural Health Care. The Rural Health Care (RHC) Program provides 
funding to eligible healthcare providers for telecommunications and 
broadband services necessary for the provision of health care services. 
When the Commission established the RHC Program in 1997, it capped 
funding for the program at $400 million per funding year. Beginning in 
2012, the Commission expanded the RHC program to include the Healthcare 
Connect Fund Program, after which total RHC program demand began to 
steadily increase. In June 2018, the Commission raised the RHC program 
funding cap to $571 million, beginning in funding year 2017, to address 
current and future demand for supported services by health care 
providers. The Commission also adjusted the funding cap annually for 
inflation using the Gross Domestic Product Chained Price Index (GDP-
CPI), beginning in funding year 2018, raising the funding cap to $581 
million. In funding year 2016, RHC demand was approximately $556 
million, and the total amount of qualifying funding requests was 
approximately $408 million.
    8. Lifeline. The Lifeline program provides subsidies for voice and 
broadband services to qualifying low-income households. In 2016, the 
Commission adopted a budget for the program of $2.25 billion with an 
annual inflation adjustment. The Lifeline program budget does not 
automatically curtail disbursements, and in the 2017 Lifeline Order and 
NPRM, 83 FR 2075, January 16, 2018 and 83 FR 2104, January 16, 2018, 
the Commission proposed adopting a self-enforcing budget mechanism for 
the Lifeline program. At the same time, recent demand has been 
considerably lower than the authorized budget levels. For example, the 
Lifeline program disbursed approximately $1.263 billion in calendar 
year 2017 and is on track to spend approximately $1.212 billion in 
2018, compared to budgets of $2.25 billion and $2.279 billion in the 
respective years.

II. Discussion

    9. The Commission believes capping the Fund overall will strike the 
appropriate balance between ensuring adequate funding for the universal 
service programs while minimizing the financial burden on ratepayers 
and providing predictability for program participants. Moreover, 
setting an overall cap will enable the Commission to take a more 
holistic view when considering future changes to the universal service 
programs and their impact on overall USF spending. By explicitly 
linking the expenditures in multiple USF programs through the overall 
cap, the Commission seeks to promote a robust debate on the relative 
effectiveness of the programs. The Commission seeks comment on 
establishing an annual combined USF cap. For example, should the 
Commission set the overall cap at $11.42 billion, which is the sum of 
the authorized budgets for the four universal service programs in 2018? 
Should the Commission set it at a different amount? The Commission 
seeks comment on this proposal, as well as other methods for setting 
the appropriate level of an annual overall USF cap.
    10. To ensure the overall cap keeps pace with inflation, the 
Commission seeks comment on how to adjust the cap over time. The 
Commission is currently using the GDP-CPI to adjust the E-Rate and RHC 
program caps, as well as the operating expense limitations for rate-of-
return carriers, and has previously found it to be more accurate than 
some other measures in estimating price changes over time. The 
Commission seeks comment on whether there are other ways to adjust the 
overall cap for inflation that would be more appropriate. Should there 
be an index specific to each USF program and how should such program-
specific indices apply to an overall USF cap? Would this process make a 
significant difference to the caps compared to the use of the GDP-CPI? 
How often should the caps be adjusted? Commenters should provide data 
to support their conclusions.
    11. The Commission next seeks comment on how to implement the cap. 
One method is to determine when disbursements are projected to exceed 
the overall USF cap and, in that event, to reduce projected universal 
service expenditures to stay within the cap. Another method, given the 
difference in some programs between the date of commitments and the 
date funding is disbursed, is to cap the commitments issued by USAC. 
The Commission seeks feedback on the best way to track and make public 
universal service demand levels to appropriately anticipate pending USF 
demand issues. In the event disbursements are projected to exceed the 
overall cap, the Commission also seeks comment on the appropriate way 
to reduce expenditures automatically consistent with its universal 
service goals and consistent with the legal imperative to remain within 
the cap.
    12. Tracking USF Demand Transparently. A critical function of an 
effective cap mechanism is that the Commission can track projected 
demand and to correct potential overspending before the cap is reached. 
As part of its administrative duties, USAC projects demand for all four 
programs each quarter when it calculates the proposed contribution 
factor. The Commission seeks comment on using this existing mechanism 
to help USAC and the Commission project future disbursements compared 
to the overall cap. In particular, the Commission seeks comment on a 
process whereby USAC will notify the Commission staff if the quarterly 
demand calculation, either alone or in combination with other data, 
suggests the cap will be exceeded by future disbursements. USAC may 
base this prediction on the size of the quarterly demand projection 
when, for example, the quarterly demand alone exceeds one quarter of 
the overall cap, or when the quarterly data in combination with other 
information suggests an increase in future demand above the cap. The 
Commission seeks comment on this idea. USAC also issues commitments in

[[Page 27573]]

some programs long before the funding is disbursed to recipients. 
Should the cap mechanism limit the commitments USAC makes or should it 
limit total disbursements? In determining the appropriate period of 
time over which to evaluate demand, should the Commission consider the 
annual cap exceeded over the course of any 12-month period or should 
the Commission evaluate the demand over the course of a calendar year? 
What about over the course of a funding year? Given the differences in 
administration of the four USF programs, are there issues with the 
timing of commitments and disbursements to consider when projecting 
demand? Should any administrative rules for any program(s) be modified 
to synchronize them and eliminate or mitigate any differences that 
would be problematic to measuring demand? What about any timing issues 
with respect to the mitigation measures the Commission would take to 
correct the projected overspending?
    13. The Commission also seeks comment on extending its projections 
out further than one year to better anticipate potential spending over 
the cap. Limiting the Commission's forecasting to a single year could 
be insufficient to assess spending levels in future years, and the 
Commission would have a better opportunity to course-correct if it can 
evaluate demand over a more extended period of time. Should the 
Commission also adopt procedures to establish a five-year forecast for 
projected program disbursements? The Commission seeks comment on this 
idea. Is a five-year period appropriate or feasible? Should the 
Commission consider a different period of time?
    14. As a first step towards greater transparency, the Commission 
next seeks comment on making these forecasts available to the public. 
USAC already makes public the quarterly demand projections and the 
Commission believes providing an extended forecast to the public would 
assist it in protecting the financial status of the Fund. 
Alternatively, the Commission seeks comment on making these forecasts 
available to state commissions. Sharing this forecast information would 
help to further the Commission's coordination with state commissions 
and allow states to continue to create complementary state universal 
support mechanisms. The Commission seeks comment on the best process 
for making these forecasts available to state commissions or the 
public.
    15. Additionally, the Commission seeks comment on how to address 
forecasting miscalculations and the potential impact on programs. For 
example, how would the Commission correct a scenario where projected 
demand is expected to exceed the cap, but actual disbursements do not 
hit the cap? Or in the alternative, how should the Commission correct a 
situation where actual commitments or disbursements exceed the cap, 
although the forecast did not anticipate an overage? How would the 
Commission handle a temporary or one-time budget increase that hits the 
overall cap during a specific period? USAC already has experience 
correcting its projections for each of the programs when actual 
disbursements differ from its projections. Each quarter, USAC typically 
makes a prior period adjustment in one or more of the programs to 
account for actual program demand and this adjustment affects the 
demand for the next quarter as well as the contribution factor. Would 
adopting a similar process work to help correct forecasting errors? How 
can the Commission use USAC's prior period adjustment to adjust for 
miscalculations? Would more frequent forecasting help to mitigate 
potential forecasting errors? What other difficulties should the 
Commission anticipate when forecasting demand and disbursements?
    16. Reduction Mechanisms. Next, the Commission seeks comment on how 
to reduce expenditures if USAC projects that disbursements will exceed 
the overall USF cap. First, the Commission notes that the program rules 
for each of the four universal service programs will continue to govern 
those programs, and therefore existing spending constraints in place 
would prevent some, but not all, of the universal service programs from 
exceeding their caps. The overall cap could be exceeded due to rising 
demand, or a future Commission decision to increase funding for a 
program or to institute a new USF program without any corresponding 
increase in the overall cap. The Commission seeks comment on ideas to 
reduce expenditures as needed under each of these scenarios. Should 
these reductions take place when commitments are expected to exceed the 
caps or should they only take place when disbursements are projected to 
exceed the caps? What criteria should be used in prioritizing 
reductions of one program against reduction in another?
    17. First, the Commission seeks comment on directing USAC and 
Commission staff to make administrative changes to reduce the size or 
amount of funding available to the individual program caps in an 
upcoming year if demand is projected to exceed the overall cap. For 
instance, should the Commission consider limiting some or all of the 
automatic inflation increases in the programs? The Commission seeks 
comment on this idea and on directing the Wireline Competition Bureau, 
which oversees the Fund, or the Office of the Managing Director, which 
currently calculates the quarterly contribution factor, to carry it 
out. Are there other administrative changes the Commission should 
consider that could provide greater flexibility to allow USAC and the 
Commission to address this issue, such as using reserve or carry 
forward funds to offset potential spending over the cap?
    18. Second, the Commission seeks comment on prioritizing the 
funding among the four universal service programs and other possible 
universal service pilots or programs if still necessary to expenditures 
where USAC projects that total disbursements will exceed the overall 
cap. Adopting clear prioritization rules and evaluating the tradeoffs 
associated with these funding decisions could make disbursements more 
specific and predictable. The Commission seeks comment on the best 
methods for prioritizing funding when faced with projected 
disbursements exceeding the overall cap. How should the Commission 
prioritize among the programs? For instance, should the Commission 
prioritize based on the cost-effectiveness of each program or the 
estimated improper payment rates? Should the Commission instead 
prioritize based on the types of services to be funded or by rurality 
of the recipient? The Commission also seeks comment on whether to 
consider limits to any demand reductions. Any prioritization will 
result in less funding available for one of the programs. In this 
instance, should there be a maximum amount that a program can be 
reduced, either as a percentage of its annual budget or a specific 
dollar amount? Should the Commission instead consider reducing each 
program's disbursements by the same amount, rather than prioritizing 
funding among the programs? Under such an approach, unexpected 
increases in demand in one program could affect the funding levels of 
other programs that have not experienced similar unexpected increases 
in demand. Is this a desirable outcome? Should any funding reduction 
mechanism distinguish between increased demand due to natural, and 
other, disasters and unexpected increases in demand due to other 
factors? How should the Commission account for future universal service

[[Page 27574]]

expenditures that the Commission may create? In past years, the 
Commission has established pilot programs designed to test the use of 
universal service funding for new purposes and has also dedicated 
discrete amounts of funding for emergency purposes. How should those 
pilot program or emergency expenditures be prioritized in comparison to 
the existing programs for universal service funding? What other factors 
should the Commission consider when considering how best to prioritize 
funding among the programs?
    19. Finally, the Commission seeks comment on how to account for 
additional duties or obligations that the Commission might create in 
other proceedings that potentially would cause projected expenditures 
to exceed the cap within the next five years. For example, if the 
Commission proposes to create a new USF program or allocate additional 
funding to a program, that action would not occur unless the Commission 
either: (a) Cuts spending elsewhere to keep projected spending below 
the cap or (b) raises the overall cap. The Commission seeks comment on 
this idea.
    20. The Commission next seeks comment on possible changes to the 
budget structures of the individual universal service programs in order 
to establish a maximum level of universal service support that can be 
disbursed annually, thus limiting contribution burdens and providing 
predictability to contributors and ratepayers. First, the Commission 
seeks comment on other changes to any of the universal service program 
rules that would assist the Commission in its efforts to achieve a more 
holistic and coherent approach to universal service support. For 
instance, consistent with previously-proposed rule changes, would self-
enforcing caps on each of the programs provide more predictability to 
universal service spending? Are there other changes that would better 
align the four programs to reduce duplicative work or simplify the 
administration of the overall cap?
    21. Additionally, the Commission seeks comment on how best to 
balance program needs with the contribution burdens imposed on 
ratepayers. In particular, the Commission requests information and data 
related to the economic efficiency costs associated with increasing 
contributions above current levels. Estimating the benefits of these 
programs could allow the Commission to prioritize them by their cost 
effectiveness. Are there ways to compare effectiveness across the 
programs more holistically in order to measure program efficiency? How 
should the Commission balance the benefits of the different programs 
with the costs of increased contributions by ratepayers? The Commission 
seeks concrete proposals that illustrate how program effectiveness 
would be measured and how it would affect the allocation of 
contributions between the individual programs. Weighing the costs of 
increased contributions against the estimated benefits of the programs 
could allow the Commission to better assess whether funds are allocated 
efficiently. The Commission seeks comment on this idea and encourages 
commenters to include data to support their conclusions.
    22. The Commission also seeks comment on combining the E-Rate and 
RHC program caps. Schools, libraries, and healthcare facilities 
increasingly offer important community resources over their broadband 
networks. Combining the program caps may be justifiable given that both 
programs promote the use of advanced services to anchor institutions 
that have similar needs for high-quality broadband services. 
Additionally, many of these institutions often operate through 
consortia for the purpose of simplifying applications for program 
support and lowering the costs for participating members. In other USF 
proceedings, some stakeholders have asked the Commission to reexamine 
the rules to better harmonize the USF program rules. It is reasonable, 
therefore, to consider combining the caps to create additional 
implementation efficiencies and flexibility. However, is administrative 
simplicity a sufficient reason to combine the programs under a single 
cap? Does combining the caps promote efficient use of limited funds if 
the effectiveness of the two programs differ significantly?
    23. The Commission seeks comment on the practical effect of 
combining the E-rate and Rural Health Care budgets. While the E-rate 
program has been substantially under its cap since its budget was 
increased to approximately $4 billion per year indexed to inflation in 
2014, there has been significant pressure on the Rural Health Care 
budget in recent years, and the Commission in 2018 increased the Rural 
Health Care budget to $571 million indexed to inflation. Assuming 
current trends persist in future years, would a combined budget that 
allows support for participants in either program to come from a single 
fund improve the efficiency with which these programs could disburse 
funding? Would a combined budget effectively increase the budget on 
whichever program is closest to their cap?
    24. Under this proposal, both the E-Rate and RHC programs would 
share a combined total cap of more than $4.64 billion in funding year 
2018 and as long as total demand for both programs did not exceed the 
combined cap, all funding requests for both programs would be approved. 
To ensure that each program has a predictable level of support, the 
Commission also proposes that if demand for either programs were to 
meet or exceed their individual program funding caps, each program 
would continue to be subject to its individual program cap and the 
existing program rules would apply. For example, if in funding year 
2018 demand for E-Rate support exceeded the E-Rate cap and demand for 
RHC support also exceeded that program's existing cap, E-Rate requests 
would be prioritized according to current E-rate program rules, up to 
$4.062 billion, and RHC requests would be subject to the proration 
rules in effect in RHC, up to $581 million. The Commission also 
believes that rules pertaining to carrying funds forward, inflationary 
adjustments, prioritization, and proration would continue to apply 
within each of the individual programs. The Commission seeks comment on 
this proposal. Is there any downside to such a proposal? The Commission 
also seeks comment on the mechanics of how it would distribute funding 
under a combined, prioritization scheme.

III. Procedural Matters

A. Paperwork Reduction Act

    25. This document does not contain proposed information collection 
requirements subject to the Paperwork Reduction Act of 1995, Public Law 
104-13. In addition, therefore, it does not contain any proposed 
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).
    26. Regulatory Flexibility Analysis. As required by the Regulatory 
Flexibility Act of 1980, as amended (RFA), the Commission has prepared 
this Initial Regulatory Flexibility Analysis (IRFA) of the possible 
significant economic impact on a substantial number of small entities 
from the policies and rules proposed in this NPRM. The Commission 
requests written public comment on this IRFA. Comments must be 
identified as responses to the IRFA and must be filed by the deadlines 
for comments on the NPRM. The Commission will send a copy of the NPRM, 
including this IRFA, to the Chief

[[Page 27575]]

Counsel for Advocacy of the Small Business Administration (SBA).
    27. This NPRM seeks comment on a proposal to adopt an overall cap 
on the Fund and to combine the caps for the schools and libraries and 
Rural Health Care programs in an effort to promote efficiency, 
fairness, and sustainability. This action is taken consistent with the 
Commission's objective to preserve and advance universal service, 
together with its obligation to protect against program waste, fraud, 
and abuse, and to ensure that programs are funded appropriately. A cap 
will limit the overall contribution burden and will provide regulatory 
and financial certainty to both recipients of and contributors to the 
Fund, including small businesses.
    28. 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).
    29. The NPRM proposes changes to the Fund and the four universal 
service support mechanisms in order to promote efficiency, fairness, 
and sustainability. The proposals in this NPRM are directed at enabling 
the Commission to meet its goals and objectives for the Fund, to 
preserve and advance universal service, to meet its obligation to 
protect against Fund waste, and to ensure that the universal service 
programs are funded appropriately. The NPRM seeks comment on some 
potential changes that could increase economic burdens on small 
entities, as well as some potential changes that would decrease 
economic burdens on small entities.
    30. Contributions. Universal Service support is funded by 
ratepayers and continuing to increase Fund expenditures unchecked risks 
an increased burden on consumers, including small businesses. Capping 
the Fund at $11.42 billion overall will strike the appropriate balance 
between ensuring adequate funding for the universal service programs 
while minimizing the burdens placed on ratepayers, including small 
businesses, who contribute to the programs.
    31. Programmatic Changes. The Commission does not expect that the 
proposed changes will result in disruption to the programs or services 
provided by the programs. However, it is possible that proposed budget 
reduction mechanisms, if necessary, could result in prioritization 
schemes or budgetary cuts that could impact program participants, 
including small businesses.
    32. 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 expects to consider all of these factors when 
it has received substantive comment from the public and potentially 
affected entities.
    33. Largely, the proposals in the NPRM, if adopted, would have no 
impact on or would reduce the economic impact of current regulations on 
small entities. Certain proposals in this NPRM could have a positive 
economic impact on small entities; for instance, the Commission seeks 
comment on some changes to the budget structures of the four universal 
service programs in order to establish a maximum level of universal 
service support that can be collected. The Commission expects that this 
will provide predictability to contributors and ratepayers, including 
small entities. In addition to proposing the budget changes to the 
individual USF programs, the Commission proposes an overall USF budget 
cap as well as reduction mechanisms to correct a scenario when 
disbursements exceed or are projected to exceed the proposed overall 
USF budget. The Commission expects that an overall cap will help to 
reduce the contribution burden for all contributors, including small 
businesses. In the NPRM, the Commission seeks comment on the burden 
this change would create for carriers and will factor that into its 
decision.
    34. More generally, the Commission expects to consider the economic 
impact on small entities, as identified in comments filed in response 
to the NPRM and this IRFA, in reaching its final conclusions and taking 
action in this proceeding. The proposals and questions laid out in the 
NPRM were designed to ensure the Commission has a complete 
understanding of the benefits and potential burdens associated with the 
different actions and methods.
    35. Ex Parte Presentations. The proceeding 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.

IV. Ordering Clauses

    36. Accordingly, it is ordered that, pursuant to the authority 
found in sections 1-5, 201-206, 214, 218-220, 251, 252, 254, 256, 
303(r), 332, 403, and 405 of the Communications Act of 1934, as 
amended, 47 U.S.C. 151-155, 201-206, 214, 218-220, 251, 252, 254, 256,

[[Page 27576]]

303(r), 403, and 405, this Notice of Proposed Rulemaking is adopted.

Federal Communications Commission.
Katura Jackson,
Federal Register Liaison.
[FR Doc. 2019-12162 Filed 6-12-19; 8:45 am]
 BILLING CODE 6712-01-P