[Federal Register Volume 85, Number 228 (Wednesday, November 25, 2020)]
[Rules and Regulations]
[Pages 75770-75828]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-24486]



[[Page 75769]]

Vol. 85

Wednesday,

No. 228

November 25, 2020

Part V





Federal Communications Commission





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47 CFR Parts 1 and 54





Establishing a 5G Fund for Rural America; Final Rule

  Federal Register / Vol. 85 , No. 228 / Wednesday, November 25, 2020 / 
Rules and Regulations  

[[Page 75770]]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 1 and 54

[GN Docket No. 20-32; FCC 20-150; FRS 17211]


Establishing a 5G Fund for Rural America

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this document, the Federal Communications Commission 
(Commission or FCC) acts on its proposal to retarget universal service 
funding for mobile broadband and voice in the high-cost program to 
support the deployment of 5G services by establishing the 5G Fund for 
Rural America as a replacement for the Mobility Fund Phase II and 
adopting the basic framework for implementing the 5G Fund.

DATES: Effective December 28, 2020, except for Sec. Sec.  
1.21001(b)(1), 1.21001(b)(2), 1.21001(b)(3), 1.21001(b)(4), 
1.21001(b)(5), 1.21001(b)(6), 1.21001(b)(7), 1.21001(b)(8), 
1.21001(b)(9), 1.21001(b)(10), 1.21001(b)(11), 1.21001(b)(12), 
1.21001(b)(13), 1.21001(e), 1.21002(e), 1.21002(f), 54.313(n), 
54.322(b), 54.322(c)(4), 54.322(g), 54.322(h), 54.322(i), 54.322(j), 
54.1014(a), 54.1014(b)(2), 54.1016(b), 54.1018(a), 54.1018(b), 
54.1018(c), 54.1019(a)(1), 54.1019(a)(2), 54.1019(a)(3), 54.1019(a)(4), 
54.1020(a), 54.1020(b), 54.1020(c)(1), and 54.1020(c)(2), which are 
delayed and for which we will publish a document in the Federal 
Register announcing the effective date.

ADDRESSES: Federal Communications Commission, 45 L Street NE, 
Washington, DC 20554.

FOR FURTHER INFORMATION CONTACT: Valerie M. Barrish, Office of 
Economics and Analytics, Auctions Division, (202) 418-0660 or 
[email protected]. For information regarding the PRA information 
collection requirements contained in this PRA, contact Cathy Williams, 
Office of Managing Director, at (202) 418-2918 or 
[email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's 5G 
Fund Report and Order in GN Docket No. 20-32, FCC 20-150, adopted on 
October 27, 2020 and released on October 29, 2020. The full text of 
this document is available on the Commission's website at https://www.fcc.gov/document/fcc-establishes-5g-fund-rural-america-0. To 
request materials in accessible formats for people with disabilities, 
send an email to [email protected] or call the Consumer & Governmental 
Affairs Bureau at 202-418-0530 (voice), 202-418-0432 (TTY).

Synopsis

I. Introduction

    1. Our nation is at the dawn of the 5G era of wireless 
connectivity. Recently, nationwide mobile wireless providers have 
deployed 5G networks covering more than 200 million Americans. And 
today we ensure that all Americans benefit from the country's 5G 
future, no matter where they live. We act on our proposal to replace 
the Mobility Fund Phase II with the 5G Fund for Rural America and make 
certain that our limited Universal Service Fund dollars are directed to 
support the deployment of state-of-the art wireless networks that are 
more responsive, more secure, and faster than today's 4G LTE networks. 
Moreover, by establishing the 5G Fund, we further secure our nation's 
leadership in 5G, which will promote technological innovation in the 
United States, enhance our economic prosperity and protect our national 
security.
    2. Many urban and suburban areas of our nation are already 
benefiting from the evolution to 5G networks. Nationwide providers have 
begun deploying 5G service in more populated parts of our country, with 
even more widely-available 5G service expected in the near future. For 
example, T-Mobile has made enforceable commitments to the Commission as 
part of its acquisition of Sprint to deploy 5G service covering 85% of 
the population in rural areas and 97% of all Americans within three 
years, with coverage rising to 90% of the population in rural areas and 
99% nationwide within six years. Moreover, it committed to deploy 5G 
service meeting minimum download speed performance benchmarks of at 
least 50 Mbps available to 90% of the rural population, with two-thirds 
of rural Americans able to receive download speeds of at least 100 
Mbps. Late last year, T-Mobile announced that it switched on its 5G 
network across the nation using low-band spectrum.
    3. 5G networks will improve the lives of Americans living and 
working in rural areas by providing much needed access to telehealth, 
telework, remote learning opportunities, precision agriculture, and 
other services and applications. We anticipate that the deployment of 
5G-capable networks in rural areas will drive job creation and have a 
powerful impact on the nation's economy. The framework for the 5G Fund 
that we adopt today will bring technological innovation and economic 
benefits to the parts of our country that need them the most. We embark 
on this new 5G era recognizing that the next decade and beyond hold 
significant promise for rural America, and we envision that the 5G Fund 
will be an important catalyst to propel the nationwide deployment of 
networks capable of closing the digital divide, once and for all.
    4. The 5G Fund for Rural America will use multi-round reverse 
auctions to distribute up to $9 billion, in two phases, bringing voice 
and 5G broadband service to those rural areas of our country that, 
absent subsidies, would be unlikely to see the deployment of 5G-capable 
networks. Based on lessons learned from the Mobility Fund, and 
overwhelming record support, we adopt our proposal to determine which 
areas will be eligible for 5G Fund support through improved mobile 
broadband coverage data that will be gathered through the Commission's 
Digital Opportunity Data Collection proceeding. Although this approach 
will not be the fastest possible path to the Phase I auction, it will 
allow us to identify with greater precision those areas of the country 
where support is most needed and will be spent most efficiently.

II. Background

    5. Since 2011, the Commission has taken numerous steps to 
comprehensively reform the universal service program to focus our 
limited funds on ensuring access to fixed and mobile broadband for 
unserved Americans living in rural, insular, and high cost areas of the 
country. As part of these efforts, in the USF/ICC Transformation Order, 
76 FR 73830, Nov. 29, 2011, the Commission froze high-cost support 
being provided to competitive eligible telecommunications carriers 
(ETCs), commenced a process to phase down this high-cost support over 
five years, and established a two-phased Mobility Fund to ensure that 
universal service support for mobile services would be targeted in a 
cost-effective manner. The Commission determined it would pause the 
phase down of the frozen ``legacy'' high-cost support for competitive 
ETCs to provide mobile wireless service at the 60% frozen support level 
in the event that the second phase of the Mobility Fund was not 
operational by July 1, 2014.\1\ However, the Commission

[[Page 75771]]

planned to adopt additional mobile broadband public interest 
obligations as a condition for the continued receipt of such support if 
the legacy support phase down was paused at any point.
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    \1\ We use the term ``legacy high-cost support'' and ``legacy 
support'' herein to refer specifically to the high-cost support that 
was frozen in the USF/ICC Transformation Order and is disbursed to 
competitive ETCs to provide mobile wireless service.
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    6. In Mobility Fund Phase I, the Commission awarded almost $300 
million, along with an additional $50 million for Tribal Mobility Fund 
Phase I, in one-time universal service support through two reverse 
auctions. Before adopting rules for Phase II of the Mobility Fund, 
Commission staff conducted a review of mobile wireless providers' FCC 
Form 477 submissions to identify the specific areas of the country that 
were lacking 4G LTE coverage as well as to examine the efficiency of 
the distribution of legacy high-cost support. Staff analysis revealed 
that almost 75% of legacy high-cost support was being distributed to 
carriers in areas where 4G LTE service was already being provided by an 
unsubsidized provider. Furthermore, according to the report, only 
approximately 20% of the land area of the United States outside of 
Alaska either lacked 4G LTE service entirely or had 4G LTE service 
provided only by a subsidized carrier. Mobile wireless carriers were 
therefore receiving approximately $300 million or more each year in 
subsidies that were unnecessary to ensure the continued availability of 
4G LTE service in those areas.
    7. Recognizing the need to redirect universal service funds to 
target areas of the country that were unlikely to receive 4G LTE 
service without subsidies, in its 2017 Mobility Fund Phase II Report 
and Order, 82 FR 15422, Mar. 28, 2017, the Commission adopted rules to 
move forward with Mobility Fund Phase II, and established the framework 
for a challenge process to resolve disputes about areas that were found 
to be presumptively ineligible for support. Mobile wireless providers 
were required to submit 4G LTE coverage maps by January 4, 2018, to be 
followed by a process in which parties could challenge the submitted 
coverage maps. In December 2018, after questions over the accuracy of 
the submitted coverage maps arose, the Commission launched an 
investigation into the 4G LTE coverage data submitted by some providers 
and suspended the response phase of the Mobility Fund Phase II 
challenge process pending the investigation.
    8. On December 4, 2019, the Rural Broadband Auctions Task Force 
released a staff report on the results of that investigation. Staff 
determined that the Mobility Fund Phase II coverage maps submitted by 
certain carriers overstated actual coverage and did not reflect on-the-
ground performance in many instances. The staff report recommended that 
the Commission terminate the challenge process, concluding that the 
coverage maps were not a sufficiently reliable or accurate basis upon 
which to complete the challenge process as designed.
    9. On April 23, 2020, we adopted the 5G Fund NPRM, 85 FR 31616, May 
26, 2020, which proposed to terminate the planned Mobility Fund Phase 
II auction and replace it with a 5G Fund for Rural America, using 
multi-round reverse auctions to distribute up to $9 billion to bring 
voice and 5G broadband service to rural areas of our country that are 
unlikely to see unsubsidized deployment of 5G-capable networks. We 
further proposed to modernize frozen mobile legacy support in order to 
ensure that advanced networks are deployed in areas served by providers 
continuing to receive legacy support.

III. Discussion

    10. To meet our obligation of ensuring that all Americans have 
access to services reasonably comparable to those in urban areas and to 
achieve our goal of ensuring that all Americans experience the benefits 
of next-generation 5G technology, we now adopt a path forward for the 
5G Fund for Rural America. The rapid pace of deployment of 5G networks 
in many parts of the country, combined with T-Mobile's commitment to 
cover 90% of rural Americans with its 5G network, supports our 
conclusion that it is no longer the time to begin a 10-year support 
program to deploy 4G LTE networks. We adopt our proposals to replace 
Mobility Fund Phase II with the 5G Fund for Rural America and to 
distribute up to $9 billion in universal service support to bring 
mobile voice and 5G broadband service to rural areas of our country. In 
adopting our proposal to replace Mobility Fund Phase II with the 5G 
Fund, we terminate the Mobility Fund Phase II challenge process and 
dismiss as moot several petitions for waiver in that proceeding which 
are unnecessary to address given the termination of the Mobility Fund 
Phase II challenge process. We also adopt our proposals to impose 5G 
public interest obligations and performance requirements on carriers 
continuing to receive legacy mobile high-cost support to help ensure 
that the areas they serve enjoy the benefits that 5G promises. Our 
actions here will ensure that rural communities can connect to the 
digital economy and benefit from the opportunities for enhanced 
education, employment, healthcare, and civic and social engagement that 
access to advanced mobile broadband communications can provide.

A. Collecting New Mobile Coverage Data Before Funding 5G Rural America

    11. We adopt our proposal, known in the 5G Fund NPRM as Option B, 
to award 5G Fund support based on new, more precise, verified mobile 
coverage data collected through the Commission's Digital Opportunity 
Data Collection. While the Commission continues to lack a congressional 
appropriation necessary to implement the new data collection, we 
believe--and the record supports our view--that the risk of any delay 
in holding an auction is outweighed by the ability to target auction 
support with greater precision. That risk is further mitigated by the 
public interest obligations we adopt for competitive ETCs that receive 
legacy high-cost support for mobile wireless services.
    12. In proposing to establish a 5G Fund for Rural America, we 
sought comment on two different options to determine the areas that 
would be eligible for support in the Phase I auction: One would be 
based upon existing governmental data on the ruralness of an area and 
allow us to proceed more quickly to the auction, and the other would be 
based upon new mobile coverage data but would, by necessity, delay the 
start of the auction. These two approaches represented a fundamental 
tradeoff between more precisely targeting support to areas that need it 
and the time required to collect, process, and analyze the data 
necessary for such precision. In the 5G Fund NPRM, we estimated that 
basing 5G Fund eligibility on the new collection of mobile coverage 
data would add 18-24 months to the process of preparing for an auction, 
even if Congress were to appropriate funds sufficient to implement the 
statute, which it still has not done.
    13. Most commenters urge us to collect new mobile coverage data 
prior to holding the 5G Fund Phase I auction, with some citing in 
particular the findings of the Mobility Fund Phase II Investigation 
Staff Report. We agree that requiring new mobile coverage data will 
result in a better understanding of the unserved areas most in need of 
our limited universal service funds than existing data.
    14. We disagree with those comments arguing that the Broadband 
Deployment Accuracy and Technological Availability (Broadband DATA) Act

[[Page 75772]]

expressly prohibits the award of 5G Fund support until after collecting 
new mobile coverage data, precluding Option A. The Broadband DATA Act 
requires the Commission to collect mobile coverage data generated using 
standardized parameters and, from these data, release mobile broadband 
deployment maps. ``[A]fter creating the maps[,]'' the statute requires 
the Commission to use those maps when awarding new funding to deploy 
broadband service. We agree with RWA that the language of the Broadband 
DATA Act does not prevent us from awarding support prior to creating 
the mobile broadband deployment maps in the Digital Opportunity Data 
Collection. As RWA notes, the plain wording of the statute is clear 
that the Commission ``is required to use new maps to award funding, but 
only `after' such maps are created.'' We therefore conclude that the 
statute does not yet impose any limitations on the data we may use to 
award new funding.
    15. Several commenters support moving forward quickly with the 5G 
Fund Phase I auction based on existing U.S. Census Bureau and U.S. 
Department of Agriculture data under our Option A proposal, or some 
variant of it. We recognize the pressing need to bring 5G to unserved 
rural areas; however we agree with the concerns raised by some 
commenters that reliance upon 10-year-old U.S. Department of 
Agriculture data as a proxy for rurality and to award funding that will 
continue for an additional 10 years risks both directing support to 
areas where support is not needed and also missing areas where support 
is needed. Option B will allow us to more efficiently allocate 5G Fund 
support by identifying areas that are already served by an unsubsidized 
provider and thus should not be ineligible for support. Establishing 
eligibility under Option A using a degree of rurality would not have 
allowed us target funds in this manner. We conclude, therefore, that on 
balance it is not in the public interest to follow the Option A 
approach. We also decline to adopt the 5G Fund Supporters' proposal for 
an ``Initial Tranche'' of support targeted at particular historically 
disadvantaged communities that this commenter contends should be given 
priority because of similar concerns about the accuracy of available 
data. We will take all appropriate steps to implement Option B as 
quickly as we can without jeopardizing the quality or accuracy of the 
new data we will collect.
    16. While urging us to first collect new mobile coverage data, many 
commenters supporting Option B make various suggestions for expediting 
the Phase I auction. We agree on the need to move quickly toward an 
auction and will take steps to minimize the delay caused by our 
decision. However, we disagree with suggestions that we should collect 
new mobile coverage data prior to implementation of the Digital 
Opportunity Data Collection. We are unconvinced that those approaches 
would provide reliable coverage data in a shorter timeframe. In 
particular, while carriers may have experience generating and 
submitting mobile coverage data as part of their required FCC Form 477 
filings, or as part of the one-time collection of 4G LTE coverage data 
for Mobility Fund Phase II, we would need to develop the processes and 
IT systems necessary to allow for the submission and verification of 
mobile coverage data and allow for a public-facing challenge process 
regardless of whether or not the collection is implemented through the 
Digital Opportunity Data Collection. Although we have recently adopted 
new requirements for the Digital Opportunity Data Collection stemming 
from the Broadband DATA Act, the Commission still lacks funding to 
implement the statute's requirements. Implementation of any alternative 
data collection and public challenge process would run into the same 
logistical and funding hurdles, and staff estimates it would take at 
least as long to complete. Such arguments also overlook the fact that 
we originally tasked the Universal Service Administrative Company 
(USAC) with implementation of the Digital Opportunity Data Collection, 
work which came to a halt when Congress expressly prohibited the 
Commission from delegating responsibility for these tasks to USAC in 
the Broadband DATA Act.

B. Determining Eligible Areas Using Updated Mobile Coverage Data

    17. We will determine the areas eligible for support in the 5G Fund 
Phase I auction based upon where new mobile coverage data submitted in 
the Digital Opportunity Data Collection show a lack of unsubsidized 4G 
LTE and 5G broadband service by at least one service provider, broadly 
in line with our Option B proposal. In determining which areas are 
subsidized for this purpose, we will use Geographic Information Systems 
(GIS) data from USAC delineating the boundaries of the subsidized 
service areas of each competitive ETC receiving mobile legacy high-cost 
support. While most providers are still in the early stages of 
deploying their 5G networks in rural areas, we expect that a new 
collection of mobile coverage data in 2021 or 2022 will show 
significant 5G broadband deployments. Because these areas will have 
already seen deployment of 5G without subsidy, we will exclude such 
areas from eligibility consistent with our longstanding policy of 
avoiding overbuilding competitive networks. Moreover, we will also 
exclude from eligibility those areas where new coverage data gathered 
in the Digital Opportunity Data Collection show unsubsidized 4G LTE 
networks have been deployed. Given the rapid state of competitive 5G 
deployment in the marketplace, combined with enforceable merger 
commitments from T-Mobile, we believe that subsidizing 5G deployments 
where unsubsidized 4G LTE networks have been deployed is unnecessary 
and risks preempting reasonably near-term 5G deployments we could 
expect in those areas.
    18. Commenters that support Option B also generally support our 
proposal to define as eligible those areas where new coverage data show 
a lack of 4G LTE broadband service. However, one commenter suggests 
also making eligible under Option B those areas that historically 
lacked 4G LTE service. Given the potential for allocating inefficient 
support to areas more likely to see competitive 5G deployments and 
concerns over the accuracy of historical FCC Form 477 and Mobility Fund 
Phase II 4G LTE mobile coverage data, we are unconvinced that there is 
a meaningful basis upon which to allocate support to some areas 
otherwise served by unsubsidized 4G LTE networks. We likewise decline 
to prioritize any areas based upon historical 3G and 4G LTE coverage 
data. While we proposed a similar approach in the context of Option A, 
we conclude that such prioritization is unnecessary in light of our 
decision to base eligibility on more precise Digital Opportunity Data 
Collection maps. Moreover, our concerns with developing a meaningful 
way to incorporate less reliable historical data sources into our 
eligibility determinations are equally applicable. There is likely 
significant overlap between areas that have historically lacked 3G or 
4G LTE service and the areas that currently lack unsubsidized 4G LTE 
service, more than 10 years after the technology was first deployed. 
Moreover, we believe that use of an adjustment factor that considers 
terrain and potential business case will provide adequate 
prioritization to ensure historically underserved or unserved areas 
will receive support in the Phase I auction.
    19. We adopt our proposal to exclude from eligibility for the 5G 
Fund those areas in Alaska, for which high-cost

[[Page 75773]]

support is provided via the mobile portion of the Alaska Plan, as well 
as areas in Puerto Rico and the U.S. Virgin Islands where the 
Commission has already provided high-cost support, including support 
for 5G mobile broadband, a proposal that RWA supports. We disagree with 
commenters suggesting that the Commission include Alaska in the roll 
out of the 5G Fund. The Commission established the Alaska Plan in 2016 
for a 10-year term, apart from earlier efforts to reform the mobile 
high-cost program due to the ```uniquely challenging operating 
conditions''' in Alaska. The Commission explained in the Mobility Fund 
Phase II Report and Order that because it ``adopt[ed] the Alaska Plan 
for mobile carriers as an Alaska-specific substitute mechanism for 
mobile high-cost support, . . . there will be no support provided under 
Mobility Fund Phase II or Tribal Mobility Fund Phase II for mobile 
services within Alaska.'' Since we today establish the 5G Fund to 
replace Mobility Fund Phase II, we similarly conclude that the Alaska 
Plan should remain the sole high-cost support mechanism for mobile 
carriers in Alaska. Moreover, we do not believe the framework that we 
adopt for the 5G Fund is appropriate for Alaska given the unique 
circumstances faced by carriers deploying mobile services in that 
state, and because it would undermine the comprehensive support 
mechanism the Commission adopted to address those challenges.

C. Framework for the 5G Fund

    20. We adopt the basic framework we proposed for the 5G Fund for 
Rural America, with a few specific modifications to the requirements we 
proposed for competitive ETCs receiving legacy high-cost support for 
mobile wireless service. We will require both legacy high-cost support 
recipients and 5G Fund auction support recipients to meet public 
interest obligations to provide voice and 5G broadband service, and to 
satisfy distinct, measured performance requirements as a condition of 
receiving support. Recipients of both legacy high-cost support and 5G 
Fund auction support must meet minimum baseline performance 
requirements for data speed, latency, and data allowance, including: 
(1) Deploying 5G networks that meet at least the 5G-NR (New Radio) 
technology standards developed by the 3rd Generation Partnership 
Project with Release 15 (or any successor release that may be adopted 
by the Office and Bureau after appropriate notice and comment) with 
median download and upload speeds of at least 35 Mbps and 3 Mbps with 
minimum cell edge download and upload speeds of 7 Mbps and 1 Mbps; (2) 
meeting end-to-end round trip data latency measurements of 100 
milliseconds or below; and (3) offering at least one service plan that 
includes a minimum monthly data allowance that is equivalent to the 
average United States subscriber data usage. We adopt performance goals 
and measures for the 5G Fund similar to those that the Commission has 
implemented in recent high-cost support proceedings and direct the 
Office and Bureau to adopt others. Designing and adopting oversight and 
accountability measures when adopting a new or modified universal 
service program not only ensures that the Commission meets its 
obligations under the Act, but also facilitates our compliance with 
government-wide obligations for the efficient and effective design and 
implementation of federal programs.
    21. These performance requirements, along with public interest 
obligations for reasonably comparable rates, collocation, and voice and 
data roaming, will ensure that rural areas receive service comparable 
to high-speed, mobile broadband service available in urban areas. We 
also adopt interim and final 5G service deployment milestones for 5G 
Fund auction support recipients, and reporting requirements to monitor 
the progress of all recipients in meeting the distinct performance 
requirements that we adopt.
1. Establishing a Two-Phased 5G Fund for Rural America
    22. We adopt our proposal to award support from the 5G Fund for 
Rural America through a competitive reverse auction in two phases. In 
Phase I, we will target support nationwide to all eligible rural areas 
that lack unsubsidized 4G LTE and 5G broadband service, and in Phase II 
we will focus support to specifically target the deployment of 
technologically innovative 5G networks that facilitate precision 
agriculture.
    23. We conclude that a reverse auction is the appropriate mechanism 
for allocating scarce universal service resources to the carriers that 
will use them most efficiently. The Commission has long endorsed 
competitive bidding for distributing support. In the USF/ICC 
Transformation Order, the Commission recognized the value of 
competitive bidding for awarding award high-cost support, both fixed 
and mobile, noting that a reverse auction ``is the best available tool 
for identifying'' areas where support can make the largest difference, 
as well as the associated support amounts. In the existing mobile 
legacy high-cost support program, on the other hand, neither the areas 
for which legacy support is currently disbursed nor the amount of 
support carriers receive have a direct nexus to the areas most in need 
of support or the amount needed to provide service therein.
    24. Our experience using competitive bidding in the Mobility Fund 
Phase I, Tribal Mobility Fund Phase I, and Connect America Fund Phase 
II auctions confirms the Commission's prediction that it is the most 
efficient and effective mechanism for awarding universal service 
support. An auction mechanism allows us to distribute support in a 
transparent, speedy, and efficient manner, and provides a 
straightforward means of identifying those providers that are willing 
to provide 5G service at the lowest cost to the Universal Service Fund 
by determining support levels that winning bidders are willing to 
accept in exchange for the public interest obligations and performance 
requirements we impose.
    25. Consistent with our decision to base eligibility on new, 
granular Digital Opportunity Data Collection mobile broadband coverage 
data, as well as our decision to adopt 5G performance requirements and 
public interest obligations for legacy high-cost recipients, we decline 
to adopt RWA's proposal for a three-phase approach that would award 
support to certain existing legacy high-cost recipients. Under RWA's 
proposal, the 5G Fund would create a $1.5 billion ``Phase 0'' for 
current legacy support recipients with 500,000 or fewer subscribers so 
that those carriers could build out 5G in areas eligible under Option A 
before proceeding to an auction with remaining funds. NTCA supports 
RWA's three-phase proposal, but proposes that the Commission should 
base eligible areas for both the Phase I and Phase II auctions on 
Option B.
    26. RWA argues that its approach would provide certainty to small 
rural carriers and promote faster 5G deployment, while NTCA claims that 
its approach can leverage existing high-cost support recipients' 
networks. Based on the record before us, and our experience with 
competitive bidding mechanisms, we are not convinced that this approach 
would be a more efficient or effective means of awarding support than 
an auction. We are unpersuaded that a three-phase approach improves our 
ability to better target support or to significantly accelerate 5G 
deployment in rural areas. While we do not doubt that recipients of 
mobile legacy high-

[[Page 75774]]

cost support have been ``good stewards of universal service funds'' as 
NTCA states, neither proposal is consistent with our decade-long 
efforts to reform universal service high-cost support. Moreover, to the 
extent RWA and NTCA are correct that carriers receiving legacy high-
cost support can deploy 5G networks in their service areas more 
efficiently, we anticipate they will have an advantage against bidders 
that do not already serve those eligible areas in the auction.
    27. We agree with AT&T that implementing a Phase 0 approach risks 
continuing to provide legacy high-cost support to fund service in areas 
that may already have unsubsidized 4G LTE (or even 5G) service from one 
or more providers. Further, we agree with T-Mobile that setting aside 
funds for a limited subset of providers would be an inefficient use of 
our scarce resources, and could limit our ability to expand 5G coverage 
to as many unserved areas as possible. This concern is amplified by the 
fact that we would risk overpaying for 5G networks in some areas that 
another provider (or even the same legacy support recipient) would be 
willing to serve for less support through an auction.
2. Budget
    28. We adopt a budget of $9 billion for the 5G Fund, to be awarded 
in two phases: Up to $8 billion for Phase I, of which we will reserve 
$680 million of support for service to Tribal lands, and at least $1 
billion in Phase II, as well as any unawarded funds from Phase I. We 
further adopt our proposal to repurpose the Mobility Fund Phase II 
budget for the 5G Fund.
    29. Given the apparent overstatement of coverage data the 
Commission staff investigation discovered, we anticipate that the more 
precise and granular mobile broadband coverage data that will become 
available in the Digital Opportunity Data Collection proceeding will 
show that the number of areas unserved by unsubsidized 4G LTE is 
greater than the Commission originally estimated, and the number of 
areas unserved by 5G will likewise be substantial. Insofar as almost 
two years have passed since the Commission ceased the Mobility Fund II 
challenge process, however, we note that some carriers will have 
expanded their 4G LTE footprint; therefore, all of the areas that were 
eligible for a Mobility Fund II auction may not be eligible for a 5G 
Fund Phase I auction. The deployment of networks capable of providing 
this 5G service undoubtedly will be expensive, particularly given the 
need to build high quality infrastructure beyond just our rural 
roadways. We therefore conclude that significantly more funds than 
those budgeted for Mobility Fund Phase II will be necessary to achieve 
our rural 5G goals. By repurposing the entire $4.53 billion budget 
originally adopted for Mobility Fund Phase II, and essentially doubling 
our financial commitment to deploying mobile broadband in rural areas, 
we will have a greater likelihood of achieving the Commission's goals 
while incentivizing carriers to participate in the auction.
    30. In establishing the total budget for the 5G Fund, we are 
mindful that the cost of universal service programs is ultimately borne 
by the consumers and businesses that pay to fund these programs, and we 
have a corresponding obligation to exercise fiscal responsibility by 
avoiding excessive subsidization and overburdening communications 
consumers. Courts have recognized that over-subsidizing universal 
service programs can actually undermine the statutory principles set 
forth in section 254(b) of the Communications Act of 1934, as amended 
(the Act). With this in mind, we adopt a 5G Fund budget that seeks to 
balance the various competing objectives in section 254 of the Act, 
including the objective of providing support that is sufficient, but 
not so excessive so as to impose an undue burden on consumers and 
businesses. Our approach is consistent with judicial interpretation of 
these objectives, as well as our own.
    31. As we have repeatedly emphasized since we began reforming of 
our universal service programs, ratepayer funds are not unlimited and 
must be prioritized to achieve our policy goals. We conclude that the 
budget of $8 billion that we adopt today for Phase I of the 5G Fund 
incentivizes competition from carriers that wish to participate in the 
Phase I auction in order to deploy 5G consistent with the public 
interest obligations and performance requirements we propose for the 5G 
Fund. We further conclude that a budget of at least $1 billion for 
Phase II of the 5G Fund will be necessary for carriers to commit to the 
deployment of technologically innovative 5G networks that facilitate 
precision agriculture. Dedicating at least $1 billion to this second 
phase of the 5G Fund will help close the remaining digital divide but 
also direct funds to networks supporting innovative agricultural 
solutions, increasing our nation's economic efficiency and encouraging 
economic growth in rural areas, especially in vast areas of 
agricultural lands that currently remain unserved.
    32. For these same reasons, we decline to allot a larger portion of 
the total 5G Fund budget to the Phase II auction, as some commenters 
suggest. Such an approach risks significantly increasing the number of 
areas that remain unserved after the Phase I auction. Moreover, because 
the amount of funds necessary to cover the phase down of legacy high-
cost support will not be known until the conclusion of the Phase I 
auction, we decline to reduce the Phase I budget by the amount 
necessary to fund the phase down, which should provide maximum 
certainty to prospective bidders.
    33. Although some commenters suggest that the total budget may be 
insufficient to deploy 5G networks to all eligible areas, none of those 
commenters proposed an alternative amount for the total 5G Fund budget. 
Those same commenters also support reassessing the Phase II budget 
following Phase I. Aside from the commenters suggesting a three-phase 
approach for the 5G Fund, no commenters addressed our request for 
comment on an alternative total budget.
    34. Although it did not offer an alternative total budget amount, 
we note that AST&Science comments that we should ``earmark a small 
portion (10% to 15%) of the 5G Fund for ``qualified applicants who 
commit to use innovative, non-traditional systems to serve areas that 
are highly unlikely to receive service even with the benefit of 
support.'' We decline to adopt this suggestion, as we have others, 
because it does not serve our primary policy goal of awarding support 
to as many eligible areas as possible with the limited funds available. 
For the same reason, we decline to adopt Lynk Global Inc.'s request 
that we set aside 1% of the 5G Fund as a reimbursable expense to 
satellite operators that successfully enable access to connectivity via 
mobile phones everywhere in the United States and its territories.
    35. We acknowledge concerns of commenters that contend that funds 
necessary to deploy 5G-capable networks in rural areas may be 
significantly higher than our total 5G Fund budget. The Commission's 
experience in the CAF Phase II auction demonstrates that competitive 
bidding can bring costs below projections: The aggregate reserve price 
of more than 713,000 locations assigned in that auction was $5 billion, 
compared to total winning bids of $1.5 billion. Moreover, we anticipate 
that many providers will use private capital in conjunction with the 5G 
Fund support they receive to build their 5G networks. By establishing 
the budget at $9 billion, we also recognize the risk of

[[Page 75775]]

overburdening consumers that contribute to the Universal Service Fund. 
Of course, the Commission will have the opportunity to reassess the 
Phase II budget following Phase I in the event it determines it is 
insufficient.
3. Support for Tribal Lands
    36. We adopt our proposal to reserve up to $680 million of the $8 
billion 5G Fund Phase I budget to support networks serving eligible 
areas in Tribal lands. Under the approach we adopt, only eligible areas 
on Tribal lands will be assigned support from this reserve. This 
doubles the minimum amount that the Commission intended to reserve to 
support Tribal lands from the Mobility Fund Phase II budget. Most 
commenters favored our proposal to reserve support for Tribal lands in 
the 5G Fund, but some express concern that $680 million will still be 
insufficient to ensure that these areas receive reasonably comparable 
service at affordable prices. We are mindful of these concerns, and we 
recognize that deploying networks that support 5G service will require 
a significant undertaking, particularly on Tribal lands where services 
often lag behind even non-Tribal rural lands. For those reasons, we 
acknowledge that we may need to revisit the amount of the budget 
reserved for Tribal lands after the conclusion of a Phase I auction, 
and, if necessary, we will do so at that time.
    37. We adopt our proposal that bidding under the Tribal reserve 
budget and bidding under the unreserved portion of the budget will take 
place simultaneously as part of the single 5G Fund Phase I auction. The 
Cherokee Nation expresses concern with this approach maintaining that 
we should conduct additional auctions as needed to ensure that the 
support reserved for Tribal lands in the 5G Fund auction serves Tribal 
lands. These concerns are unwarranted. Contrary to the Cherokee 
Nation's assumption, conducting bidding simultaneously creates no 
disincentive for bidders because fewer bids on Tribal lands under the 
reserved Tribal lands budget will not lead to more funds being 
transferred to the unreserved budget. Rather, Tribal areas with winning 
bids will receive a greater share of the Tribal budget. Accordingly, we 
do not believe that reserving those funds for a subsequent auction for 
support for Tribal lands will be a timely or practical approach to 
enhance 5G Tribal land deployments.
    38. Consistent with past practice, the details and final bidding 
procedures for a 5G Fund auction will be developed during our standard 
pre-auction process, and we anticipate that the procedures we adopt 
after notice and comment will ensure that support levels assigned from 
the Tribal reserve will not be less than support assigned from the 
unreserved budget, except possibly in cases where more than one bidder 
is competing for support in the same area.
    39. We decline to adopt Smith Bagley, Inc.'s Remote Tribal Areas 
Plan, which proposes allowing carriers serving Tribal lands to 
participate in an opt-in funding plan similar to the Alaska Plan, as an 
alternative mechanism for providing support to remote Tribal areas. We 
are not convinced that this approach would improve the outcome on 
Tribal lands over awarding support to Tribal areas through a reverse 
auction. As the Commission explained in rejecting a similar proposal in 
the Mobility Fund Phase II proceeding, the Commission adopted the 
Alaska Plan not because of the existence of Tribal lands in Alaska, but 
because of the need for support to be flexible enough to accommodate 
Alaska's unique conditions, like its ``remoteness, lack of roads, 
challenges and costs associated with transporting fuel, lack of 
scalability per community, satellite and backhaul availability, extreme 
weather conditions, challenging topography, and short construction 
season.'' We again conclude that adopting such an approach for all 
remaining states would be inconsistent with our decision to use a 
reverse auction as an efficient mechanism for deciding where to 
allocate Tribal support. Based on the $680 million budget that we are 
reserving for support for Tribal lands, we anticipate that 5G Fund 
support will meaningfully flow to Tribal areas.
    40. We also decline to adopt Standing Rock Telecommunications, 
Inc.'s request that we use a Tribal entity weighting factor as a 
mechanism to provide Tribal entities with the opportunity to become the 
winning bidder to provide supported 5G service on their Tribal lands. 
The $680 million reserved Tribal lands budget we adopt will create a 
powerful incentive for service providers to bid to serve Tribal lands. 
We are unpersuaded that creating a preference for a particular type of 
entity will advance our goals and produce greater deployment on Tribal 
lands. Indeed, including an additional weighting factor for Tribal 
entities could deter non-Tribal entities from bidding to serve Tribal 
lands, reducing both the competitiveness of the Phase I auction and the 
potential reach of our finite funds.
    41. Identifying Tribal Lands. We adopt our proposal to amend the 
definition of ``Tribal lands'' in section 54.5 of the Commission's 
rules to allow for the designation of certain non-Tribal areas and 
communities as Tribal lands, consistent with the rules for the Lifeline 
program. All commenters who addressed this proposal support it. This 
designation process permits expansion of the definition of Tribal lands 
for the high-cost program upon an appropriate showing that certain 
areas or communities that fall outside the boundaries of existing 
Tribal lands--i.e., off-reservation lands other than those already 
covered by the definition in section 54.5--have the same 
characteristics as existing Tribal lands. Although this designation 
process was adopted solely for the Lifeline program, the Commission 
previously has relied on precedent for the Lifeline program when 
adopting, interpreting, and expanding the definition of Tribal lands 
for purposes of the high-cost program. We find that the adoption and 
use of the designation process for the high-cost program is in the 
public interest because it will: (1) Reflect the flexibility that the 
Commission has used to adjust, as appropriate, the definition of Tribal 
lands in the universal service context; and (2) enable us to maximize 
bidding by all eligible bidders to serve Tribal lands in a 5G Fund 
auction and any future universal service auctions by grouping together 
existing Tribal lands and associated off-reservation lands, thereby 
making those areas more attractive for bidders and facilitating 
coverage to Tribal lands, as well as promoting competitive bidding for 
funding of such coverage.
    42. We designate three types of off-reservation lands as Tribal 
lands for purposes of the high-cost program. First, we designate as 
Tribal lands any federally recognized off-reservation trust lands, 
Tribal designated statistical areas (TDSAs), or joint use areas from 
the Census Bureau's American Indian, Alaska Native, and Native Hawaiian 
boundaries. In effect, we will thus include as Tribal lands all areas 
from the U.S. Census Bureau's American Indian, Alaska Native, Native 
Hawaiian dataset that are classified as federally recognized, 
regardless of the area's census code, classification, or component type 
in the data. Because many Tribal citizens live and work in, or travel 
to such off-reservation trust lands, TDSAs, or joint use areas, or are 
otherwise areas which are near federally-recognized reservations that 
we unambiguously consider Tribal lands, we conclude that the ``Tribal 
character of'' such off-reservation lands is clear. Moreover, in the 
context of the high-cost program, such areas face many of the same 
barriers to service as faced by on-reservation land--e.g., low

[[Page 75776]]

population density, high levels of poverty, lack of infrastructure, and 
historical lack of service. We find that including off-reservation 
areas in our definition of Tribal lands will help ensure we close the 
digital divide by facilitating carriers availing themselves of Tribal 
support mechanisms in our high-cost programs to serve more expansive 
areas with many of the same characteristics. We acknowledge that 
Commission staff previously concluded that certain TDSAs did not 
qualify as ``Tribal lands'' under the section 54.5 definition for 
purposes of the Tribal Mobility Fund Phase I auction. For the reasons 
previously stated, however, we now consider all TDSAs as Tribal lands 
for the 5G Fund and other high-cost program mechanisms. Second, we 
designate as Tribal lands those areas within the study area boundaries 
of the Eastern Navajo Agency and Sacred Wind Communications in New 
Mexico to allow so-called ``checkerboard'' Tribal and non-Tribal land 
areas in this section of New Mexico to be aggregated as Tribal lands 
for purposes of the high-cost program, including the 5G Fund, 
consistent with past Commission waivers. Under this approach, all 
Tribal land with the same four-digit census code within the minimum 
geographic area for bidding will be grouped together to allow bidders 
to bid on Tribal areas grouped by Tribal entity. For Tribal land that 
is not part of the Census Bureau's federally recognized American 
Indian, Alaska Native, and Native Hawaiian boundaries, we will assign 
such land the census code for the appropriate Tribal entity. Because 
there is no individual Alaska Native village associated with areas in 
Alaska that are not part of the American Indian, Alaska Native, and 
Native Hawaiian boundary data, we will identify these areas with the 
appropriate Alaska Native Regional Corporation identifier. 
Specifically, we will identify as part of the Navajo Nation the 
portions of the study area boundaries of the Eastern Navajo Agency and 
Sacred Wind Communications in New Mexico that fall outside of any 
Tribal boundary from the Census Bureau's data. Lastly, we designate as 
Tribal lands any areas within the geographic boundaries reflected in 
the Historical Map of Oklahoma (1870-1890), including the Cherokee 
Outlet, consistent with the Commission's interpretation of the ``former 
reservations in Oklahoma'' in section 54.400(e). We note the Supreme 
Court's recent decision in McGirt v. Oklahoma, 140 S. Ct. 2452 (2020), 
holding that land reserved for the Creek Nation since the 19th century 
remains ``Indian country'' for purposes of the Major Crimes Act and 
recognizing approximately half of the state of Oklahoma as Native 
American reservation land, but further note that this decision does not 
impact the approach to defining and identifying Tribal lands for 
purposes of the high-cost program we adopt here because the lands at 
issue in that decision were already considered to be Tribal lands under 
our proposal.
    43. Commenters generally support our proposals concerning 
identification of Tribal lands. Smith Bagley supports the definitional 
change to the Eastern Navajo Agency to capture so-called 
``checkerboard'' areas consisting of multiple land classifications, so 
that residents have access to the 5G Fund, and all future universal 
service programs, consistent with past Commission waivers. It submits 
that it is the correct course for the Commission to identify as part of 
the Navajo Nation the portions of the study area boundaries of the 
Eastern Navajo Agency and Sacred Wind Communications in New Mexico that 
fall outside of any Tribal boundary from the Census Bureau's data, and 
submits that solidifying the Eastern Navajo Agency's status as Tribal 
land will save Commission resources, bring certainty to carriers 
serving these areas, and generally serve the public interest.
    44. The Cherokee Nation states that it interprets the Commission's 
proposal to mean that the Cherokee Nation's former reservation lands, 
the Cherokee Outlet, will be assigned to the Cherokee Nation because 
the Cherokee Nation is the only tribe to have treaty rights to the 
Cherokee Outlet, and that any ``former reservation lands'' of the Iowa, 
Kickapoo, and Pawnee will be assigned to them respectively, but asks 
for clarity regarding which particular ``former reservation lands'' 
will be assigned to each of the four Tribal entities. RWA supports the 
Cherokee Nation's request. We clarify that the area not currently 
designated as Tribal in the U.S. Census Bureau's American Indian, 
Alaska Native, and Native Hawaiian data but identified as the Cherokee 
Outlet on the Oklahoma Historical Map (1870-1890) will be considered 
Tribal under the definition we adopt. Similarly, areas not currently 
designated as Tribal in the Census Bureau data but identified as Iowa, 
Kickapoo, or Pawnee based upon the ``former reservations in Oklahoma'' 
identified on the Oklahoma Historical Map (1870-1890) will be 
considered Tribal.
    45. The Council of Athabascan Tribal Governments and the Mount 
Sanford Tribal Consortium each state that the Commission's proposal to 
include Alaska in the definition of ``Tribal lands'' but exclude Alaska 
from the 5G Fund is inconsistent and will create confusion unless the 
Commission either deletes the reference to Alaska, or notes in the 
definition that areas in Alaska are not eligible for 5G Fund support. 
We note that the existing definition of ``Tribal lands'' in section 
54.5 of the Commission's rules defines that term for purposes of high-
cost support and thus applies to all high-cost support programs. The 
Commission did not propose in the 5G Fund NPRM a new definition of 
``Tribal lands'' that is unique to the 5G Fund for Rural America. The 
amendments to section 54.5 proposed in the 5G Fund NPRM--which we adopt 
here--are not specific to the 5G Fund and will apply to all high-cost 
support programs going forward, including the new 5G Fund, and for this 
reason, we do not qualify the reference to Alaska in the definition of 
``Tribal lands.'' Instead, consistent with our policy of not providing 
high-cost support funding to more than one mobile competitive ETC in a 
geographic area, we proposed in the 5G Fund NPRM to exclude areas in 
Alaska, for which high-cost support is already being provided via the 
mobile portion of the Alaska Plan, from the areas eligible for 5G Fund 
support. In formally adopting our proposal to exclude areas in Alaska 
from eligibility for 5G Fund support today, we make clear that such 
areas are not eligible for 5G Fund support.
4. Term of Support
    46. We adopt a 10-year support term for each phase of the 5G Fund, 
with monthly disbursements to winning bidders. As we recently explained 
in adopting a 10-year support term for the Rural Digital Opportunity 
Fund in the Rural Digital Opportunity Fund Report and Order, 85 FR 
13773, Mar. 10, 2020, a support term of 10 years encourages long-term 
investment and contributed to the robust participation in the 
successful Connect America Fund Phase II auction. We conclude that the 
same incentives apply here.
    47. Commenters largely agree that a 10-year support term will 
provide the certainty and stability needed to encourage deployment of 
5G service in rural areas while allowing providers to recover the cost 
of deploying their networks over time. We decline to shorten the term 
of support to five years as one commenter suggests, because we conclude 
that a five-year support term is too short to encourage long-term 
investment. For similar reasons, we also reject the suggestion that we 
should

[[Page 75777]]

accelerate the disbursement of funds by increasing support awarded 
during the first year, because our decision to disburse support on a 
monthly basis best ensures our ability to safeguard universal service 
funds in the event that service providers do not comply with our 
performance requirements and public interest obligations, and provides 
predictability for the Fund's contributions mechanism. Moreover, 
monthly disbursements provide 5G support recipients with reliable and 
predictable payments that conform to a variety of business cycles.
5. A Multi-Round, Descending Clock Auction
    48. We adopt our proposal to rely on the Commission's existing Part 
1, Subpart AA competitive bidding process rules for universal service 
support for the 5G Fund, with specific detailed clock auction bidding 
and bid processing procedures to be developed through our ordinary pre-
auction notice and comment process. For Phase I and Phase II of the 5G 
Fund, we will use a multi-round, descending clock auction to identify 
the areas that will receive support, the carriers that will receive 
support in those areas, and the amount of support that each winning 
bidder will be eligible to receive. This descending clock auction will 
consist of sequential bidding rounds according to an announced 
schedule. Using multi-round auctions will enable bidders to adjust 
their bidding strategies over the course of the bidding so as to create 
viable aggregations of geographic areas in which to construct networks. 
The Commission has found that this approach to developing competitive 
bidding procedures--first defining important elements of the basic 
structure while later considering the detailed procedures for 
implementation--gives it necessary flexibility for integrating its 
auction objectives and high-level decisions into a workable and 
consistent auction process. Most commenters support our proposal. CCA, 
however, cautions against the use of reverse auctions because they can 
``drive support to lowest cost options,'' specifically citing the use 
of equipment that may be subject to security concerns. We do not find 
this argument compelling. Firms generally face an incentive to minimize 
costs not limited to reverse auction bidders. Moreover, the Commission 
generally ensures equipment safety and security standards, and those 
concerns are not limited to competitive bidding in a reverse clock 
auction.
    49. For both the Phase I and Phase II auctions, we adopt our 
proposal to accept bids and identify winning bids using a support price 
per adjusted square kilometer. Each eligible area will have an 
associated number of square kilometers which will be adjusted by an 
adjustment factor, described below. We will determine support amounts 
for an area by multiplying an area's associated adjusted square 
kilometers by the relevant price per square kilometer. For example, an 
area with 100 square kilometers and an adjustment factor of 1.2 would 
have 100 x 1.2 or 120 adjusted square kilometers. This approach will 
ensure that carriers bidding to serve the hardest-to-serve parts of the 
country can compete efficiently and fairly in the auction. Commenters 
did not oppose these specific proposals.
    50. During the pre-auction processes for Phase I and Phase II, as 
is the Commission's normal practice, we will seek comment on and adopt 
an opening price per adjusted square kilometer that is high enough that 
even carriers requiring a very high level of support will be able to 
compete in the auction. The opening price multiplied by the number of 
adjusted square kilometers in the area will represent the highest 
support amount that a winning bidder could receive for the area in the 
auction. The same opening price and subsequent clock prices, in dollars 
per adjusted square kilometer, will apply to all the eligible areas in 
the auction. The clock price will be decremented in subsequent rounds 
of the auction, implying lower support amounts for each area. Since the 
opening price is intended to serve as a starting point for bidding and 
not an estimate of final prices, we anticipate that the opening price 
that we propose will be based on rough estimates of the cost of 
providing service in hard-to serve areas, taking into account any 
adjustments that are adopted.
6. Minimum Geographic Area for Bidding
    51. We conclude that the minimum geographic area for bidding--i.e., 
the geographic area by which areas eligible for 5G Fund support will be 
grouped for bidding--in a 5G Fund auction will be no larger than a 
census tract and no smaller than a census block group, as designated by 
the U.S. Census Bureau. Our goal in adopting a minimum geographic area 
for bidding is to ensure that a wide variety of interested bidders, 
including small entities, have the flexibility to design a network that 
matches their business model and technical capabilities and that allows 
service providers to achieve their performance benchmarks and public 
interest obligations efficiently. Thus, as the Commission did in the 
CAF Phase II and Rural Digital Opportunity Fund proceedings, we will 
determine the exact geographic area for grouping eligible areas during 
the pre-auction process when we finalize the auction design and have 
better data for determining eligible areas. Commenters are split on 
whether the minimum geographic area for bidding in a 5G Fund auction 
should be smaller than a census tract, and none support larger ones. In 
considering whether to use a minimum geographic area smaller than a 
census tract, we are mindful of the concerns of commenters that the 
number of square kilometers in a census tract may not correspond well 
with the low population density of that large a geographic area and 
that it may be difficult for carriers meet the 5G Fund performance 
requirements.
    52. We also conclude that the minimum geographic area for bidding 
for a 5G Fund auction will be larger than individual census blocks, 
which are smaller than census tracts and census block groups. Although 
at least one commenter supports using individual census blocks, as we 
recently concluded in the context of the CAF Phase II and Rural Digital 
Opportunity Fund auctions, doing so would significantly increase the 
complexity of the bidding process both for bidders and the bidding 
system and minimize the potential for broad coverage by winning 
bidders. Furthermore, using census blocks as the minimum geographic 
area could create more challenges for providers in putting together a 
bidding strategy that aligns with their intended network construction 
or expansion.
    53. In order to provide interested parties greater certainty, and 
insofar as no commenter objected to it, we also adopt our proposal to 
remove from a 5G Fund auction any geographic area that has de minimis 
eligible areas, which we define as an area of one square kilometer or 
less within the geographic area that we ultimately adopt. We believe 
there would be little or no demand for these de minimis areas, the 
administrative burdens would outweigh any potential benefits, and that 
the amount of the winning bid associated with such areas would be so 
small in terms of monthly disbursements that the cost to distribute it 
would outweigh its utility in benefitting a support recipient.
    54. Moreover, because we decide to allocate funds reserved for 
support to Tribal lands from a separate Tribal lands budget, we also 
adopt our proposal to identify the eligible areas that coincide with an 
area of a specific Tribal entity by overlaying the boundaries of Tribal 
lands for each federally recognized

[[Page 75778]]

Tribal entity on the eligible areas within each minimum geographic area 
that we adopt. We note that while commenters generally did not address 
this proposal, two commenters--Smith Bagley and the Cherokee Nation--
are generally supportive of our proposals to identify and group Tribal 
areas with the appropriate entity for purposes of the high-cost program 
and 5G Fund.
7. Adjustment Factor
    55. We adopt our proposal to incorporate an adjustment factor into 
the 5G Fund auction that will assign a weight to each geographic area 
and will apply that adjustment factor to bidding for support amounts, 
and to apply that adjustment factor to the methodology for 
disaggregating legacy high-cost support. This weighting will reflect 
the relative cost of serving areas with differing terrain 
characteristics, as well as the potential business case for each area, 
with less profitable areas receiving greater weight and therefore 
greater support. The descending clock auction format we will use is one 
in which a uniform support rate is offered across all eligible areas, 
and carriers indicate which specific areas they would serve at that 
rate. If the sum of all payments that would be made at a specific rate 
given carriers' expressed willingness to serve exceeds the 5G Fund 
budget, then the rate is reduced and carriers express their willingness 
to serve at the lower rate. This process continues until the payment is 
equal to the 5G Fund budget. Under this process, carriers will be 
willing to serve fewer areas as the rate falls, but if the same rate is 
offered for all remaining areas, more support than is needed will flow 
to the less costly-to-serve and more profitable remaining areas. The 
adjustment factor will, however, for any given support rate, allocate a 
multiple of the support rate to more costly and less profitable areas, 
thereby making them more attractive to serve and increasing the support 
to such areas.
    56. Using an adjustment factor to help distribute 5G Fund support 
to, and disaggregate legacy support in, a range of areas across the 
country that are geographically and economically diverse serves the 
public interest. As stated in the 5G Fund NPRM, however, we do not 
expect an adjustment factor to capture the full differences between the 
costs and benefits of providing service to different types of 
geographic areas. In addition, we may cap the adjustment factor if we 
believe that it would be helpful to do so in balancing our goals of 
providing broad and equitable support for 5G.
    57. As directed in the 5G Fund Order, 85 FR 34525, Jun. 5, 2020, 
the Office and Bureau proposed and sought comment in the 5G Fund 
Adjustment Factor Public Notice, DA 20-594, rel. Jun. 5, 2020, on 
specific adjustment factor values and the underlying methodologies used 
to develop them. Consistent with our decision to adopt the use of an 
adjustment factor, the adjustment factor values that are adopted by the 
Office and Bureau will be used in both bidding in the 5G Fund auction 
and for the disaggregation of legacy support.
    58. Commenters broadly support our proposal to adopt an adjustment 
factor, although they differ in how to calculate and apply it. T-Mobile 
argues that an adjustment factor will ``encourage investment in areas 
that are more costly or less profitable to serve.'' The Massachusetts 
Department of Telecommunications and Cable also supports using an 
adjustment factor to score auction bids, but argues that the Commission 
should ``account for all relevant differences in 5G deployment and 
operating costs between locations, not just differences in terrain.'' 
AST&Science strongly supports incorporating an adjustment factor into 
the 5G Fund auction design ``in order to increase support to areas that 
are more costly and less profitable to serve.'' RWA believes that 
adjustment factors are ``an effective way of targeting support to hard-
to-serve rural areas'' in an auction.
    59. Our application of an adjustment factor in bidding in the 5G 
Fund auction and for the disaggregation of legacy support recognizes 
the variability of costs of deploying service, especially mobile 
service, across the country, and in that way advances our core 
universal service goal of ensuring access to reasonably comparable 
services in all areas of the country. We accordingly decline to adopt a 
disaggregation methodology allocating universal service support 
uniformly throughout a provider's subsidized service area; doing so 
would ignore the significant additional costs that wireless providers 
incur to deploy service in more difficult terrain and economic 
conditions. Instead, consistent with the direction in the 5G Fund 
Order, the Office and Bureau will apply a disaggregation methodology 
that uses an adjustment factor as a proxy for determining areas that 
are relatively more costly for potential bidders and current legacy 
support recipients.
    60. We adopt our proposal to use an adjustment factor that accounts 
for both the relative costs and business cases of deploying a 5G 
network given the differing terrain and economic conditions throughout 
the United States. The adopted adjustment factor will ensure that bids 
to serve areas that tend to be less profitable to serve, such as more 
economically disadvantaged areas and areas with more challenging 
terrain, are given greater weight in the auction and are not 
disadvantaged. We defer the final determination of the precise manner 
in which the adjustment factor will be incorporated into the auction 
mechanism to the pre-auction process.
    61. We disagree with Verizon that applying such an adjustment 
factor to bidding is untested. In the CAF Phase II auction, the 
Commission's cost model adjusted reserve prices based on variations in 
the deployment costs of fixed networks due to factors like geography 
and regional costs. This cost-based adjustment to the bid amount is 
effectively the same as we adopt here--albeit designed here for 
application to mobile networks--and we will build on our experience in 
that auction. We also disagree with RWA that the adjustment factor 
should not be applied to the disaggregation of legacy support. Using an 
adjustment factor is appropriate because it will alleviate potential 
concerns over a carrier losing a disproportionate amount of its legacy 
support resulting from a disaggregation methodology in which more 
costly areas would be treated the same as less costly areas with 
respect to subsidies received. For example, a hypothetical carrier 
serving one mountainous census tract and one flat census tract of equal 
size in its subsidized service area might require 75% of its support to 
serve the mountainous tract and 25% to serve the flat tract. Were an 
unsubsidized carrier to enter the flat tract, which may be more likely 
given the relatively lower costs in the flat tract, if we did not apply 
the adjustment factor in calculating disaggregated support, the carrier 
would lose 50% of its funding and would be unable to continue serving 
the mountainous tract. However, applying an adjustment factor of three 
to the mountainous area would result in the carrier retaining 75% of 
its original support amount and allow it to continue serving the 
mountainous tract.
    62. We decline to adopt the Massachusetts Department of 
Telecommunications and Cable's proposal to explicitly account for all 
5G capital and ongoing cost differences in the calculation of the 
adjustment factor. We first note that two of the models presented in 
the 5G Fund Adjustment Factor Public Notice, the Entry and Auction 
Bidding models, do reflect differences across geographic areas in

[[Page 75779]]

capital and ongoing costs, including the differences in labor rates, 
utility rates and other factors cited by the Massachusetts Department 
of Telecommunications and Cable. These models estimate differences in 
total profitability from deployment, and as such, capture differences 
in capital and ongoing costs as well as revenues from subscriber 
demand. Also, as we observed in the 5G Fund NPRM, we do not intend for 
the adjustment factor to be an exhaustive accounting of all cost and 
demand differences across every area. Rather, it is to allow bidders in 
less profitable to serve areas to effectively compete in the auction 
while at the same time allowing the auction, rather than a cost model, 
to determine the most economically efficient allocation of winning 
bidders and funding levels across geographic areas.

D. Public Interest Obligations and 5G Service Performance Requirements 
for Legacy High-Cost Support and 5G Fund Auction Support Recipients

1. 5G Public Interest Obligations for Legacy High Cost Support 
Recipients
    63. To bring accountability and ensure deployment of 5G technology 
in each carrier's subsidized service area, we establish broadband 
public interest obligations that will require competitive ETCs 
receiving legacy high-cost support for mobile wireless service to 
provide mobile, terrestrial voice and data services that comply, at a 
minimum, with 5G-NR technology as defined by 3GPP Release 15 (or any 
successor release that the Office of Economics and Analytics and the 
Wireline Competition Bureau may require after notice and comment). 
Specifically, we adopt our proposal to require that legacy support 
recipients use an increasing percentage of their support toward 5G 
service. We will also require competitive ETCs receiving legacy high-
cost support to meet specified coverage requirements until such legacy 
support begins to phase down or otherwise ceases.
    64. We note that the Commission has already begun phasing down 
support for those competitive ETCs that receive legacy high-cost 
support to provide service to fixed locations, and will similarly 
exempt entirely from new obligations and requirements competitive ETCs 
receiving legacy high-cost support for mobile wireless service in 
Alaska, Puerto Rico, and the U.S. Virgin Islands, areas for which the 
Commission adopted alternative support mechanisms and that are not 
otherwise eligible for 5G Fund support. We further note that 
competitive ETCs may voluntarily relinquish receipt of legacy high-cost 
support for a subsidized service area, and upon so doing, will no 
longer be required to meet these public interest obligations. However, 
in cases where a carrier voluntarily relinquishes legacy support at 
some point after effective date of these rules, the Commission may seek 
up to full recovery of all legacy support the carrier received after 
the effective date of these rules which was not spent toward the 
deployment, operation, and/or maintenance of 5G services consistent 
with the non-compliance framework we adopt herein.
    65. No commenter disputes our reliance on the Commission's 
determination in the USF/ICC Transformation Order that any pause in the 
phase down of legacy high-cost support should be accompanied by 
additional public interest obligations and performance requirements for 
these support recipients. Rural Americans deserve timely deployment of 
service by legacy recipients of high-cost support that is comparable to 
what is being offered in urban areas, and our stewardship of the 
Universal Service Fund demands that we specify and clarify the 
obligations of legacy support recipients.
    66. Because we recognize that the amount of legacy high-cost 
support received by each competitive ETC varies considerably and bears 
no direct relation to the size of its subsidized service area or to the 
expected cost of deploying 5G service, we do not adopt our proposal to 
require recipients to meet uniform 5G service deployment milestone 
coverage requirements largely mirroring those we adopt herein for 5G 
Fund support recipients. Instead, we adopt a general requirement for 
competitive ETCs receiving legacy high-cost support to meet deployment 
coverage requirements, and direct the Office and Bureau to develop and 
adopt, after notice and comment, specific 5G broadband service 
deployment coverage requirements and service deployment milestone 
deadlines for each legacy support recipient that take into 
consideration the amount of legacy support the carrier receives. In so 
doing, we direct the Office and Bureau to analyze the costs of 5G 
deployment in subsidized service areas and to evaluate the adequacy of 
legacy support to meet the particular deployment coverage requirements 
ultimately adopted.
    67. Some parties raise objections to or otherwise question our 
directing the Office and Bureau to develop 5G deployment coverage 
requirements for legacy support recipients. We disagree and believe 
that these workstreams can proceed in parallel. Without more rigorous 
and objective 5G deployment obligations, we are concerned that legacy 
support may not ensure the timely deployment of 5G service to rural 
areas, that we will lack adequate information by which to measure the 
effectiveness of this support, and that legacy recipients may not be 
properly incentivized to participate in a 5G Fund auction. We therefore 
disagree with these concerns and anticipate that the Office and Bureau 
will adopt appropriate carrier-specific coverage deployment 
requirements expeditiously.
    68. We note as a threshold matter that each ETC receiving high-cost 
support has an existing public interest obligation to offer broadband 
service throughout its subsidized service area. The details of the 
technical characteristics and deployment requirements of this broadband 
public interest obligation differ for each of the specific mechanisms 
under which carriers receive high-cost support, but the obligation to 
offer broadband service applies broadly, including to competitive ETCs 
that continue to receive legacy high-cost support to provide mobile 
services. Our decision today thus helps to complete the reform of the 
high-cost program begun in 2011 by effectuating this broadband service 
public interest obligation for legacy high-cost support recipients, 
whose broadband-specific public interest obligations for mobile 
services were not previously detailed. In so doing, we also effectuate 
the Commission's expectation that any pause in the phase down would 
include additional mobile broadband public interest obligations and 
performance requirements for the continued receipt of support. For the 
reasons stated in the 5G Fund NPRM, we adopt our proposal to require 
legacy high-cost support recipients to meet additional public interest 
obligations and performance requirements and will require recipients of 
legacy high-cost support to meet the specific public interest 
obligations and performance requirements detailed herein.
    69. Each competitive ETC receiving legacy high-cost support for 
mobile wireless services must now use an increasing percentage of its 
legacy support toward the deployment, maintenance, and operation of 
voice and broadband networks that support 5G meeting the performance 
requirements we adopt today within its subsidized service areas. 
Specifically, legacy support recipients must use at least one-third of 
the legacy support they receive in 2021 and at least two-thirds of the 
legacy support they receive in 2022 for these purposes. Some carriers 
raise a concern that budgets and

[[Page 75780]]

deployment plans for 2021 are largely complete, which could make it 
difficult for some legacy support recipients to achieve the 2021 
requirement. As such, we will also afford a carrier the flexibility to 
use less than one-third of its legacy support in 2021 and make up any 
shortfall in 2021 by proportionally increasing the requirement in 2022 
(above the two-thirds of its support the carrier is required to spend 
on 5G in that year). For example, a legacy high-cost support recipient 
that receives $9 million per year in legacy support could meet this 
requirement by spending on 5G: $3 million in 2021 and $6 million in 
2022; $1.5 million in 2021 and $7.5 million in 2022; or even $0 in 2021 
and $9 million in 2022. To take advantage of this flexibility, a 
carrier receiving legacy support must certify to the Bureau by March 
31, 2021 (or 30 days after the Commission receives Paperwork Reduction 
Act approval, whichever is later) as to the amount of 2021 legacy 
support it will use for the 5G deployment requirements and certify that 
it will make up any shortfall in 2022. For legacy support received in 
2023 and for each subsequent year, the full amount of legacy support a 
carrier receives in the calendar year must be used for these purposes 
by the end of the calendar year until its legacy support for an area 
begins to phase down or otherwise ceases. We note that this requirement 
is not intended to prohibit a competitive ETC from using a portion of 
its legacy support on the maintenance or operation of 4G LTE or 
previous generation services in its subsidized service area as part of 
a network otherwise capable of providing 5G service meeting the 
performance requirements, for example, in order to continue to support 
older generation consumer handsets. In line with the geographic 
flexibility we adopt herein, the percentage of legacy support that a 
competitive ETC must use will be calculated against the total amount of 
legacy high-cost support that the carrier receives for all of the 
subsidized service areas for which it (or any affiliated competitive 
ETCs) receives support at 60% of the frozen high-cost support level, 
calculated pursuant to section 54.307(e)(2)(iii).
    70. We conclude that adopting uniform coverage requirements for 5G 
broadband service deployment similar to those we adopt for 5G Fund 
winning bidders without first estimating the sufficiency of support 
amounts to meet a coverage requirement could give some carriers a 
windfall for little deployment while imposing impossible expectations 
on others. On the other hand, requiring that an increasing percentage 
of legacy support be used to deploy 5G service does not present similar 
concerns about the sufficiency of support. For example, a competitive 
ETC that receives $10 million per year to provide service across a 
state would thus, presumably, be able to deploy 5G broadband service on 
a faster timeline and covering more area (e.g., perhaps to 85% of its 
subsidized service area within four years) than would a competitive ETC 
that receives only $1 million per year to provide service to a similar 
sized area across the same state. Nevertheless, both legacy support 
recipients would be able to spend the same proportion of legacy support 
toward deployment of 5G service in order to meet their broadband public 
interest obligations. Requiring a gradual shift to spending on 5G 
service, as we do today, will broadly align with the schedule for 5G 
deployment in unsubsidized and urban areas, and will help ensure that 
high-cost areas do not fall behind.
    71. Several commenters oppose our proposal to require legacy 
support recipients to meet uniform 5G coverage requirements as part of 
the public interest obligations and performance requirements we 
tentatively concluded we should adopt. AT&T argues that requiring 5G 
deployment in areas after support has been phased down would ``violate[ 
] the Commission's obligation [under section 254(b)(5) of the Act] to 
establish support mechanisms that provide sufficient funding.'' We 
expressly proposed in the 5G Fund NPRM to exempt from any 5G broadband 
service deployment public interest obligation areas where the legacy 
support recipient is subject to two-year phase down of support, both 
during the two-year phase down period and also after legacy support 
ceases, a proposal which we adopt herein. In other words, contra AT&T's 
suggestion, there will be no requirement to deploy 5G broadband service 
in areas where support is being or has been phased down. The Coalition 
of Rural Wireless Carriers (CRWC) similarly argues that requiring 5G 
deployment public interest obligations without evaluating the costs 
required to deploy service is arbitrary and capricious and would 
violate the statute. Smith Bagley opposes 5G deployment requirements 
for legacy support recipients on remote Tribal lands, where, it states, 
costs are so high and current support levels are insufficient to 
provide even 4G LTE service in many areas and that ``the Commission 
cannot require carriers to improve facilities and service levels in 
uneconomic high-cost areas unless it provides support that is explicit 
and sufficient . . . .'' We agree with these commenters that requiring 
legacy support recipients to meet uniform coverage requirements for 5G 
broadband service buildout without further analysis of the amount of 
legacy support each competitive ETC receives is premature. We have 
therefore directed the Office and Bureau to evaluate the adequacy of 
legacy support to meet particular deployment coverage requirements and 
to adopt specific 5G broadband service deployment coverage requirements 
and service deployment milestone deadlines for each legacy support 
recipient that take into consideration the amount of legacy support the 
carrier receives after notice and comment.
    72. Three commenters support alternative frameworks that would 
require the deployment of 5G broadband service over a 10-year period in 
return for the same or an increased amount of legacy support carriers 
receive. Both RWA and NTCA suggest requiring modified 5G broadband 
service deployment obligations and performance requirements of legacy 
support recipients, but only as part of their respective ``5G Small 
Carrier Fund'' proposals. These proposals, which are largely modeled on 
the Commission's Alaska Plan, would offer legacy support recipients an 
increase in their support amounts over 10 years to deploy 5G and which 
we declined to adopt above. Smith Bagley proposes a ``Remote Tribal 
Areas Plan'' that would similarly offer the same amount of support, or 
a modified amount determined by the Commission, over 10 years for 
legacy support recipients that serve remote Tribal lands to deploy 5G 
in such areas. While we recognize the challenges of small carriers and 
those that provide service to Tribal areas, as we explain above in 
declining to adopt the alternate proposals advanced by RWA, NTCA, and 
Smith Bagley, the Commission's experience awarding support via 
competitive bidding has shown it to be an effective use of ratepayer 
funds and none of these commenters has convinced us that departing from 
that approach is warranted. We further conclude that the broadband 
public interest obligations and performance requirements we adopt today 
will help bring 5G service to existing high-cost areas while 
incentivizing current legacy high-cost support recipients, including 
small carriers and those that serve Tribal lands, to participate in the 
5G Fund Phase I auction, ultimately ensuring that

[[Page 75781]]

the largest number of rural areas receive support.
    73. Finally, recognizing that there may be particular circumstances 
where the amount of legacy support received is so low or the costs of 
any steps toward the deployment of 5G service so high as to frustrate 
any 5G broadband public interest obligation, we direct the Office and 
Bureaus to consider adopting, after notice and comment, a de minimis 
exception to any 5G deployment public interest obligations that the 
Office and Bureau may adopt as part of the proceeding to develop 
carrier-specific coverage requirements. In so doing, we direct the 
Office and Bureau to consider in setting any de minimis exceptions the 
amount of legacy support a carrier receives in relation to the 
administrative costs of establishing and verifying 5G deployment.
2. 5G Public Interest Obligations for 5G Fund Auction Support 
Recipients
    74. We adopt our proposal to establish public interest obligations 
for 5G Fund support recipients to provide terrestrial mobile voice and 
data services that comply, at a minimum, with 5G-NR technology defined 
as 3GPP Release 15 (or any successor release that the Office and Bureau 
may require 5G Fund support recipients to comply with after appropriate 
notice and comment) and to meet measured performance requirements as a 
condition of receiving support. We also adopt our proposal to require 
5G Fund support recipients to meet baseline performance requirements 
for minimum data speed, maximum data latency, and a minimum monthly 
data allowance.
    75. Commenters generally support requiring specific public interest 
obligations and performance requirements for 5G Fund support 
recipients, and most support requiring the deployment of 5G service. 
CCA, however, suggests allowing 5G Fund support recipients to deploy 4G 
LTE-Advanced and provide a plan to transition to 5G-NR within a set 
period. In its reply comments, RWA disagrees with CCA's suggestion that 
5G Fund support recipients be allowed to deploy 4G LTE-Advanced and 
suggests that the 5G buildout requirements require 5G-NR 3GPP Release 
15 or later.
    76. We agree with RWA and find it imperative that consumers in 
rural America receive service meeting the minimum industry standard to 
be considered 5G in order to ensure the 5G Fund is consistent with our 
goal to bridge the digital divide. We therefore adopt the requirement 
that 5G service deployed to meet public interest obligations and 
performance requirements for 5G Fund support recipients comply with the 
5G-NR standard defined as 3GPP Release 15 (or any successor release 
with which the Office and Bureau may require 5G Fund support recipients 
to comply after notice and comment). In so doing, we also decline to 
adopt the suggestion of the 5G Fund Supporters who argue that the 
Commission should add an extension of the Cable Procurement Rule to the 
5G Fund public interest obligations to ensure that minority- and women-
owned businesses apply for the many procurement opportunities that will 
owe their creation to the 5G Fund. Our experience using reverse 
auctions to distribute support successfully in the Mobility Fund Phase 
I and CAF Phase II auctions supports our decision that competitive 
bidding without specific preferences provides the most efficient and 
effective mechanism to award universal service support.
    77. 5G Service Milestones. To ensure that 5G Fund support 
recipients meet their public interest obligation to provide 5G service 
in areas where they receive support, we adopt interim and final service 
deployment milestones to monitor progress in timely meeting the 5G Fund 
performance requirements. Specifically, we adopt our proposal for 
interim service deployment milestones requiring a 5G Fund support 
recipient to offer 5G service meeting established performance 
requirements to at least 40% of the total square kilometers associated 
with the eligible areas for which it is authorized to receive 5G Fund 
support in a state by the end of the third full calendar year following 
authorization of support, to at least 60% of the total square 
kilometers by the end of the fourth full calendar year, and to at least 
80% of the total square kilometers by the end of the fifth full 
calendar year.
    78. We also adopt our proposed final service deployment milestone 
that requires a 5G Fund support recipient to offer 5G service that 
meets the established 5G Fund performance requirements to at least 85% 
of the total square kilometers associated with the eligible areas for 
which it is authorized to receive 5G Fund support in a state by the end 
of the sixth full calendar year following authorization of support. 
Additionally, we adopt our proposal to require a 5G Fund support 
recipient to demonstrate by the end of the sixth full calendar year 
following authorization of support that it provides service that meets 
the established 5G performance requirements to least 75% of the total 
square kilometers within each of its individual biddable areas.
    79. NTCA generally supports our proposed interim and final service 
deployment milestones, and the New York Public Service Commission 
similarly supports our proposals. We decline to adopt an alternative 
milestone schedule for deployment of 5G service suggested by RWA that 
would require recipients to cover 40% of the areas for which 5G Fund 
support is authorized by the end of year four, 60% by the end of year 
six, and 85% by the end of year 10. While RWA claims that deployment of 
a 5G network is ``more complex and time consuming than building out 
prior generation networks'' and will be difficult for legacy high-cost 
support recipients to do as part of its Phase 0 proposal, RWA provides 
no persuasive reason why 5G Fund support recipients should follow this 
delayed schedule. We are unconvinced that 5G Fund support recipients, 
which are able to factor in the cost and complexity of meeting service 
deployment milestones when placing bids in an auction, will find it 
overly burdensome to meet the deployment milestones we adopt.
    80. We decline to adopt the proposal of the California Public 
Utilities Commission to adopt a higher service deployment milestone 
coverage requirement--90% by the end of year six and 100% by the end of 
year seven. There may be isolated areas that are particularly 
challenging to serve even in terrain that is otherwise not difficult to 
serve, and adopting a 100% coverage requirement could drastically 
increase costs in a 5G Fund auction if bidders reasonably conclude that 
certain areas they would otherwise be interested in serving are cost 
prohibitive due to an especially challenging terrain feature like a 
ravine or mountaintop. Such a requirement would thus potentially 
distort the 5G Fund auction with little gain. At the same time, we 
disagree with Verizon's suggestion to reduce the required coverage 
percentage within each biddable unit with particularly challenging 
areas, based on an alternate deployment requirement focusing on road 
miles and population. We believe that deviating from our area-coverage 
approach in the 5G Fund would undercut our focus on ensuring widespread 
availability of 5G services, including in sparsely populated areas like 
agricultural lands. Moreover, while we acknowledge that achieving 5G 
deployment covering 85% required by the final service deployment 
milestone may be difficult to achieve in particularly challenging 
terrain, bidders in a 5G Fund auction will be able to factor in the 
costs of deployment in

[[Page 75782]]

such environments when placing bids in the auction.
    81. Lastly, we adopt the interim and final service milestones for 
5G Fund support recipients as proposed in the 5G Fund NPRM because we 
conclude it is imperative that carriers receiving 5G Fund support make 
significant progress toward providing 5G service early in their support 
term, and then continue to make progress toward overall coverage goals 
throughout the remainder of the term. We note that the service 
milestones we adopt for the 5G Fund are similar to those adopted for 
the Rural Digital Opportunity Fund and CAF Phase II, as well as in the 
Uniendo a Puerto Rico Fund and Connect USVI Fund proceeding. Adopting a 
consistent approach here ensures that we act as responsible stewards of 
universal service funds. The requirement that 5G Fund support 
recipients cover at least 75% of the total square kilometers within 
each biddable unit also ensures that support recipients do not cherry-
pick the easiest-to-serve areas and leave more difficult regions cut 
off from service and from other potential service providers.
3. 5G Service Performance Requirements
    82. We adopt our proposal to require recipients of legacy high-cost 
support and 5G Fund support to meet baseline performance requirements 
for minimum data speed, maximum latency, and minimum monthly data 
allowance. In the 5G Fund NPRM, we proposed minimum baseline 
performance requirements for legacy and 5G Fund support recipients to 
deploy 5G service speeds of at least 35/3 Mbps, sought comment on 
whether the required data speed should be a median, mean, or another 
percentile of probability, proposed 100 milliseconds or lower round-
trip latency, and proposed a minimum monthly data allowance that would 
correspond to the average U.S. subscriber data usage. Consistent with 
these proposals, we will require that support recipients deploy 5G-NR 
service with median speeds of at least 35/3 Mbps, minimum cell edge 
speeds of at least \7/1\ Mbps, and have round-trip latency of 100 
milliseconds or less. We do not adopt additional standardized 
propagation modeling requirements as proposed. As discussed further in 
Section III.E.1 and III.G.1, we will instead defer to the propagation 
modeling standards adopted for reporting of 5G mobile broadband 
coverage in the Digital Opportunity Data Collection. Additionally, we 
will require that support recipients offer at least one service plan in 
the areas for which legacy support is disbursed or 5G Fund support is 
authorized that includes a data allowance that is equivalent to the 
average United States subscriber data usage.
    83. We disagree with CCA's suggestion to fund both 5G deployments 
and 4G LTE-Advanced deployments using equipment that can subsequently 
be upgraded to 5G. As RWA and CRWC demonstrate, many competitive ETCs 
receiving legacy high-cost support have already deployed 4G LTE 
equipment in their network core using legacy support, which should 
significantly reduce the burden of using future legacy support to 
upgrade these networks to 5G service meeting at least the 5G-NR 
standard we adopt. Consistent with our overall approach in this 
proceeding, we believe support is best directed to modern 5G 
deployments rather than further deployments of 4G LTE technology. 
Moreover, we agree with RWA that ``[o]nly real 5G will allow the 
provision of flexible broadband services, increased speed, reduced 
latency, and reduced energy consumption, [among] other 5G capabilities 
that 4G (or `5G Lite') simply cannot provide.''
    84. RWA is the only commenter to directly address adopting these 
performance requirements specifically for legacy high-cost support 
recipients, which it generally supports albeit with a longer deployment 
buildout timeframe and as part of its ``Phase 0'' proposal. RWA and 
AT&T otherwise support our proposed data speeds of 35/3 Mbps, and we 
agree with these commenters that a median speed of 35/3 Mbps, combined 
with the requirement that supported networks meet 3GPP's 5G-NR 
standard, recognizes that network speeds will vary across service areas 
and will allow a variety of 5G applications in rural areas. We disagree 
with CCA's claims that data speeds of 35/3 Mbps are arbitrary and will 
not be attainable for rural carriers without substantial cost. The 
Commission has previously required minimum speeds of 35/3 Mbps for 5G 
service in the high-cost program and to date most eligible carriers 
have accepted that funding and associated obligation to deploy at those 
speeds. While it is true that 5G service is not defined by a particular 
speed, we conclude that setting both minimum cell edge and median 
target speeds based upon what we believe to be achievable with a 
minimum amount of spectrum will help align the services funded with 5G 
Fund support with the performance of 5G service in unsubsidized areas. 
We note that a review of the Commission's public Universal Licensing 
System indicates that the licenses held by competitive ETCs receiving 
legacy high-cost support provide the minimum amount of bandwidth that 
we find to be necessary to support 5G services (at least 10 megahertz x 
10 megahertz using frequency division duplex (FDD) or 20 megahertz 
using time division duplex (TDD)) meeting these speeds in more than 95% 
of subsidized service areas. We consequently believe even small and 
mid-size rural providers will be reasonably capable of meeting a 35/3 
Mbps standard with available spectrum.
    85. We also disagree with suggestions from Next Century Cities, 
Juniper Networks, and Verizon that we should adopt higher speeds for 
the 5G Fund, ranging from 50/5 Mbps to 1 Gbps. While many 5G networks 
will be capable of higher speeds, the 5G Fund is intended to support 
networks in even the most sparsely populated and hardest-to-serve parts 
of the country. Setting network speeds too high risks raising the costs 
of deploying in those areas so high that service providers are 
unwilling to bid. As we have noted, we believe 35/3 Mbps will be 
achievable by the vast majority of potential 5G Fund bidders and legacy 
support recipients, and is consistent with other 5G universal support 
requirements in insular areas. We likewise disagree with CRWC's 
suggestion to use signal strength requirements and a link budget as the 
manner of measuring compliance with performance requirements, rather 
than data speed and latency. We do not believe there is, and CRWC does 
not offer, a meaningful way to impose a single set of signal strength 
and link budget parameters that can reliably predict network 
performance for every network design and configuration.
    86. Though AST&Science argues that low-earth orbit satellite 
service should be able to meet the 100 milliseconds or lower latency 
standard, other satellite companies seek to allow higher latency, 
perhaps via a tiered system similar to Rural Digital Opportunity Fund's 
performance and latency tiers. We agree with RWA that an increase in 
permitted latency could reduce service quality, however. We also 
decline to add the complexity of adopting a tiered system to the 5G 
Fund auctions. We believe that adopting a round-trip latency 
requirement of 100 milliseconds or better for all areas better achieves 
our goal of ensuring access to services reasonably comparable to those 
in urban areas. One of the key benefits of 5G over other mobile 
technologies is reduced latency.
    87. While the New York Public Service Commission generally 
supported requiring a data allowance that corresponds to the average 
United

[[Page 75783]]

States subscriber data usage, we received no specific comments 
addressing a data source for the average United States subscriber data 
usage, on the time during the support term that any increases in the 
required data allowance should be established, or on whether there 
should be a cap on what minimum monthly data allowance should be 
required at future points during the support term. We continue to 
believe that tying the minimum monthly data allowance to average United 
States subscriber usage will ensure that rural Americans are not 
provided second-rate service, and we therefore adopt this standard for 
the minimum monthly data allowance. We defer to the proceeding in which 
the Office and Bureau adopt carrier-specific 5G coverage requirements 
for legacy support recipients and to the pre-auction process for 5G 
Fund auction support recipients to determine the data source from which 
we will evaluate the average United States subscriber data usage and 
the further parameters necessary to implement an evolving minimum 
monthly data allowance, respectively.
4. Additional Public Interest Obligations
    88. Reasonably Comparable Rates. Consistent with section 254(b)(3) 
of the Act, we will require as a public interest obligation for the 
receipt of mobile high-cost support that all legacy high-cost and 5G 
Fund support recipients offer 5G service in the areas where they 
receive support for deploying 5G service at rates that are reasonably 
comparable to rates they offer in urban areas, as proposed in the 5G 
Fund NPRM. In the USF/ICC Transformation Order, the Commission 
concluded that, as a condition of receiving federal high-cost universal 
service support, all recipients of such support must offer broadband 
service in their supported area that meets certain basic performance 
requirements at rates in rural areas that are reasonably comparable to 
rates offered in urban areas.
    89. For both voice and broadband services, the Commission considers 
rural rates to be ``reasonably comparable'' to urban rates under 
section 254(b)(3) if rural rates fall within a reasonable range of 
urban rates for reasonably comparable voice and broadband services. As 
an initial matter, we will define ``urban'' for this purpose consistent 
with the definition from the latest decennial U.S. Census Bureau data. 
Currently, the latest decennial data available from the U.S. Census 
Bureau for this purpose is from 2010. We anticipate that 2020 data will 
be available in the near future. Consequently, we will update our 
definition of ``urban'' when new decennial data becomes available. 
Consistent with suggestions filed in the Mobility Fund Phase II docket 
and our decision in that proceeding, we conclude that if a legacy high-
cost or 5G Fund support recipient is offering the same rates, terms, 
and conditions (including usage allowances, if any, for a specified 
rate) to both urban and rural customers, then it would fulfill the 
requirement that its rates are reasonably comparable. We also will 
allow a support recipient to demonstrate it provides reasonably 
comparable rates if one of its stand-alone voice plans and one service 
plan offering data are substantially similar to plans offered in urban 
areas. We note that we may define more precisely the circumstances 
under which a legacy or 5G Fund support recipient can demonstrate 
compliance with this certification in later proceedings, and retain our 
authority to look behind recipients' certifications and take action to 
address any violations.
    90. Where a legacy high-cost or 5G Fund support recipient does not 
serve urban areas and therefore cannot demonstrate that it is offering 
reasonably comparable rates based upon its own offerings, we will 
require the support recipient to identify the carrier and specific rate 
plans upon which it is basing its compliance certification so that we 
can verify that its rates are reasonably comparable. We note that 
allowing for cross-carrier comparison is broadly similar to our 
decision in the Mobility Fund Phase II Report and Order to require that 
a support recipient offer at least one service plan that includes a 
minimum monthly data allowance equivalent to a mid-level plan offered 
by a nationwide provider. In such a case, we will require that the 
support recipient submit corroborating evidence of reasonably 
comparable rates from the web page or other marketing materials of the 
other mobile carrier that does serve urban areas.
    91. The New York Public Service Commission supports the proposed 
method for a support recipient to demonstrate that it offers reasonably 
comparable rates if it offers stand-alone voice plans and one service 
plan with data that is substantially like those offered in urban areas. 
NTCA also supports this approach, stating that ``[a]ll who receive or 
win funding must . . . commit to offering a terrestrial mobile wireless 
product that is similar in features and price to the 5G mid-level plan 
offered in urban areas by large, nationwide providers.'' We note that 
AST&Science supports our proposal to adopt a reasonably comparable rate 
requirement, but suggests that we include handset costs when 
determining whether rates are reasonably comparable. We decline to 
mandate specific prices for handsets because handsets are broadly 
available from vendors other than service providers, and thus market 
forces establish handset prices. We received no comments on the 
proposed method of demonstrating reasonably comparable rates if the 
support recipient does not serve urban areas by identifying a carrier 
and specific rate plan upon which the support recipient is basing its 
compliance certification, and requiring the submission of corroborating 
evidence of reasonably comparable rates from the web page or other 
marketing materials of the mobile carrier serving urban areas on which 
the demonstration is based. We adopt this proposal as a reasonable and 
not burdensome method of demonstrating compliance with the reasonably 
comparable rate requirement.
    92. Emphasizing the obligation to offer voice and broadband service 
at reasonably comparable rates further ensures that service made 
available with universal service funds in rural areas is not beyond the 
financial reach of rural customers. We note that all ETCs must 
advertise the availability of their voice services throughout their 
service areas, and we require support recipients also to advertise the 
availability of their broadband services within their service area.
    93. Collocation and Voice and Data Roaming. We adopt our proposal 
to require competitive ETCs to allow collocation and voice and data 
roaming as a public interest obligation of the receipt of both legacy 
high-cost and 5G Fund support, and will require the same general 
collocation and voice and data roaming obligations that the Commission 
adopted for Mobility Fund Phase I, with certain minor changes for 
legacy support recipients. Until a competitive ETC ceases to receive 
legacy support, we will require the support recipient to allow 
reasonable collocation by other carriers of services that would meet 
the technological requirements of the 5G Fund on all cell-site 
infrastructure that it owns or manages in the subsidized service area 
for which it receives legacy support. For 5G Fund support recipients, 
to ensure that a support recipient does not use public funds to achieve 
unfair competitive advantage, we require that during the 5G Fund 
support term, a support recipient allow reasonable collocation by other 
providers of services that meet the technological requirements of the 
5G Fund on all

[[Page 75784]]

newly-constructed 5G cell-site infrastructure that the support 
recipient owns or manages in the areas for which it receives support. 
We note that this public interest obligation for legacy high-cost 
support recipients differs slightly from what we adopt for 5G Fund 
support recipients and from the requirements adopted by the Commission 
in Mobility Fund Phase I and Mobility Fund Phase II. We conclude it is 
appropriate to apply a broader collocation requirement for legacy 
support recipients because we anticipate that such recipients will have 
already built their infrastructure and allowing reasonable collocation 
on those facilities serves our underlying policy goals of allowing 
other service providers to benefit from the public universal service 
funds. During the period of time that a carrier receives either legacy 
high-cost or 5G Fund support, we will also prohibit each support 
recipient from entering into facilities access arrangements that 
restrict any party to the arrangement from allowing others to collocate 
on the respective cell-site infrastructure.
    94. RWA purports to support this collocation proposal, but asserts 
that collocation should only be required to the extent that the tower 
can support multiple carriers, and suggests that any reinforcement or 
upgrade costs would have to be borne by the last provider desiring to 
collocate on the tower. We disagree with RWA's view regarding 
reasonable collocation because it conflicts with the underlying policy 
of ensuring that universal service support is used in a manner that 
does not allow one provider to gain an unfair competitive advantage 
over another. As the Commission explained in the context of adopting a 
similar requirement for Mobility Fund Phase II, the goal of having a 
public interest obligation to require reasonable collocation is to 
ensure that ``publicly funded investments can be leveraged by other 
service providers.'' We decline to adopt RWA's position regarding 
collocation because we conclude it would place an undue burden on those 
service providers seeking to take advantage of the public benefits that 
can be gained for rural consumers from the 5G Fund, and would run 
counter to our efforts to close the digital divide. We remind both 
legacy high-cost and 5G Fund support recipients that they must also 
comply with the Commission's voice and data roaming requirements in 
effect as of the effective date of these rules on networks that are 
built using high-cost support.

E. Additional Mobile Legacy High-Cost Support Requirements

1. Reporting Requirements
    95. Initial Report of Current Service Offerings. We adopt our 
proposal to require each competitive ETC receiving legacy high-cost 
support for mobile wireless service to file an initial report of its 
current service offerings in each of its subsidized service areas 
detailing how it is using legacy support. Legacy support recipients 
must file this report no later than three months after the Commission 
receives Paperwork Reduction Act approval for this requirement. RWA 
broadly supported requiring an initial report since ``[t]his 
information will help the Commission ensure that support is actually 
being used for its intended purpose.'' We agree. No other commenters 
discussed this point. We note that RWA addressed this proposed 
requirement only at a high-level, as was proposed in the 5G Fund NPRM, 
and not the specific certifications and requirements that we adopt 
herein. Moreover, we disagree with RWA's suggestion that the initial 
report of current service offerings should be required only after the 
Commission determines the final areas eligible for support in the 5G 
Fund Phase I auction, as doing so would unnecessarily delay our efforts 
to bring accountability to the high-cost program and to gain a more 
complete understanding of how legacy high-cost support is being used.
    96. Consistent with our decision herein to require annual reports 
from legacy support recipients, we will require initial reports to be 
filed with USAC via a web portal, and the reports will be made 
available to the Commission and the relevant state, territory, and 
Tribal governmental agencies, as applicable. A legacy support recipient 
must maintain the accuracy and completeness of the information provided 
its initial report, and any substantial change in the accuracy or 
completeness of any initial report submitted by a legacy support 
recipient must be reported within 10 business days after the reportable 
event occurs. We retain our authority to look behind recipients' 
initial reports and to take action to address any violations. We 
additionally direct the Office and Bureau to further specify the 
process by which legacy high-cost support recipients will be required 
to file their initial reports.
    97. In order to have a complete understanding of current service 
offerings, we will require in the initial report information about the 
service each legacy support recipient offers in each subsidized service 
area where it receives legacy support. Such information will include an 
indication of the highest level of technology deployed, a target date 
for when 5G broadband service meeting the performance requirements we 
adopt today will be deployed within the subsidized service area (for 
any service area in which 5G has not been deployed), and an estimate of 
the percentage of area covered by 5G deployment meeting the adopted 
performance requirements (for any area in which 5G has been deployed). 
To help us better understand the services offered, we will also require 
that each recipient provide infrastructure information on the cell 
sites that the carrier uses to provide mobile service within each 
subsidized service area in a standardized template. We note that we are 
currently considering in our Digital Opportunity Data Collection 
proceeding whether to require from all mobile service providers the 
submission of infrastructure information more generally across 
providers' networks. Our decision to adopt a requirement here that 
legacy support recipients provide infrastructure information for 
subsidized service areas is without prejudice to the matter of whether 
to adopt a similar requirement in the Digital Opportunity Data 
Collection proceeding. We recognize that carriers may consider 
infrastructure information to be sensitive, and so we will treat such 
data submitted as part of the initial report as presumptively 
confidential. While the Commission and USAC will treat as presumptively 
confidential and withhold from public inspection infrastructure 
information submitted as part of this report, USAC will provide these 
data to the Commission and the relevant state, territory, and Tribal 
governmental entities that have jurisdiction over a particular service 
area, as applicable.
    98. We will require each legacy support recipient to provide, as 
part of the initial report, a brief narrative describing its current 
service offerings and providing a high-level accounting of how it has 
used legacy high-cost support received for the 12-month period prior to 
the deadline for the initial report. We direct the Office and Bureau to 
issue further guidance on the level of detail required and manner in 
which such initial accounting information must be provided consistent 
with our decision. Finally, we will require that each legacy support 
recipient provide certain certifications related to its current service 
offerings and use of legacy high-cost support, as

[[Page 75785]]

part of its initial report. These will include, among other 
certifications, a certification that the carrier has filed relevant 
deployment data (either via FCC Form 477 or the Digital Opportunity 
Data Collection, as appropriate) that reflect its current deployment 
covering its subsidized service area. To the extent that the Digital 
Opportunity Data Collection is not yet in place at the time that the 
initial report of current service offerings is due, we will require 
that each legacy support recipient certify to submitting coverage data 
consistent with the specifications adopted in the Digital Opportunity 
Data Collection proceeding via the existing FCC Form 477 system.
    99. Annual Reports. We also adopt our proposal to require 
recipients of mobile legacy high-cost support to file annual reports 
regarding their efforts to provide 5G services throughout their 
subsidized service areas meeting the public interest obligations and 
performance requirements we adopt today. To that end, we will require 
that each legacy high-cost support recipient submit an annual report by 
July 1 in each year that includes updated information about the 
carrier's service offerings for the previous calendar year in its 
subsidized service areas, and how legacy support is being used, as well 
as certifications that the support recipient is in compliance with its 
public interest obligations and performance requirements. RWA was the 
only commenter to address our annual reporting proposal, of which it 
was supportive. Similar to initial reporting requirements above, we 
conclude that requiring annual reports will ensure accountability in 
the high-cost program by ensuring that legacy support recipients meet 
their public interest obligations and performance requirements.
    100. Legacy high-cost support recipients must file annual reports 
with USAC via a web portal and filing these reports will replace the 
carrier's current obligation to annually file the existing FCC Form 481 
with USAC. The requirement for legacy high-cost support recipients to 
file annual reports, and that these reports will replace the current 
obligation to file the existing FCC Form 481, will take effect 
following submission of the initial report of current service 
offerings. As with the initial reports, we will require a legacy 
support recipient to report any substantial change in the accuracy or 
completeness of any annual report it submits within 10 business days 
after the reportable event occurs, and we retain our authority to look 
behind recipients' annual reports and to take action to address any 
violations. And as with the initial reports, USAC will make the annual 
report filings available to the Commission and the relevant state, 
territory, and Tribal governmental agencies, as applicable. We direct 
the Office and Bureau to further specify the process by which legacy 
high-cost support recipients will be required to file their annual 
reports, including whether these reports will be incorporated into a 
modified FCC Form 481 or will be collected via a new form.
    101. In addition to collecting the same general information 
collected as part of FCC Form 481, and broadly similar to the initial 
report, we will require annual reports to include updated information 
about the services each legacy support recipient offers in each 
subsidized service area where it receives legacy support for the 
previous calendar year, including the highest level of technology 
deployed, a target date for when 5G broadband service meeting the 
performance requirements will be deployed within the subsidized service 
area (for any service area in which 5G has not been deployed), and an 
estimate of the percentage of area covered by 5G deployment meeting the 
performance requirements we adopt today (for any area in which 5G has 
been deployed), as well as other relevant information that the Office 
and Bureau decide may be necessary. We will also require that each 
recipient provide updated infrastructure information on the cell sites 
that are located within each subsidized service area in a standardized 
template. As with the submission of these data as part of the initial 
report, we will treat infrastructure data submitted as part of an 
annual report as presumptively confidential.
    102. We will require legacy support recipients to provide as part 
of each annual report an accounting of the support a carrier has 
received and how legacy support is being used, including a brief 
narrative with high-level accounting of how it used legacy high-cost 
support received for the previous calendar year. In addition, we will 
require that the legacy support recipient indicate which of these 
expenditures were for the deployment, maintenance, and/or operation of 
networks capable of offering 5G service that meet the performance 
requirements we adopt herein. Requiring this information will allow us 
to ensure that legacy support recipients meet their public interest 
obligation to use an increasing percentage of their legacy support 
toward the deployment of 5G service. We note that all ETCs that receive 
high-cost support remain subject to periodic audits by USAC to ensure 
compliance, and while we will not require legacy support recipients to 
submit detailed accounting information on its expenditures as part of 
its annual reports, opting instead to require only a brief submission 
of a high-level narrative alongside certifications on the use of 
support, we emphasize to competitive ETCs that they should retain 
adequate accounting records as evidence that they have met their public 
interest obligations to spend a minimum percentage of legacy support on 
the deployment of 5G in the case of an audit.
    103. Finally, we will require that each legacy support recipient 
provide a number of certifications related to its current service 
offerings and use of legacy high-cost support as part of its annual 
reports. These will include, among other certifications, a 
certification that the carrier has used the required minimum percentage 
of legacy support toward the deployment and/or operation of 5G service 
meeting the minimum performance requirements, as well as that it has 
filed relevant deployment data either as part of FCC Form 477 or in the 
Digital Opportunity Data Collection, as appropriate, that reflect its 
current deployment covering the subsidized service area. As with our 
decision to require an initial report of current service offerings, to 
the extent that the Digital Opportunity Data Collection is not yet in 
place at the time that an annual report is due, we will require that 
each legacy support recipient certify to submitting coverage data 
consistent with the specifications adopted in the Digital Opportunity 
Data Collection proceeding via the existing FCC Form 477 system.
    104. Service Milestone Reports. We adopt a high-level requirement 
that legacy high-cost support recipients submit 5G service milestone 
reports, and direct the Office and Bureau to propose and adopt, after 
notice and comment, the content and schedule of such reports in the 
proceeding in which they adopt carrier-specific 5G service deployment 
coverage requirements. We anticipate that the particular service 
milestone report requirements that the Office and Bureaus adopt would 
be generally similar to the requirements we adopt herein for 5G Fund 
support recipients to file interim and final service milestone reports.
2. Demonstrating Compliance With Performance Requirements
    105. We adopt a modified version of our proposal to require legacy 
support recipients to demonstrate compliance with performance 
requirements. This

[[Page 75786]]

decision is consistent with requiring legacy support recipients to 
spend an increasing percentage of support on the deployment, 
maintenance, and operation of networks capable of supporting 5G 
broadband service that meets the performance requirements we adopt. In 
the 5G Fund NPRM, we proposed to require that legacy support 
recipients, as with 5G Fund support recipients, demonstrate compliance 
with performance requirements by submitting milestone coverage maps 
reflecting 5G service deployment in conjunction with comprehensive on-
the-ground measurement testing. Because we are not specifying carrier-
specific 5G broadband service coverage requirements at this time, we 
will require a legacy support recipient to demonstrate the performance 
of any 5G networks deployed using legacy support by certifying in its 
annual report that it filed the relevant mobile deployment data as part 
of its FCC Form 477 filing or in the Digital Opportunity Data 
Collection, as appropriate, and that such data reflect any 5G 
deployment covering its subsidized service area. To the extent that the 
Digital Opportunity Data Collection is not operational at the time that 
a legacy support recipient is required to demonstrate compliance via 
the submission of 5G coverage maps, the support recipient will be 
required to submit maps generated consistent with the propagation model 
parameters adopted in the Digital Opportunity Data Collection 
proceeding through the legacy FCC Form 477 system. Additionally, we 
adopt a high-level requirement that legacy support recipients 
substantiate deployment coverage data with on-the-ground measurement 
tests, but defer a decision on the precise requirements for such tests, 
as well as the methodologies for conducting and validating on-the-
ground measurement tests for legacy support recipients, to the 
proceeding in which the Office and Bureau adopt carrier-specific 5G 
broadband service coverage requirements.
    106. Because the requirements adopted for the filing of 5G coverage 
maps in the Digital Opportunity Data Collection proceeding mirror the 
propagation model parameters specified for 5G deployment maps proposed 
in the 5G Fund NPRM, requiring that legacy support recipients verify to 
the submission of coverage data in their FCC Form 477 or Digital 
Opportunity Data Collection filings will still provide us with the same 
information. Deferring to the Digital Opportunity Data Collection's 
requirements for the generation and submission of mobile coverage data 
therefore avoids the burden on legacy support recipients of having 
duplicative or conflicting requirements, as suggested by AT&T and CTIA, 
without undermining the public interest obligations and performance 
requirements we adopt. We note, however, that legacy support recipients 
will be required to file 5G broadband coverage maps otherwise generated 
using the standardized propagation model parameters adopted in the 
Digital Opportunity Data Collection proceeding for 5G coverage data 
(i.e., minimum cell edge speeds of \7/1\ Mbps with 50% cell loading and 
90% cell edge probability) via FCC Form 477 prior to filing any annual 
reports, to the extent that a report is due prior to the first 
collection of mobile coverage data in the Digital Opportunity Data 
Collection.
    107. Although we adopt a general requirement that legacy high-cost 
support recipients submit on-the-ground measurement tests to 
demonstrate compliance with 5G performance requirements, we do not 
adopt specific requirements at this time because of our decision 
deferring adoption of carrier-specific 5G broadband service coverage 
requirements for these recipients. Instead, we direct the Office and 
Bureau to adopt, after notice and comment, appropriate parameters for 
legacy high-cost support recipients to demonstrate compliance with 5G 
broadband public interest obligations and performance requirements, as 
necessary, concurrent with adoption of carrier-specific 5G broadband 
service coverage requirements for legacy support recipients. We 
anticipate that the test metrics and data specifications that the 
Office and Bureaus adopt, along with the methodologies for conducting 
on-the-ground tests and validating results, would be generally similar 
to the requirements we adopt herein for 5G Fund support recipients to 
demonstrate compliance.
    108. Several commenters oppose the on-the-ground measurement 
testing methodology proposed in the 5G Fund NPRM, or even the use of 
on-the-ground tests at all to demonstrate buildout. The Vermont 
Department of Public Service, on the other hand, argues that on-the-
ground testing, including drive testing, is critical to verify 
deployment, though it ``does not oppose [AT&T's] proposed approach of 
determining validation methodology for the 5G Fund through the [Digital 
Opportunity Data Collection] proceeding.''
    109. We agree with the Vermont Department of Public Service that 
on-the-ground testing is important to verify appropriate use of legacy 
support. We nevertheless acknowledge commenters' concerns that on-the-
ground testing may be burdensome, and expect the Office and Bureau will 
give appropriate weight to those concerns in determining the 
appropriating testing methodology for legacy support recipients. 
Although the issue of whether to adopt a requirement that service 
providers substantiate coverage maps with on-the-ground testing data 
remains open in the Digital Opportunity Data Collection proceeding, the 
outcome of that proceeding is not determinative here.
    110. Because this is a universal service subsidy program, our 
obligations as stewards of the Fund require that we take steps to 
ensure that support is being used for its intended purpose and to 
minimize waste, fraud, and abuse. This view is consistent with our 
treatment of fixed broadband deployments in the universal service high-
cost program, where support recipients' subsidized networks are subject 
to mandatory speed and latency testing, even though we did not adopt a 
similar testing requirement for fixed broadband networks in the Digital 
Opportunity Data Collection Proceeding.
3. Non-Compliance Measures for Failure To Comply With Public Interest 
Obligations and Performance Requirements
    111. We adopt our proposal to terminate support payments to mobile 
competitive ETCs receiving legacy high-cost support that fail to comply 
with their public interest obligations and performance requirements. As 
stewards of the Universal Service Fund, it is our obligation to ensure 
that all Americans living in areas served by these carriers receive the 
most advanced wireless services. We do this, and create a powerful 
incentive to meet obligations, by ending support payments to legacy 
mobile competitive ETCs that fail to comply with their obligations and/
or performance requirements. While ending support payments is a 
stricter consequence than what other high-cost support recipients face 
for failing to meet their public interest obligations and performance 
requirements, the continuation of legacy support is an interim 
mechanism in place as we implement the 5G Fund, and therefore, unlike 
the Commission's other modernized support mechanisms, the non-
compliance measures here do not benefit from allowing legacy support 
recipients to come back into compliance prior to the end of the support 
term.
    112. The rule we adopt is a modified version of our proposal. As we 
proposed, mobile competitive ETCs

[[Page 75787]]

receiving legacy high-cost support that fail to comply with public 
interest obligations or performance requirements must notify the Bureau 
and USAC within 10 business days of non-compliance. We initially 
proposed that upon receipt of this notification, we would deem the 
carrier to be in default, and the carrier would no longer be eligible 
to receive support disbursements, and would be subject to recovery of 
support disbursed since the effective date of the public interest 
obligations and performance requirements. We modify the language of the 
proposed rule in two ways. First, we make clear that in addition to 
basing a finding of default on a legacy high-cost support recipient's 
notification of its non-compliance, the Bureau or USAC may in the 
absence of any such notification determine that the support recipient 
is in default and subject to the same consequences if they become aware 
of a recipient's non-compliance. Second, to address concerns of 
``disproportionate penalties,'' we limit the amount of support that may 
be subject to recovery to the legacy support not spent on the 
deployment, operation, and/or maintenance on voice and broadband 
networks that support 5G meeting the performance requirements. The 
amount of support we make subject to recovery, therefore, goes beyond 
Verizon's proposal to simply adopt the approach that the Commission 
used for fixed legacy high-cost support. Under the approach we adopt, 
for example, if the amount of legacy high-cost support disbursed to a 
mobile competitive ETC since the effective date of the public interest 
obligations and performance requirements is $10 million and the carrier 
spent $2 million on 5G deployment at the time of default, the carrier 
would be subject to up to $8 million in recovery. We conclude this 
modified approach for non-compliance better incentivizes 5G deployment, 
and thus we tweak our proposal in the 5G Fund NPRM to avoid adverse 
outcomes. For instance, if a carrier foresaw its inability to meet its 
public interest obligations, under the approach proposed in the 5G Fund 
NPRM, it could be incentivized to stop spending altogether knowing that 
all legacy support is subject to recovery. By making any support spent 
on 5G not subject to recovery, such a carrier is better incentivized to 
keep spending on 5G. While Verizon's proposal would incentivize 
continued spending, such spending would not necessarily be 5G related.
    113. CRWC's argument that provisions in the Consolidated 
Appropriations Act of 2020, Public Law 116-93 (2020 Appropriations 
Act), barring the Commission from modifying its rules to reduce 
competitive mobile ETCs' support below 60% of their monthly baseline 
support amount until the Commission begins disbursing Mobility Fund 
Phase II support has no bearing on our authority to impose the non-
compliance measures we adopt. The 2020 Appropriations Act does not 
relieve competitive ETCs of their obligation to comply with the high-
cost program's rules, including public interest obligations. 
Consequently, the Commission, even after enactment of the 2020 
Appropriations Act, maintains its authority to subject competitive ETCs 
to reductions in support amounts for failing to comply with program 
rules. Nor does any provision of the 2020 Appropriations Act prohibit 
us from adopting new rules or obligations for mobile competitive ETCs, 
which if not adhered to, would result in reductions in support. 
Congress was aware that the Commission in 2011 had expressed its intent 
to subject legacy high-cost support recipients to additional mobile 
broadband public interest obligations if the phase down in support were 
paused when it passed the later-in-time 2016 Appropriations Act, Public 
Law 114-113. The proviso to the appropriations statute permits the 
adoption of additional public interest obligations. The proviso states 
that it ``shall not prohibit the Commission from . . . adopting other 
support mechanisms as an alternative to Mobility Fund Phase II.'' 
Because this Report and Order implements a comprehensive alternative 
plan for mobile high-cost support that would replace Mobility Fund 
Phase II (much like the Alaska Plan, Uniendo a Puerto Rico Fund, and 
Connect USVI Fund), including a transition for legacy support 
recipients, the adoption of the 5G Fund and the associated public 
interest obligations on legacy support recipients are consistent with 
the statutory language.
    114. In addition, the public interest obligations we adopt here do 
not ``modify, amend, or change the rules or regulations of the 
Commission for universal service high-cost support for competitive 
eligible telecommunications carriers in a way that is inconsistent 
with'' the relevant rules in place in 2015--support amounts for 
competitive ETCs that comply with their obligations are still 
determined pursuant to those rules. In fact, the public interest 
obligations we adopt today do not alter the support amounts competitive 
ETCs receive and are consistent with the statutory requirement that 
recipients use support ``for the provision, maintenance, and upgrading 
of facilities and services for which the support is intended.'' 
Finally, in enacting the 2020 Appropriations Act, Congress was 
legislating against the background of the established principle that we 
can impose additional conditions on the continued receipt of universal 
service funds.
4. Geographic Flexibility on Use of Legacy High Cost Support
    115. We adopt our proposal to give mobile competitive ETCs 
receiving legacy high-cost support for a particular subsidized service 
area the flexibility to use support for the provision, maintenance, and 
upgrading of facilities and services within any of the designated 
service areas for which they receive legacy mobile support. Mobile 
competitive ETCs may also use legacy support within any of the 
designated service areas of an affiliated mobile competitive ETC (e.g., 
where several ETCs share a common holding company), regardless of 
whether those areas span more than one state. Our decision also applies 
to U.S. territories where competitive ETCs receive mobile legacy high-
cost support. As we reasoned in the 5G Fund NPRM, this allows for more 
efficient decisions about use of legacy support while still satisfying 
the statutory obligation to use support for its intended purposes.'' 
This effectively makes permanent a waiver, which has since expired, of 
the Commission's rules granted by the Bureau in response to the COVID-
19 pandemic.
    116. Commenters were generally supportive of our proposal, and we 
agree with CRWC that providing geographic flexibility on the use of 
legacy high-cost support ``is a no-cost means of improving the 
efficiency of investments to cover the greatest number of rural 
citizens.'' AT&T supports providing legacy support recipients with this 
flexibility, but cautions that doing so could result in state 
regulators being ``unwilling to include the carrier in its annual 
[section 54.314] certification, rendering the ETC ineligible for 
support the following year.'' AT&T proposes that the Commission 
``permit ETCs that avail themselves of this flexibility to certify 
directly to the Commission pursuant to section 54.314(b).'' We believe 
adopting such a procedure at this time is premature because we cannot 
say whether this perceived issue will develop. Moreover, nothing we 
adopt permits a competitive ETC to use high-cost support to provide 
service outside of its or an affiliated competitive ETC's

[[Page 75788]]

designated service areas, nor do we permit any competitive ETC to use 
high-cost support for anything but its intended purposes. As such, we 
expect a state regulator to include a carrier that otherwise complies 
with its ETC obligations as required in its annual certification, and 
further note that we expect recipients that take advantage of this 
flexibility to be able to certify and produce evidence to document 
compliance as necessary.
5. Freeze of Non-Frozen Legacy High-Cost Support
    117. We adopt our proposal to freeze the mobile high-cost support 
of Standing Rock, the sole competitive ETC that continues to receive 
non-frozen support. Standing Rock, a competitive ETC in North Dakota 
(study area code: 389014) and South Dakota (study area code: 399020) 
has been exempt from the freeze and phase-down of competitive ETC 
support. The pause of the phase down of competitive ETC support in 2014 
adopted in the USF/ICC Transformation Order extended Standing Rock's 
exemption. While the phase down of frozen support for every other 
legacy support recipient was paused at 60% level specified in section 
54.307(e)(2)(iii) of our rules, in this particular case, we will treat 
Standing Rock's support amount for the most recent 12-month period 
prior to the effective date of this Report and Order as the level 
specified in section 54.307(e)(2)(iii) for purposes of transitioning 
such support to 5G Fund support. The Commission adopted this approach 
in 2011 in order to provide time for Standing Rock, a ``nascent 
Tribally-owned ETC . . . to reach a sustainable scale so that consumers 
on the Reservation can realize the benefits of connectivity that, but 
for Standing Rock, they might not otherwise have access to.'' Standing 
Rock is no longer nascent and has had ample time--more time than the 
Commission anticipated in 2011--to reach a sustainable scale, and so 
the rationale for special treatment no longer exists and Standing Rock 
has not demonstrated a reason for continued special treatment. 
Accordingly, we now freeze Standing Rock's high-cost support at the 
level it received for the most recent 12-month period prior to the 
effective date of this Report and Order, after which it will be subject 
to the same disaggregation and phase-down rules we adopt for all 
competitive ETCs whose legacy support was frozen pursuant to the USF/
ICC Transformation Order.
    118. Standing Rock urges the Commission to delay freezing support 
until release of the final eligibility map and in that time continue to 
use line counts for determining support amounts. It reasons that due to 
the COVID-19 pandemic, it ``expects'' line counts to increase (which 
would result in more support) as ``Tribal residents continue to adapt 
to social distancing requirements and the need for online learning and 
online business.'' With increased line counts, Standing Rock's support 
will increase, and it claims that it will therefore be in a better 
position to meet the ``needs of Tribal residents.'' However, Standing 
Rock offers no data to support this claim. Given that its comments were 
filed more than three months after the President declared a national 
emergency due to the COVID-19 pandemic, we would expect Standing Rock 
to demonstrate that its line counts have already increased, but it did 
not. Without adequate support for the claim, we find no reason to 
deviate from our proposal.
6. Limitations on Mobile Legacy High Cost Support
    119. We now clarify, as we proposed, that only terrestrial mobile 
wireless carriers may receive mobile high-cost support, and that 
recipients of mobile legacy high-cost support must use such support 
only for the provision, maintenance, and upgrading of terrestrial 
mobile voice and broadband facilities and services. Consequently, 
carriers offering only non-terrestrial services, such as mobile-
satellite service, will no longer be eligible to receive mobile legacy 
high-cost support after the effective date of these rules. We must 
ensure that we are funding advanced mobile services with our limited 
universal service funds, even for carriers receiving legacy support, 
and non-terrestrial services receiving legacy support cannot meet the 
appropriate broadband public interest obligations that we adopt for 
legacy support recipients. However, an affected carrier is not 
prohibited from bidding for, and winning, new 5G Fund support in an 
auction, provided that it is otherwise determined to be eligible. 
Moreover, we clarify that legacy support and 5G Fund support recipients 
may use whatever backend technologies, including satellite backhaul, to 
meet 5G public interest obligations so long as they offer to the end 
user terrestrial 5G service that complies with the 5G-NR standard and 
meets all performance requirements. We are not, therefore, 
categorically excluding satellite technology from networks supported by 
the 5G Fund so long as a carrier seeking 5G Fund support is capable of 
providing voice and 5G broadband terrestrial service meeting necessary 
program requirements.

F. Schedule for Transition From Legacy High-Cost Support to 5G Fund 
Support

    120. Authority to Modify the Legacy High-Cost Support Rules. We 
adopt our tentative conclusion that the 5G Fund constitutes a 
comprehensive mechanism for mobile high-cost support that serves as an 
alternative to Mobility Fund Phase II and likewise conclude that the 
framework we adopt for the 5G Fund is consistent with the Commission's 
statutory authority to modify the rules for legacy high-cost support. 
We reached similar conclusions with respect to both the Alaska Plan and 
the Uniendo a Puerto Rico Fund and the Connect USVI Fund.
    121. The statutory language expressly allowed for the Commission to 
``consider[ ], develop[ ], or adopt[ ] other support mechanisms as an 
alternative to Mobility Fund Phase II.'' Indeed, the Commission has 
adopted alternate support mechanisms and otherwise ceased disbursement 
of legacy high-cost support based upon the phase down schedule in 
section 54.307(e)(2) of our rules to mobile competitive ETCs in Alaska, 
as well as in Puerto Rico and the U.S. Virgin Islands. Similar to the 
schedule we adopt here, 12 months after release of the Alaska Plan 
Order, 81 FR 69772, Dec. 7, 2016, adopting the Alaska Plan as a 
``comprehensive alternative plan for high-cost mobile support in 
Alaska,'' the Commission commenced a three-year phase down of support 
for carriers in Alaska that did not elect to participate in the Alaska 
Plan. As with the adoption of those alternate support mechanisms, the 
5G Fund for Rural America will serve as a comprehensive alternative 
mechanism for mobile legacy high-cost mobile support adopted as an 
alternative to Mobility Fund Phase II. Because the statute does not 
prohibit the Commission from adopting other comprehensive support 
mechanisms for high-cost mobile support as an alternative to Mobility 
Fund Phase II, we conclude that there is no legal issue with us 
adopting rules that will allow for the phase down of legacy support in 
areas that will be ineligible for 5G Fund support in the Phase I 
auction, and doing so prior to that auction.
    122. In the 5G Fund NPRM, we proposed a schedule for phasing down 
legacy high-cost support over two years for areas that are ineligible 
for 5G Fund support once the final eligible areas are known prior to 
conducting the 5G Fund Phase I auction. Several commenters question our 
legal authority to resume the phase down of legacy high-cost support 
before we conclude the 5G

[[Page 75789]]

Fund Phase I auction. These commenters focus on statutory language 
limiting our ability to modify our rules for competitive ETCs receiving 
legacy high-cost support in a manner inconsistent with sections 
54.307(e)(5) and (e)(6) of our rules, as in effect in 2015. Section 
54.307(e)(5) of the 2015 rules provided that legacy high-cost support 
competitive ETCs would continue to receive support at 60% of the frozen 
support level until ``Mobility Fund Phase II is implemented.'' We do 
not address former section 54.307(e)(6) because the language in that 
rule applies only to competitive ETCs that become eligible to receive 
Mobility Fund Phase II support, whereas our proposal to resume the 
phase down of legacy support prior to the 5G Fund Phase I auction to 
which some commenters object pertains only to those areas that are 
determined to be ineligible for support.
    123. The assertion by CRWC that ``a competitive ETC is currently 
entitled to receive 60 percent of its monthly base line support amount 
each month until Mobility Fund Phase II is implemented'' widely misses 
the mark. As the Commission has consistently made clear and the courts 
have recognized, carriers are not ``entitled'' to receipt of universal 
service funds. The statutory provision is best read as a limitation on 
our ability to resume the currently-paused phase down of legacy support 
without ensuring that recipients can avail themselves of a high-cost 
support mechanism to replace legacy support, and not as establishing an 
``entitlement'' for competitive ETCs to receive mobile legacy high-cost 
support at 60% of the frozen support level. As an alternative to 
Mobility Fund Phase II, the 5G Fund, along with the transition schedule 
adopted herein, provides an alternate comprehensive mechanism for 
distributing high-cost support as provided for within our statutory 
authority.
    124. We also disagree with CRWC's argument that we are ``barred 
from finding that, by adopting new rules [the Commission] will have 
successfully `implemented' '' the 5G Fund, which CRWC considers to be 
simply a ``rebranded Mobility Fund [Phase] II.'' This 
``implementation'' argument lacks merit because nothing in the express 
language of the statute precludes us from adopting rules for a 
comprehensive support mechanism that is an alternative to Mobility Fund 
Phase II, and in so doing, reducing the legacy support for areas that 
are found to be ineligible for support under this new, alternate 
mechanism. We also do not consider the 5G Fund simply to be Mobility 
Fund Phase II by another name. Rather, this Report and Order 
establishes an entirely new program for mobile high-cost support that 
builds upon lessons we have learned from our previous efforts to reform 
high-cost support and close the digital divide, and includes an 
integrated plan with performance requirements, public interest 
obligations, and compliance provisions for both legacy high-cost 
support recipients and 5G Fund support recipients to ensure the 
efficiency and the good stewardship of our limited universal service 
fund dollars.
    125. Even if our ability to reduce the amount of mobile legacy 
high-cost support that we distribute were to turn on whether we have 
``implemented'' the 5G Fund, CRWC's argument still fails. In finalizing 
the rules and determining the final map of areas eligible for 5G Fund 
support, we will have implemented the 5G Fund for ineligible areas 
because we will have ``give[n] practical effect to'' the new program 
and ensured its ``actual fulfillment by concrete measures.'' In reading 
the language of the statute and our rules, CRWC seemingly confuses the 
concept of adopting a support mechanism, i.e., Mobility Fund Phase II, 
with the concept of holding the Mobility Fund Phase II auction, which 
was included in the framework of that support mechanism and was to be 
the means with which we would determine the amounts of support a 
recipient would receive. Indeed, in 2015, when Congress originally 
adopted the appropriations rider, the Commission had not even adopted 
the use of an auction to distribute Mobility Fund Phase II support, 
something we did only in 2017. By analogy here, the fact that steps 
will remain after we finalize both the rules for the 5G Fund and the 
final list of areas that will be eligible for support in the Phase I 
auction is also not dispositive, and is in fact irrelevant, to a 
determination of when the 5G Fund is ``implemented.'' To the extent 
that the time at which we determine final eligible areas would have 
been earlier under the Option A approach, which appears to be of 
concern to CRWC, we note that, consistent with our decision adopting 
Option B, we anticipate that the final eligible areas will be 
determined no earlier than the time at which we finalize the Phase I 
auction procedures as part of our typical pre-auction process. While 
CRWC contends that the 5G Fund would not be ``implemented'' until the 
first month that a winning bidder receives 5G Fund support, it is 
wholly unclear why such a particular action definitively marks the 
implementation of the 5G Fund more plausibly than other actions, such 
as when the rulemaking is complete and final rules become effective, 
when the Phase I auction closes but before 5G Fund support is 
authorized, or when all winning bidders have either been authorized for 
5G Fund support or defaulted. CRWC's reading that only when new 5G Fund 
support is awarded can legacy high-cost support be reduced below the 
60% level would seemingly mean that if we conducted a Phase I auction 
and no carriers were ultimately authorized for 5G Fund support (due to, 
e.g., the auction failing to close, or auction defaults for failure to 
file a long form application) we would continue to be obligated to 
disburse legacy support indefinitely. Neither the Commission nor 
Congress would have intended such a result.
    126. Further, we are also not persuaded by CRWC's argument that its 
reading of the verb ``implement'' is most consistent with section 
54.307(e)(5) and (e)(6) of our rules, as in effect in 2015. Former 
section 54.307(e)(5) specifies the legacy support amount that a 
competitive ETC shall receive ``[i]n the event that the implementation 
of Mobility Fund Phase II has not occurred by'' 2014, whereas former 
section 54.307(e)(6) specifies the ``[e]ligibility after 
[i]mplementation of Mobility Fund Phase II'' of a competitive ETC to 
continue receiving legacy support after it becomes eligible to receive 
Mobility Fund Phase II support. These rules are meant to override the 
general phase down schedule in section 54.307(e)(2), establishing the 
legacy high-cost support amounts that a competitive ETC is eligible to 
receive at points in time before and after future high-cost support 
amounts are determined via the support mechanism that replaces legacy 
high-cost support. In the 5G Fund, we will have determined the future 
high-cost support amounts for areas that are ineligible for 5G Fund (no 
support) after the final rules are effective and eligible areas are 
finalized.
    127. Lastly, reading the statute and our rules in the manner that 
CRWC proposes, providing potentially endless entitlement to legacy 
high-cost support after a final conclusion that no support is 
warranted, would broadly conflict with our responsibility to be good 
stewards of universal service support and our long standing policy goal 
to reform our high-cost program. We do not believe Congress could 
reasonably have intended such a result. Indeed, this reading would 
provide a competitive ETC with legacy support at the same level until 
the close of the Phase I auction, even after we have made a final

[[Page 75790]]

determination that the area is no longer in need of ongoing support. 
CRWC would have us delay reform of the legacy support program for such 
areas for months or even longer after finalizing the rules and 
procedures for the program, regardless of whether we have made a 
determination that the supported area is currently being served by an 
unsubsidized competitor and is therefore ineligible for 5G Fund support 
in the Phase I auction. Such an outcome is not in the public interest, 
and CRWC has identified no reasons why Congress or the Commission 
intended to require this outcome. We therefore conclude that there is 
no legal bar to commencing phase down of legacy high-cost support in 
areas that are ineligible for 5G Fund support as soon as those areas 
are finalized. This is especially true because we are proceeding with 
Option B, and using new, granular mobile broadband data to render such 
determinations. Our decision here is guided by our need to balance 
competing priorities when managing our universal service support 
programs.
    128. Legacy High-Cost Support Transition Schedule. We adopt a 
modified version of our proposed schedule for transitioning from legacy 
high-cost support to 5G Fund support that will reform mobile high-cost 
support while minimizing the disruption to carriers currently receiving 
legacy support. Similar to the transition schedule we adopted for 
Mobility Fund Phase II, legacy high-cost support will be converted to 
5G Fund support, maintained for no more than five years to preserve 
service, or subject to phase down over two years depending upon whether 
the area was eligible for 5G Fund Phase I support and if eligible for 
the auction, whether there was a winning bidder for the area. We do not 
set an absolute date on which mobile legacy high-cost support would 
cease, regardless of when the 5G Fund Phase I auction is conducted. For 
legacy high-cost support that is subject to two-year phase down, 
support will be provided at two-thirds of the level of the 
disaggregated legacy support for the first 12 months, and one-third of 
the level of the disaggregated legacy support for the next 12 months. 
We will exempt competitive ETCs from 5G deployment public interest 
obligations and performance requirements for any areas where legacy 
support is being phased down, including the requirement that support 
recipients spend an increasing percentage of support on 5G services and 
that recipients demonstrate compliance through the submission of on-
the-ground measurement tests. We will continue to require that 
competitive ETCs meet public interest obligations relating to offering 
service at reasonably comparable rates, collocation and voice and data 
roaming requirements, and reporting requirements for subsidized service 
areas where legacy support is being phased down, however. Once legacy 
support has been completely phased down for a service area, the 
competitive ETC will no longer need to meet any public interest 
obligations for such an area. All legacy high-cost support received by 
a competitive ETC in areas subject to phase down will end no later than 
two years after announcement of the conclusion of the auction. With the 
exception of the timing of the phase down of legacy support in 
ineligible areas previously discussed or our proposal to cease all 
support after five years discussed below, commenters generally did not 
object to our general transition schedule, including our proposals to 
phase down support over two years or to continue legacy support for up 
to five years to preserve service.
    129. Under the transition schedule we adopt, in areas determined 
not to be eligible for 5G Fund Phase I support, legacy support will be 
phased down starting the first day of the month after the release of 
the final map of areas eligible for 5G Fund support. Because we expect 
that carriers will not require support in order to deploy 5G service in 
areas ineligible for 5G Fund support, and legacy support recipients 
will not be able to win 5G Fund support in the 5G Fund Phase I auction 
for those areas, we conclude that it is not in the public interest to 
continue legacy support for ineligible areas. As previously discussed, 
we will exempt areas determined to be ineligible for support from the 
5G broadband public interest obligations and performance requirements 
we adopt for legacy high-cost support recipients. However, legacy 
support recipients will continue to have a public interest obligation 
to file annual reports, offer services at reasonably comparable rates, 
and allow for reasonable collocation and voice and data roaming for 
areas ineligible for support until support is fully phased down and 
they cease to receive legacy high-cost support for such areas. We will 
commence the phase down of support in ineligible areas after release of 
the final map of eligible areas and prior to the conclusion of the 
Phase I auction. While CRWC asserts that it would be ``arbitrary'' to 
adopt the phase down of support in ineligible areas prior to the close 
of the 5G Fund Phase I auction because carriers' support funds have 
already been committed through 2020 and 2021, in view of our decision 
to base the areas eligible for Phase I support on a new collection of 
coverage data, we now anticipate that it may be a year or more before 
this phase down would commence. Competitive ETCs that receive legacy 
high-cost support should therefore be able to factor into their capital 
expenditure plans that the amount of support they receive may be 
reduced in areas also served by an unsubsidized competitor in the near 
future.
    130. However, we decline to adopt our proposal to end all legacy 
high-cost support to mobile carriers at the frozen high-cost support 
level no later than five years after the effective date of this Order, 
regardless of when the 5G Fund Phase I auction is conducted. No 
commenters support this proposal, and we agree that providing more 
certainty to legacy support recipients will promote expansive 5G 
deployment in these otherwise high-cost areas. Instead, for areas that 
are eligible for 5G Fund Phase I support, on the first day of the month 
following the release of a public notice announcing the close of the 5G 
Fund Phase I auction, legacy support for current recipients will either 
be maintained, pending authorization of the winning bidder to receive 
5G Fund support, maintained in order to preserve service in areas 
without a winning bidder in the Phase I auction, or subject to phase 
down for all other legacy support recipients. That is, for eligible 
areas not won in the 5G Fund Phase I auction, legacy support will begin 
to phase down over two years or be maintained in order to preserve 
service for no more than five years after the Phase I auction closes 
regardless of whether the eligible area may be won in the 5G Fund Phase 
II auction.
    131. In eligible areas won in the 5G Fund Phase II auction, legacy 
support (whether subject to phase down or preservation-of-service 
support) will either be maintained, pending authorization of the 
winning bidder to receive 5G Fund support, maintained in order to 
preserve service for the legacy support recipient receiving 
preservation-of-service support in areas without a winning bidder, or 
be subject to phase down beginning the first day of the month following 
release of a public notice announcing the close of the 5G Fund Phase II 
auction. Legacy high-cost support subject to phase down after the 5G 
Fund Phase I auction will continue to follow the original phase down 
schedule that commenced after the close of the 5G Fund Phase I auction 
for support recipients that were not the winning bidder in eligible 
areas won

[[Page 75791]]

during the 5G Fund Phase II auction. If the carrier receiving 
maintenance of support in order to preserve service is not the winning 
bidder for an eligible area won during the 5G Fund Phase II auction, 
that carrier would begin to receive phased down support at this time. 
Legacy high-cost support maintained to preserve service after the 5G 
Fund Phase I auction will continue for eligible areas not won during 
the 5G Fund Phase II auction, but for no more than five years after the 
close of the Phase I auction.
    132. More specifically, we adopt our proposal that for a winning 
bidder that is receiving legacy support in the area of its bid, legacy 
support will cease and 5G Fund support will commence on the first day 
of the month following release of a public notice authorizing that 
carrier to receive 5G Fund support. For portions of a legacy support 
recipient's subsidized service area that are eligible for 5G Fund 
support but for which there is no winner in a 5G Fund auction, the 
carrier will continue to receive legacy support in areas that do not 
overlap another legacy support recipient's subsidized service area. In 
those portions where more than one carrier receives legacy support 
(i.e., overlapping subsidized service areas), the recipient that 
receives the lowest amount of disaggregated legacy support for that 
area among the carriers that have reported deployment of the highest 
level of technology--e.g., 5G--in the state will continue to receive 
legacy support for the overlapping area while all others recipients 
will receive phase down support, based upon the recipients' submitted 
mobile broadband coverage data. In the case of ties where two carriers 
receive an identical amount of legacy support, we adopt our proposal to 
choose the preservation-of-service support recipient that has 
subsidized service areas covering a larger total area within the state. 
If the winning bidder defaults on its bid prior to authorization, or 
otherwise fails to be authorized, we will not award 5G Fund support for 
that area. However, to avoid perverse incentives, consistent with our 
decision to maintain support to preserve service only in areas that 
lack a winning bid, a carrier receiving legacy support in the area of 
its winning bid will not receive preservation-of-service support and 
will instead be subject to phase down if not authorized to receive 5G 
Fund support.
    133. In eligible areas where there is no winning bidder in the 5G 
Fund Phase I auction, the legacy support recipient receiving the 
minimum level of sustainable support will continue to receive support 
until further Commission action, but for no more than five years after 
the first day of the month following the release of a public notice 
announcing the close of the 5G Fund Phase I auction. We adopt our 
proposal to define the minimum level of sustainable support to be the 
lowest amount of legacy support among carriers that have deployed the 
highest level of mobile technology within the state. In eligible areas 
where there is no winning bidder in the 5G Fund Phase II auction, the 
legacy support recipient receiving the minimum level of sustainable 
support would continue to receive such ``preservation-of-service'' 
support until further Commission action, but for no more than five 
years after the first day of the month following the release of a 
public notice announcing the close of the 5G Fund Phase I auction.
    134. The following chart summarizes the schedule we adopt to 
transition from legacy support to 5G Fund support for areas in the 5G 
Fund Phase I auction:

                       Transition Schedule for Legacy High-Cost Support to 5G Fund Support
----------------------------------------------------------------------------------------------------------------
                                                                     Bidder or recipient
        Area eligibility                   Auction result                   status         Support type & timing
----------------------------------------------------------------------------------------------------------------
Ineligible.....................  .................................  .....................  2-year phase down
                                                                                            commences after
                                                                                            effective date of
                                                                                            rules and release of
                                                                                            final eligible
                                                                                            areas.
Eligible.......................  Won in auction...................  Carrier is the         Legacy support ceases
                                                                     winning bidder and     and 5G Fund support
                                                                     is a legacy support    commences after
                                                                     recipient for the      auction closes and
                                                                     area it won.           bidder is authorized
                                                                                            for area.
Eligible.......................  Won in auction...................  Carrier is a legacy    2-year phase down of
                                                                     support recipient      legacy support
                                                                     but is not the         commences after
                                                                     winning bidder in      auction closes.
                                                                     the area for which
                                                                     it receives support.
Eligible.......................  Not won in auction...............  Carrier is a legacy    2-year phase down of
                                                                     support recipient      legacy support
                                                                     but does not receive   commences after
                                                                     the minimum level of   auction closes.
                                                                     sustainable support
                                                                     for the area for
                                                                     which it receives
                                                                     support.
Eligible.......................  Not won in auction...............  Carrier is a legacy    Legacy support
                                                                     support recipient      continues for no
                                                                     and receives the       more than 5 years
                                                                     minimum level of       after auction close.
                                                                     sustainable support
                                                                     for the area for
                                                                     which it receives
                                                                     support.
----------------------------------------------------------------------------------------------------------------

Consistent with the existing high-cost disbursement schedule, all 
legacy support transition schedule timing will be aligned to the first 
day of the month following a triggering action.

G. Additional 5G Fund Support Requirements

1. Reporting Requirements
    135. Consistent with the requirements adopted for CAF Phase II and 
the Rural Digital Opportunity Fund, we will require that a 5G Fund 
support recipient file annual reports certifying its compliance with 
the public interest obligations, performance requirements, and any 
other terms and conditions associated with receipt of 5G Fund support, 
and file interim and final service deployment milestone reports 
demonstrating that it has met the 5G Fund performance requirements for 
deployment of service. We also adopt a rule that would require a 
support recipient authorized to receive 5G Fund support and its agents 
to retain any documentation prepared for, or in connection with, the 
award of the 5G Fund support for a period of not less than 10 years 
after the date on which the support recipient receives its final 
disbursement of 5G Fund support.
    136. Annual Reports. We adopt our proposal to require that each 5G 
Fund support recipient file an annual report by July 1 of each year 
after the year in which it was authorized to receive 5G Fund support. 
We will require a support recipient's annual report to cover the 
preceding calendar year and will require the support recipient to 
certify that it has complied with the public interest obligations, 
performance requirements, and any other terms and conditions

[[Page 75792]]

associated with receipt of 5G Fund support in order to continue 
receiving 5G Fund disbursements. As each annual report covers the 
preceding calendar year, no report would be due in the year in which 
the auction is held. The annual report must be filed with USAC via a 
web portal, and USAC will make all such data available to the 
Commission and the relevant state, territory, and Tribal governmental 
entities, as applicable. A 5G Fund support recipient must maintain the 
accuracy and completeness of the information provided its annual 
reports. Any substantial change in the accuracy or completeness of any 
annual report submitted by a 5G Fund support recipient must be reported 
within 10 business days after the reportable event occurs. We retain 
our authority to look behind recipients' annual reports and to take 
action to address any violations. A 5G Fund support recipient must 
maintain the accuracy and completeness of the information provided its 
annual reports. Any substantial change in the accuracy or completeness 
of any annual report submitted by a 5G Fund support recipient must be 
reported within 10 business days after the reportable event occurs. 
Other than AST&Science's general agreement that the proposals for 
annual reports and interim and final milestone reports are consistent 
with the Commission's obligation to assure that fund recipients are 
meeting their public interest obligations, we received no comment on 
our annual reporting proposals, and we direct the Office and Bureau to 
develop further specifics of reporting instructions in the pre-auction 
process.
    137. Service Milestone Reports. We adopt the 5G Fund NPRM's 
proposal that 5G Fund support recipients must submit interim and final 
service milestone reports, but in an effort to reduce data collection 
burdens and streamline reporting for Universal Service Fund 
participants, we do not adopt the 5G Fund NPRM's proposals regarding 
specific data to be collected in these reports, choosing instead to 
rely on the data reporting as developed further in the Digital 
Opportunity Data Collection proceeding that is considering more broadly 
applicable standards. The service milestone reports would include 
certifications as to compliance with the interim and final service 
milestones and the performance requirements for the 5G Fund, as 
substantiated by the timely submission of milestone 5G coverage maps in 
the Digital Opportunity Data Collection, or if the Digital Opportunity 
Data Collection is not yet operational at the time 5G Fund reports are 
due, by the timely submission of its 5G coverage maps (generated 
consistent with the propagation modeling parameters adopted in the 
Digital Opportunity Data Collection proceeding) through the existing 
FCC Form 477 system.
    138. The New York Public Service Commission supports the proposal 
to establish interim and final service milestones ``to ensure 5G Fund 
support recipients meet their public interest obligations.'' We adopt 
interim and final service milestone reporting requirements to ensure 
that support recipients continually document their progress toward 
meeting their meeting 5G Fund public interest obligations and 
performance requirements, as a mechanism to reveal and remedy non-
compliance. We will also require that each 5G Fund support recipient 
provide infrastructure information on the cell sites that the carrier 
uses to provide mobile service within the areas for which it is 
authorized to receive 5G Fund support in a standardized template as 
part of its interim and final milestone reports, as suggested by the 
Massachusetts Department of Telecommunications and Cable. We note that 
we are currently considering in the Digital Opportunity Data Collection 
proceeding whether to require from all mobile service providers the 
submission of infrastructure information more generally across 
providers' networks. Our decision to adopt a requirement that 5G Fund 
support recipients provide infrastructure information for areas in 
which the carrier is authorized to receive 5G Fund support is without 
prejudice to the matter of whether to adopt a similar requirement in 
the Digital Opportunity Data Collection proceeding. We recognize that 
carriers may consider infrastructure information to be sensitive, and 
so we will treat such data submitted as part of the initial report as 
presumptively confidential. While the Commission and USAC will treat as 
presumptively confidential and withhold from public inspection 
infrastructure information submitted as part of this report, USAC will 
provide these data to the relevant state, territory, or Tribal 
governmental entity that has jurisdiction over a particular service 
area, if applicable.
    139. While we adopt our proposal from the 5G Fund NPRM that these 
reports will be submitted to USAC, as adopted for CAF Phase II and the 
Rural Digital Opportunity Fund, we clarify that we will share the 
relevant coverage data submitted via the Digital Opportunity Data 
Collection portal to which 5G Fund support recipients certify with USAC 
for the purposes of verifying these reports. USAC personnel would be 
responsible for verifying submitted data to determine compliance with 
5G Fund requirements.
    140. We adopt our proposal to require a support recipient to file 
interim and final service deployment milestone reports by March 1 of 
the calendar year following each applicable December 31 milestone 
deadline. Failing to timely submit a service milestone report that 
includes the required certification concerning performance and coverage 
requirements by the established deadline would subject support 
recipients to defined consequences (as specified in the non-compliance 
requirements below). We also adopt the proposal that standards for 
related data submissions align with those adopted for the Digital 
Opportunity Data Collection, as modified below.
2. Demonstrating Compliance With Performance Requirements
    141. We adopt a modified version of our proposals regarding the 5G 
Fund support recipients' demonstration of compliance with performance 
requirements. We will not require customized propagation modeling and 
mapping data, as we proposed in the 5G Fund NPRM, but instead will 
require 5G Fund support recipients to certify at the established 
interim and final milestones to filing, in the Digital Opportunity Data 
Collection portal, 5G mobile broadband coverage data reflecting 
deployments in the eligible areas for which they are authorized to 
receive 5G Fund support. We will also require that 5G Fund support 
recipients conduct on-the-ground measurement tests to substantiate 5G 
broadband coverage data, and adopt a modified version of the 
methodologies and requirements proposed in the 5G Fund NPRM for 
conducting and validating results of such testing. The methodologies we 
adopt for conducting on-the-ground tests and validating test results 
are intended to be broadly consistent with the framework we proposed 
for the submission of governmental and third-party challenges in the 
Digital Opportunity Data Collection. We will defer to the pre-auction 
process, however, the adoption of additional requirements and 
parameters for on-the-ground measurement tests.
    142. We decide neither to specify distinct 5G Fund requirements for 
propagation modeling nor to require the separate submission of coverage 
data because the requirements adopted for the filing of 5G coverage 
maps in the Digital Opportunity Data Collection proceeding mirror the 
propagation

[[Page 75793]]

model parameters specified for 5G deployment maps proposed in the 5G 
Fund NPRM. Therefore, requiring that 5G Fund support recipients verify 
to the submission of coverage data in their Digital Opportunity Data 
Collection filings will provide us with the same information while 
reducing the burden of potentially duplicated or conflicting 
requirements, as suggested by some commenters, without undermining the 
public interest obligations and performance requirements we adopt here.
    143. We will require 5G Fund support recipients to substantiate 
reported 5G deployment with on-the-ground measurement tests submitted 
at interim and final milestones, as proposed. Rather than adopt 
customized 5G Fund testing requirements at this time, we adopt as a 
starting point test metrics, data specifications, and permitted testing 
applications at least as stringent as those already adopted or that may 
be adopted for the governmental and third party challenges in the 
Digital Opportunity Data Collection proceeding. Such requirements will 
serve as a minimum for the on-the-ground tests that we require for the 
5G Fund, and we defer to the pre-auction process specifying any 
additional parameters, to allow for similar matters to be resolved in 
the Digital Opportunity Data Collection proceeding. However, because we 
have a heightened obligation to ensure the prudent use of universal 
service support, we note that we may go further than the requirements 
adopted in the Digital Opportunity Data Collection proceeding, or 
otherwise adopt more stringent requirements during the pre-auction 
process.
    144. As for the methodologies for conducting on-the-ground tests 
and validating test results, we adopt the 5G Fund NPRM's proposals with 
certain modifications that will reduce the burden on 5G Fund support 
recipients. We note that the methodology adopted herein for conducting 
on-the-ground testing may not be identical to that adopted for the 
purposes of ensuring that T-Mobile meets its transaction commitments. 
We note that 5G Fund support recipients must validate geographically 
based 5G deployment, whereas T-Mobile's commitments are population-
based, and other obligations such as data speed requirements also 
differ between T-Mobile's commitments and requirements for 5G Fund 
support recipients. Similarly, this methodology may also not be 
identical to that used to determine whether DISH has met its 
commitments as set forth in the Order of Modification and Extension of 
Time to Construct, DA 20-1072 (WTB Sept. 11, 2020). Specifically, we 
will require that 5G Fund support recipients submit on-the-ground 
measurement tests with at least three tests conducted per square-
kilometer, measured by overlaying a uniform grid of one square 
kilometer (1 km by 1 km) on recipients' submitted 5G coverage maps 
within the area for which 5G Fund support was awarded, as we proposed, 
but only for a subset of grid cells. In response to concerns about the 
burdens of on-the-ground testing, we will require only that a support 
recipient conduct such tests in a percentage of all drive-testable grid 
cells where the recipient reports deployment of 5G by the service 
milestone. We will define as drive-testable any grid cell that has more 
than a de minimis amount of total roads, based upon the most recent 
roadway data from the U.S. Census Bureau available for this purpose, 
considering roads classified in the primary road (S1100), secondary 
road (S1200), local road (S1400), and service drive (S1640) categories. 
We defer to the pre-auction process establishing the de minimis road 
threshold for what is considered a drive-testable grid cell. 
Additionally, we will require that the minimum percentage of drive-
testable grid cells tested equal the minimum percentage of coverage 
required for each service buildout milestone (i.e., 40%, 60%, 80%, 
85%). When verifying that the minimum number of grid cells have been 
tested, we will compare against the in-vehicle 5G broadband coverage 
maps modeled to a 7/1 Mbps minimum cell edge speed submitted by 5G Fund 
support recipients in the Digital Opportunity Data Collection portal. 
To avoid duplicative testing, we will only require such testing in grid 
cells that report new 5G deployment for each milestone, so that 
previously reported testing will be cumulative.
    145. Finally, we adopt a methodology to validate results of on-the-
ground testing based on the 5G Fund NPRM's proposed approach. To 
broadly align with the specifications for generating 5G mobile 
broadband coverage maps, we will require that cumulative test data 
results show at least 90% of measurements report 5G service record 
download and upload speeds of at least 7/1 Mbps, and record median 
download and upload speeds of at least 35/3 Mbps. Additionally, to 
avoid confusion and simplify alignment of requirements, we will reduce 
our proposed requirement that 96% of latency tests show data latency of 
100 milliseconds or less, and will instead require that cumulative test 
data results show at least 90% of tests record data latency of 100 
milliseconds or less at the cell edge. This modification will simplify 
testing requirements and reduce the burden on carriers by aligning the 
probability of meeting the cell edge latency requirement value (of 100 
milliseconds or less) with the probability of meeting the cell edge 
speed requirement value (of 7/1 Mbps or greater).
    146. The Vermont Department of Public Services generally supports 
on-the-ground testing, arguing it provides the most accurate 
information regarding availability of broadband, and would serve as a 
check on what is reported based on propagation modeling alone. We 
agree, and believe that requiring on-the-ground measurement testing 
will help ensure that 5G Fund support recipients are actually providing 
the level of service necessary to help close the digital divide. CTIA 
supports aligning the 5G Fund demonstrations of compliance and testing 
with the Digital Opportunity Data Collection proceeding and the 
Broadband DATA Act, noting that doing so will promote consistent 
information about mobile coverage, avoid confusion, and prevent wasted 
resources. AT&T urges the Commission not to adopt the 5G Fund NPRM's 
proposed Mobility Fund Phase II challenge process-like approach to 
demonstrating compliance with on-the-ground measurement testing and to 
allow the Digital Opportunity Data Collection process to be completed 
before establishing milestone mapping and speed test requirements for 
the 5G Fund so we can look at lessons learned from that proceeding in 
designing its validation methodology, but supports the proposal to 
require median speeds of 35/3 Mbps with a 7/1 Mbps cell edge as 
reasonable. AT&T specifically objects to any requirement that every 
kilometer in an eligible area be tested. Verizon emphasizes that all 
definitions and specifications of testing must be clear across 
propagation mapping and speed testing.
    147. We agree with CTIA and AT&T that we should generally align the 
framework for 5G Fund support recipients to demonstrate compliance with 
public interest obligations and performance requirements with the 
Digital Opportunity Data Collection to the extent appropriate, and have 
taken steps to do just that. We also acknowledge the concerns raised by 
AT&T and have modified the requirements and methodologies proposed in 
the 5G Fund NPRM to reduce the amount of area that must be tested, 
learning from the experience of the Mobility Fund Phase II challenge 
process. RWA, CTIA, and the CRWC advocate for changes to the proposed

[[Page 75794]]

on-the-ground testing methodology, or to avoid an on-the-ground testing 
requirement altogether, with more focus on sampling or propagation 
maps. CCA encourages the Commission to consider alternatives and grant 
waivers as necessary for the most rural and difficult to test areas. 
While we recognize that there is a cost to requiring 5G Fund support 
recipients to conduct on-the-ground measurement tests, we conclude that 
the burden of conducting such tests is justified by our obligation to 
responsibly manage ratepayer funds. Moreover, bidders in a 5G Fund 
auction will be able to factor in the expected costs of complying with 
these requirements when bidding in an auction.
    148. The California Public Utilities Commission urges the 
Commission to require 5G Fund recipients to demonstrate milestone 
compliance with drive test data, until and unless recipients 
demonstrate that such test results validate the accuracy of propagation 
modeling and maps predicting coverage based on on-the-move radio 
frequency sampling. The California Public Utilities Commission notes 
that ``drive tests'' often includes two types of testing--tests taken 
from a moving vehicle and stationary tests taken at specific designated 
points--and that drive tests should be designed to capture the service 
parameters likely to be experienced by consumers and thus should be 
conducted using stationary testing, rather than testing from moving 
vehicles, because stationary testing will most accurately capture this 
user experience. The Institute for the Wireless Internet of Things at 
Northeastern University advocates for site surveying through unmanned 
aerial systems, with methodology hardened by experimentation at the 
AERPAW PAWR platform or other test environments where controlled 
flights are permitted, and for realistic, at-scale validation and 
testing using the world's largest radiofrequency emulation platform--
Colosseum. We anticipate that the possible use of UAS for mobile 
coverage testing will be addressed subsequently along with other 
testing metrics and specifications.
    149. In light of comments suggesting that we harmonize requirements 
in the 5G Fund with the Digital Opportunity Data Collection proceeding, 
we decline to adopt these alternative methods of demonstrating 
coverage. Our decision to align the test metrics, data specifications, 
and permitted testing applications as part of the 5G Fund's reporting 
requirements with those already adopted or that may be adopted for the 
Digital Opportunity Data Collection moots many of the issues raised in 
these comments. We anticipate that standardizing the data required for 
compliance reporting will ease the burden on support recipients 
throughout universal service programs, while collecting sufficient data 
to confirm that the 5G Fund's requirements have been met.
    150. We disagree with the assertion that propagation modeling 
alone, in the absence of on-the-ground measurements to substantiate 
predicted coverage, is sufficient for 5G Fund support recipients, and 
note that our obligation to be good stewards of limited ratepayer funds 
weighs on our conclusion to also require on-the-ground tests. To the 
extent that commenters raise concerns about the burden of requiring 
such on-the-ground tests, we conclude that by relaxing the requirement 
to conduct a test in every grid cell, we have substantially reduced the 
burden of demonstrating compliance with 5G Fund public interest 
obligations and performance requirements. Moreover, we believe that 
bidders in a 5G Fund auction will adequately take into account the 
expected costs of demonstrating compliance when placing their bids, and 
that such costs would be less than the cost to the fund, in the absence 
of any on-the-ground testing requirement, of providing support to 
carriers that have not fully met their obligations. We defer to the 
pre-auction process specifying any further speed test parameters.
3. Non-Compliance Measures
    151. We adopt post-authorization non-compliance measures for the 5G 
Fund that are similar to the non-compliance measures and framework for 
support reductions applicable to all high-cost ETCs and the process 
adopted by the Commission for drawing on letters of credit for CAF 
Phase II and Rural Digital Opportunity Fund support recipients to 
address a support recipient's failure to meet a service milestone. We 
will require any support recipient to notify the Commission, USAC, and 
the relevant state, U.S. Territory, or Tribal government, if 
applicable, within 10 business days of its non-compliance with any 
interim milestone. Upon such notification, the Bureau will issue a 
letter evidencing the default, and the issuance of this letter will 
initiate reporting obligations and withholding a percentage of the 5G 
Fund support recipient's total monthly 5G Fund support, if applicable, 
starting the month after issuance of the letter. We will rely on the 
following non-compliance tiers for failure to meet the 5G Fund 
performance requirements as of the deadline for each interim service 
milestone:

                        Non-Compliance Framework
------------------------------------------------------------------------
        Compliance gap                   Non-compliance measure
------------------------------------------------------------------------
Tier 1: 5% to less than 15%    Quarterly reporting.
 required square kilometers
 coverage.
Tier 2: 15% to less than 25%   Quarterly reporting + withhold 15% of
 required square kilometers     monthly support.
 coverage.
Tier 3: 25% to less than 50%   Quarterly reporting + withhold 25% of
 required square kilometers     monthly support.
 coverage.
Tier 4: 50% or more required   Quarterly reporting + withhold 50% of
 square kilometers coverage.    monthly support for six months; after
                                six months withhold 100% of monthly
                                support and recover percentage of
                                support equal to compliance gap plus 10%
                                of support disbursed to date.
------------------------------------------------------------------------

    152. A compliance gap is the percentage of required square 
kilometers that a recipient has not served by the relevant service 
milestone. A 5G Fund support recipient will have the opportunity to 
move tiers as it comes into compliance and will receive any support 
that has been withheld if it moves from one of the higher tiers (i.e., 
Tiers 2-4) to Tier 1 status (or comes into full compliance) during the 
service milestones. Except that consistent with what we adopted for the 
Rural Digital Opportunity Fund, non-compliance of 50% or more at the 
Year Three Interim Milestone will result in default with no additional 
time permitted to come back into compliance. Consistent with the

[[Page 75795]]

approach adopted for the CAF Phase II auction and for the Rural Digital 
Opportunity Fund, we reserve the right to impose reporting obligations 
in individual instances if a 5G Fund support recipient misses an 
interim milestone by less than 5% of the required coverage for that 
interim milestone where the support recipient shows no progress in 
addressing the shortfall by the fifth year of support.
    153. We separately require a support recipient that has not 
deployed service that meets the performance requirements adopted for 
the 5G Fund to at least 20% of the total square kilometers associated 
with the eligible areas for which it is authorized to receive support 
in a state by the Year Three Interim Service Milestone deadline to 
notify the Commission and USAC within 10 business days of its non-
compliance. Upon such notification, the Bureau will issue a letter 
evidencing the default, and the support recipient will be subject to 
full support recovery and will not be permitted to avail itself of the 
opportunity provided by the non-compliance tier framework to come into 
greater or full compliance.
    154. We will require any support recipient to notify the 
Commission, USAC, and the relevant state, U.S. Territory, or Tribal 
government, if applicable, within 10 business days of its non-
compliance with the Year Six Final Service Milestone. If a support 
recipient misses the Year Six Final Service Milestone, it will have 12 
months from the date of the Year Six Final Service Milestone deadline 
within which to come into full compliance.
    155. If the support recipient is not able to come into full 
compliance with the Year Six Final Service Milestone deployment 
requirements within this 12-month grace period, as verified by USAC, 
the Wireline Competition Bureau will issue a letter to that effect and 
support will be recovered as follows: (1) If the support recipient has 
deployed service to at least 80%, but less than the required 85%, of 
the total eligible square kilometers in a state, USAC will recover 1.25 
times the average support amount per square kilometer that the 
recipient has received in the state times the number of square 
kilometers unserved, up to the 85% coverage requirement; (2) if the 
support recipient has deployed service to at least 75% but less than 
80% of the total eligible square kilometers in a state, USAC will 
recover 1.5 times the average support per square kilometer that the 
recipient has received in the state times the number of eligible square 
kilometers unserved, up to the 85% coverage requirement, plus 5% of the 
recipient's total 10-year support in the state; and (3) if the support 
recipient has deployed service to less than 75% of the total eligible 
square kilometers in a state, USAC will recover 1.75 times the average 
support per square kilometer that that the recipient has received in 
the state times the number of eligible square kilometers unserved up to 
the 85% coverage requirement, plus 10% of the recipient's total 10-year 
support for the state.
    156. We will apply the same support reduction if USAC subsequently 
determines in the course of a compliance review that a support 
recipient did not provide evidence to demonstrate that it was offering 
service at the required performance levels to the square kilometers 
required by the Year Six Final Service Milestone. The non-compliance 
measures we adopt are consistent with those adopted for the Rural 
Digital Opportunity Fund, with adjustments to account for the fact that 
we are proposing that the Year Six Final Service milestone require 
service to at least 85% of the total eligible square kilometers in a 
state.
    157. We also adopt a service deployment requirement pursuant to 
which a 5G Fund support recipient must demonstrate that it provides 
service that aligns with the 5G Fund performance requirements 
established by the Commission to least 75% of the total square 
kilometers within each biddable area (e.g., census block group or 
census tract) for which it is authorized to receive support by the Year 
Six Final Service Milestone. If the support recipient is not able to 
come into full compliance with this service deployment requirement 
after the 12-month grace period we adopt, USAC will recover an amount 
of support that is equal to 1.5 times the average amount of support per 
square kilometer that the support recipient had received in the 
eligible area times the number of square kilometers unserved within 
that eligible area, up to the 75% requirement.
    158. As for CAF Phase II and the Rural Digital Opportunity Fund, 
USAC will be authorized to draw on a 5G Fund support recipient's letter 
of credit to recover the full value of the support covered by the 
letter of credit in the event that a support recipient does not meet 
the relevant service milestones, does not come into compliance during 
the Year Six Final Service Milestone grace period, and does not repay 
the Commission the support associated with the non-compliance gap 
within a certain amount of time. If a support recipient is in Tier 4 
status during the deployment period or has missed the Year Six Final 
Service Milestone, and USAC has initiated support recovery as described 
above, the support recipient will have six months to pay back the 
support that USAC seeks to recover. If the support recipient does not 
repay USAC by the deadline, the Wireline Competition Bureau will issue 
a letter to that effect and USAC will draw on the letter of credit to 
recover all of the support covered by the letter of credit, with any 
remaining balance due being a debt owed to the Commission by the 
support recipient.
    159. If a support recipient has closed its letter of credit and it 
is later determined that the support recipient have ceased offering 
service at the required performance levels to the required square 
kilometers of eligible area in a state during the 10-year term of 
support, the support recipient will be subject to additional non-
compliance measures, such as withholding of monthly payments and 
enforcement action, if it does not repay the Commission after six 
months. As for other high-cost universal service support programs, the 
failure to comply with the public interest obligations or any other 
terms and conditions associated with receipt of 5G Fund support may 
subject the support recipient to the Commission's existing enforcement 
procedures and penalties, reductions in support amounts, potential 
revocation of ETC designation, and/or suspension or debarment.
    160. And as for CAF Phase II and the Rural Digital Opportunity 
Fund, 5G Fund support recipients will be subject to compliance reviews. 
If subsequent to the Year Six Final Service Milestone USAC determines 
that a support recipient does not have sufficient evidence to 
demonstrate that it continues to offer service that meets the 
performance requirements adopted for the 5G Fund to all of the eligible 
square kilometers in the state as required by the Year Six Final 
Service Milestone, USAC will immediately recover a percentage of 
support from the support recipient.
    161. As we concluded in the CAF Phase II Auction Order, 81 FR 44413 
(Jul. 7, 2016), ``drawing on the letter of credit in the event that the 
ETC fails to repay the support that USAC is instructed to recover will 
ensure that the Commission will be able to recover the support in the 
event that the ETC is unable to pay.'' Through the support reduction 
framework we are adopting, a 5G Fund support recipient will have a 
number of opportunities to cure its non-compliance before we will seek 
to recover the support that is associated with the compliance gap. 
Moreover, we will only recover 100% of the support that has been 
disbursed in those cases

[[Page 75796]]

where a 5G Fund support recipient has not repaid the support associated 
with its compliance gap. Because a 5G Fund support recipient that fails 
to repay the support associated with its compliance gap is also 
unlikely to be able to meet its obligations to use the support to offer 
service that meets the 5G Fund performance requirements, we conclude 
that recovering 100% of the support will allow us to re-award such 
support through an alternative mechanism to an ETC that will be able to 
meet its obligations.

H. Eligibility Requirements

    162. We adopt our proposal to require parties seeking 5G Fund 
support to satisfy eligibility requirements that are consistent with 
those adopted for Mobility Fund Phase I, CAF Phase II, and the Rural 
Digital Opportunity Fund.
1. Eligible Telecommunications Carrier Eligibility Requirements
    163. ETC Designations. We adopt the same flexibility adopted for 
CAF Phase II and the Rural Digital Opportunity Fund with respect to ETC 
designations and will not require an entity seeking to participate in a 
5G Fund auction to obtain designation as an ETC in the areas where it 
seeks support prior to applying for or bidding in a 5G Fund auction. 
Rather, we will permit a 5G Fund auction winning bidder to be 
designated as an ETC after it is announced as a winning bidder for a 
particular area. A 5G Fund auction winning bidder will be required to 
obtain an ETC designation from the relevant state commission, or this 
Commission if the state commission lacks jurisdiction, that covers the 
each of the geographic areas in which it won support within 180 days 
after the release of the public notice announcing winning bidders.
    164. As the Commission determined in CAF Phase II, permitting 
entities to obtain ETC designation after the announcement of winning 
bidders for support encourages broader participation in the competitive 
process by a wider range of entities. It will also conserve 
participants' resources by avoiding obligations for auction 
participants who do not win any coverage areas in the auction, as well 
as safeguarding potential bidding strategies of applicants seeking ETC 
designation before an auction. The Commission's experience with CAF 
Phase II indicates that most applicants were ultimately designated 
within the long-form review period, even if it took them longer than 
the deadline for submitting proof of ETC designation. If the ETC 
process takes longer than 180 days, we will entertain requests from 
winning bidders for waiver of the ETC deadline. Consistent with the 
approach adopted for CAF Phase II and the Rural Digital Opportunity 
Fund, we will require such waiver requests to demonstrate that the ETC 
application was filed no later than 30 days after the release of the 
public notice announcing that it is a winning bidder or that the 
petitioner has a persuasive good-faith case for not having done so. As 
the Commission discovered with both the rural broadband experiments and 
CAF Phase II auction, there were various circumstances impacting the 
ability of individual bidders to file their ETC applications, and when 
an application was filed did not always determine whether an applicant 
was designated within the 150 remaining days. We note that any 
circumstances where a state will need more time due to procedural 
requirements or resource issues can be dealt with through the waiver 
process. The limited comment we received on our ETC designation 
eligibility requirement proposals support this approach.
    165. Forbearance from Service Area Redefinition Process. Consistent 
with the approach adopted for Mobility Fund Phase I, CAF Phase II, and 
the Rural Digital Opportunity Fund, we will forbear from the statutory 
requirement that the ETC service area of a 5G Fund support recipient 
conform to the service area of the rural telephone company serving the 
same area. Following the approach the Commission adopted for CAF Phase 
II and the Rural Digital Opportunity Fund, we will likewise be 
maximizing the use of 5G Fund support by making it available for only 
one provider per geographic area. Thus, forbearance is appropriate and 
in the public interest. RWA, the only commenter that commented on our 
proposal to forbear from the service area redefinition process, 
supports this approach.
    166. Therefore, for those entities that obtain ETC designations 
after becoming winning bidders in a 5G Fund auction, we forbear from 
applying section 214(e)(5) of the Act, insofar as this section requires 
that the service area of such an ETC conform to the service area of any 
rural telephone company serving an area eligible for 5G Fund support. 
We note that forbearing from the service area conformance requirement 
eliminates the need for redefinition of any rural telephone company 
service areas in the context of 5G Fund competitive bidding process. 
Accordingly, Commission rules regarding the redefinition process are 
inapplicable to petitions that are subject to this Report and Order. 
However, if an existing ETC seeks support through the 5G Fund 
competitive bidding process for areas within its existing service area, 
this forbearance will not have any impact on the ETC's pre-existing 
obligations with respect to other support mechanisms and the existing 
service area. For the Mobility Fund Phase I auction, the Commission 
forbore from requiring that the service areas of an ETC conform to the 
service area of any rural telephone company serving the same area, 
pursuant to section 214(e)(5) of the Act and section 54.207(b) of the 
Commission's rules. Similarly, the Commission concluded that like 
Mobility Fund Phase I, some of the price cap carrier study areas that 
may become eligible for the CAF Phase II and the Rural Digital 
Opportunity Fund competitive bidding processes meet the statutory 
definition so that the carrier serving those study areas would be 
classified as a rural telephone company.
    167. We find that forbearance is warranted in these limited 
circumstances. Our objective is to distribute support to winning 
bidders as soon as possible so that they can begin the process of 
deploying new broadband service to consumers in those areas. Case-by-
case forbearance would likely delay our post-selection review of 
entities once they are announced as winning bidders.
    168. The Act requires the Commission to forbear from applying any 
requirement of the Act or our regulations to a telecommunications 
carrier if the Commission determines that: (1) Enforcement of the 
requirement is not necessary to ensure that the charges, practices, 
classifications, or regulations by, for, or in connection with that 
telecommunications carrier or telecommunications service are just and 
reasonable and are not unjustly or unreasonably discriminatory; (2) 
enforcement of that requirement is not necessary for the protection of 
consumers; and (3) forbearance from applying that requirement is 
consistent with the public interest. We conclude each of these 
statutory criteria is met for the 5G Fund for the same reasons we 
concluded they were met for Mobility Fund Phase I, CAF Phase II, and 
the Rural Digital Opportunity Fund.
    169. Just and Reasonable. We conclude that compliance with the 
service area conformance requirement of section 214(e)(5) of the Act 
and section 54.207(b) of the Commission's rules is not necessary to 
ensure that the charges, practices, and classifications of carriers 
designated as ETCs in areas for which support will be authorized 
through a 5G Fund auction are just and reasonable

[[Page 75797]]

and not unjustly or unreasonably discriminatory. As discussed herein, 
we find that the three factors traditionally taken into account by the 
Commission and the states when reviewing a potential redefinition of a 
rural service area pursuant to section 214(e)(5) of the Act no longer 
apply in the context of designating ETCs in areas for which support 
will be authorized through a 5G Fund auction. Forbearance from the 
service area conformance requirement would not prevent the Commission 
from enforcing sections 201 or 202 of the Act, which require all 
carriers to charge just, reasonable, and non-discriminatory rates. We 
note that all ETCs--whether rural ETCs or other entities designated as 
ETCs in areas eligible for 5G Fund support in order to receive such 
support--will continue to be subject to the requirements of the Act 
that consumers have access to reasonably comparable services at 
reasonably comparable rates. Moreover, we adopt herein a public 
interest obligation for a 5G Fund support recipient to offer its 
services in the areas for which it is authorized to receive support at 
rates that are reasonably comparable to those rates offered in urban 
areas. In fact, as we discuss herein, the deployment of voice and 5G 
broadband-capable networks into these areas will expand the choice of 
telecommunications services for consumers in the relevant areas. The 
resulting competition is likely to help ensure just, reasonable, and 
nondiscriminatory offerings of services. For these reasons, we find 
that the first prong of section 10(a) is met.
    170. Consumer Protection. We also conclude that it is not necessary 
to apply the service area conformance requirement to a winning bidder 
in the 5G Fund competitive bidding process to protect consumers. 
Forbearance from the service area conformance requirement in these 
limited circumstances will not harm consumers currently served by the 
rural telephone companies in the relevant service areas. To the 
contrary, these consumers will benefit from the use of 5G Fund support 
to deploy voice and 5G broadband-capable networks in these areas. 
Moreover, 5G Fund support recipients, like all ETCs, will be required 
to certify that they will satisfy applicable consumer protection and 
service quality standards in their service areas. For these reasons, we 
find that the second prong of section 10(a) is met.
    171. Public Interest. We conclude that it is in the public interest 
to forbear from the service area conformance requirement in these 
limited circumstances. Because we adopt our proposal to distribute 5G 
Fund support through competitive bidding, we set up a system under 
which only one ETC will receive support to serve a given area eligible 
for 5G Fund support. Geographic eligibility for 5G Fund support is 
based on whether specific areas show a lack of unsubsidized 4G LTE and 
5G broadband service by at least one carrier, a definition that is 
unrelated to the boundaries of rural carrier service areas. Thus, a 
rural telephone carrier's service area is not a relevant consideration 
in determining where a 5G Fund support recipient that is awarded 
support through competitive bidding should be designated as an ETC. 
Accordingly, the analysis that the relevant state and the Commission 
historically undertook when deciding whether to redefine a rural 
telephone carrier's service area is not applicable to the 5G Fund 
competitive bidding process. Because the service area redefinition 
analysis is not relevant to the 5G Fund competitive bidding process, we 
find it is not in the public interest for the states and the Commission 
to work together to define the service area of 5G Fund support 
recipients serving rural telephone companies' service areas. However, 
we note that forbearance in these limited circumstances does not 
otherwise impact the state's primary role in designating ETCs. State 
commissions are still required to consider the public interest, 
convenience and necessity of designating an ETC in a rural area already 
served by a rural telephone company. We note that the redefinition 
process is still required for ETCs seeking other kinds of support, and 
that our action today does not disturb the roles of state commissions 
and this Commission in the ETC designation process or in the 
redefinition process in other circumstances where redefinition is 
required. We find that forbearing from the conformance requirement will 
encourage participation by assuring that obligations of new ETCs will 
not extend to portions of rural service areas for which a new ETC may 
not receive support. By providing this assurance, we reduce the cost of 
auction participation, encourage lower bids, and improve auction 
outcomes.
    172. Similarly, enabling new ETC service areas to be defined in a 
more targeted manner for the 5G Fund is consistent with our approach of 
targeting support to areas with a specific need for the support, helps 
preserve those efficiencies, and thus serves the public interest. 5G 
Fund support will be determined by a competitive bidding process in 
which ETCs will bid for the support they need to serve a specific area, 
rather than any larger area, such as an underlying rural telephone 
company study area. Absent forbearance, we find that entities seeking 
5G Fund support may be required to take on unsupported ETC obligations 
in portions of rural carriers' study areas--areas that may not be 
eligible for support or for which they may not win support--and that 
this is likely to discourage participation in a 5G Fund auction. We 
conclude that requiring 5G Fund support recipients to serve a wider 
area runs counter to the Commission's recent and ongoing efforts to 
serve the public interest by focusing Universal Service Fund resources 
on defined areas of need.
    173. We also note that requiring each 5G Fund support recipient to 
conform its service areas to those of the rural telephone companies in 
the states they seek to serve could result in lengthy redefinition 
proceedings, which may delay our post-auction review of winning 
bidders' long-form applications and consequently delay our distribution 
of 5G Fund support and the deployment of voice and 5G broadband 
services in the area(s) won by the support recipient.
    174. In addition, we find that in these limited circumstances 
requiring conformance is not essential to protect the ability of rural 
telephone companies to continue to provide service. Past concerns that 
an ETC serving only a relatively low-cost portion of a rural carrier's 
service area might cream skim by receiving per line support based on 
the rural carrier's costs of serving the entire area are not relevant 
to 5G Fund support, which will be awarded through a competitive 
process. Unlike the legacy identical support rule, under which a 
competitive ETC received the same per-line support as an incumbent 
calculated based on the incumbent's cost of serving its entire service 
area, the amount of 5G Fund support is not linked to the support 
received by an overlapping rural carrier but is determined by the 
results of competitive bidding for support. Consequently, cream 
skimming concerns that arose under the identical support rule are not 
relevant for purposes of seeking 5G Fund support. Moreover, because the 
Commission decided in the USF/ICC Transformation Order that universal 
service could support both mobile and fixed services in a given area, 
we see no inherent conflict between a mobile provider receiving support 
to offer previously unavailable service in a portion of a rural 
telephone company's study area and the rural telephone company 
continuing to provide its pre-existing service. We note that our 
decision to grant forbearance in these limited circumstances does not 
impose any

[[Page 75798]]

additional administrative requirements on rural telephone companies.
    175. For similar reasons, we conclude that forbearance in these 
limited circumstances will not harm competitive market conditions. The 
public interest benefits of forbearance go beyond efficiently enabling 
consumer access to 5G services. If anything, forbearance may enhance 
competition by introducing new service providers to the market and, as 
discussed above, will not eliminate any existing market participants or 
introduce concerns about cream skimming. ETCs that receive 5G Fund 
support will have the obligations of any other ETCs, including an 
obligation to make available Lifeline service to eligible low-income 
consumers, and thus an ETC deploying 5G services to new areas as part 
of the 5G Fund also will be making its services available to low-income 
consumers who may qualify to receive reduced charges for these advanced 
services. Moreover, as a 5G Fund support recipient is deploying service 
in its funded areas, it may also find that it has a business case to 
deploy service in surrounding areas, thereby increasing competition and 
providing more options for consumers.
    176. We further note that forbearance from the conformance 
requirement and redefinition process for these limited purposes should 
not affect rural carriers' abilities to serve their entire rural 
service territories. Moreover, the Act contains safeguards to address 
any such potential concerns. The Act already requires designating 
commissions to affirmatively determine that designating a carrier as an 
ETC within a rural service area is in the public interest, and this is 
not affected by this grant of forbearance.
2. Spectrum Access
    177. We will require that an applicant seeking to participate in a 
5G Fund auction have exclusive access to licensed spectrum with 
sufficient bandwidth in an area that enables it to satisfy the 
applicable performance requirements in order to receive 5G Fund support 
for that area. As more fully explained in the application process 
requirements we adopt herein, we will require an applicant to have 
exclusive access to licensed spectrum with sufficient bandwidth (i.e., 
spectrum for which the applicant holds a license or lease) and to 
describe its access to such spectrum. We also will require an applicant 
to certify that the description is accurate, that it has access to such 
spectrum in the area(s) in which it intends to bid for support, that it 
has such access to spectrum at the time it applies to participate in 
competitive bidding and at the time it applies for support if it is a 
winning bidder, and that it will retain its access to such spectrum for 
at least 10 years after the date on which it is authorized to receive 
support.
3. Financial and Technical Capability
    178. Consistent with what the Commission has required in other 
universal service proceedings, we adopt our proposal to require an 
entity to certify that it is financially and technically qualified to 
meet the 5G Fund public interest obligations and performance 
requirements within the 10-year support term in the geographic areas 
for which it seeks support. We implemented such a requirement for 
Mobility Fund Phase I, Tribal Mobility Fund Phase I, CAF Phase II, and 
the Rural Digital Opportunity Fund, and we conclude it is an equally 
appropriate requirement for the 5G Fund. As we have previously stated, 
``it would not be administratively efficient to conduct a competitive 
bidding process with participation from entities that are not prepared 
to make such commitments.'' Accordingly, requiring this certification 
is a reasonable protection for the auction process and to safeguard the 
award of universal service funds. As more fully explained in the 
application process requirements we adopt herein, we will require an 
applicant to certify as to its financial and technical qualifications 
in both its pre-auction short-form application and its post-auction 
long-form application.
4. Encouraging Participation
    179. To encourage participation by the widest possible range of 
entities, we adopt our proposal to permit all qualified applicants to 
participate in a 5G Fund auction. Our commitment to fiscal 
responsibility requires that we distribute our finite budget cost 
effectively in light of our goals for the 5G Fund and consistent with 
the bidding procedures we adopt for the auction. The Commission did not 
prohibit any particular class of parties from participating in Mobility 
Fund Phase I based on size or other concerns or from seeking Mobility 
Fund Phase I support based solely on a party's past decision to 
relinquish universal service support provided on another basis. In 
order to avoid potentially limiting our ability to close the 5G 
coverage gap, we follow the same approach here. We expect that our 
general auction rules and procedures will provide the basis for an 
auction process that promotes our objectives for the 5G Fund and 
provide a fair opportunity for all serious, interested parties to 
participate.
    180. AST&Science asks the Commission to allow mobile-satellite 
companies capable of providing 5G-NR broadband service to standard 
smartphones and off-the-shelf user devices to participate meaningfully 
in closing the digital divide by partnering with terrestrial broadband 
providers in the 5G Fund auction. It states that providers should be 
invited to demonstrate, on a case-by-case basis at the short-form 
application stage, the capability of these transformational, mobile-
satellite-based technologies to meet the technical and performance 
standards for the 5G Fund, consistent with the Commission's 
longstanding policy of implementing regulatory policies in a 
technologically-neutral fashion and in a manner that avoids picking 
winners and losers. AST&Science submits that this approach would enable 
it to more quickly implement its business plan of formulating 
cooperative arrangements with wireless carriers to extend high-quality 
5G services to areas that are extremely unlikely to be covered by 
traditional terrestrial technologies. SES Americom and O3B Limited 
similarly state the Commission ``should not stifle 5G deployment by 
barring mobile service providers from using satellite technologies that 
can support latency-sensitive mobile services, such as SES's Medium 
Earth Orbit (``MEO'') satellite network.''
    181. RWA asserts that satellite providers should be eligible to 
participate in a 5G Fund auction ``if they can (1) meet the proposed 
speed and latency performance requirements; and (2) provide for 
continuity of mobile service by being capable of holding voice and data 
sessions while moving across the country at speeds of 75 miles per hour 
without regularly dropping the session, and being able to provide 
roaming services at reasonable rates to other carriers pursuant to the 
Commission's roaming rules.'' We decline to adopt RWA's continuity of 
mobile service threshold for being capable of holding voice and data 
sessions without regularly dropping a session because we find it adds a 
qualifier to the definition of what we consider to be a component of 5G 
mobile service. We are unconvinced that this qualifier is how 
reasonably comparable 5G services in urban environment are defined. We 
therefore conclude that the requirements we adopt for median data 
speed, latency, and technology standards are sufficient to capture the 
range of services that customers reasonably expect 5G services to 
provide.

[[Page 75799]]

    182. Consistent with our decision to permit all qualified 
applicants to participate in a 5G Fund auction, we will not 
categorically preclude a satellite provider from applying for, bidding 
in, and winning 5G Fund support in a 5G Fund auction, provided that it 
is otherwise eligible. We note that pursuant to the rules we adopt 
herein, entities seeking 5G Fund support must satisfy certain 
eligibility requirements, and 5G Fund support recipients must be 
capable of providing mobile, terrestrial voice and broadband services 
that meet public interest obligations and performance requirements we 
adopt for the 5G Fund as a condition of receiving support--which 
include among other things offering voice and 5G broadband service that 
conforms to the 5G-NR standard using permitted spectrum bands directly 
to an off-the-shelf handset (e.g., an iPhone), and otherwise meets our 
adopted median data speed and end-to-end round-trip latency 
requirements of at least 35/3 Mbps and 100 milliseconds or less, 
respectively. Accordingly, while a carrier could potentially use non-
terrestrial services, such as satellite service, to augment its 
provision of mobile, terrestrial voice and data services in the areas 
for which it is awarded 5G Fund support, it cannot rely solely on any 
such non-terrestrial services to meet its 5G Fund public interest 
obligations and performance requirements.
5. Enforceable Commitments To Deploy 5G
    183. In the 5G Fund NPRM, we tentatively concluded that T-Mobile 
should not be allowed to use any eligible areas for which it might win 
5G Fund support to fulfill its transaction-specific rural commitments 
to deploy 5G. As a threshold matter, today we adopt restrictions on the 
use of 5G Fund support to fulfill enforceable commitments to deploy 5G. 
We do this to ensure that our limited universal service funds are spent 
in the most cost-effective manner. We conclude it would be inefficient 
to allow any provider with enforceable 5G deployment obligations to use 
universal service support to fund those deployments. At the same time, 
we are concerned that it would be equally inefficient to use our 
limited universal service funding to overbuild T-Mobile's extensive 
rural 5G deployment commitments. We sought comment on two approaches to 
avoiding such an outcome: (1) Allowing T-Mobile to make pre-auction 
binding commitments to deploy 5G services in eligible areas within the 
time frames adopted as deployment milestones for the 5G Fund without 
receiving 5G Fund support and otherwise prohibiting T-Mobile from 
participating in the auction; and (2) permitting T-Mobile to identify 
areas before the auction where they intend to deploy 5G service and 
removing these areas from the list of eligible areas.
    184. AT&T, the California Public Utilities Commission, CCA, RWA, 
and Verizon agree with our tentative conclusion that T-Mobile should 
not be allowed to use 5G Fund support to fulfill its transaction 
commitments to deploy 5G. T-Mobile does not object to prohibiting it 
from using 5G Fund support to meet its transaction commitments, but 
argues that such a prohibition should not apply only to it, asserting 
that it would be unfair to single out T-Mobile in this way and that 
such a prohibition applied only to T-Mobile would be an inefficient use 
of funds. T-Mobile has encouraged the Commission to rely on objective 
criteria such as rurality and population density or coverage data to 
determine the areas that are eligible for 5G Fund support, and to keep 
T-Mobile's transaction commitments separate from the 5G Fund. We 
believe that establishing 5G Fund auction eligibility based upon a new 
mobile data coverage collection, combined with the procedures we adopt 
herein regarding enforceable commitments to deploy 5G, appropriately 
address this concern while balancing our priorities in distributing 
universal service fund support.
    185. CRWC asserts that T-Mobile could game any pre-auction 
commitment process by strategically selecting areas thereby excluding 
them from the 5G Fund auction for anti-competitive reasons, cross-
subsidize its merger commitments, and then face no consequences if it 
ultimately does not decide to deploy in those areas. Accordingly, CRWC 
argues that T-Mobile should be barred from participating in a 5G Fund 
auction. CRWC attempts to show that it would be optimal to exclude T-
Mobile from the auction through a stylized numerical simulation of 
subsidy auctions in Missouri. CRWC quantifies the benefits of excluding 
T-Mobile by comparing its simulations to two baseline scenarios making 
the following assumptions about T-Mobile's conduct: (1) T-Mobile might 
not deploy 5G in an eligible area if another provider could cover that 
area for a lower cost, or (2) T-Mobile would not deploy at all in any 
eligible area. However, it is likely T-Mobile will deploy in many 
eligible areas regardless of where other providers deploy or what 
happens in an auction, especially in light of its transaction 
commitments; in those cases, the area would not require a subsidy to be 
served. These baseline scenarios are therefore inappropriate. Further, 
the analysis ignores the auction budget constraint, and therefore 
cannot capture the benefits of increased competition by including T-
Mobile. The analysis also attempts to demonstrate that T-Mobile could 
use the pre-selection process to strategically disadvantage rival 
service providers, but it is based on a single simplified theoretical 
scenario with no evidence of its practical relevance. RWA also argues 
that T-Mobile should not be able to make pre-auction binding 
commitments to deploy 5G that would remove areas from the auction.
    186. In advocating for Commission approval of its transaction with 
Sprint, T-Mobile made several commitments to deploy 5G, which were 
adopted as conditions of approval. T-Mobile is subject to significant 
financial penalties if it does not meet its 5G deployment commitments. 
We expect T-Mobile to be able to fulfill these commitments without 5G 
Fund support based upon their claimed merger synergies. Accordingly, we 
agree that T-Mobile should not be allowed to use 5G Fund support to 
fulfill its transaction commitments to deploy 5G. We are mindful that 
other entities could be similarly situated to T-Mobile, with 
enforceable commitments to deploy 5G, and any such entities will 
likewise not be allowed to use 5G Fund support to fulfill their 
commitments. We note that on July 26, 2019, DISH filed applications 
seeking more time to satisfy the construction requirements for its AWS-
4, Lower 700 MHz E Block, and AWS H block licenses, and that DISH has 
enforceable commitments to deploy 5G and is subject to significant 
penalties if it fails to meet its commitments. Accordingly, DISH cannot 
use 5G Fund support to meet its enforceable 5G deployment commitments. 
We will nevertheless evaluate enforceable commitments other than T-
Mobile's on a case-by-case basis considering the specific commitments 
and our goals in the 5G Fund.
    187. We are mindful that prohibiting carriers with enforceable 
commitments from participating in a 5G Fund auction would accomplish 
the goal of preventing universal service funds from being used to 
fulfill those commitments. Such a prohibition, however, would not 
address our interest in avoiding the use of universal funds to 
overbuild areas that will already see 5G deployment. As we noted in the 
5G Fund NRPM, ``failing to adequately account for T-Mobile's 
enforceable 5G deployment commitments would risk using our

[[Page 75800]]

limited universal service support to overbuild areas that would see 
timely, unsubsidized 5G deployment [as defined by the Commission] by T-
Mobile.'' Moreover, prohibiting participation by otherwise qualified 
carriers would undermine our interest in maximizing auction 
participation so as to achieve the most efficient auction result and 
covering the most area at the least cost. All recipients of high-cost 
funds are subject to a statutory requirement to only use those funds 
for the universal service purposes for which they were granted. 
Recipients of 5G Fund support will be subject to reporting 
requirements, as well as auditing, to ensure that funding awards are 
spent as intended.
    188. We conclude that our approach to enforceable commitments to 
deploy 5G must promote our goals of: Prohibiting the use of 5G Fund 
support to fulfill enforceable 5G deployment commitments; avoiding the 
use of 5G Fund support to overbuild areas that will see unsubsidized 5G 
deployment; and establishing procedures that will ensure a fair and 
competitive auction. Accordingly, we will allow T-Mobile to make pre-
auction, binding commitments to deploy 5G in certain areas, thus 
removing those areas from the auction inventory of areas eligible for 
support. We note that if T-Mobile does remove areas from the auction 
inventory of areas eligible for support, then those areas would be 
subject to the drive-testing requirements negotiated in the transaction 
and not to the 5G Fund performance requirements. We direct the Office 
and Bureau to establish the specific procedures for pre-auction binding 
commitments, that would cover, as appropriate, qualifications and 
restrictions on participating in the pre-selection process. These pre-
auction commitment procedures will address which entities with 
enforceable commitments can use these procedures. For example, these 
procedures will address whether DISH should receive the same or similar 
treatment as T-Mobile. These procedures can address, as appropriate, 
deterrence of any anti-competitive behavior, performance measures, 
noncompliance penalties, and any actions (before, during, or after the 
auction) that would run contrary to the goals of the 5G Fund. We are 
confident that the Office and Bureau can develop and implement 
procedures that accord with enforceable commitments, balance our 
priorities, ensure the most efficient use of our limited funds, and 
appropriately address anti-competitive concerns.
    189. In addition, we will allow T-Mobile to participate--and win 
support--in the 5G Fund auction, but consistent with our prohibition on 
using universal service support to fulfill other 5G deployment 
obligations, we will not allow T-Mobile to claim any population in 
areas won in the 5G Fund auction toward their population-based merger 
commitments. Similar to T-Mobile's commitment concerning its potential 
participation in the Puerto Rico/U.S. Virgin Islands Stage 2 
Competition, population in any areas won by T-Mobile in a 5G Fund 
auction will be added to its merger population commitments, such that 
T-Mobile's total deployment commitment shall increase in equal measure. 
The same condition will apply to any similarly situated carrier with 
enforceable commitments for 5G deployment that participates in the 5G 
Fund auction, preventing the 5G Fund supported deployments from 
counting toward satisfying the carrier's enforceable commitments to 
deploy 5G.
    190. These measures balance our interests in prohibiting entities 
from using universal service funding to fulfill enforceable 
commitments, limiting overbuilding by not subsidizing areas that will 
already see timely 5G deployment without universal service support, and 
holding an efficient, open auction in which entities can compete 
vigorously for funding to serve areas that they would not otherwise 
serve without support.
6. Inter-Relationship With Other Universal Service Mechanisms and 
Obligations
    191. We adopt our proposal to allow recipients of other high-cost 
universal service support to participate in a 5G Fund auction. While we 
will not prohibit applicants from participating in a 5G Fund auction 
merely because they have won support through other universal service 
mechanisms, we note that the goals of 5G Fund are to help ensure the 
availability of mobile voice and broadband services across rural areas 
of the country. Accordingly, we will prohibit a 5G Fund support 
recipient from using 5G Fund support to satisfy any pre-existing high-
cost deployment obligations to fixed locations and prohibit a recipient 
of other high-cost support from using that support to satisfy its 5G 
Fund deployment obligations.

I. Application Process

    192. Consistent with prior Commission auctions and the process 
adopted for the Rural Digital Opportunity Fund, we adopt a two-stage 
application process for the 5G Fund, consisting of pre-auction and 
post-auction requirements. Each entity interested in participating in a 
5G Fund auction will be required to file a pre-auction short-form 
application that provides basic information and certifications 
regarding its qualifications to receive support. If determined to be 
qualified to bid, an applicant will be allowed to participate in the 
auction. After the auction concludes, a winning bidder must file a 
post-auction long-form application with more extensive information 
about its qualifications, funding, and the network it intends to use to 
meet its 5G Fund public interest obligations and performance 
requirements to demonstrate to the Commission that it is legally, 
technically and financially qualified to receive 5G Fund support. As we 
did for CAF Phase II and the Rural Digital Opportunity Fund, we stress 
that each potential bidder has the sole responsibility to perform its 
due diligence research and analysis before proceeding to participate in 
a 5G Fund auction. We direct the Office and Bureau and to adopt the 
format and deadlines for the submission of documentation for the short-
form and long-form application processes.
1. Short-Form Application Process
    193. As more fully explained below, we adopt our proposal to apply 
the Commission's existing Part 1, Subpart AA universal service 
competitive bidding rules to entities seeking to participate in the 
competitive bidding process for 5G Fund support so that such entities 
will be required to: (1) Provide information that would establish their 
identity, including disclosing parties with ownership interests and any 
agreements they may have relating to the support to be sought through 
the competitive bidding process, (2) identify their authorized bidders, 
(3) make various universal service support specific certifications, (4) 
provide any additional information that may be required by the 
Commission in order to evaluate their qualifications to participate in 
the competitive bidding process, and (5) comply with the rule 
prohibiting certain communications during the competitive bidding 
process. We also adopt our proposed amendments to various Part 1, 
Subpart AA rules to codify policies and procedures applicable to the 
auction application process that have been adopted for CAF Phase II and 
the Rural Digital Opportunity Fund, better align provisions in Part 1, 
Subpart AA with like provisions in the Commission's Part 1, Subpart Q 
spectrum auction rules, and make other updates for consistency, 
clarification, and other purposes. We received no comments on our 
proposed

[[Page 75801]]

amendments to the Part 1, Subpart AA rules, and adopt them as proposed 
in the 5G Fund NPRM. The Part 1, Subpart AA universal service 
competitive bidding rules, as amended herein, will apply to 
participants in a 5G Fund auction. In addition, we adopt our proposal 
to require entities seeking to participate in a 5G Fund auction to also 
provide certain 5G Fund specific information in their short-form 
applications. The limited comments we received on our 5G Fund specific 
short-form application proposals are summarized and discussed in this 
section as necessary to address any issues or alternative approaches 
raised by commenters concerning our proposals. We conclude the pre-
auction short-form requirements we adopt here provide for a fair and 
efficient process and will best serve the Commission's ability to 
determine whether an applicant is qualified to bid for 5G Fund support.
    194. An entity interested in participating in the 5G Fund 
competitive bidding process will submit a pre-auction short-form 
application in which it must provide, among other things, information 
as to the applicant's identity, ownership, and any agreements into 
which it has entered, as well as a description of the applicant's 
access to spectrum and various applicant certifications. Commission 
staff then will review the submitted short-form applications to 
determine whether applicants have provided the necessary information 
required at the short-form stage and thereafter release a public notice 
indicating which short-form applications are deemed complete and which 
are deemed incomplete. Consistent with CAF Phase II and the Rural 
Digital Opportunity Fund, applicants whose short-form applications are 
deemed incomplete will be given a limited opportunity to cure defects 
and to resubmit correct applications, excluding major modifications. As 
in CAF Phase II and the Rural Digital Opportunity Fund, following the 
conclusion of the short-form application review process and a 
determination of which applicants are qualified to participate in the 
auction, a public notice will be released identifying those applicants 
that may bid in the auction.
    195. Ownership Disclosures. Section 1.21001(b)(1) of the 
Commission's rules currently requires each universal service auction 
applicant to provide information in its short-form application to 
establish its identity, including information concerning its real 
parties in interest and information regarding parties that have an 
ownership or other interest in the applicant. For past universal 
service support auctions, the Commission has adopted separate, program 
specific rules specifying that the type of ownership information to be 
provided by applicants is the information required by section 1.2112(a) 
of the Commission's rules. To simplify the ownership disclosure 
requirements for all universal service auction applicants going forward 
and eliminate the need for the Commission to continue to separately 
adopt the same ownership disclosure requirements in the program 
specific rules for each universal service auction, we adopt our 
proposed amendment to section 1.21001(b)(1) to specify that the type of 
ownership information to be provided by such applicants is the 
information set forth in section 1.2112(a).
    196. Authorized Bidders. Section 1.21001(b)(2) of the Commission's 
rules currently requires each universal service auction applicant to 
identify in its short-form application up to three individuals 
authorized to make or withdraw a bid on behalf of the applicant. The 
Commission's spectrum auction rules prohibit the same individual from 
serving as an authorized bidder for more than one applicant in an 
auction in order to ensure that an individual is not in a position to 
be privy to the bidding strategies of more than one applicant in a 
spectrum auction, which could allow it to be a conduit--intentional or 
unintentional--for bidding information between auction applicants. The 
same concerns that prompted the Commission to adopt this prohibition in 
spectrum auctions exist in the universal service auction context. We 
note that a violation of the Commission's prohibited communications 
rule could occur if an individual acts as the authorized bidder for two 
or more applicants because a single individual may, even unwittingly, 
be influenced by the knowledge of the bids or bidding strategies of 
multiple applicants, in his or her actions on behalf of such 
applicants. Therefore, to align with our spectrum auction rules and to 
help guard against potential violations of the prohibited 
communications rule, we adopt our proposed amendment to this rule and 
will prohibit the same individual from serving as an authorized bidder 
for more than one auction applicant in a given universal service 
auction.
    197. Agreement Disclosures; Certification Concerning Agreement 
Disclosures. Sections 1.21001(b)(3) and (b)(4) of the Commission's 
rules currently require each universal service auction applicant to 
identify in its short-form application all real parties in interest to 
any agreements relating to the participation of the applicant in the 
competitive bidding and to certify that its application discloses all 
real parties in interest to any agreements involving the applicant's 
participation in the competitive bidding. To better align the agreement 
disclosure requirement and associated certification for universal 
service auctions with the agreement disclosure requirement in our 
spectrum auction rules and with the procedures adopted for the CAF 
Phase II auction and the Rural Digital Opportunity Fund, we adopt our 
proposed amendments to these rules. Accordingly, an applicant must 
disclose all real parties in interest to any agreements and provide a 
brief description of each agreement it discloses, and must certify that 
its application discloses all real parties in interest to any 
agreements and that it has provided a brief description of, and 
identified each party to, any partnerships, joint ventures, consortia 
or other agreements, arrangements, or understandings of any kind, 
including any joint bidding arrangements, relating to the applicant's 
participation in the competitive bidding and the support being sought.
    198. Certification Concerning Auction Defaults. Section 
1.21001(b)(7) of the Commission's rules currently requires each 
universal service auction applicant to certify that it will make any 
payment that may be required in the event of an auction default. To 
confirm an applicant's understanding that it will be deemed in default 
and thus liable for a payment, we adopt our proposed amendment to this 
rule to require an applicant to also acknowledge, as part of making 
this certification and as a condition of participating in the auction, 
that it will be deemed in default and subject to either a default 
payment or a forfeiture in the event of an auction default.
    199. Due Diligence Certification. We adopt our proposal to require 
each universal service auction applicant to acknowledge through a 
certification that it has sole responsibility for investigating and 
evaluating all technical and marketplace factors that may have a 
bearing on the level of support it submits as a bid, and that if the 
applicant wins support, it will be able to build and operate facilities 
in accordance with the obligations applicable to the type of support it 
wins and the Commission's rules generally. This certification will help 
ensure that each applicant acknowledges and accepts responsibility for 
its bids and any forfeitures imposed in the event of an auction 
default, and that the applicant will not attempt to place

[[Page 75802]]

responsibility for the consequences of its bidding activity on either 
the Commission or third parties.
    200. Technical and Financial Qualifications Certification. In 
connection with the eligibility requirements relating to technical and 
financial qualifications we adopt herein, we adopt our proposal to 
require each 5G Fund auction applicant to certify that it is 
technically and financially capable of meeting the 5G Fund public 
interest obligations and performance requirements in each area for 
which it seeks support. Based on our experience with Mobility Fund 
Phase I, CAF Phase II, and the Rural Digital Opportunity Fund, this 
approach is an appropriate screening process to ensure serious 
participation, without being overly burdensome to applicants and 
recipients.
    201. Status as an Eligible Telecommunications Carrier. Although we 
will not to require an applicant to obtain an ETC designation prior to 
applying to participate in a 5G Fund auction, consistent with the 
approach taken in the CAF Phase II and Rural Digital Opportunity Fund 
auctions, we adopt our proposal to require each 5G Fund auction 
applicant to disclose in its short-form application its status as an 
ETC in any area for which it will seek 5G Fund support or as an entity 
that will become an ETC in any such area after if it is a winning 
bidder for 5G Fund support, and to certify that its disclosure is 
accurate. As for CAF Phase II and the Rural Digital Opportunity Fund, 
we will also require each auction applicant to disclose in the short-
form application any study area codes (SACs) associated with an 
applicant (or its parent company) if the applicant indicates it is 
currently an ETC.
    202. Access to Spectrum. In connection with the eligibility 
requirements relating to spectrum access we adopt herein, we adopt our 
proposal to require each 5G Fund auction applicant to describe in its 
short-form application the spectrum access it plans to use to meet its 
5G Fund public interest obligations and performance requirements in the 
particular area(s) for which it intends to bid. Specifically, an 
applicant must (1) disclose whether it currently holds or leases the 
spectrum, (2) identify the license applicable to the spectrum to be 
accessed, the type of service covered by the license, the particular 
frequency band(s), the call sign, and any necessary renewal expectancy, 
and (3) indicate whether such spectrum access is contingent on 
obtaining support in a 5G Fund auction.
    203. Because the spectrum an applicant plans to use to meet its 5G 
Fund public interest obligations and performance requirements must be 
capable of supporting 5G service as it is defined in the performance 
requirements adopted for 5G Fund support, we will require that entities 
seeking to receive support from the 5G Fund have access to spectrum and 
sufficient bandwidth (at a minimum, 10 megahertz x 10 megahertz using 
frequency division duplex (FDD) or 20 megahertz using time division 
duplex (TDD)) capable of supporting 5G services in the particular 
area(s) for which it intends to bid. An applicant will be required to 
disclose the total amount of bandwidth (in megahertz) to which the 
applicant has access under the license applicable to the spectrum to be 
accessed.
    204. In addition, we will permit an applicant to rely only on 
licensed spectrum to which the applicant has exclusive use (i.e., 
spectrum licensed by the Commission for which the applicant holds a 
license or lease and that it is not required to share use of with 
others pursuant to such license or lease) to meet its 5G Fund public 
interest obligations and performance requirements, and will require an 
applicant to have secured any Commission approvals necessary for the 
required spectrum access prior to submitting an auction application for 
the described spectrum access to be considered sufficient. A pending 
request for such an approval would not be considered sufficient to 
satisfy this requirement. Each applicant will be required to certify in 
its short-form application that it has access to spectrum in each area 
in which it intends to bid for 5G Fund support within each state and/or 
Tribal land area selected in this application, that it will retain such 
access for at least ten (10) years after the date on which it is 
authorized to receive support, and that the description of spectrum 
access in the area(s) for which it intends to bid for support provided 
in its application is accurate.
    205. AST&Science supports requiring applicants to demonstrate that 
they have access to spectrum in an area sufficient to satisfy the 5G 
Fund performance requirements, but asks the Commission to clarify that 
an applicant with a binding contract to gain access to the requisite 
spectrum at the time of the auction meets this eligibility requirement. 
AST&Science submits that a contractual right to access spectrum should 
be sufficient even if Commission approval is necessary to consummate 
the contract, as long as there is no apparent regulatory disability 
that would prevent the applicant from securing the requisite consent, 
and advocates allowing a winning bidder to file the requisite request 
for Commission approval promptly (e.g., within 30 days) after the 
auction concludes, rather than having to demonstrate the receipt of all 
necessary Commission spectrum access approvals in advance of the 
auction, as is the case with post-auction securing of ETC designations.
    206. We decline to allow a winning bidder to obtain any necessary 
spectrum access approvals after the auction because we find that doing 
so in an auction where spectrum is the sole technology that will be 
relied upon by a winning bidder to meet the public interest obligations 
and performance requirements associated with receiving support could 
increase the risk of defaults if it is ultimately unable to secure the 
necessary approvals. Unlike the post-auction ETC designation process 
with state entities or the Commission, pre-auction agreements between 
private parties for exclusive use of licensed spectrum that are 
contingent upon a party winning in the auction could raise auction 
integrity concerns involving, for example, prohibited communications 
between potential bidders and joint bidding. In addition, such 
agreements present more risk of default for multiple reasons, including 
the statutory requirements for Commission approval of such agreements. 
In addition, it would not be appropriate for the short-form application 
review process to effectively grant an advisory opinion on whether an 
applicant is likely to receive Commission approval for spectrum access 
after due consideration of the spectrum screen and any potential 
competitive implications. Accordingly, we conclude that requiring an 
applicant to have secured any Commission approvals necessary for the 
required spectrum access prior to submitting its short-form application 
to participate in a 5G Fund auction, as we did for Mobility Fund Phase 
I, CAF Phase II, and the Rural Digital Opportunity Fund, will serve to 
avoid these issues.
    207. RWA supports our proposal to require 5G Fund auction 
applicants to demonstrate that they have access to sufficient bandwidth 
to meet their 5G Fund public interest obligations and performance 
requirements, and submits that a minimum of 15 megahertz of spectrum 
should be available in a given census tract that can be devoted to 5G 
use because 15 megahertz is a sufficient amount of spectrum to support 
35/3 Mbps speed when used in coordination with Multiple Input Multiple 
Output

[[Page 75803]]

(MIMO). We find that RWA's proposed minimum amount of dedicated 15 
megahertz TDD spectrum for 5G is sufficient to meet the 35/3 Mbps 
speeds requirement when the downlink to uplink ratio is 2:1. However, 
we conclude that 15 megahertz FDD paired spectrum (or 7.5 megahertz x 
7.5 megahertz) is insufficient to satisfy the 35/3 Mbps speeds 
requirement even for mid-band spectrum which generally has higher 
spectral efficiency than low-band spectrum. The minimum bandwidth 
requirement of 10 megahertz x 10 megahertz FDD (or 20 megahertz TDD in 
ratio of 1:1) we adopt is based on the need for 10 megahertz of 
downlink spectrum to achieve the required download speed of 35 Mbps 
that we adopt for 5G Fund support recipients. For this reason, we would 
consider 15 megahertz TDD of dedicated bandwidth to be sufficient if it 
has a downlink to uplink ratio of 2:1 and thus provides 10 megahertz of 
bandwidth for downlink, but would not consider 15 megahertz FDD (i.e., 
7.5 megahertz x 7.5 megahertz) of dedicated bandwidth to be sufficient 
because it does not provide the minimum amount of spectrum (i.e., at 
least 10 megahertz of downlink spectrum) necessary to achieve a 
download speed of 35 Mbps.
    208. RWA opposes allowing unlicensed spectrum to be used to satisfy 
the spectrum access eligibility criterion because its availability 
cannot be relied upon, but submits that General Authorized Access (GAA) 
spectrum in the Citizens Broadband Radio Service should be considered 
qualifying spectrum if enough is available in the rural area due to the 
presence of Spectrum Access System (SAS) administrators in the 3550-
3700 MHz band (3.5 GHz band). The Commission adopted a three-tiered 
access and authorization framework to coordinate shared federal and 
non-federal use of the 3.5 GHz band, with incumbents comprising the 
first tier (Incumbent Access) and receiving protection from all other 
users, followed by Priority Access Licenses (PALs) in the second tier, 
and GAA in the third tier. GAA spectrum is available on a shared/non-
exclusive basis throughout the 3550-3700 MHz band (3.5 GHz band), and 
GAA users are also permitted to use frequencies in the 3550-3650 MHz 
band when higher-tier Incumbent Access tier users and Priority Access 
Licensees are not using the spectrum, as determined by the SAS, and 
consistent with the rules governing PAL protection areas. GAA users 
must avoid causing harmful interference to higher-tier users and must 
accept interference from all other users, including other GAA users. We 
decline to allow 5G Fund support recipients to rely only on GAA 
spectrum to satisfy the spectrum access requirements we adopt for the 
5G Fund. We find that the criteria for gaining and retaining access to 
GAA spectrum and the interference provisions associated with its use 
are inconsistent with the spectrum access requirements we adopt for an 
applicant seeking to participate in the 5G Fund, which require an 
applicant to demonstrate that it has secured access to spectrum and 
sufficient bandwidth to meet the 5G Fund public interest obligations 
and performance requirements in the areas for which it seeks support 
prior to submitting its short-form application and to certify that it 
will retain such access over the ten year support term if it is 
authorized to receive 5G Fund support. We therefore conclude that, 
similar to unlicensed spectrum, the availability of GAA spectrum cannot 
be relied upon by a 5G Fund support recipient to meet its public 
interest obligations and performance requirements because the recipient 
may not be able to predictably and/or consistently gain and/or retain 
access to GAA spectrum throughout the support term, which could 
significantly increase its risk of default. Thus, while we will permit 
a 5G Fund support recipient to use GAA spectrum to augment its spectrum 
access in its provision of 5G service in areas for which it is awarded 
support, it must have exclusive access to a sufficient amount of 
spectrum that enables it to meet the 5G Fund public interest 
obligations and performance requirements independently of any GAA 
spectrum use. Consistent with our decision not to allow 5G Fund support 
recipients to rely on GAA spectrum alone to satisfy the spectrum access 
requirements we adopt for the 5G Fund, we will similarly not allow 5G 
Fund support recipients to rely on GAA spectrum alone to meet the 
associated minimum bandwidth requirement we adopt. Thus, while a 5G 
Fund support recipient may use GAA spectrum to augment the amount of 
bandwidth it has available to meet the 5G Fund public interest 
obligations and performance requirements, it must have access to 
sufficient bandwidth that enables it to meet the minimum bandwidth 
requirement independently of any GAA spectrum use.
    209. Technical and Financial Qualifications. Similar to the 
approach adopted for CAF Phase II and the Rural Digital Opportunity 
Fund, we establish two pathways for a 5G Fund auction applicant to 
demonstrate its technical and financial qualifications to participate 
in a 5G Fund auction. To determine which pathway an applicant needs to 
take, we will first require the applicant to indicate in its 
application whether it has been providing mobile wireless voice and/or 
mobile wireless broadband service for at least three years prior to the 
short-form application deadline (or that it is a wholly-owned 
subsidiary of an entity that has been providing such service for at 
least three years). As for applicants in the CAF Phase II auction, an 
applicant for a 5G Fund auction will be deemed to have started 
providing mobile wireless broadband service on the date it began 
commercially offering service to end users. If the applicant is 
applying as a consortium or joint venture, we will allow the applicant 
to rely on the length of time a member of the consortium or joint 
venture has been providing mobile service prior to the short-form 
application deadline in responding to this question.
    210. Applicants That Have Been Providing Mobile Wireless Service 
for at Least Three Years. We adopt our proposal to require an applicant 
that indicates it has been providing mobile wireless voice and/or 
mobile wireless broadband service to end user subscribers for at least 
three years prior to the short-form application deadline (or is a 
wholly owned subsidiary of an entity that has been providing such 
service for at least three years) to certify to that effect, and to: 
(1) Specify the number of years it (or its parent company, if it is a 
wholly owned subsidiary) has been providing such service, (2) certify 
that it (or its parent company, if it is a wholly owned subsidiary) has 
submitted mobile wireless voice and/or mobile wireless broadband data 
on FCC Form 477 as required during that time period, and (3) provide 
any FCC Registration Numbers (FRNs) that the applicant or its parent 
company (and in the case of a holding company applicant, its operating 
companies) have used to submit mobile wireless voice and/or mobile 
wireless broadband data with FCC Form 477 data for the past three 
years. We conclude that data regarding where a service provider offers 
mobile wireless voice and/or mobile wireless broadband service, the 
number of mobile wireless voice and/or mobile wireless broadband 
subscribers it has, and the mobile wireless broadband speeds it offers 
will provide insight into an applicant's experience in providing such 
service that will help Commission staff in determining whether an 
applicant can reasonably be expected to be capable of

[[Page 75804]]

meeting the 5G Fund public interest obligations and performance 
requirements. We also expect that it will generally be sufficient to 
review FCC Form 477 data (and/or Digital Opportunity Data Collection 
filings, as applicable) from only the past three years because those 
data would reflect the services that the applicant is currently 
offering or recently offered and will illustrate the extent to which an 
applicant was able to scale its network in the recent past.
    211. Applicants That Have Been Providing Mobile Wireless Service 
for Fewer Than Three Years, or Not at All. If an applicant indicates 
that it has not been providing mobile wireless voice and/or mobile 
wireless broadband service for at least three years prior to the short-
form application deadline (or is not a wholly owned subsidiary of an 
entity that has been providing such service for at least three years), 
we will require the applicant to submit certain high-level operational 
history, technical, and financial information to enable Commission 
staff to determine whether the applicant can reasonably be expected to 
be capable of meeting the 5G Fund public interest obligations and 
performance requirements. Specifically, we will require such an 
applicant to submit (1) information concerning its operational history 
and a preliminary project description, (2) a letter of interest from a 
qualified bank stating that the bank would provide a letter of credit 
to the applicant if the applicant becomes a winning bidder for bids of 
a certain dollar magnitude, as well as the maximum dollar amount for 
which the bank would be willing to issue a letter of credit to the 
applicant, and (3) a statement that the bank would be willing to issue 
a letter of credit that is substantially in the same form as set forth 
in the model letter of credit in Appendix C to this Report and Order. 
Consistent with the procedures adopted for CAF Phase II and the Rural 
Digital Opportunity Fund, we will treat the information submitted by an 
applicant concerning its operational history and its preliminary 
project description, along with any associated supporting information, 
as confidential, and will withhold such information from routine public 
inspection both during and after a 5G Fund auction.
    212. As in any Commission auction for universal service fund 
support, we seek to balance the burdens on 5G Fund auction applicants 
of completing a short-form application with the Commission's statutory 
obligation to protect universal service funds, the integrity of the 
auction, and rural consumers. We conclude that requiring a potential 
bidder to submit evidence in its short-form application that it can 
meet the 5G Fund public interest obligations and performance 
requirements in the area(s) for which it seeks 5G Fund support strikes 
the correct balance of helping to safeguard consumers from situations 
where bidders unable to meet such obligations divert support from 
bidders that can meet them while not being unduly burdensome for 
auction applicants.
    213. Limit on Filing Applications. To simplify the application 
process for applicants, reduce the administrative burden on Commission 
staff, and align with the Commission's spectrum auction rules and the 
approach adopted in recent universal service auctions, we will prohibit 
the filing of more than one application by the same entity or by 
commonly controlled entities in a single universal service auction 
under any circumstances. To be clear, we will not restrict smaller 
carriers that do not individually submit short-form applications from 
entering into joint ventures and bidding consortia in order to combine 
resources and achieve other efficiencies. We adopt the definitions for 
the terms ``controlling interest,'' ``consortium,'' and ``joint 
venture'' proposed in the 5G Fund NPRM, which we will use to identify 
commonly controlled entities for purposes of this prohibition and for 
purposes of an applicant making any required auction application 
certifications. As in our spectrum auctions, in the case of a 
consortium, each member of the consortium would be considered to have a 
controlling interest in the consortium filing an application for an 
auction and thus a consortium member would not be able to separately 
file its own application to participate in that auction (or be a member 
of another consortium applicant in that auction). In addition, we adopt 
our proposal that in the event that applications for a universal 
service auction are filed by applicants with overlapping controlling 
interests, both applications will be deemed incomplete and at most only 
one such applicant may be deemed qualified to bid. In our experience in 
the spectrum auction context, this has helped to minimize unnecessary 
burdens on the Commission's resources by eliminating the need to 
process duplicative, repetitious, or conflicting applications.
    214. Certification Concerning Non-Controlling Interests. Although 
we prohibit the filing of more than one application by commonly 
controlled entities in a single universal service auction, we recognize 
that in some circumstances, entities may have non-controlling interests 
in other entities and both entities may wish to bid in an auction. To 
the extent that there is no overlap between the employees in both 
entities that leads to the sharing of bidding information, such an 
arrangement may not implicate our concerns over joint bidding among 
separate applicants in an auction. However, such an arrangement could 
allow for the non-controlling interest or shared employees to act as a 
conduit for communication of bidding information unless the applicants 
establish internal controls to ensure that bidding information would 
not flow between them. To address this possibility and ensure that such 
arrangements do not serve or appear to be conduits for information, and 
align with the Commission's spectrum auction rules, we will require an 
applicant that has a non-controlling interest with respect to more than 
one application in a single universal service auction to certify that 
it is not, and will not be, privy to, or involved in, in any way, the 
bids or bidding strategy of more than one auction applicant and that it 
has established internal control procedures to preclude any person 
acting on behalf of the applicant from possessing information about the 
bids or bidding strategies of more than one applicant or communicating 
such information with respect to either applicant to another person 
acting on behalf of and possessing such information regarding another 
applicant. We caution, however, that submission of such certification 
by an applicant will not outweigh specific evidence that a 
communication violating the Commission's rules has occurred, nor will 
it preclude the initiation of an investigation when warranted.
    215. Application Processing. Consistent with the limits on filing 
applications we adopt, we adopt our proposed amendment to the 
application processing rules to specify that if an entity submits 
multiple applications in a single universal service auction, or if 
entities that are commonly controlled by the same individual or same 
set of individuals submit more than one application in a single 
auction, only one of such applications may be found to be complete when 
reviewed for completeness and compliance with the Commission's rules. 
In our experience in the spectrum auction context, this has helped to 
minimize unnecessary burdens on the Commission's resources by 
eliminating the need to process duplicative, repetitious, or 
conflicting applications. We also adopt our clarifying amendments to 
the

[[Page 75805]]

application processing rules in order to simplify the application 
process for applicants, reduce the administrative burden on Commission 
staff, and align with the Commission's spectrum auction rules and the 
approach adopted in recent universal service auctions.
    216. Prohibition on Joint Bidding Arrangements; Prohibited 
Communications Rule. In view of our decision to prohibit commonly 
controlled entities from filing more than one application in a single 
universal service auction, and to align with the Commission's practice 
in spectrum auctions and with the approach adopted for the Rural 
Digital Opportunity Fund Phase I auction, we adopt our proposal to 
prohibit applicants from entering into joint bidding arrangements 
relating to their participation in a universal service auction. We also 
adopt our proposals to amend the definition of ``applicant'' and add a 
definition of ``bids or bidding strategies'' in section 1.21002(a), and 
add a requirement that each universal service auction applicant certify 
in its short-form application that it has not entered into any explicit 
or implicit agreements, arrangements, or understandings of any kind 
related to the support to be sought through the auction, other than 
those disclosed in the short-form application.
    217. Further, we adopt our other proposed amendments to section 
1.21002 to better align with our spectrum auction rules and the 
decisions adopted herein. We will require an applicant that has a non-
controlling interest with respect to more than one application to 
implement internal controls that preclude any person acting on behalf 
of the applicant from possessing information about the bids or bidding 
strategies of more than one applicant or communicating such information 
with respect to either applicant to another person acting on behalf of 
and possessing such information regarding another applicant. We will 
also require an applicant to modify its application for an auction to 
reflect any changes in ownership or in membership of a consortium or a 
joint venture or agreements or understandings related to the support 
being sought. In addition, we adopt our proposed clarification and 
accuracy amendments to section 1.21002 concerning the procedure for 
reporting a prohibited communication.
2. Red Light Rule for Universal Service Auctions
    218. The Commission adopted rules, including a provision referred 
to as the ``red light rule,'' that implement the Commission's 
obligation under the Debt Collection Improvement Act of 1996, which 
governs the collection of debts owed to the United States, including 
debts owed to the Commission. Under the red light rule, applications 
and other requests for benefits filed by parties that have outstanding 
debts owed to the Commission will not be processed. Applicants seeking 
to participate in a universal service auction are subject to the 
Commission's red light rule. Pursuant to the red light rule, unless 
otherwise expressly provided for, the Commission will withhold action 
on an application by any entity found to be delinquent in its debt to 
the Commission.
    219. Concluding that robust participation would be critical to the 
success of the CAF Phase II auction, the Commission provided a limited 
waiver of the red light rule for any CAF Phase II auction applicant 
seeking to participate in the auction that was red lighted for debt 
owed to the Commission at the time it timely filed its short-form 
application. Because we consider robust participation to be critical to 
the success of any universal service auction, including a 5G Fund 
auction, we adopt our proposed amendments to the Commission's rules to 
codify the relief granted by the CAF Phase II auction limited waiver, 
to provide an applicant seeking to participate in any universal service 
auction the opportunity to resolve its red light issue(s) by the close 
of the application resubmission filing window. Under this approach, a 
red lighted applicant seeking to participate in a universal service 
auction will have until the close of the application resubmission 
filing window for that auction to resolve with its red light issue(s). 
If the applicant has not resolved its red light issue(s) by the close 
of the initial application filing window for a given auction, its 
application would be deemed incomplete, and if the applicant has not 
resolved its red light issue(s) by the close of the application 
resubmission window for the auction, Commission staff will immediately 
cease all processing of the applicant's short-form application, and the 
applicant will be deemed not qualified to bid in the auction.
    220. We provide no further opportunity for an applicant to cure any 
red light issue beyond what we describe here. Moreover, we emphasize 
that the amendments we adopt here do not waive or otherwise affect the 
Commission's right or obligation to collect any debt owed to the 
Commission by a universal service auction applicant by any means 
available to the Commission, including set off, referral of debt to the 
United States Treasury for collection, and/or by red lighting other 
applications or requests filed by the affected auction applicant.
3. Long-Form Application Requirements
    221. After the close of the auction, a public notice will be 
released declaring the auction closed, identifying the winning bidders, 
and establishing details and deadlines for next steps. A winning bidder 
will then be required to submit a post-auction long-form application 
with more extensive information about its qualifications, funding, and 
the network it intends to use to meet its 5G Fund public interest 
obligations and performance requirements, allowing for a further in-
depth review of its qualifications prior to authorization of support.
    222. We adopt our proposal to apply the Commission's existing Part 
1, Subpart AA universal service competitive bidding rules (including 
the amendments to those rules adopted herein) to 5G Fund auction 
winning bidders applying for 5G Fund support, as well as our proposed 
amendments to such rules. We also adopt our proposal to require 5G Fund 
auction winning bidders to provide the information described below in 
their post-auction long-form applications to demonstrate their 
qualifications for support. We conclude the long-form application 
requirements we adopt here provide for a fair and efficient review 
process and will best serve the Commission's ability to determine 
whether the applicants are ultimately eligible for 5G Fund support 
authorization funding.
    223. Ownership Disclosures. We will require a winning bidder to 
disclose in its long-form application ownership information as set 
forth in section 1.2112(a) of the Commission's rules. Ownership 
reported by a winning bidder during the short-form application process 
must be updated in the long-form application if any ownership disclosed 
in its short-form application has changed.
    224. Agreement Disclosures. We will require a winning bidder to 
provide in its long-form application any updated information regarding 
the agreements, arrangements, or understandings related to its 5G Fund 
support disclosed in its short-form application. A winning bidder may 
also be required to disclose in its long-form application the specific 
terms, conditions, and parties involved in any agreement into which it 
has entered and the agreement itself.
    225. ETC Designation. Consistent with our decision to permit a 
winning bidder

[[Page 75806]]

to obtain its ETC designation after the close of the auction, we will 
require a winning bidder to submit appropriate documentation of its ETC 
designation in all the areas for which it will receive support in its 
long-form application, or certify that it will do so within 180 days of 
the public notice identifying winning bidders. We will also require a 
winning bidder to demonstrate that it has been designated an ETC 
covering each of the geographic areas for which it seeks to be 
authorized for support and that its ETC designation allows it to fully 
comply with the 5G Fund coverage requirements within the time provided 
to meet this requirement before 5G Fund support is authorized.
    226. Financial and Technical Capability Certification. As for the 
short-form application, we will require a winning bidder to certify in 
its long-form application that it is financially and technically 
capable of providing the required coverage and performance levels 
within the specified timeframe in the geographic areas in which it won 
support.
    227. Project Description. We will require a winning bidder to 
submit for its winning bids a detailed project description that 
describes the network to be built; identifies the proposed technology; 
demonstrates that the project is technically feasible; discloses the 
complete project budget; discusses each specific phase of the project 
(e.g., network design, construction, deployment, and maintenance); and 
includes a complete project schedule with timelines, milestones, and 
costs. As we did for the Rural Digital Opportunity Fund, additional 
details and guidance concerning the project description will be 
provided during the pre-auction process.
    228. Spectrum Access. As for the short-form application, we will 
require a winning bidder to provide in its long-form application a 
description of the spectrum access that will be used to meet its 
obligations in areas for which it is the winning bidder, including 
whether it currently holds or leases the spectrum, the license 
applicable to the spectrum to be accessed, the type of service covered 
by the license, the particular frequency band(s), and the call sign, 
the total amount of bandwidth (in megahertz) to which the applicant has 
access under the license applicable to the spectrum to be accessed, and 
any necessary renewal expectancy. We will also require a winning bidder 
to certify that the description is accurate, that it has access to 
spectrum in the area(s) for which it is applying for support, and that 
it will retain such access for the entire 10-year support term. 
Consistent with the requirements adopt for 5G Fund auction applicants, 
we will permit winning bidders to rely only on licensed spectrum to 
which they have exclusive use (i.e., spectrum licensed by the 
Commission for which a winning bidder holds a license or lease and that 
it is not required to share use of with others pursuant to such license 
or lease).
    229. Certifications as to Program Requirements. We will require a 
winning bidder to make various certifications in its long-form 
application as to program requirements. Specifically, a winning bidder 
must certify that it has the funds available for all project costs that 
exceed the amount of support to be received and that it will comply 
with all program requirements, including the public interest 
obligations and performance requirements adopted for the 5G Fund. A 
winning bidder must also certify that it will meet the applicable 
deadlines and requirements for demonstrating interim and final 
construction milestones adopted for the 5G Fund, and will comply with 
the data speed, data latency, data allowance, collocation, voice and 
data roaming, and reasonably comparable rate performance requirements 
and public interest obligations adopted for the 5G Fund.
    230. Additional Information. Similar to what the Commission is 
afforded under its Part 1, Subpart AA rules for competitive bidding for 
universal service support with respect to short-form applications, we 
adopt our proposal to permit the Commission to request in connection 
with its review of long-form applications such additional information 
as the Commission may require to determine whether a long-form 
applicant should be authorized to receive 5G Fund support.
4. Letters of Credit and Bankruptcy Opinion Letters
    231. Letters of Credit. Consistent with the requirements adopted 
for Mobility Fund Phase I, CAF Phase II, and for the Rural Digital 
Opportunity Fund, we adopt our proposal to require a long-form 
applicant to submit an irrevocable standby letter of credit prior to 
being authorized for support. As the Commission has previously 
explained, requiring all long-form applicants to obtain a letter of 
credit is ``an effective means for accomplishing [the Commission's] 
role as stewards of the public's funds'' because they ``permit the 
Commission to immediately reclaim support'' from support recipients 
that are not meeting their auction obligations. The value of the letter 
of credit must escalate as more funds are disbursed, until such time as 
the recipient has met the Interim Milestones, which would permit 
reductions. A support recipient must maintain an open letter of credit 
until its certifications and data reporting regarding the final service 
milestone have been verified by USAC. The letter of credit requirements 
we adopt for the 5G Fund will establish a mechanism to recover 
disbursed funding efficiently in the event of non-compliance and 
fulfill our responsibility to protect program funds, while also 
reducing the costs for applicants to participate in the 5G Fund. The 
Commission will draw on the letter of credit in the event that the 
support recipient does not meet its service milestones or take 
advantage of the opportunities to cure or pay back the relevant 
support.
    232. We adopt the same letter of credit rules for the 5G Fund as 
adopted for the Rural Digital Opportunity Fund, inclusive of subsequent 
guidance concerning the issuance of letters of credit by non-United 
States banks. Letters of credit must be issued by a bank that is 
acceptable to the Commission in substantially the same form as set 
forth in the model letter of credit in Appendix C to this Report and 
Order and that is otherwise acceptable in all respects to the 
Commission. Letters of credit must be obtained from a domestic or 
foreign bank meeting the requirements adopted herein. For United States 
banks, the bank must be insured by the Federal Deposit Insurance 
Corporation (FDIC) and have a Weiss bank safety rating of B- or higher. 
Similarly, for non-United States banks, the bank must be among the 100 
largest non-United States banks in the world (determined on the basis 
of total assets as of the end of the calendar year immediately 
preceding the issuance of the letter of credit, determined on a U.S. 
dollar equivalent basis as of such date) and must meet the Commission's 
other non-United States bank eligibility requirements. Winning bidders 
also have the option of obtaining a letter of credit from CoBank or the 
National Rural Utilities Cooperative Finance Corporation so long as 
they continue to meet the Commission's requirements.
    233. In addition, to ensure uniformity and transparency across our 
high-cost universal service rules, we adopt our proposed amendments to 
the Commission's letter of credit rules for other universal service 
programs to codify the expansion of the definition of branch offices of 
non-United States banks that are considered eligible to issue letters 
of credit concerning such programs.
    234. Prior to being authorized for support, a 5G Fund long-form 
applicant must obtain a letter of credit valued at

[[Page 75807]]

an amount equal to one year of the total support it will receive. For 
Year Two of its support term, a 5G Fund support recipient must obtain a 
letter of credit valued at an amount equal to eighteen months of its 
total support, and for Year Three, must obtain a letter of credit 
valued at an amount equal to two years of its total support. For Year 
Four of its support term, a support recipient must obtain a letter of 
credit valued at an amount equal to three years of its total support, 
which it must maintain at that level until the support recipient meets 
the requirements we adopt herein for reducing the value of letters of 
credit.
    235. Consistent with the rules adopted for the Rural Digital 
Opportunity Fund, we will allow a 5G Fund support recipient to reduce 
the value of its letter of credit after it meets--and USAC verifies 
that a support recipient has completed--a relevant service milestone 
deadline. Specifically, we require support recipients to submit their 
service milestone reports to USAC by March 1 of the calendar year 
following each applicable December 31 milestone deadline. Upon 
verification by USAC that the support recipient has timely met a 
service milestone, we will then allow the recipient to reduce the value 
of its letter of credit to an amount equal to only one year of total 
support. Once a support recipient reduces the value of its letter of 
credit to an amount equal to one year of total support, we will allow 
the recipient to maintain its letter of credit at that level for the 
remainder of the service milestones, as long as USAC verifies that the 
support recipient has successfully and timely met each of its remaining 
service milestone obligations and deadlines.
    236. Additionally, consistent with the rules adopted for the Rural 
Digital Opportunity Fund, we adopt our proposal to create an Optional 
Year Two Interim Service Milestone to provide an accelerated approach 
for a 5G Fund support recipient to reduce its letter of credit. Under 
this approach, a support recipient may reduce the value of its letter 
of credit to an amount equal to one year of total support if it is 
providing--and USAC has verified that it is providing--service that 
meets the performance requirements adopted for the 5G Fund to at least 
20% of the total square kilometers associated with the eligible areas 
for which it is authorized to receive support in a state by December 31 
of the second full calendar year following support authorization. This 
approach allows a support recipient to demonstrate concrete progress in 
service deployment earlier than its required milestones (i.e., 40% in 
Year Three), thereby enabling it to reduce its letter of credit earlier 
than it could otherwise. We reiterate that this 20% service deployment 
benchmark is optional; if a support recipient does not meet this 
optional milestone, it will not be able to reduce the value of its 
letter of credit, but it also will not face any reductions in support.
    237. Consistent with the approach adopted for the Rural Digital 
Opportunity Fund, a 5G Fund support recipient does not need to wait for 
a specific support year to end to meet a deployment milestone. For 
example, if a support recipient is able to deploy to 20% of the total 
square kilometers associated with the eligible areas for which it is 
authorized to receive support in a state by the end of Year One, it may 
report its deployment progress and request that USAC complete the 
verification process in order to allow it to reduce the value of its 
letter of credit to an amount equal to one year of support. In those 
instances, we require that a support recipient be able to promptly 
produce the necessary documentation to minimize the time required for 
USAC to verify its milestone.
    238. As we determined for the Rural Digital Opportunity Fund, we 
find it necessary to maintain larger letters of credit for support 
recipients that fail to meet their service deployment milestones by the 
applicable deadlines. Specifically, if a support recipient misses a 
required interim service milestone, it will be required to obtain a new 
letter of credit (or renew its existing letter of credit) that it is 
valued at an amount equal to its existing letter of credit, plus an 
additional year of support, up to a maximum of three years of its total 
support. Likewise, any support recipient that fails to meet two or more 
service milestones (that is, fails to catch up after missing a service 
deployment milestone and remains behind on service deployed to the 
required percentage of square kilometers at the next service milestone 
deployment deadline) will be required to maintain a letter of credit in 
the amount of three years of support and will be subject to the 
additional non-compliance measures we adopt herein. We find that these 
increased letter of credit requirements will both protect federal funds 
from potential non-compliance and serve as an incentive to timely 
deployment. Under the non-compliance measures we adopt herein, a 
support recipient that fails to meet any required service milestone 
must file a letter informing the Commission of the missed milestone 
within 10 business days of the conclusion of the relevant support year 
for which that milestone was applicable, which will allow the Wireline 
Competition Bureau to determine whether it is necessary to direct USAC 
to suspend disbursements to the recipient or engage other mechanisms, 
including requiring a greater value letter of credit going forward.
    239. We will require a 5G Fund support recipient to maintain a 
letter of credit until it has certified, and USAC has verified, that it 
is providing service that meets the 5G Fund performance requirements to 
at least 85% of the total square kilometers associated with the 
eligible areas for which it is authorized to receive support in a 
state, and at least 75% of the total square kilometers in each eligible 
census tract in a state, by the Year Six Final Service Milestone 
deadline. Consistent with the approach adopted for CAF Phase II and the 
Rural Digital Opportunity Fund, a 5G Fund support recipient may be 
subject to other action if it does not comply with the public interest 
obligations or any other terms and conditions associated with receiving 
5G Fund support, including but not limited to the Commission's existing 
enforcement procedures and penalties, reductions in support amounts, 
revocation of ETC designations, and suspension or debarment.
    240. We find that the letter of credit schedule we adopt for 5G 
Fund support recipients balances the need to safeguard federal funds 
with the costs a support recipient many incur to maintain a letter of 
credit.
    241. Consistent with CAF Phase II and the Rural Digital Opportunity 
Fund, we will only authorize USAC to draw on the letter of credit for 
the entire amount of the letter of credit if the entity does not repay 
the Commission for the support associated with its compliance gap. 
Additionally, as stated in CAF Phase II, ``[i]f the entity fails to pay 
this support amount, we conclude that the risk that the entity will be 
unable to continue to serve its customers or may go into bankruptcy is 
more likely, and thus it is necessary to ensure that the Commission can 
recover the entire amount of support that it has disbursed.''
    242. In instances where the amount of the letter of credit fails to 
satisfy the amount owed, such deficiency will be a debt due to the 
Commission and, if not paid, will be collected pursuant to the 
Commission's rules. Where the draw on the letter of credit results in a 
greater recovery than is required to satisfy the default, we direct the 
Wireline Competition Bureau to take appropriate

[[Page 75808]]

measures to promptly return any excess funds.
    243. As we have previously recognized, we will again allow greater 
flexibility regarding letter of credit for Tribally owned and 
controlled winning bidders. Consistent with our approach for CAF Phase 
II and the Rural Digital Opportunity Fund, if any Tribally owned and 
controlled 5G Fund winning bidder is unable to obtain a letter of 
credit, it may file a petition for a waiver of the letter of credit 
requirement. Consistent with our precedent, a petitioner must show, 
with evidence acceptable to the Commission, that the Tribally owned and 
controlled winning bidder is unable to obtain a letter of credit.
    244. As for the Rural Digital Opportunity Fund, we provide a letter 
of credit trajectory for 5G Fund support recipients that recognizes 
that once a recipient has demonstrated significant and verifiable 
progress toward meeting its service deployment obligations, it should 
have the opportunity to avoid some of the more costly letter of credit 
requirements. For support recipients that elect to deploy service 
quickly and meet the Optional Year Two Service Milestone early in their 
support term, and continue to meet all of their service milestones, 
their letters of credit may never exceed 18 months' support at any time 
during their support term. At the same time, the more gradual increase 
in the letter of credit requirements we adopt for support recipients 
that do not chose to take advantage of the Optional Year Two Service 
Milestone will nonetheless reduce potential financial strain on support 
recipients, and still allow those support recipients to maintain a 
smaller letter of credit after they timely meet their Year Three 
Interim Service Milestone.
    245. Only two parties commented on our letter of credit proposals. 
RWA supports our proposal to adopt an early service milestone that 
would allow a support recipient to reduce the value of its letter of 
credit if it offers service that meets the established 5G performance 
requirements in at least 20% of the total square kilometers in its 
winning bid areas in a state by the end of Year Two. RWA submits that 
the letter of credit should be further reduced by another 20% at the 
end of Year Four, provided the recipient has met its Year Four 40% 
benchmark coverage, and by another 20% at the end of Year Six, provided 
the recipient has met its 60% coverage benchmark.
    246. We decline to adopt the additional letter of credit reductions 
at the end of Year Four and Year Six advanced by RWA. We note that 
RWA's proposal is similar to proposals we received in the Rural Digital 
Opportunity Fund proceeding which we declined to adopt after 
determining that such proposals fail to sufficiently account for the 
Commission's interests in ensuring that universal service dollars are 
being used efficiently and for their intended purposes, as well as 
protecting against the potential for those carriers that may fail to 
fulfill their broadband deployment obligations. We conclude that the 
rules we adopt permitting 5G Fund support recipients to reduce their 
letters of credit after meeting the Optional Year Two Interim Milestone 
or the Year Three Interim Milestone--which are modeled on those adopted 
for the Rural Digital Opportunity Fund, and which took into account 
lessons learned from CAF Phase II and comments received in the Rural 
Digital Opportunity Fund proceeding--provide sufficient flexibility and 
will help reduce the costs of participating in the 5G Fund.
    247. The National Association of Surety Bond Producers (NASBP) 
supports broadening the range of options for performance security to 
include a surety bond because it asserts that doing so would help rural 
internet service providers (ISPs) who are having difficulty securing 
sufficient collateral to obtain a letter of credit, and creates greater 
competition and participation, which may reduce costs while still 
protecting the government's financial interest. NASBP submits that a 
performance bond assures that carrier awarded support is qualified to 
perform its obligations under the award, and serves as a ``deep 
pocket'' in the event the carrier fails. It states that by comparison, 
a letter of credit is secured by a specific liquid asset(s), has a 
specific expiration date, and does not provide the same financial 
guarantee to the government. RWA supports NASBP's request to allow 
surety bonds as an option for performance security, stating that they 
are more economical than letters of credit, and that allowing their use 
would enable support recipients to make greater investment in their 
networks rather than tying up money on securing letters of credit.
    248. We decline to allow the use of a surety bond as security for a 
5G Fund participant's failure to meet its public interest obligations 
and/or and performance requirements. We note that these commenters' 
requests are similar to those we received in the Rural Digital 
Opportunity Fund proceeding, where we noted that letters of credit, 
unlike performance bonds, allow for an immediate reclamation of support 
in the event the recipient is not properly using those funds, and that 
performance bonds would not provide the same level of protection and 
would require the involvement of a third party to adjudicate any 
disputes that arise, which would complicate our process and 
unnecessarily limit the Commission's authority to allocate funds. A 
letter of credit, unlike a performance bond, has the benefit of the 
``independence principle'' in that the letter of credit is independent 
of the underlying transaction. The bank's obligation to pay under the 
letter of credit does not depend on the auction winner's default but on 
the presentation of documents evidencing the default. As in the Rural 
Digital Opportunity Fund, we conclude that being independent in this 
way assures that USAC can collect monies due to it promptly without 
engaging in disputes with the winning bidder, the performance bond 
guarantor or the winning bidder's trustee in bankruptcy over whether 
the funds should be paid or even whether the funds are available to the 
5G Fund due to competing claims of creditors.
    249. As we noted in the Rural Digital Opportunity Fund Report and 
Order, while we appreciate that there are costs associated with the 
letter of credit, we find that the letter of credit requirement will 
best protect the 5G Fund and continue to believe that bidders can 
incorporate these costs when determining their bidding strategies prior 
to an auction. And as we have previously stated, letters of credit have 
``the added advantage of minimizing the possibility that the support 
becomes property of a recipient's bankruptcy estate for an extended 
period of time, thereby preventing the funds from being used promptly 
to accomplish our goals.'' We therefore conclude that the letter of 
credit requirements we adopt here, which establish a mechanism to 
easily recover disbursed funding in the event of non-compliance, 
fulfill our responsibility to protect program funds while also reducing 
the costs of participating in the 5G Fund.
    250. Opinion Letter. Consistent with our requirements for past 
universal service fund auctions, we will require a winning bidder to 
also submit with its letter(s) of credit a bankruptcy opinion letter 
from outside legal counsel. The opinion letter must clearly state, 
subject only to customary assumptions, limitations, and qualifications, 
that in a proceeding under the Bankruptcy Code, the bankruptcy court 
would not treat the letter of credit or proceeds of the letter of 
credit as property of the winning bidder's bankruptcy estate, or the 
bankruptcy estate of any other winning bidder-related entity requesting

[[Page 75809]]

issuance of the letter of credit under section 541 of the Bankruptcy 
Code.
5. Defaults
    251. Forfeiture in the Event of an Auction Default. In the 5G Fund 
NPRM, we made proposals for establishing the framework pursuant to 
which a 5G Fund winning bidder would be subject to a forfeiture under 
section 503 of the Act if it defaults on its winning bid(s) before it 
is authorized to begin receiving support. We received no comments on 
any aspect of our 5G Fund auction default proposals and adopt them as 
proposed, with one modification described below.
    252. A winning bidder will be considered in default and will be 
subject to forfeiture if it is not authorized to receive 5G Fund 
support (e.g., it fails to timely file or prosecute a long-form 
application, fails to meet any document submission deadline, has its 
long-form application dismissed or denied, is found ineligible or 
unqualified to receive support, or otherwise defaults on its bid or is 
disqualified for any reason prior to the authorization of 5G Fund 
support). Consistent with the approach taken in CAF Phase II and the 
Rural Digital Opportunity Fund, a winning bidder will be subject to a 
$3,000 base forfeiture for each separate violation of the Commission's 
rules. We define a violation as any form of default with respect to 
each geographic unit subject to a bid, in order to ensure that each 
violation has a relationship to the area affected by the auction 
default. In other words, there shall be separate violations for each 
geographic unit assigned in a bid. Similar to the approach taken in CAF 
Phase II and the Rural Digital Opportunity Fund, we will limit the 
total base forfeiture in order to ensure that the amount of the base 
forfeiture is not disproportionate or unduly punitive. Notwithstanding 
the limitation on the total base forfeiture, in instances where the 
facts of an auction default in a 5G Fund auction indicate that a 
winning bidder engaged in anticompetitive behavior, the total 
forfeiture that could be owed by winning bidder in such circumstances 
may be adjusted up to the amount associated with preservation of 
service in the applicable area.
    253. We conclude that it is reasonable to subject all bidders to 
the same $3,000 base forfeiture per violation subject to adjustment 
based on the criteria set forth in our forfeiture guidelines. To 
determine the final forfeiture amount, the Commission's Enforcement 
Bureau will consider the ``nature, circumstances, extent and gravity of 
the violations and, with respect to the violator, the degree of 
culpability, any history of prior offenses, ability to pay, and such 
other matters as justice may require.''
    254. As the Commission has previously stated, auction defaults 
undermine the stability and predictability of the auction process and 
impose costs on the Commission and higher support costs for the 
Universal Service Fund. They also hinder the disbursement of funds that 
could have gone to another carrier, and thereby further delay the 
deployment of broadband service offerings in unserved areas. The 5G 
Fund represents our biggest undertaking for any mobile universal 
service program thus far, and will award the largest amount of support 
for mobile service deployments to date. The areas eligible for 5G Fund 
support will be those that have been determined to lack unsubsidized 4G 
LTE and 5G broadband service by at least one carrier. Therefore, in 
keeping with our goal of facilitating the deployment of 5G mobile 
services to as many of these areas as possible with the limited funds 
that are available, and as responsible stewards of 5G Fund support, it 
is imperative that we ensure that there are appropriate safeguards in 
place to deter auction defaults by 5G Fund winning bidders to the 
greatest extent possible.
    255. In adopting procedures for competitive bidding in advance of 
an auction, the Commission makes a determination through notice and 
comment regarding how it will calculate payments or forfeitures for an 
auction default, taking into account the nature of the auction, lessons 
learned from past auctions, and other relevant factors. We note that in 
our typical spectrum auctions, where the highest bid is the winning 
bid, basing the amount owed for an auction default on a percentage of 
the defaulted winning bid, which will increase with each round of 
bidding as bids increase, serves as a sufficient deterrent to auction 
defaults. However, in an auction where the lowest bid is the winning 
bid, basing the amount owed for an auction default on a percentage of 
the winning bid, which will decrease with each round of bidding as bids 
decrease, could increase the risk that an auction default will not 
sufficiently deter insincere bidding or anti-competitive behavior. We 
find this risk to be especially concerning in the context of a 5G Fund 
auction, where the stakes for closing the mobile digital divide have 
never been higher.
    256. In view of this, we modify our proposal to limit the total 
base forfeiture to a percentage of a winning bidder's total winning bid 
amount for the support term, and will instead limit the total base 
forfeiture to 15% of the support at the opening price for an area for 
the entire 10-year support term for each separate violation. The 
opening price multiplied by the number of adjusted square kilometers in 
an area represents the highest support amount that a winning bidder 
could receive for that area in the auction for the 10-year support 
term. Given the nature of 5G Fund auctions, we find that basing the 
limit of the forfeiture on the support at the opening price for an 
area, rather than the winning bid price for an area, will better 
balance our interest in ensuring that the amount of any forfeiture 
assessed for a 5G Fund auction default is sufficient to deter insincere 
bidding while at the same time having a relationship to the area 
affected by the auction default, and is thus a better approach for 
achieving our desired effect. We recognize this is a departure from the 
approach taken in our recent universal service auctions but find it 
appropriate under these circumstances after taking into account the 
nature of auctions for 5G Fund support and what is at stake to meet our 
goals for the 5G Fund.
    257. As we did for CAF Phase II and the Rural Digital Opportunity 
Fund, we conclude that the rules we adopt governing forfeitures for 
auction defaults and requiring auction applicants to acknowledge in 
their short-form applications that they will be subject to a forfeiture 
in the event of an auction default will impress upon entities that 
apply to participate in a 5G Fund auction the importance of being 
prepared to meet the requirements adopted for the post-auction support 
authorization process, and highlight the need to conduct a due 
diligence review to ensure that they are qualified to both participate 
in the 5G Fund competitive bidding process and to meet the terms and 
conditions for being authorized to receive support if they become 
winning bidders.
    258. Dismissal of Long-Form Application for Failure to Prosecute. 
Section 1.21004(a) of the Commission's rules requires a winning bidder 
in any universal service auction to submit a timely and sufficient 
application for universal service support associated with its winning 
bids and provides that a winning bidder that fails to file an 
application for support or that for any other reason is not authorized 
to receive support has defaulted on its winning bids. However, this 
rule does not discuss the timing within which a winning bidder with a 
pending support application must respond to

[[Page 75810]]

Commission staff requests for additional information regarding its 
application and become authorized for support before that winning 
bidder will be considered to have failed to prosecute its application. 
The rule also does not specify the timing or circumstances pursuant to 
which the Commission can take action to dismiss an application for the 
winning bidder's failure to prosecute and deem the winning bidder to be 
in default.
    259. To allow the Commission to more efficiently and effectively 
process pending applications for universal service support, and taking 
into account lessons learned from the Mobility Fund Phase I and CAF 
Phase II post-auction application processes such as significant delays 
or failures by applicants in prosecuting their applications, we adopt 
our proposal to amend section 1.21004 to add a new rule that permits 
the Commission to dismiss any universal service auction winning 
bidder's long-form application with prejudice and deem the winning 
bidder to be in default if the winning bidder fails to prosecute its 
long-form application, fails to respond substantially within a 
specified time period to official correspondence or requests for 
additional information, or otherwise fails to comply with requirements 
for becoming authorized to receive universal service support. We 
received no comments on our proposal and adopt the rule as proposed in 
the 5G Fund NPRM. The new rule will apply to winning bidders in any 5G 
Fund auction and all future universal service auctions. We conclude 
that this approach will encourage winning bidders to timely and 
diligently prosecute their long-form applications and take the steps 
necessary to become authorized to receive support, and will allow the 
Commission to efficiently dispose of applications for a winning 
bidder's failure to prosecute its application or otherwise comply with 
the requirements for becoming authorized to receive support and in turn 
deem the winning bidder to be in default.

IV. Procedural Matters

A. Paperwork Reduction Act Analysis

    260. The 5G Fund Report and Order contains new and modified 
information collection requirements subject to the Paperwork Reduction 
Act of 1995 (PRA) Public Law 104-13. It will be submitted to the Office 
of Management and Budget (OMB) for review under section 3507(d) of the 
PRA. OMB, the general public, and other Federal agencies will be 
invited to comment on the new or modified information collection 
requirements adopted in this proceeding. In addition, the Commission 
notes that pursuant to the Small Business Paperwork Relief Act of 2002, 
it previously sought specific comment on how the Commission might 
further reduce the information collection burden for small business 
concerns with fewer than 25 employees.

B. Congressional Review Act

    261. The Commission has determined, and the Administrator of the 
Office of Information and Regulatory Affairs, Office of Management and 
Budget, concurs that this rule is non-major under the Congressional 
Review Act, 5 U.S.C. 804(2). The Commission will send a copy of this 
Report and Order to Congress and the Government Accountability Office 
pursuant to 5 U.S.C. 801(a)(1)(A).

C. Final Regulatory Flexibility Analysis

    262. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was 
incorporated in the 5G Fund NPRM. The Commission sought written public 
comment on the proposals in the 5G Fund Notice of Proposed Rulemaking, 
including comment on the IRFA. The Commission did not receive any 
comments in response to this IRFA. This Final Regulatory Flexibility 
Analysis (FRFA) conforms to the RFA.
    263. Need for, and Objectives of, the Report and Order. Our nation 
is at the dawn of the 5G era of wireless connectivity. Recently, 
nationwide mobile wireless providers have deployed 5G networks covering 
more than 200 million Americans. And today the Commission ensures that 
all Americans benefit from the country's 5G future, no matter where 
they live. The Commission acts on its proposal to replace the Mobility 
Fund Phase II with the 5G Fund for Rural America and make certain that 
the Commission's limited Universal Service Fund dollars are directed to 
support the deployment of state-of-the art wireless networks that are 
more responsive, more secure, and faster than today's 4G LTE networks. 
Moreover, by establishing the 5G Fund, the Commission further secures 
the nation's leadership in 5G, which will promote technological 
innovation in the United States, enhance economic prosperity and 
protect national security. Closing the digital divide in rural areas of 
the country will provide all Americans with the opportunity to enjoy 
the benefits of the most modern, advanced communications technologies 
offered in the wireless telecommunications marketplace no matter where 
they live, work, or travel.
    264. Many urban and suburban areas of the nation are already 
benefiting from the evolution to 5G networks. Nationwide providers have 
begun deploying 5G service in populated parts of the country, with even 
more widely-available 5G service expected in the near future. For 
example, T-Mobile has made enforceable commitments to the Commission as 
part of its acquisition of Sprint to deploy 5G service covering 85% of 
the population in rural areas and 97% of all Americans within three 
years, with coverage rising to 90% of the population in rural areas and 
99% nationwide within six years. Moreover, it committed to deploy 5G 
service meeting minimum download speed performance benchmarks of at 
least 50 Mbps available to 90% of the rural population, with two-thirds 
of rural Americans able to receive download speeds of at least 100 
Mbps. Late last year, T-Mobile announced that it switched on its 5G 
network across the nation using low-band spectrum.
    265. 5G networks will improve the lives of Americans living and 
working in rural areas by providing much needed access to telehealth, 
telework, remote learning opportunities, precision agriculture, and 
other services and applications. The Commission anticipates that the 
deployment of 5G-capable networks in rural areas will drive job 
creation and have a powerful impact on the nation's economy. The 
framework for the 5G Fund that the Commission adopts today will bring 
technological innovation and economic benefits to the parts of the 
country that need them the most. The Commission embarks on this new 5G 
era recognizing that the next decade and beyond hold significant 
promise for rural America, and envisions that the 5G Fund will be an 
important catalyst to propel the nationwide deployment of networks 
capable of closing the digital divide, once and for all.
    266. The 5G Fund for Rural America will use multi-round reverse 
auctions to distribute up to $9 billion, in two phases, bringing voice 
and 5G broadband service to those rural areas of the country that, 
absent subsidies, would be unlikely to see the deployment of 5G-capable 
networks. Based on lessons learned from the Mobility Fund, and 
overwhelming record support, the Commission adopts its proposal to 
determine which areas will be eligible for 5G Fund support through 
improved mobile broadband coverage data that will be gathered through 
the Commission's Digital Opportunity Data Collection

[[Page 75811]]

proceeding. Although this approach will not be the fastest possible 
path to the Phase I auction, it will allow us to identify with greater 
precision those areas of the country where support is most needed and 
will be spent most efficiently.
    267. Summary of Significant Issues Raised by Public Comments in 
Response to the IRFA. There were no comments filed that specifically 
addressed the rules and policies proposed in the 5G Fund Notice of 
Proposed Rulemaking.
    268. Response to Comments by the Chief Counsel for Advocacy of the 
Small Business Administration. Pursuant to the Small Business Jobs Act 
of 2010, which amended the RFA, the Commission is required to respond 
to any comments filed by the Chief Counsel of the Small Business 
Administration (SBA), and to provide a detailed statement of any change 
made to the proposed rule(s) as a result of those comments. The Chief 
Counsel did not file any comments in response to the proposed rules in 
this proceeding.
    269. Description and Estimate of the Number of Small Entities to 
which the Rules Would Apply. 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 rules adopted in the 5G Fund 
Report and Order. 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 SBA.
    270. The Commission's actions, over time, may affect small entities 
that are not easily categorized at present. The Commission therefore 
describes here, at the outset, three broad groups of small entities 
that could be directly affected herein. First, while there are industry 
specific size standards for small businesses that are used in the 
regulatory flexibility analysis, according to data from the Small 
Business Administration's (SBA) Office of Advocacy, in general a small 
business is an independent business having fewer than 500 employees. 
These types of small businesses represent 99.9% of all businesses in 
the United States, which translates to 30.7 million businesses.
    271. Next, the type of small entity described as a ``small 
organization'' is generally ``any not-for-profit enterprise which is 
independently owned and operated and is not dominant in its field.'' 
The Internal Revenue Service (IRS) uses a revenue benchmark of $50,000 
or less to delineate its annual electronic filing requirements for 
small exempt organizations. Nationwide, for tax year 2018, there were 
approximately 571,709 small exempt organizations in the U.S. reporting 
revenues of $50,000 or less according to the registration and tax data 
for exempt organizations available from the IRS.
    272. Finally, the small entity described as a ``small governmental 
jurisdiction'' is defined generally as ``governments of cities, 
counties, towns, townships, villages, school districts, or special 
districts, with a population of less than fifty thousand.'' U.S. Census 
Bureau data from the 2017 Census of Governments indicate that there 
were 90,075 local governmental jurisdictions consisting of general 
purpose governments and special purpose governments in the United 
States. Of this number there were 36,931 general purpose governments 
(county, municipal and town or township) with populations of less than 
50,000 and 12,040 special purpose governments--independent school 
districts with enrollment populations of less than 50,000. Accordingly, 
based on the 2017 U.S. Census of Governments data, the Commission 
estimates that at least 48,971 entities fall into the category of 
``small governmental jurisdictions.''
    273. Small entities potentially affected by the rules adopted 
herein include Wireless Telecommunications Carriers (except Satellite), 
internet Service Providers (Broadband), and Satellite 
Telecommunications.
    274. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements. In the 5G Fund Report and Order, the 
Commission adopts public interest obligations, performance 
requirements, and reporting requirements that competitive ETCs 
receiving legacy high-cost support for mobile wireless service must 
meet in order to continue receiving legacy high-cost support, to ensure 
that the most advanced mobile services are available in all areas where 
a carrier is currently supported by legacy high-cost support. The 
Commission also establishes the framework for the 5G Fund by adopting 
rules that will apply in a 5G Fund auction and to recipients of 5G Fund 
support.
    275. The Commission adopts a public interest obligation for both 
competitive ETCs receiving legacy high-cost support for mobile wireless 
service and 5G Fund support recipients to provide mobile voice and 5G 
broadband service in their subsidized areas, and to satisfy distinct, 
measured performance requirements as a condition of receiving support. 
Recipients of both legacy high-cost support and 5G Fund support will 
have minimum baseline performance requirements for data speed, data 
latency, and data allowance. Like all high-cost ETCs, both legacy high-
cost support recipients and 5G Fund support recipients will be required 
to offer voice and broadband services meeting the relevant performance 
requirements at rates that are reasonably comparable to what they offer 
in urban areas. These performance requirements, along with public 
interest obligations the Commission adopts for data allowances, 
reasonably comparable rates, collocation, and voice and data roaming, 
will ensure that rural areas receive service comparable to high-speed, 
mobile broadband available in urban areas.
    276. The Commission adopts a 10-year support term for 5G Fund 
support recipients, along with three interim service deployment 
milestones and a final service deployment milestone at which a support 
recipient must demonstrate that it provides 5G service that meets the 
performance requirements the Commission adopts in the 5G Fund Report 
and Order. The Commission adopts a requirement that legacy high-cost 
support recipients use an increasing percentage of their support toward 
deploying 5G service in their subsidized service areas. Because the 
Commission recognizes that the amount received by each competitive ETC 
receiving legacy high-cost support for mobile wireless service varies 
considerably and bears no direct relation to the size of its subsidized 
service area or to the expected cost of deploying 5G broadband service, 
the Commission does not adopt its proposal to require legacy high-cost 
support recipients to meet the uniform 5G service deployment milestone 
coverage requirements proposed in the 5G Fund NPRM that would require 
deployment to a specified percentage of each legacy support recipient's 
subsidized service area. Instead, the Commission adopts a general 
requirement for legacy high-cost support recipients to meet deployment 
coverage requirements, and direct the Office of Economics and Analytics 
and the Wireline Competition Bureau to develop and adopt, after notice 
and comment, specific 5G broadband service deployment coverage 
requirements and service deployment milestone deadlines for a legacy 
support recipient that take

[[Page 75812]]

into consideration the amount of legacy support the carrier receives.
    277. The Commission adopts certain eligibility requirements for 
entities that are interested in participating in a 5G Fund auction, as 
well as a two-step application process. The Commission will require 
applicants to submit a pre-auction short-form application that includes 
information about their ownership, any agreements relating to the 
support to be sought through the auction, technical and financial 
qualifications, current status as an ETC, access to spectrum, and an 
acknowledgement of their responsibility to conduct due diligence. 
Commission staff will review the applications to determine if 
applicants are qualified to bid in the auction.
    278. After the auction ends, winning bidders will be required to 
submit a post-bidding long-form application in which they will submit 
ownership, agreement, and spectrum access information, as well as 
information about their qualifications, funding, and the networks they 
intend to use to meet their obligations. During the long-form 
application review process, the Commission will also require winning 
bidders to obtain and submit documentation of an ETC designation from 
the state or the Commission, as appropriate, that covers each of the 
geographic areas in which they won support within 180 days after the 
release of the public notice announcing winning bidders. Prior to being 
authorized to receive support, winning bidders must submit an 
irrevocable stand-by letter of credit that meets the Commission's 
requirements from an eligible bank along with a bankruptcy opinion 
letter from outside legal counsel. The letter of credit must be valued 
at an amount equal to one year of the total support it will receive. 
Commission staff will review the applications and submitted 
documentation to determine whether long-form applicants are qualified 
to be authorized to receive support. The Commission will subject 
winning bidders or long-form applicants that default during the long-
form application process to forfeiture.
    279. A 5G Fund support recipient will be required to submit a 
modified, renewed, or new letter of credit annually in order to receive 
its next year's support. The value of the letter of credit must cover 
the support that has been disbursed and that will be disbursed in the 
coming year, subject to modest adjustments as support recipients meet--
and the Universal Service Administrative Company (USAC) has verified 
they have timely completed--their required service deployment 
milestones.
    280. The Commission also adopts specific reporting requirements to 
monitor the progress of both competitive ETCs receiving legacy high-
cost support for mobile wireless service and 5G Fund support recipients 
in meeting the public interest obligations and distinct performance 
requirements the Commission adopts. The Commission will require each 
legacy high-cost support recipient to file an initial report of its 
current service offerings that includes accounting information on the 
support a carrier has received and how legacy support is being used, 
along with certifications related to its current service offerings and 
use of legacy high-cost support. The Commission will also require each 
legacy high-cost support recipient to file annual reports that include 
updated information about the carrier's service offerings for the 
previous calendar year in its subsidized service areas, and how legacy 
support is being used, along with certifications that the support 
recipient is in compliance with its public interest obligations and 
performance requirements. The Commission will require a 5G Fund support 
recipient to file service milestone reports demonstrating that it has 
met its interim and final milestones for deployment of 5G service that 
meets the 5G Fund performance requirements the Commission adopts. The 
Commission will also require a 5G Fund support recipient to file annual 
reports covering the preceding calendar year along with certifications 
that the support recipient is in compliance with each of the 5G Fund 
public interest obligations, performance requirements, and any other 
terms and conditions associated with receipt of 5G Fund support. As for 
other high-cost support recipients, both legacy high-cost support 
recipients and 5G Fund support recipients will be subject to record 
retention and audit requirements, and to support reductions and/or full 
recovery for untimely filings.
    281. The Commission will subject a 5G Fund support recipient that 
fails to meet its public interest obligations and/or and performance 
requirements or other terms and conditions of receiving 5G Fund support 
to a reduction, or loss, in support, in accordance with the framework 
for support reductions that is applicable to all high-cost ETCs that 
are required to meet adopted service deployment milestones and to the 
process the Commission adopts in the 5G Fund Report and Order for 
drawing on letters of credit. Additionally, if a 5G Fund support 
recipient fails to meet any interim or the final service deployment 
milestone, it must notify the Wireline Competition Bureau and USAC 
within 10 business days and provide information explaining its non-
compliance. Upon receipt of the notification, the Commission will find 
the recipient to be default and the recipient will be subject to the 
non-compliance measures adopted in the 5G Fund Report and Order until 
it is able to come into full compliance. If a support recipient has not 
deployed service to at least 20% of the total square kilometers 
associated with the eligible areas for which it is authorized to 
receive support in a state by the Year Three Interim Service Milestone 
it must notify the Wireline Competition Bureau and USAC of its non-
compliance, and upon receipt of this notification, the recipient will 
be deemed in default and subject to full support recovery, rather than 
being given additional time to come into compliance.
    282. The Commission will require a competitive ETC receiving legacy 
high-cost support for mobile wireless service that fails to comply with 
its public interest obligations or performance requirements to notify 
the Wireline Competition Bureau and USAC within 10 business days of its 
non-compliance. Upon receipt of the notification, the Commission will 
find the recipient to be in default, and the recipient will no longer 
be eligible to receive such support, will receive no further support 
disbursements, and may be subject to up to full recovery of all such 
support disbursed since effective date of the public interest 
obligations and performance requirement rules adopted in the 5G Fund 
Report and Order. In addition to basing a finding of default on a 
legacy high-cost support recipient's notification of its non-
compliance, the Wireline Competition Bureau or USAC may in the absence 
of any such notification deem the support recipient in to be in default 
and the same consequences if the they become aware of a recipient's 
non-compliance.
    283. Steps Taken to Minimize Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered. The RFA requires an 
agency to describe any significant alternatives that it has considered 
in reaching its approach, which may include the following four 
alternatives, among others: ``(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,

[[Page 75813]]

standards; and (4) an exemption from coverage of the rule, or any part 
thereof, for small entities.'' The Commission has considered the 
economic impact on small entities in reaching its final conclusions and 
taking action in this proceeding. The rules that the Commission adopts 
in the 5G Fund Report and Order will provide greater certainty and 
flexibility for all carriers, including small entities.
    284. The Commission concludes that the minimum geographic area for 
bidding in a 5G Fund auction will be no larger than a census tract and 
no smaller than a census block group, as identified by the U.S. Census 
Bureau. Consistent with its approach in recent universal service 
auctions, the Commission will determine the exact geographic area for 
grouping eligible areas when it finalizes the auction design during the 
pre-auction process and have better data for determining eligible 
areas. The Commission finds that this approach is preferable because it 
ensures that a wide variety of interested bidders, including small 
entities, have the flexibility to design a network that matches their 
business model and that allows service providers to achieve their 
performance benchmarks and public interest obligations efficiently. We 
decline to adopt census blocks as the minimum geographic unit in a 5G 
Fund auction, as some commenters suggest, because doing so would 
significantly increase the complexity of the bidding process both for 
bidders and the bidding system and minimize the potential for broad 
coverage by winning bidders, and using census blocks as the minimum 
geographic area could create more challenges for providers in putting 
together a bidding strategy that aligns with their intended network 
construction or expansion. No commenter suggests that the Commission 
should adopt a geographic area larger than a census tract.
    285. We are reserving up to $680 million of the $8 billion 5G Fund 
Phase I budget to support networks serving eligible areas in Tribal 
lands--which is double the amount that the Commission had estimated it 
would reserve to support Tribal lands from the Mobility Fund Phase II 
budget--to provide an incentive for service providers, including small 
entities, to bid on and serve Tribal lands.
    286. Consistent with the approach taken in recent universal service 
auctions, the Commission adopts a two-step application process for 
participating in the 5G Fund consisting of a pre-auction short-form 
application and a post-auction long-form application. Entities 
interested in bidding to submit a short-form application in order to be 
deemed qualified to bid in the auction, which the Commission has found 
to be an appropriate but not burdensome screen to ensure participation 
by qualified carriers, including small entities. Only if an applicant 
becomes a winning bidder will it be required to submit a long-form 
application, which requires a more detailed information about, and a 
more thorough review of, an applicant's qualifications to be authorized 
to receive 5G Fund support.
    287. We provide two pathways for an applicant to demonstrate its 
technical and financial qualifications to participate in a 5G Fund 
auction based on its experience providing mobile wireless voice and/or 
broadband service. Entities, including small entities, that have been 
providing mobile wireless voice and/or broadband service for at least 
three years will be required to submit information concerning the 
number of years they have been providing service and their FCC Form 477 
filings and/or Digital Opportunity Data Collection filings, as 
applicable, for the past three years, but will not be required to 
submit any other technical or financial information, while entities 
that have been providing such service(s) for fewer than three years (or 
not at all) will need to submit information concerning their 
operational history, a preliminary project description, and an 
acceptable letter of interest from an eligible bank. We expect that by 
allowing experienced entities to submit less information at the short-
form application stage to demonstrate their technical and financial 
qualifications, more entities, including small entities, will be able 
to participate in the auction.
    288. We will also permit all long-form applicants, including small 
entities, to obtain their ETC designations after becoming winning 
bidders so that they do not have to go through the ETC designation 
process prior to finding out if they won support through the auction. 
We decline to adopt the alternatives to letters of credit that were 
suggested by commenters because letters of credit better achieve the 
Commission's objective of protecting the public's funds. But 
recognizing that some participants in the Commission's past universal 
auctions, including small entities, have expressed concerns about the 
costs of obtaining and maintaining a letter of credit, the Commission 
adopts rules allowing support recipients to cover less support with 
their letters of credit and further reduce the value of their letters 
of credit once it has been verified that they have met certain service 
deployment milestones. Additionally, consistent with the approach taken 
in recent universal service auctions, the Commission will allow greater 
flexibility regarding letters of credit for Tribally owned and 
controlled winning bidders by permitting any Tribally owned and 
controlled 5G Fund winning bidder that is unable to obtain a letter of 
credit to petition for a waiver of the letter of credit requirement.
    289. To streamline the filing of annual reports by both mobile 
legacy high-cost support recipients and 5G Fund support recipients 
regarding their efforts to provide 5G services throughout their 
subsidized service areas that meet the public interest obligations and 
distinct performance requirements adopted in the 5G Fund Report and 
Order, the Commission will require these reports to be filed with USAC 
via a web portal. Moreover, to reduce the burden on mobile legacy high-
cost support recipients, these annual report filings will replace a 
mobile legacy high-cost support recipient's existing obligation to 
annually file FCC Form 481 with USAC.
    290. The Commission also provides a competitive ETC receiving 
legacy high-cost support for a particular subsidized service area with 
the flexibility to use such support for the provision, maintenance, and 
upgrading of facilities and services within any of the designated 
service areas for which it receives legacy high-cost support for mobile 
services, which the Commission concludes could allow for more efficient 
decisions about use of legacy support while ``still satisfying the 
statutory obligation to use such support for its intended purposes.''
    291. The additional public interest obligations, performance 
requirements, and reporting requirements adopted for current mobile 
legacy high-cost support recipients in order to continue receiving 
high-cost support, as well as the public interest obligations and 
performance requirements, interim and final construction milestones, 
reporting obligations, and non-compliance measures adopted for the 5G 
Fund, balance the Commission's responsibility to monitor the use of 
universal service funds with minimizing administrative and compliance 
costs and burdens on mobile legacy high-cost support recipients and 5G 
Fund support recipients, including small entities. The reporting 
requirements the Commission adopts for all mobile legacy high-cost 
support and for all 5G Fund support recipients are tailored to ensuring 
that support is used for its intended purpose and so that the 
Commission can monitor the progress of recipients in meeting

[[Page 75814]]

their public interest obligations and distinct performance 
requirements. The Commission finds that the importance of monitoring 
the use of the public's funds outweighs the burden of filing the 
required information on all entities, including small entities, 
particularly because much of the information that the Commission 
requires they report is information it expects they will already be 
collecting to ensure they comply with the terms and conditions of 
receiving support.

V. Ordering Clauses

    292. Accordingly, it is ordered that, pursuant to the authority 
contained in sections 4(i), 214, 254, 303(r), and 403 of the 
Communications Act of 1934, as amended, 47 U.S.C. 154(i), 214, 254, 
303(r), and 403, this Report and Order is adopted.
    293. It is further ordered that the rules and requirements adopted 
herein will become effective thirty (30) days after publication in the 
Federal Register, with the exception of Sec. Sec.  1.21001(b)(1), 
1.21001(b)(2), 1.21001(b)(3), 1.21001(b)(4), 1.21001(b)(5), 
1.21001(b)(6), 1.21001(b)(7), 1.21001(b)(8), 1.21001(b)(9), 
1.21001(b)(10), 1.21001(b)(11), 1.21001(b)(12), 1.21001(b)(13), 
1.21001(e), 1.21002(e), 1.21002(f), 54.313(n), 54.322(b), 54.322(c)(4), 
54.322(g), 54.322(h), 54.322(i), 54.322(j), 54.1014(a), 54.1014(b)(2), 
54.1016(b), 54.1018(a), 54.1018(b), 54.1018(c), 54.1019(a)(1), 
54.1019(a)(2), 54.1019(a)(3), 54.1019(a)(4), 54.1020(a), 54.1020(b), 
54.1020(c)(1), and 54.1020(c)(2), which contain new or modified 
information collection requirements that require review and approval by 
the Office of Management and Budget (OMB) under the Paperwork Reduction 
Act. The Commission will announce the effective date of those 
information collections in a document published in the Federal Register 
after the Commission receives OMB approval, and will cause Sec. Sec.  
1.21001(b)(1), 1.21001(b)(2), 1.21001(b)(3), 1.21001(b)(4), 
1.21001(b)(5), 1.21001(b)(6), 1.21001(b)(7), 1.21001(b)(8), 
1.21001(b)(9), 1.21001(b)(10), 1.21001(b)(11), 1.21001(b)(12), 
1.21001(b)(13), 1.21001(e), 1.21002(e), 1.21002(f), 54.313(n), 
54.322(b), 54.322(c)(4), 54.322(g), 54.322(h), 54.322(i), 54.322(j), 
54.1014(a), 54.1014(b)(2), 54.1016(b), 54.1018(a), 54.1018(b), 
54.1018(c), 54.1019(a)(1), 54.1019(a)(2), 54.1019(a)(3), 54.1019(a)(4), 
54.1020(a), 54.1020(b), 54.1020(c)(1), and 54.1020(c)(2) to be revised 
accordingly.
    294. It is further ordered that the Petition to Correct Mobility 
Fund Phase II Map of Presumptively Eligible and Ineligible Areas and to 
Extend Challenge Process Filing Window filed by Missouri RSA 5 
Partnership d/b/a Chariton Valley Wireless Services in WC Docket No. 
10-90 and WT Docket No. 10-208 on November 26, 2018, is dismissed as 
moot as indicated herein.
    295. It is further ordered that the Petition for Waiver to Accept 
Certain Mobility Fund Challenge Records filed by Jeanne Dietsch in WC 
Docket No. 10-90 and WT Docket No. 10-208 on November 27, 2018, is 
dismissed as moot as indicated herein.
    296. It is further ordered that the Request for Limited Waiver of 
Mobility Fund Phase II Designated Handset Requirements filed by the 
Vermont Department of Public Service in WC Docket No. 10-90 and WT 
Docket No. 10-208 on June 28, 2019, is dismissed as moot as indicated 
herein.

List of Subjects

47 CFR Part 1

    Administrative practice and procedures, Reporting and recordkeeping 
requirements, Telecommunications.

47 CFR Part 54

    Communications common carriers, internet, Reporting and 
recordkeeping requirements, Telecommunications.

Federal Communications Commission.
Marlene Dortch,
Secretary.

Final Rules

    For the reasons discussed in the preamble, the Federal 
Communications Commission amends 47 CFR parts 1 and 54 to read as 
follows:

PART 1--PRACTICE AND PROCEDURE

0
1. The authority citation for part 1 continues to read as follows:

    Authority: 47 U.S.C. chs. 2, 5, 9, 13; 28 U.S.C. 2461, unless 
otherwise noted.


0
2. Amend Sec.  1.1902 by revising paragraph (f) to read as follows:


Sec.  1.1902   Exceptions.

* * * * *
    (f) Nothing in this subpart shall supersede or invalidate other 
Commission rules, such as the part 1 general competitive bidding rules 
(47 CFR part 1, subparts Q and AA) or the service specific competitive 
bidding rules, as may be amended, regarding the Commission's rights, 
including but not limited to the Commission's right to cancel a license 
or authorization, obtain judgment, or collect interest, penalties, and 
administrative costs.

0
3. Amend Sec.  1.21001 by:
0
a. Revising paragraph (b);
0
b. Redesignating paragraphs (c) and (d) as paragraphs (e) and (f), 
respectively;
0
c. Adding new paragraphs (c) and (d); and
0
d. Revising newly redesignated paragraph (f).
    The revisions and additions read as follows:


Sec.  1.21001   Participation in competitive bidding for support.

* * * * *
    (b) Application contents. Unless otherwise established by public 
notice, an applicant to participate in competitive bidding pursuant to 
this subpart shall provide the following information in an acceptable 
form:
    (1) The identity of the applicant, i.e., the party that seeks 
support, and the ownership information as set forth in Sec.  1.2112(a);
    (2) The identities of up to three individuals authorized to make or 
withdraw a bid on behalf of the applicant. No person may serve as an 
authorized bidder for more than one auction applicant;
    (3) The identities of all real parties in interest to, and a brief 
description of, any agreements relating to the participation of the 
applicant in the competitive bidding;
    (4) Certification that the applicant has provided in its 
application a brief description of, and identified each party to, any 
partnerships, joint ventures, consortia or other agreements, 
arrangements or understandings of any kind relating to the applicant's 
participation in the competitive bidding and the support being sought, 
including any agreements that address or communicate directly or 
indirectly bids (including specific prices), bidding strategies 
(including the specific areas on which to bid or not to bid), or the 
post-auction market structure, to which the applicant, or any party 
that controls as defined in paragraph (d)(1) of this section or is 
controlled by the applicant, is a party;
    (5) Certification that the applicant (or any party that controls as 
defined in paragraph (d)(1) of this section or is controlled by the 
applicant) has not entered and will not enter into any partnerships, 
joint ventures, consortia or other agreements, arrangements, or 
understandings of any kind relating to the support to be sought that 
address or communicate, directly or indirectly, bidding at auction 
(including specific

[[Page 75815]]

prices to be bid) or bidding strategies (including the specific areas 
on which to bid or not to bid for support), or post-auction market 
structure with any other applicant (or any party that controls or is 
controlled by another applicant);
    (6) Certification that if the applicant has ownership or other 
interest disclosed pursuant to paragraph (b)(1) of this section with 
respect to more than one application in a given auction, it will 
implement internal controls that preclude any individual acting on 
behalf of the applicant as defined in Sec.  1.21002(a) from possessing 
information about the bids or bidding strategies (including post-
auction market structure), of more than one party submitting an 
application for the auction or communicating such information with 
respect to a party submitting an application for the auction to anyone 
possessing such information regarding another party submitting an 
application for the auction;
    (7) Certification that the applicant has sole responsibility for 
investigating and evaluating all technical and marketplace factors that 
may have a bearing on the level of support it submits as a bid, and 
that if the applicant wins support, it will be able to build and 
operate facilities in accordance with the obligations applicable to the 
type of support it wins and the Commission's rules generally;
    (8) Certification that the applicant and all applicable parties 
have complied with and will continue to comply with Sec.  1.21002;
    (9) Certification that the applicant is in compliance with all 
statutory and regulatory requirements for receiving the universal 
service support that the applicant seeks, or, if expressly allowed by 
the rules specific to a high-cost support mechanism, a certification 
that the applicant acknowledges that it must be in compliance with such 
requirements before being authorized to receive support;
    (10) Certification that the applicant will be subject to a default 
payment or a forfeiture in the event of an auction default and that the 
applicant will make any payment that may be required pursuant to Sec.  
1.21004;
    (11) Certification that the applicant is not delinquent on any debt 
owed to the Commission and that it is not delinquent on any non-tax 
debt owed to any Federal agency as of the deadline for submitting 
applications to participate in competitive bidding pursuant to this 
subpart, or that it will cure any such delinquency prior to the end of 
the application resubmission period established by public notice.
    (12) Certification that the individual submitting the application 
is authorized to do so on behalf of the applicant; and
    (13) Such additional information as may be required.
    (c) Limit on filing applications. In any auction, no individual or 
entity may file more than one application to participate in competitive 
bidding or have a controlling interest (as defined in paragraph (d)(1) 
of this section) in more than one application to participate in 
competitive bidding. In the case of a consortium, each member of the 
consortium shall be considered to have a controlling interest in the 
consortium. In the event that applications for an auction are filed by 
applicants with overlapping controlling interests, pursuant to 
paragraph (f)(3) of this section, both applications will be deemed 
incomplete and only one such applicant may be deemed qualified to bid.
    (d) Definitions. For purposes of the certifications required under 
paragraph (b) of this section and the limit on filing applications in 
paragraph (c) of this section:
    (1) The term controlling interest includes individuals or entities 
with positive or negative de jure or de facto control of the applicant. 
De jure control includes holding 50 percent or more of the voting stock 
of a corporation or holding a general partnership interest in a 
partnership. Ownership interests that are held indirectly by any party 
through one or more intervening corporations may be determined by 
successive multiplication of the ownership percentages for each link in 
the vertical ownership chain and application of the relevant 
attribution benchmark to the resulting product, except that if the 
ownership percentage for an interest in any link in the chain meets or 
exceeds 50 percent or represents actual control, it may be treated as 
if it were a 100 percent interest. De facto control is determined on a 
case-by-case basis. Examples of de facto control include constituting 
or appointing 50 percent or more of the board of directors or 
management committee; having authority to appoint, promote, demote, and 
fire senior executives that control the day-to-day activities of the 
support recipient; or playing an integral role in management decisions. 
In the case of a consortium, each member of the consortium shall be 
considered to have a controlling interest in the consortium.
    (2) The term consortium means an entity formed to apply as a single 
applicant to bid at auction pursuant to an agreement by two or more 
separate and distinct legal entities.
    (3) The term joint venture means a legally cognizable entity formed 
to apply as a single applicant to bid at auction pursuant to an 
agreement by two or more separate and distinct legal entities.
    (e) Financial Requirements for Participation. As a prerequisite to 
participating in competitive bidding, an applicant may be required to 
post a bond or place funds on deposit with the Commission in an amount 
based on the default payment or forfeiture that may be required 
pursuant to Sec.  1.21004. The details of and deadline for posting such 
a bond or making such a deposit will be announced by public notice. No 
interest will be paid on any funds placed on deposit.
    (f) Application Processing. (1) Any timely submitted application 
will be reviewed by Commission staff for completeness and compliance 
with the Commission's rules. No untimely applications will be reviewed 
or considered.
    (2) Any application to participate in competitive bidding that does 
not identify the applicant or does not include all of the 
certifications required pursuant to this section is unacceptable for 
filing and cannot be corrected subsequent to the applicable deadline 
for submitting applications. The application will be deemed incomplete 
and the applicant will not be found qualified to bid.
    (3) If an individual or entity submits multiple applications in a 
single auction, or if entities that are commonly controlled by the same 
individual or same set of individuals submit more than one application 
in a single auction, then at most only one of such applications may be 
deemed complete, and the other such application(s) will be deemed 
incomplete, and such applicants will not be found qualified to bid.
    (4) An applicant will not be permitted to participate in 
competitive bidding if the applicant has not provided any bond or 
deposit of funds required pursuant to paragraph (e) of this section, as 
of the applicable deadline.
    (5) The Commission will provide applicants a limited opportunity to 
cure defects (except for failure to sign the application and to make 
all required certifications) during a resubmission period established 
by public notice and to resubmit a corrected application. During the 
resubmission period for curing defects, an application may be amended 
or modified to cure defects identified by the Commission or to make 
minor amendments or modifications. After the resubmission period has 
ended, an application may be

[[Page 75816]]

amended or modified to make minor changes or correct minor errors in 
the application. An applicant may not make major modifications to its 
application after the initial filing deadline. An applicant will not be 
permitted to participate in competitive bidding if Commission staff 
determines that the application requires major modifications to be made 
after that deadline. Major modifications include, but are not limited 
to, any changes in the ownership of the applicant that constitute an 
assignment or transfer of control, or any changes in the identity of 
the applicant, or any changes in the required certifications. Minor 
amendments include, but are not limited to, the correction of 
typographical errors and other minor defects not identified as major. 
Minor modifications may be subject to a deadline established by public 
notice. An application will be considered to be newly filed if it is 
amended by a major amendment and may not be resubmitted after 
applicable filing deadlines.
    (6) An applicant that fails to cure the defects in their 
applications in a timely manner during the resubmission period as 
specified by public notice will have its application dismissed with no 
further opportunity for resubmission.
    (7) An applicant that is found qualified to participate in 
competitive bidding shall be identified in a public notice.
    (8) Applicants shall have a continuing obligation to make any 
amendments or modifications that are necessary to maintain the accuracy 
and completeness of information furnished in pending applications. Such 
amendments or modifications shall be made as promptly as possible, and 
in no case more than five business days after applicants become aware 
of the need to make any amendment or modification, or five business 
days after the reportable event occurs, whichever is later. An 
applicant's obligation to make such amendments or modifications to a 
pending application continues until they are made.

0
4. Revise Sec.  1.21002 to read as follows:


Sec.  1.21002   Prohibition of certain communications during the 
competitive bidding process.

    (a) Definitions. For purposes of this section:
    (1) The term ``applicant'' shall include all controlling interests 
in the entity submitting an application to participate in a given 
auction, as well as all holders of partnership and other ownership 
interests and any stock interest amounting to 10 percent or more of the 
entity, or outstanding stock, or outstanding voting stock of the entity 
submitting the application, and all officers and directors of that 
entity. In the case of a consortium, each member of the consortium 
shall be considered to have a controlling interest in the consortium; 
and
    (2) The term bids or bidding strategies shall include capital calls 
or requests for additional funds in support of bids or bidding 
strategies.
    (b) Certain communications prohibited. After the deadline for 
submitting applications to participate, an applicant is prohibited from 
cooperating or collaborating with any other applicant with respect to 
its own, or one another's, or any other competing applicant's bids or 
bidding strategies, and is prohibited from communicating with any other 
applicant in any manner the substance of its own, or one another's, or 
any other competing applicant's bids or bidding strategies, until after 
the post-auction deadline for winning bidders to submit applications 
for support.
    (1) Example 1. Company A is an applicant in area 1. Company B and 
Company C each own 10 percent of Company A. Company D is an applicant 
in area 1, area 2, and area 3. Company C is an applicant in area 3. 
Without violating the Commission's Rules, Company B can enter into a 
consortium arrangement with Company D or acquire an ownership interest 
in Company D if Company B certifies either:
    (i) That it has communicated with and will communicate neither with 
Company A or anyone else concerning Company A's bids or bidding 
strategy, nor with Company C or anyone else concerning Company C's bids 
or bidding strategy, or
    (ii) That it has not communicated with and will not communicate 
with Company D or anyone else concerning Company D's bids or bidding 
strategy.
    (2) [Reserved]
    (c) Internal controls required. Any party submitting an application 
for a given auction that has an ownership or other interest disclosed 
with respect to more than one application for an auction must implement 
internal controls that preclude any individual acting on behalf of the 
applicant as defined in paragraph (a)(1) of this section from 
possessing information about the bids or bidding strategies as defined 
in paragraph (a)(2) of this section of more than one party submitting 
an application for the auction or communicating such information with 
respect to a party submitting an application for the auction to anyone 
possessing such information regarding another party submitting an 
application for the auction. Implementation of such internal controls 
will not outweigh specific evidence that a prohibited communication has 
occurred, nor will it preclude the initiation of an investigation when 
warranted.
    (d) Modification of application required. An applicant must modify 
its application for an auction to reflect any changes in ownership or 
in membership of a consortium or a joint venture or agreements or 
understandings related to the support being sought.
    (e) Duty to report potentially prohibited communications. An 
applicant that makes or receives communications that may be prohibited 
pursuant to paragraph (b) of this section shall report such 
communications to the Commission staff immediately, and in any case no 
later than 5 business days after the communication occurs. An 
applicant's obligation to make such a report continues until the report 
has been made.
    (f) Procedures for reporting potentially prohibited communications. 
Any report required to be filed pursuant to this section shall be filed 
as directed in public notices detailing procedures for the bidding that 
was the subject of the reported communication. If no such public notice 
provides direction, the party making the report shall do so in writing 
to the Chief of the Auctions Division, Office of Economics and 
Analytics, by the most expeditious means available, including 
electronic transmission such as email.

0
5. Amend Sec.  1.21004 by:
0
a. Redesignating paragraphs (b) and (c) as paragraphs (c) and (d), 
respectively;
0
b. Adding new paragraph (b); and
0
c. Revising newly redesignated paragraphs (c) and (d).
    The addition and revisions read as follows:


Sec.  1.21004  Winning bidder's obligation to apply for support.

* * * * *
    (b) Dismissal for failure to prosecute. The Commission may dismiss 
a winning bidder's application with prejudice for failure of the 
winning bidder to prosecute, failure of the winning bidder to respond 
substantially within the time period specified in official 
correspondence or requests for additional information, or failure of 
the winning bidder to comply with requirements for becoming authorized 
to receive support. A winning bidder whose application is dismissed for 
failure to prosecute pursuant to this paragraph has defaulted on its 
bid(s).

[[Page 75817]]

    (c) Liability for default payment or forfeiture in the event of 
auction default. A winning bidder that defaults on its bid(s) is liable 
for either a default payment or a forfeiture, which will be calculated 
by a method that will be established as provided in an order or public 
notice prior to competitive bidding. If the default payment is 
determined as a percentage of the defaulted bid amount, the default 
payment will not exceed twenty percent of the amount of the defaulted 
bid amount.
    (d) Additional liabilities. In addition to being liable for a 
default payment or a forfeiture pursuant to paragraph (c) of this 
section, a winning bidder that defaults on its winning bid(s) shall be 
subject to such measures as the Commission may provide, including but 
not limited to disqualification from future competitive bidding 
pursuant to this subpart.

PART 54--UNIVERSAL SERVICE

0
6. 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, 
229, 254, 303(r), 403, 1004, and 1302, unless otherwise noted.


0
7. Amend Sec.  54.5 by:
0
a. Revising the definition of ``Administrator'';
0
b. Revising the definition of ``High-cost support'';
0
c. Adding, in alphabetical order, a definition for ``Mobile competitive 
eligible telecommunications carrier''; and
0
d. Revising the definition of ``Tribal lands''.
    The revisions and addition read as follows:


Sec.  54.5  Terms and definitions.

* * * * *
    Administrator. The term ``Administrator'' or ``USAC'' shall refer 
to the Universal Service Administrative Company that is an independent 
subsidiary of the National Exchange Carrier Association, Inc., and that 
has been appointed the permanent Administrator of the federal universal 
service support mechanisms.
* * * * *
    High-cost support. ``High-cost support'' refers to those support 
mechanisms in existence as of October 1, 2011, specifically, high-cost 
loop support, safety net additive and safety valve provided pursuant to 
subpart F of part 36, local switching support pursuant to Sec.  54.301, 
forward-looking support pursuant to Sec.  54.309, interstate access 
support pursuant to Sec. Sec.  54.800 through 54.809, and interstate 
common line support pursuant to Sec. Sec.  54.901 through 54.904, 
support provided pursuant to Sec. Sec.  51.915, 51.917, and 54.304, 
support provided to competitive eligible telecommunications carriers as 
set forth in Sec.  54.307(e), Connect America Fund support provided 
pursuant to Sec.  54.312, and Mobility Fund and 5G Fund support 
provided pursuant to subpart L of this part.
* * * * *
    Mobile competitive eligible telecommunications carrier. A ``mobile 
competitive eligible telecommunications carrier'' is a carrier that 
meets the definition of a ``competitive eligible telecommunications 
carrier'' in this section and that provides a terrestrial-based service 
meeting the definition of ``commercial mobile radio service'' in Sec.  
51.5 of this chapter.
* * * * *
    Tribal lands. For the purposes of high-cost support, ``Tribal 
lands'' include any federally recognized Indian tribe's reservation, 
pueblo or colony, including former reservations in Oklahoma, Alaska 
Native regions established pursuant to the Alaska Native Claims 
Settlement Act (85 Stat. 688) and Indian Allotments, see Sec.  
54.400(e), as well as Hawaiian Home Lands--areas held in trust for 
native Hawaiians by the state of Hawaii, pursuant to the Hawaiian Homes 
Commission Act, 1920, July 9, 1921, 42 Stat 108, et seq., as amended, 
and any land designated as such by the Commission.
* * * * *

0
8. Amend Sec.  54.207 by adding new paragraph (f):


Sec.  54.207   Service areas.

* * * * *
    (f) Geographic flexibility provided for mobile competitive eligible 
telecommunications carriers receiving legacy high-cost support. A 
mobile competitive eligible telecommunications carrier receiving legacy 
high-cost support pursuant to Sec.  54.307(e)(5), (6), or (7) for a 
particular subsidized service area may use the support for the 
provision, maintenance, and upgrading of facilities and services within 
any of the designated service areas for which it or an affiliated 
mobile competitive eligible telecommunications carrier (e.g., where 
several mobile competitive eligible telecommunications carriers share a 
common holding company) receives legacy high-cost support regardless of 
whether the service areas span more than one state or territory. This 
paragraph does not affect a mobile competitive eligible 
telecommunications carrier's obligations and requirements pursuant to 
Sec. Sec.  54.7 and 54.322.

0
9. Amend Sec.  54.307 by:
0
a. Revising paragraph (e)(2);
0
b. Revising paragraph (e)(5);
0
c. Adding paragraph (e)(6);
0
d. Redesignating paragraphs (e)(7) and (e)(8) as paragraphs (e)(8) and 
(e)(9), respectively; and
0
e. Adding new paragraph (e)(7).
    The revisions and addition read as follows:


Sec.  54.307  Support to a competitive eligible telecommunications 
carrier.

* * * * *
    (e) * * *
    (2) Monthly support amounts. Competitive eligible 
telecommunications carriers shall receive the following support 
amounts, except as provided in paragraphs (e)(3) through (7) of this 
section.
    (i) From January 1, 2012, to June 30, 2012, each competitive 
eligible telecommunications carrier shall receive its monthly baseline 
support amount each month.
    (ii) From July 1, 2012 to June 30, 2013, each competitive eligible 
telecommunications carrier shall receive 80 percent of its monthly 
baseline support amount each month.
    (iii) Beginning July 1, 2013, each competitive eligible 
telecommunications carrier shall receive 60 percent of its monthly 
baseline support amount each month.
* * * * *
    (5) Eligibility for interim support before 5G Fund Phase I auction. 
Beginning the first day of the month following the effective date of 
the Report and Order, FCC 20-150, a competitive eligible 
telecommunications carrier that receives support pursuant to paragraph 
(a) or (e)(2) of this section shall no longer receive such support and 
shall instead receive support as described in this paragraph.
    (i) A competitive eligible telecommunications carrier that is not a 
mobile competitive eligible telecommunications carrier, as that term is 
defined in Sec.  54.5, shall no longer receive monthly baseline 
support.
    (ii) Until the first day of the month following the release of a 
public notice by the Office of Economics and Analytics and Wireline 
Competition Bureau announcing the final areas eligible for support in 
the 5G Fund Phase I auction:
    (A) A mobile competitive eligible telecommunications carrier that 
receives support pursuant to paragraph (a) of this

[[Page 75818]]

section shall receive ``monthly baseline support'' in an amount equal 
to one-twelfth (\1/12\) of its total support received for the preceding 
12-month period.
    (B) A mobile competitive eligible telecommunications carrier that 
receives support pursuant to paragraph (e)(2) of this section shall 
receive support at the same level described in paragraph (e)(2)(iii) of 
this section.
    (iii) Beginning the first day of the month following the release of 
a public notice by the Office of Economics and Analytics and Wireline 
Competition Bureau announcing the final areas eligible for support in 
the 5G Fund Phase I auction and until the first day of the month 
following release of a public notice announcing the close of the 5G 
Fund Phase I auction, a mobile competitive eligible telecommunications 
carrier that receives support pursuant to paragraph (e)(5)(ii) of this 
section for any such eligible area shall receive an adjusted, 
disaggregated amount of monthly support for that area, which shall be 
calculated by multiplying the monthly support level described in 
paragraph (e)(5)(ii) of this section by the areal percentage of the 
eligible portion of the competitive eligible telecommunications 
carrier's service area, weighted by applying the 5G Fund adjustment 
factor methodology and values adopted by the Office of Economics and 
Analytics and Wireline Competition Bureau and announced in a public 
notice.
    (iv) Beginning the first day of the month following the release of 
a public notice by the Office of Economics and Analytics and Wireline 
Competition Bureau announcing the final areas eligible for support in 
the 5G Fund Phase I auction, a mobile competitive eligible 
telecommunications carrier that receives support pursuant paragraph 
(e)(5)(ii) of this section for any ineligible area shall receive an 
adjusted, disaggregated amount of monthly support for that area, which 
shall be calculated by multiplying the monthly support level described 
in paragraph (e)(5)(ii) of this section by the areal percentage of the 
ineligible portion of the competitive eligible telecommunications 
carrier's service area, weighted by applying the 5G Fund adjustment 
factor methodology and values adopted by the Office of Economics and 
Analytics and Wireline Competition Bureau and announced in a public 
notice, and reduced as follows:
    (A) For the first 12 months, each mobile competitive eligible 
telecommunications carrier shall receive monthly support that is two-
thirds (\2/3\) of the level described in paragraph (e)(5)(iv) of this 
section for the ineligible area.
    (B) For 12 months starting the first day of the month following the 
period described in paragraph (e)(5)(iv)(A) of this section, each 
mobile competitive eligible telecommunications carrier shall receive 
monthly support that is one-third (\1/3\) of the level described in 
paragraphs (e)(5)(iv) of this section for the ineligible area.
    (C) Following the period described in paragraph (e)(5)(iv)(B) of 
this section, no mobile competitive eligible telecommunications carrier 
shall receive monthly support for any ineligible area pursuant to this 
section.
    (6) Eligibility for support after 5G Fund Phase I auction. (i) 
Notwithstanding the schedule described in paragraph (e)(5)(iii) of this 
section, a mobile competitive eligible telecommunications carrier that 
receives monthly support pursuant to paragraph (e)(5)(iii) of this 
section and is a winning bidder in the 5G Fund Phase I auction shall 
continue to receive support at the same level it was receiving support 
for such area at the time of the release of a public notice announcing 
the close of the 5G Fund Phase I auction until such time as the Office 
of Economics and Analytics and Wireline Competition Bureau determine 
whether or not to authorize the carrier to receive 5G Fund Phase I 
support.
    (A) Upon the Office of Economics and Analytics and Wireline 
Competition Bureau's release of a public notice approving a mobile 
competitive eligible telecommunications carrier's application for 
support submitted pursuant to Sec.  54.1014(b) and authorizing the 
carrier to receive 5G Fund Phase I support, the carrier shall no longer 
receive support at the level of monthly support described in paragraph 
(e)(5)(iii) of this section for such area. Thereafter, the carrier 
shall receive monthly support in the amount of its 5G Fund Phase I 
winning bid pursuant to Sec.  54.1017, provided that the Administrator 
shall decrease the amount of the carrier's support to the extent 
necessary to account for any support the carrier received during the 
period between the close of the 5G Fund Phase I auction and the release 
of the public notice authorizing the carrier to receive 5G Fund Phase I 
support.
    (B) A mobile competitive eligible telecommunications carrier that 
is a winning bidder in the 5G Fund Phase I auction but is not 
subsequently authorized to receive 5G Fund Phase I support shall no 
longer receive support at the level of monthly support described in 
paragraph (e)(5)(iii) of this section for such area following the 
determination not to authorize the carrier for 5G Fund Phase I support. 
Thereafter, the carrier shall receive monthly support as set forth in 
paragraph (e)(6)(iv) of this section for such area, provided that the 
Administrator shall decrease the amount of the carrier's support to the 
extent necessary to account for any support the carrier received during 
the period between the close of the 5G Fund Phase I auction and the 
Office of Economics and Analytics and Wireline Competition Bureau's 
authorization determination.
    (ii) A mobile competitive eligible telecommunications carrier that 
does not receive monthly support pursuant to this section and is a 
winning bidder in the 5G Fund Phase I auction shall receive monthly 
support pursuant to Sec.  54.1017.
    (iii) A mobile eligible telecommunications carrier that receives 
monthly support pursuant to paragraph (e)(5)(iii) of this section for 
an area for which support is not won in the 5G Fund Phase I auction 
shall continue to receive support at the level of monthly support 
described in paragraph (e)(5)(iii) of this section provided that it is 
the carrier receiving the minimum level of sustainable support for the 
area, but for no more than 60 months from the first day of the month 
following the release of a public notice by the Office of Economics and 
Analytics and Wireline Competition Bureau announcing the close of the 
5G Fund Phase I auction. The ``minimum level of sustainable support'' 
is the lowest monthly support received by a mobile competitive eligible 
telecommunications carrier for the area that has deployed the highest 
level of technology (e.g., 5G) within the state encompassing the area.
    (iv) All other mobile competitive eligible telecommunications 
carriers that receive monthly support pursuant to paragraph (e)(5)(iii) 
of this section for eligible areas shall instead receive the following 
monthly support amounts for such areas:
    (A) For 12 months starting the first day of the month following 
release of a public notice announcing the close of the 5G Fund Phase I 
auction, each mobile competitive eligible telecommunications carrier 
shall receive monthly support that is two-thirds (\2/3\) of the level 
described in paragraph (e)(5)(iii) of this section for the area.
    (B) For 12 months starting the month following the period described 
in paragraph (e)(6)(iv)(A) of this section, each mobile competitive 
eligible telecommunications carrier shall receive monthly support that 
is one-third (\1/3\) of

[[Page 75819]]

the level described in paragraph (e)(5)(iii) of this section for the 
area.
    (C) Following the period described in paragraph (e)(6)(iv)(B) of 
this section, no mobile competitive eligible telecommunications carrier 
shall receive monthly support for the area pursuant to this section.
    (7) Eligibility for support after 5G Fund Phase II auction. (i) 
Notwithstanding the schedule described in paragraphs (e)(6)(iii) or 
(iv) of this section, a mobile competitive eligible telecommunications 
carrier that receives monthly support pursuant to paragraphs 
(e)(6)(iii) or (iv) of this section, as applicable, and is a winning 
bidder in the 5G Fund Phase II auction shall receive support at the 
same level it was receiving support for such area at the time of the 
release of a public notice announcing the close of the 5G Fund Phase II 
auction until such time as the Office of Economics and Analytics and 
Wireline Competition Bureau determine whether or not to authorize the 
carrier to receive 5G Fund Phase II support.
    (A) Upon the Office of Economics and Analytics and Wireline 
Competition Bureau's release of a public notice approving a mobile 
competitive eligible telecommunications carrier's application for 
support submitted pursuant to Sec.  54.1014(b) and authorizing the 
carrier to receive 5G Fund Phase II support, the carrier shall no 
longer receive support at the level of monthly support pursuant to this 
section for such area. Thereafter, the carrier shall receive monthly 
support in the amount of its 5G Fund Phase II winning bid pursuant to 
Sec.  54.1017, provided that the Administrator shall decrease the 
amount of the carrier's support to the extent necessary to account for 
any support the carrier received during the period between the close of 
the 5G Fund Phase II auction and the release of the public notice 
authorizing the carrier to receive 5G Fund Phase II support.
    (B) A mobile competitive eligible telecommunications carrier that 
is a winning bidder in the 5G Fund Phase II auction but is not 
subsequently authorized to receive 5G Fund Phase II support shall no 
longer receive support at the level of monthly support pursuant to 
paragraph (e)(6)(iii) or (iv) of this section for such area, as 
applicable, following the determination not to authorize the carrier 
for 5G Fund Phase II support. Thereafter, the carrier shall receive 
monthly support as set forth in paragraphs (e)(7)(iv) or (v) of this 
section for such area, as applicable, provided that the Administrator 
shall decrease the amount of the carrier's support to the extent 
necessary to account for any support received during the period between 
the close of the 5G Fund Phase II auction and the Office of Economics 
and Analytics and Wireline Competition Bureau's authorization 
determination.
    (ii) A mobile competitive eligible telecommunications carrier that 
does not receive monthly support pursuant to this section and is a 
winning bidder in the 5G Fund Phase II auction shall receive monthly 
support pursuant to Sec.  54.1017.
    (iii) A mobile competitive eligible telecommunications carrier that 
receives monthly support pursuant to paragraph (e)(6)(iii) of this 
section for an area for which support is not won in the 5G Fund Phase 
II auction shall continue to receive support for that area as described 
in paragraph (e)(6)(iii) of this section.
    (iv) A mobile competitive eligible telecommunications carrier that 
receives monthly support pursuant to paragraph (e)(6)(iii) of this 
section for an area for which support is won in the 5G Fund Phase II 
auction and for which the carrier is not the winning bidder shall 
receive the following monthly support amounts for such areas:
    (A) For 12 months starting the first day of the month following 
release of a public notice announcing the close of the 5G Fund Phase II 
auction, the mobile competitive eligible telecommunications carrier 
shall receive monthly support that is two-thirds (\2/3\) of the level 
described in paragraph (e)(6)(iii) of this section for the area.
    (B) For 12 months starting the month following the period described 
in paragraph (e)(7)(iv)(A) of this section, the mobile competitive 
eligible telecommunications carrier shall receive monthly support that 
is one-third (\1/3\) of the level described in paragraph (e)(6)(iii) of 
this section for the area.
    (C) Following the period described in paragraph (e)(7)(iv)(B) of 
this section, the mobile competitive eligible telecommunications 
carrier shall not receive monthly support for the area pursuant to this 
section.
    (v) All other mobile competitive eligible telecommunications 
carriers that receive monthly support pursuant to paragraph (e)(6)(iv) 
of this section for an area shall continue to receive support for the 
area pursuant to that paragraph.

0
10. Amend Sec.  54.313 by:
0
a. Revising paragraph (k); and
0
b. Adding new paragraph (n).
    The revisions and addition read as follows:


Sec.  54.313  Annual reporting requirements for high-cost recipients.

* * * * *
    (k) This section does not apply to recipients that solely receive 
support from Phase I of the Mobility Fund.
* * * * *
    (n) In addition to the information and certifications in paragraph 
(a) of this section, a mobile competitive eligible telecommunications 
carrier receiving legacy high-cost support pursuant to Sec.  
54.307(e)(5), (e)(6), or (e)(7) shall certify whether it used any 
support pursuant to Sec.  54.207(f), and if so, whether it used such 
support in compliance with Sec.  54.7.

0
11. Amend Sec.  54.315 by revising paragraph (c)(2)(iv)(B) to read as 
follows:


Sec.  54.315  Application process for Connect America Fund phase II 
support distributed through competitive bidding.

* * * * *
    (c) * * *
    (2) * * *
    (iv) * * *
    (B) Has a branch office:
    (1) Located in the District of Columbia; or
    (2) Located in New York City, New York, or such other branch office 
agreed to by the Commission, that will accept a letter of credit 
presentation from the Administrator via overnight courier, in addition 
to in-person presentations;
* * * * *

0
12. Add Sec.  54.322 to read as follows:


Sec.  54.322  Public interest obligations and performance requirements, 
reporting requirements, and non-compliance mechanisms for mobile legacy 
high-cost support recipients.

    (a) General. A mobile competitive eligible telecommunications 
carrier that receives monthly support pursuant to Sec.  
54.307(e)(5)(ii), (e)(5)(iii), (e)(6)(iii), or (e)(7)(iii) shall deploy 
voice and broadband data services that meet at least the 5G-NR (New 
Radio) technology standards developed by the 3rd Generation Partnership 
Project with Release 15, or any successor release that may be adopted 
by the Office of Economics and Analytics and the Wireline Competition 
Bureau after notice and comment.
    (b) Service milestones and deadlines. A mobile competitive eligible 
telecommunications carrier that receives monthly support pursuant to 
Sec.  54.307(e)(5)(ii), (e)(5)(iii), (e)(6)(iii), or (e)(7)(iii) shall 
deploy 5G service that meets the performance requirements specified in 
paragraph (d) of this section to a percentage of the service areas for 
which the carrier receives monthly support and on a schedule as 
specified and adopted by the Office of Economics

[[Page 75820]]

and Analytics and Wireline Competition Bureau after notice and comment.
    (c) Support usage. A mobile competitive eligible telecommunications 
carrier that receives monthly support pursuant to Sec.  
54.307(e)(5)(ii), (e)(5)(iii), (e)(6)(iii) or (e)(7)(iii) shall use an 
increasing percentage of such support for the deployment, maintenance, 
and operation of mobile networks that provide 5G service as specified 
in paragraph (a) of this section and that meet the performance 
requirements specified in paragraph (d) of this section as follows:
    (1) Year one support usage. The carrier shall use at least one-
third (\1/3\) of the total monthly support received pursuant to Sec.  
54.307(e)(5)(ii), (e)(5)(iii), (e)(6)(iii), or (e)(7)(iii) in calendar 
year 2021 as specified in paragraph (c) of this section by December 31, 
2021.
    (2) Year two support usage. The carrier shall use at least two-
thirds (\2/3\) of the total monthly support received pursuant to Sec.  
54.307(e)(5)(ii), (e)(5)(iii), (e)(6)(iii), or (e)(7)(iii) in calendar 
year 2022 as specified in paragraph (c) of this section by December 31, 
2022.
    (3) Year three and subsequent year support usage. The carrier shall 
use all monthly support received pursuant to Sec.  54.307(e)(5)(ii), 
(e)(5)(iii), (e)(6)(iii), or (e)(7)(iii) as specified in paragraph (c) 
of this section in 2023 and thereafter.
    (4) Year one support usage flexibility. If the carrier is unable to 
meet the support usage requirement in paragraph (c)(1) of this section, 
the carrier shall have the flexibility to instead proportionally 
increase the support usage requirement in paragraph (c)(2) of this 
section such that its combined usage of monthly support received 
pursuant to Sec.  54.307(e)(5)(ii), (e)(5)(iii), (e)(6)(iii), or 
(e)(7)(iii) in calendar years 2021 and 2022 is equal to the total 
amount of such support that the carrier receives annually, provided 
that the carrier certifies to the Wireline Competition Bureau this 
amount and that it will make up for any shortfall in a filing due by 
March 31, 2021 or 30 days after Paperwork Reduction Act approval, 
whichever is later.
    (d) Performance requirements. A mobile competitive eligible 
telecommunications carrier that receives monthly support pursuant to 
Sec.  54.307(e)(5)(ii), (e)(5)(iii), (e)(6)(iii), or (e)(7)(iii) shall 
meet the following minimum baseline performance requirements for data 
speeds, data latency, and data allowances in areas that it has deployed 
5G service as specified in paragraph (a) of this section and for which 
it receives support for at least one plan that it offers:
    (1) Median data transmission rates of 35 Mbps download and 3 Mbps 
upload, and with at least 90 percent of measurements recording data 
transmission rates of not less than 7 Mbps download and 1 Mbps upload;
    (2) Transmission latency of 100 milliseconds or less round trip for 
successfully transmitted measurements (i.e., ignoring lost or timed-out 
packets); with at least 90 percent of measurements recording latency of 
100 milliseconds or less round trip, and
    (3) At least one service plan offered must include a data allowance 
that is equivalent to the average United States subscriber data usage 
as specified and adopted by the Office of Economics and Analytics and 
Wireline Competition Bureau after notice and comment.
    (e) Collocation obligations. A mobile competitive eligible 
telecommunications carrier that receives monthly support pursuant to 
Sec.  54.307(e)(5), (e)(6), or (e)(7) shall allow for reasonable 
collocation by other carriers of services that would meet the 
technological requirements specified in paragraph (a) of this section 
on all cell-site infrastructure constructed with universal service 
funds that it owns or manages in the area for which it receives such 
monthly support. In addition, during the time that the mobile 
competitive eligible telecommunications carrier receives such support, 
the carrier may not enter into facilities access arrangements that 
restrict any party to the arrangement from allowing others to collocate 
on the cell-site infrastructure.
    (f) Voice and data roaming obligations. A mobile competitive 
eligible telecommunications carrier that receives monthly support 
pursuant to Sec.  54.307(e)(5), (e)(6), or (e)(7) shall comply with the 
Commission's voice and data roaming requirements that are currently in 
effect on networks that are built with universal service funds.
    (g) Reasonably comparable rates. A mobile competitive eligible 
telecommunications carrier that receives monthly support pursuant to 
Sec.  54.307(e)(5), (e)(6), or (e)(7) shall offer its services in the 
areas for which it receives such monthly support at rates that are 
reasonably comparable to those rates offered in urban areas and must 
advertise the voice and broadband services it offers in its subsidized 
service areas. A mobile competitive eligible telecommunications 
carrier's rates shall be considered reasonably comparable to urban 
rates, based upon the most recently-available decennial U.S. Census 
Bureau data identifying areas as urban, if rates for services in rural 
areas fall within a reasonable range of urban rates for reasonably 
comparable voice and broadband services.
    (1) If the carrier offers service in urban areas, it may 
demonstrate that it offers reasonably comparable rates if it offers the 
same rates, terms, and conditions (including usage allowances, if any, 
for a specific rate) in both urban and rural areas or if one of the 
carrier's stand-alone voice service plans and one service plan offering 
data are substantially similar to plans it offers in urban areas.
    (2) If the carrier does not offer service in urban areas, it may 
demonstrate that it offers reasonably comparable rates by identifying a 
carrier that does offer service in urban areas and the specific rate 
plans to which its plans are reasonably comparable, along with 
submission of corroborating evidence that its rates are reasonably 
comparable, such as marketing materials from the identified carrier.
    (h) Initial report of current service offerings. (1) A mobile 
competitive eligible telecommunications carrier that receives monthly 
support pursuant to Sec.  54.307(e)(5), (e)(6), or (e)(7) shall submit 
an initial report describing its current service offerings in its 
subsidized service areas and how the monthly support it is receiving is 
being used in such areas no later than three months after the effective 
date of the Report and Order, FCC 20-150, and Paperwork Reduction Act 
approval. This report shall include the following information:
    (i) Information regarding the carrier's current service offerings 
in its subsidized service areas, including the highest level of 
technology deployed, a target date for when 5G broadband service 
meeting the performance requirements specified in paragraph (d) of this 
section will be deployed within the subsidized service area, and an 
estimate of the percentage of area covered by 5G deployment meeting the 
performance requirements specified in paragraph (d) of this section 
within the subsidized service area;
    (ii) A brief narrative describing its current service offerings and 
providing an accounting of how monthly support has been used to provide 
mobile wireless services for the 12-month period prior to the deadline 
of this report;
    (iii) Detailed cell-site and sector infrastructure information for 
infrastructure that the carrier uses to provide service in its 
subsidized service areas;
    (iv) Certification that the carrier has filed relevant deployment 
data (either via FCC Form 477 or the Digital Opportunity Data 
Collection, as

[[Page 75821]]

appropriate) that reflect its current deployment covering its 
subsidized service areas;
    (v) Certification that the carrier is in compliance with the public 
interest obligations as set forth in this section and all of the terms 
and conditions associated with the continued receipt of such monthly 
support disbursements; and
    (vi) Additional information as required by the Office of Economics 
and Analytics and Wireline Competition Bureau after release of a public 
notice detailing the procedures to file this report.
    (2) The party submitting the report must certify that it has been 
authorized to do so by the mobile competitive eligible 
telecommunications carrier that receives support.
    (3) Each initial report of current service offerings shall be 
submitted solely via the Administrator's online portal.
    (i) The Commission and the Administrator shall treat infrastructure 
data submitted as part of such reports as presumptively confidential.
    (ii) The Administrator shall make such reports available to the 
Commission and to the relevant state, territory, and Tribal 
governmental entities, as applicable.
    (4) A mobile competitive eligible telecommunications carrier that 
receives monthly support pursuant to Sec.  54.307(e)(5), (e)(6), or 
(e)(7) shall have a continuing obligation to maintain the accuracy and 
completeness of the information provided in its initial report. Any 
substantial change in the accuracy or completeness of such a report 
must be reported as an update to its submitted report within ten (10) 
business days after the reportable event occurs.
    (5) The Commission shall retain the authority to look behind a 
mobile competitive eligible telecommunications carrier's initial report 
and to take action to address any violations.
    (i) Annual reports. (1) A mobile competitive eligible 
telecommunications carrier that receives monthly support pursuant to 
Sec.  54.307(e)(5) (e)(6), or (e)(7) shall submit an annual report no 
later than July 1 in each year following the year in which its initial 
report of current service offerings as specified in paragraph (h) of 
this section is submitted. Each such report shall include the following 
information:
    (i) Except for areas for which the carriers receives monthly 
support pursuant to Sec.  54.307(e)(5)(iv), (e)(6)(iv) or (e)(7)(iv), 
updated information regarding the carrier's current service offerings 
in its subsidized service areas for the previous calendar year, 
including the highest level of technology deployed, a target date for 
when 5G broadband service meeting the performance requirements 
specified in paragraph (d) of this section will be deployed within the 
subsidized service area, and an estimate of the percentage of area 
covered by 5G deployment meeting the performance requirements specified 
in paragraph (d) of this section within the subsidized service area;
    (ii) A brief narrative providing an accounting of the support the 
carrier has received and how monthly support has been used to provide 
mobile wireless services for the previous calendar year, with an 
indication of which of these expenditures were used to meet the 
requirements specified in paragraph (c) of this section within the 
subsidized service area;
    (iii) Detailed cell-site and sector infrastructure information for 
infrastructure that the carrier uses to provide service in its 
subsidized service areas;
    (iv) Certification that the carrier has filed relevant deployment 
data (either via FCC Form 477 or the Digital Opportunity Data 
Collection, as appropriate) that reflect its current deployment 
covering its subsidized service areas;
    (v) Certification that the carrier is in compliance with the public 
interest obligations as set forth in this section and all of the terms 
and conditions associated with the continued receipt of monthly 
support; and
    (vi) Additional information as required by the Office of Economics 
and Analytics and Wireline Competition Bureau after release of a public 
notice detailing the procedures to file these reports.
    (2) A mobile competitive eligible telecommunications carrier that 
receives monthly support pursuant to Sec.  54.307(e)(5), (e)(6), or 
(e)(7) shall supplement the information provided to the Administrator 
in any annual report within ten (10) business days from the onset of 
any reduction in the percentage of areas for which the recipient 
receives support being served after the filing of an initial or annual 
certification report or in the event of any failure to comply with any 
of the requirements for continued receipt of such support.
    (3) The party submitting the annual report must certify that it has 
been authorized to do so by mobile competitive eligible 
telecommunications carrier that receives support.
    (4) Each annual report shall be submitted solely via the 
Administrator's online portal.
    (i) The Commission and the Administrator shall treat infrastructure 
data submitted as part of such a report as presumptively confidential.
    (ii) The Administrator shall make such reports available to the 
Commission and to the relevant state, territory, and Tribal 
governmental entities, as applicable.
    (5) A mobile competitive eligible telecommunications carrier that 
receives monthly support pursuant to Sec.  54.307(e)(5), (e)(6), or 
(e)(7) shall have a continuing obligation to maintain the accuracy and 
completeness of the information provided in its annual reports. Any 
substantial change in the accuracy or completeness of any such report 
must be reported as an update to the submitted annual report within ten 
(10) business days after the reportable event occurs.
    (6) The Commission shall retain the authority to look behind a 
mobile competitive eligible telecommunications carrier's annual reports 
and to take action to address any violations.
    (j) Service milestone reports. (1) A mobile competitive eligible 
telecommunications carrier that receives monthly support pursuant to 
Sec.  54.307(e)(5)(ii), (e)(5)(iii), (e)(6)(iii), or (e)(7)(iii) shall 
submit a report after each of the service milestones described in 
paragraph (b) of this section by the deadlines established by the 
Office of Economics and Analytics and Wireline Competition Bureau 
demonstrating that it has deployed 5G service that meets the 
performance requirements specified in paragraph (d) of this section, 
which shall include information as required by the Office of Economics 
and Analytics and Wireline Competition Bureau in a public notice.
    (2) All data submitted in or certified to in any service milestone 
report shall be subject to verification by the Administrator for 
compliance with the performance requirements specified in paragraph (d) 
of this section.
    (k) Non-compliance measures for failure to comply with performance 
requirements or public interest obligations. (1) A mobile competitive 
eligible telecommunications carrier that receives monthly support 
pursuant to Sec.  54.307(e)(5) (e)(6), or (e)(7) that fails to comply 
with the public interest obligations set forth in paragraphs (e) 
through (j) of this section, fails to comply with the performance 
requirements set forth in paragraph (d) of this section at the 
prescribed level by the applicable service milestone

[[Page 75822]]

deadline established in paragraph (b) of this section, or that fails to 
use monthly support as set forth in paragraph (c) of this section must 
notify the Wireline Competition Bureau and the Administrator within 10 
business days of its non-compliance.
    (2) Upon notification by a carrier of its non-compliance pursuant 
to paragraph (k) of this section, or a determination by the 
Administrator or Wireline Competition Bureau of a carrier's non-
compliance with any of the public interest obligations set forth in 
paragraphs (e) through (j) of this section or the performance 
requirements set forth in paragraph (d) of this section, the carrier 
will be deemed to be in default, and for monthly support received 
pursuant to Sec.  54.307(e)(5), (e)(6), or (e)(7), will no longer be 
eligible to receive such support, will receive no further support 
disbursements, and may be subject to recovery of up to the amount of 
support received since the effective date of the Report and Order, FCC 
20-150, that was not used for the deployment, maintenance, and 
operation of mobile networks that provide 5G service as specified in 
paragraph (a) of this section and that meet the performance 
requirements specified in paragraph (d) of this section. The carrier 
may also be subject to further action, including the Commission's 
existing enforcement procedures and penalties, potential revocation of 
ETC designation, and suspension or debarment pursuant to Sec.  54.8.
    (3) A mobile competitive eligible telecommunications carrier that 
voluntarily relinquishes receipt of monthly support pursuant to Sec.  
54.307(e)(5), (e)(6), or (e)(7) will no longer be required to comply 
with the public interest obligations specified in this section, except 
that the carrier may be deemed to be in default and subject to recovery 
of support as set forth in paragraph (k)(2) of this section.

0
13. Amend Sec.  54.804 by revising paragraph (c)(2)(iv)(B) to read as 
follows:


Sec.  54.804  Rural Digital Opportunity Fund application process.

* * * * *
    (c) * * *
    (2) * * *
    (iv) * * *
    (B) Has a branch office:
    (1) Located in the District of Columbia; or
    (2) Located in New York City, New York, or such other branch office 
agreed to by the Commission, that will accept a letter of credit 
presentation from the Administrator via overnight courier, in addition 
to in-person presentations;
* * * * *

0
14. Amend subpart L by revising the heading and Sec. Sec.  54.1011 
through 54.1021 to read as follows:

Subpart L--Mobility Fund and 5G Fund

Sec.
* * * * *
54.1011 5G Fund.
54.1012 Geographic areas eligible for support.
54.1013 Applicant eligibility.
54.1014 Application process.
54.1015 Public interest obligations and performance requirements for 
5G Fund support recipients.
54.1016 Letter of credit.
54.1017 5G Fund support disbursements.
54.1018 Annual reports.
54.1019 Interim service and final service milestone reports.
54.1020 Non-compliance measures for 5G Fund support recipients.
54.1021 Record retention for the 5G Fund.


Sec.  54.1011  5G Fund.

    (a) The Commission will use competitive bidding, as provided in 
part 1, subpart AA, of this chapter, to determine the recipients of 
support available through the 5G Fund and the amount(s) of support that 
they may receive for specific geographic areas, subject to applicable 
post-auction procedures.
    (b) 5G Fund support will be awarded in two phases using multi-
round, descending clock auctions.
    (c) Areas eligible for 5G Fund Phase I support will be those areas 
identified by the Office of Economics and Analytics and Wireline 
Competition Bureau in a public notice as showing a lack of 4G Long Term 
Evolution (LTE) and 5G coverage on an unsubsidized basis based on the 
mobile broadband coverage maps created by the Commission using coverage 
data submitted in the Digital Opportunity Data Collection pursuant to 
Sec.  1.7004(c)(3).
    (d) The Commission will incorporate an adjustment factor into the 
5G Fund auction design that will assign a weight to each geographic 
area eligible in the 5G Fund Phase I auction using the adjustment 
factor values adopted by the Office of Economics and Analytics and 
Wireline Competition Bureau and announced in a public notice.
    (e) The Commission will incorporate an adjustment factor into the 
methodology for disaggregation of high-cost legacy support pursuant to 
Sec.  54.307(e)(5)(iii) and (e)(5)(iv) that will assign a weight to 
each geographic area using the adjustment factor values adopted by the 
Office of Economics and Analytics and Wireline Competition Bureau and 
announced in a public notice.


Sec.  54.1012  Geographic areas eligible for support.

    (a) 5G Fund support will be made available for geographic areas 
identified as eligible by public notice.
    (b) Coverage units for purposes of conducting competitive bidding 
and disbursing support based on square kilometers will be identified by 
public notice for each area eligible for support.


Sec.  54.1013  Applicant eligibility.

    (a) An applicant for 5G Fund support shall be an eligible 
telecommunications carrier in an area in order to receive 5G Fund 
support for that area. The applicant may obtain its designation as an 
eligible telecommunications carrier after the close of a 5G Fund 
auction, provided that the applicant submits proof of its designation 
within 180 days after the release of the public notice identifying the 
applicant as a winning bidder. The eligible telecommunications carrier 
service area of a 5G Fund support recipient will not be required to 
conform to the service area of the rural telephone company serving the 
same area. An applicant for 5G Fund support shall not receive such 
support prior to the submission of proof of its designation as an 
eligible telecommunications carrier. After such submission, the 
eligible telecommunications carrier shall receive a balloon payment 
that will consist of the carrier's monthly 5G Fund support amount 
multiplied by the number of whole months between the first day of the 
month after the close of the auction and the issuance of the public 
notice authorizing the carrier to receive 5G Fund support.
    (b) An applicant must have exclusive access to Commission licensed 
spectrum and sufficient bandwidth in an area that enables it to satisfy 
the performance requirements specified in Sec.  54.1015 in order to 
receive 5G Fund support for that area. The applicant shall describe its 
access to spectrum as specified in Sec.  54.1014(a)(3) and certify, in 
a form acceptable to the Commission, that it has such access and 
sufficient bandwidth (at a minimum, 10 megahertz x 10 megahertz using 
frequency division duplex (FDD) or 20 megahertz using time division 
duplex (TDD)) in each area in which it intends to bid for support at 
the time it applies to participate in competitive bidding, and that it 
will retain such access for at least ten (10) years after the date on 
which it is authorized to receive

[[Page 75823]]

support. A winning bidder that applies for 5G Fund support applicant 
shall describe its access to spectrum as specified in Sec.  
54.1014(b)(2)(v) at the time it applies for support and certify, in a 
form acceptable to the Commission, that it has such access and 
sufficient bandwidth (at a minimum, 10 megahertz x 10 megahertz using 
frequency division duplex (FDD) or 20 megahertz using time division 
duplex (TDD)) in each area in which it is applying for support, and 
that it will retain such access for at least ten (10) years after the 
date on which it is authorized to receive support.
    (c) An applicant shall certify that it is financially and 
technically qualified to provide the services supported by the 5G Fund 
within the ten (10) year support term in each geographic area for which 
it seeks and is authorized to receive support.


Sec.  54.1014  Application process.

    (a) Application to participate in competitive bidding for 5G Fund 
support. In addition to providing the information specified in Sec.  
1.21001(b) of this chapter and any other information required by the 
Commission, an applicant to participate in competitive bidding for 5G 
Fund support shall:
    (1) Certify that the applicant is financially and technically 
capable of meeting the public interest obligations and performance 
requirements in Sec.  54.1015 in each area for which it seeks support;
    (2) Disclose its status as an eligible telecommunications carrier 
in any area for which it will seek support and associated study area 
code(s) or as an entity that will file an application to become an 
eligible telecommunications carrier in any such area after being 
identified as a winning bidder for such area in a 5G Fund auction, and 
certify that the disclosure is accurate;
    (3) Describe the Commission licensed spectrum to which the 
applicant has exclusive access that the applicant plans to use to meet 
its public interest obligations and performance requirements in areas 
for which it will bid for support, including whether the applicant 
currently holds a license for or leases the spectrum, including any 
necessary renewal expectancy, and whether such spectrum access is 
contingent upon receiving support in a 5G Fund auction, the license 
applicable to the spectrum to be accessed, the type of service covered 
by the license, the particular frequency band(s), the call sign, and 
the total amount of bandwidth (in megahertz) to which the applicant has 
access under the license applicable to the spectrum to be accessed, and 
certify that the description is accurate, that the applicant has access 
to spectrum in each area for which it intends to bid for support, and 
that the applicant will retain such access for at least ten (10) years 
after the date on which it is authorized to receive 5G Fund support;
    (4) Submit specified operational and financial information;
    (i) Indicate whether the applicant has been providing mobile 
wireless voice and/or mobile wireless broadband service for at least 
three years prior to the short-form application deadline (or is a 
wholly-owned subsidiary of an entity that has been providing such 
service for at least three years). An applicant for a 5G Fund auction 
will be deemed to have started providing mobile wireless broadband 
service on the date it began commercially offering service to end 
users. If the applicant is applying as a consortium or joint venture, 
the applicant will be permitted to rely on the length of time a member 
of the consortium or joint venture has been providing mobile service 
prior to the short-form application deadline in responding to this 
question;
    (ii) If the applicant has been providing mobile wireless voice and/
or mobile wireless broadband service for at least three years prior to 
the short-form application deadline (or is a wholly-owned subsidiary of 
an entity that has been providing such service for at least three 
years), it must:
    (A) Certify that the applicant has been providing mobile wireless 
voice and/or mobile wireless broadband service for at least three years 
prior to the short-form application deadline (or is a wholly-owned 
subsidiary of an entity that has been providing such service for at 
least three years),
    (B) Specify the number of years it (or its parent company, if it is 
a wholly-owned subsidiary) has been providing such service,
    (C) Certify that it (or its parent company, if it is a wholly-owned 
subsidiary) has submitted mobile wireless voice and/or mobile wireless 
broadband data as required on FCC Form 477 and/or in the Digital 
Opportunity Data Collection, as applicable, during that time period,
    (D) Provide each of the FCC Registration Numbers (FRNs) that the 
applicant or its parent company (and in the case of a holding company 
applicant, its operating companies) has used to submit mobile wireless 
voice and/or mobile wireless broadband data on FCC Form 477 and/or in 
the Digital Opportunity Data Collection, as applicable, during that 
time period.
    (iii) If the applicant has been providing mobile wireless voice 
and/or mobile wireless broadband service for fewer than three years 
prior to the application deadline (or is not a wholly-owned subsidiary 
of an entity that has been providing such service for at least three 
years), it must:
    (A) submit information concerning its operational history and a 
preliminary project description as prescribed by the Commission or the 
Office of Economics and Analytics and the Wireline Competition Bureau 
in a public notice;
    (B) submit a letter of interest from a qualified bank that meets 
the qualifications set forth in Sec.  54.1016 stating that the bank 
would provide a letter of credit as described in section to the 
applicant if the applicant becomes a winning bidder for bids of a 
certain dollar magnitude, as well as the maximum dollar amount for 
which the bank would be willing to issue a letter of credit to the 
applicant; and
    (C) submit a statement that the bank would be willing to issue a 
letter of credit that is substantially in the same form as the 
Commission's model letter of credit.
    (5) Certify that it will be subject to a forfeiture pursuant to 
Sec.  1.21004 in the event of an auction default; and
    (6) Certify that the party submitting the application is authorized 
to do so on behalf of the applicant.
    (b) Application by winning bidders for 5G Fund support--(1) 
Deadline. Unless otherwise provided by public notice, winning bidders 
for 5G Fund support shall file an application for 5G Fund support no 
later than ten (10) business days after the public notice identifying 
them as winning bidders.
    (2) Application contents. An application for 5G Fund support must 
contain:
    (i) Identification of the party seeking the support, including 
ownership information as set forth in Sec.  1.2112(a) of this chapter;
    (ii) Updated information regarding the agreements, arrangements, or 
understandings related to 5G Fund support disclosed in the application 
to participate in competitive bidding for 5G Fund support. A winning 
bidder may also be required to disclose in its application for 5G Fund 
support the specific terms, conditions, and parties involved in any 
agreement into which it has entered and the agreement itself;
    (iii) Certification that the applicant is financially and 
technically capable of providing the required coverage and performance 
levels within the specified timeframe in the geographic areas in which 
it won support;

[[Page 75824]]

    (iv) Proof of the applicant's status as an eligible 
telecommunications carrier, or a statement that the applicant will 
become an eligible telecommunications carrier in any area for which it 
seeks support within 180 days of the public notice identifying them as 
winning bidders, and certification that the proof is accurate;
    (v) A description of the Commission licensed spectrum to which the 
applicant has exclusive access that the applicant plans to use to meet 
its public interest obligations and performance requirements in areas 
for which it is winning bidder for support, including whether the 
applicant currently holds a license for or leases the spectrum, along 
with any necessary renewal expectancy, the license applicable to the 
spectrum to be accessed, the type of service covered by the license, 
the particular frequency band(s), the call sign, and the total amount 
of bandwidth (in megahertz) to which the applicant has access under the 
license applicable to the spectrum to be accessed, and certification 
that the description is accurate, that the winning bidder has access to 
spectrum in each area for which it is applying for support, and that 
the applicant will retain such access for the entire ten (10) year 5G 
Fund support term;
    (vi) A detailed project description that describes the network to 
be built, identifies the proposed technology, demonstrates that the 
project is technically feasible, discloses the complete project budget, 
and discusses each specific phase of the project (e.g., network design, 
construction, deployment, and maintenance), as well as a complete 
project schedule, including timelines, milestones, and costs;
    (vii) Certifications that the applicant has available funds for all 
project costs that exceed the amount of support to be received from 5G 
Fund and that the applicant will comply with all program requirements, 
including the public interest obligations and performance requirements 
set forth in Sec.  54.1015;
    (viii) Any guarantee of performance that the Commission may require 
by public notice or other proceedings, including but not limited to the 
letters of credit and opinion letter required in Sec.  54.1016, or a 
written commitment from an acceptable bank, as defined in Sec.  
54.1016, to issue such a letter of credit;
    (ix) Certification that the applicant will offer services in 
supported areas at rates that are reasonably comparable to the rates 
the applicant charges in urban areas;
    (x) Certification that the party submitting the application is 
authorized to do so on behalf of the applicant; and
    (xi) Such additional information as the Commission may require.
    (3) Application processing. (i) No application will be considered 
unless it has been submitted in an acceptable form during the period 
specified by public notice. No applications submitted or demonstrations 
made at any other time shall be accepted or considered.
    (ii) Any application that, as of the submission deadline, either 
does not identify the applicant seeking support as specified in the 
public notice announcing application procedures, or does not include 
required certifications, shall be denied.
    (iii) An applicant may be afforded an opportunity to make minor 
modifications to amend its application or correct defects noted by the 
applicant, the Commission, the Administrator, or other parties. Minor 
modifications include correcting typographical errors in the 
application and supplying non-material information that was 
inadvertently omitted or was not available at the time the application 
was submitted.
    (iv) Applications to which major modifications are made after the 
deadline for submitting applications shall be denied. Major 
modifications include, but are not limited to, any changes in the 
ownership of the applicant that constitute an assignment or change of 
control, or the identity of the applicant, or the certifications 
required in the application.
    (v) After receipt and review of the applications, a public notice 
shall identify each winning bidder that may be authorized to receive 5G 
Fund support, after the winning bidder submits a Letter of Credit and 
an accompanying opinion letter from its outside legal counsel as 
required by Sec.  54.1016, in a form acceptable to the Commission, and 
any final designation as an eligible telecommunications carrier that 
any applicant may still require. Each such winning bidder shall submit 
a Letter of Credit and an accompanying opinion letter from its outside 
legal counsel as required by Sec.  54.1016, in a form acceptable to the 
Commission, and any required final designation as an eligible 
telecommunications carrier no later than ten (10) business days 
following the release of the public notice.
    (vi) After receipt of all necessary information, a public notice 
will identify each winning bidder that is authorized to receive 5G Fund 
support.


Sec.  54.1015  Public interest obligations and performance requirements 
for 5G Fund support recipients.

    (a) General. A 5G Fund support recipient shall deploy voice and 
data services that meet at least the 5G-NR (New Radio) technology 
standards developed by the 3rd Generation Partnership Project with 
Release 15, or any successor release that may be adopted by the Office 
of Economics and Analytics and the Wireline Competition Bureau after 
notice and comment.
    (b) Interim and final service milestones and deadlines. A 5G Fund 
support recipient shall deploy 5G service as specified in paragraph (a) 
of this section as follows:
    (1) Year three interim service milestone deadline. A support 
recipient shall deploy service that meets the 5G Fund performance 
requirements as specified in paragraph (c) of this section to at least 
40 percent of the total square kilometers associated with the eligible 
areas for which it is authorized to receive 5G Fund support in a state 
no later than December 31 of the third full calendar year following 
authorization of support.
    (2) Year four interim service milestone deadline. A support 
recipient shall deploy service that meets the 5G Fund performance 
requirements as specified in paragraph (c) of this section to at least 
60 percent of the total square kilometers associated with the eligible 
areas for which it is authorized to receive 5G Fund support in a state 
no later than December 31 of the fourth full calendar year following 
authorization of support.
    (3) Year five interim service milestone deadline. A recipient shall 
deploy service that meets the 5G Fund performance requirements as 
specified in paragraph (c) of this section to at least 80 percent of 
the total square kilometers associated with the eligible areas for 
which it is authorized to receive 5G Fund support in a state no later 
than December 31 of the fifth full calendar year following 
authorization of support.
    (4) Year six final service milestone deadline. A support recipient 
shall deploy service that meets the 5G Fund performance requirements as 
specified in paragraph (c) of this section to at least 85 percent of 
the total square kilometers associated with the eligible areas for 
which it is authorized to receive 5G Fund support in a state no later 
than December 31 of the sixth full calendar year following funding 
authorization. In addition, a recipient shall deploy service meeting 
the 5G Fund performance requirements as specified in paragraph (c) of 
this section to at least 75 percent of the total square kilometers 
associated with every census tract or

[[Page 75825]]

census block group for which it was authorized to receive 5G Fund 
support no later than December 31 of the sixth full calendar year 
following authorization of support.
    (5) Optional year two interim service milestone deadline. A support 
recipient may, at its option, deploy service that meets the 5G Fund 
performance requirements as specified in paragraph (c) of this section 
to at least 20 percent of the total square kilometers associated with 
the eligible areas for which it is authorized to receive 5G Fund 
support in a state no later than December 31 of the second full 
calendar year following funding authorization. Meeting this optional 
interim service milestone would permit the support recipient, after 
confirmation of the service deployment by the Administrator, to reduce 
its letter of credit so that it is valued at an amount equal to one 
year of support as described in Sec.  54.1016(a)(1)(v).
    (c) Performance requirements. A recipient authorized to receive 5G 
Fund support shall meet the following minimum baseline performance 
requirements for data speeds, data latency, and data allowances in 
areas where it receives support:
    (1) Median of 35 Mbps download and 3 Mbps upload, and with at least 
90 percent of measurements recording data transmission rates of not 
less than 7 Mbps download and 1 Mbps upload; and
    (2) Transmission latency of 100 milliseconds or less round trip for 
successfully transmitted measurements (i.e., ignoring lost or timed-out 
packets), with at least 90 percent of measurements recording latency of 
100 milliseconds or less round trip.
    (3) At least one service plan offered must include a data allowance 
that is equivalent to the average United States subscriber data usage 
as specified by public notice.
    (d) Collocation obligations. During the 5G Fund support term, a 
recipient authorized to receive 5G Fund support shall allow for 
reasonable collocation by other carriers of services that would meet 
the technological requirements of the 5G Fund on all newly constructed 
cell-site infrastructure constructed with universal service funds that 
it owns or manages in the area(s) for which it receives 5G Fund 
support. In addition, during the 5G Fund support term, the recipient 
may not enter into facilities access arrangements that restrict any 
party to the arrangement from allowing others to collocate on the newly 
constructed cell-site infrastructure.
    (e) Voice and data roaming obligations. A recipient authorized to 
receive 5G Fund support shall comply with the Commission's voice and 
data roaming requirements that are currently in effect on networks that 
are built with 5G Fund support.
    (f) Reasonably comparable rates. A recipient authorized to receive 
5G Fund support shall offer its services in the areas for which it is 
authorized to receive support at rates that are reasonably comparable 
to those rates offered in urban areas and must advertise the voice and 
broadband services it offers in its subsidized service areas. A 5G Fund 
support recipient's rates shall be considered reasonably comparable to 
urban rates, based upon the most recently available decennial U.S. 
Census Bureau data identifying areas as urban, if rates for services in 
rural areas fall within a reasonable range of urban rates for 
reasonably comparable voice and broadband services.
    (1) If the recipient offers service in urban areas, it may 
demonstrate that it offers reasonably comparable rates if it offers the 
same rates, terms, and conditions (including usage allowances, if any, 
for a specific rate) in both urban and rural areas or if one of the 
carrier's rural stand-alone voice service plans and one rural service 
plan offering data are substantially similar to plans it offers in 
urban areas.
    (2) If the recipient does not offer service in urban areas, it may 
demonstrate that it offers reasonably comparable rates by identifying a 
carrier that does offer service in urban areas and the specific rate 
plans to which its rural plans are reasonably comparable, along with 
submission of corroborating evidence that its rates are reasonably 
comparable, such as marketing materials from the identified carrier.
    (g) Liability for failure to comply with performance requirements 
and public interest obligations. A support recipient that fails to 
comply with the performance requirements set forth in paragraph (c) of 
this section is subject to the non-compliance measures set forth in 
Sec.  54.1020. A support recipient that fails to comply with the public 
interest obligations or any other terms and conditions associated with 
receiving 5G Fund support may be subject to action, including the 
Commission's existing enforcement procedures and penalties, reductions 
in support amounts, revocation of eligible telecommunications carrier 
designation, and suspension or debarment pursuant to Sec.  54.8.


Sec.  54.1016  Letter of credit.

    (a) Before being authorized to receive 5G Fund support, a winning 
bidder shall obtain an irrevocable standby letter of credit which shall 
be acceptable in all respects to the Commission.
    (1) Each winning bidder that becomes authorized to receive 5G Fund 
support shall maintain the standby letter of credit in an amount equal 
to, at a minimum, one year of support, until the Administrator has 
verified that the support recipient serves at least 85 percent of the 
eligible square kilometers for which it is authorized to receive 
support in a state, and at least 75 percent of the eligible square 
kilometers in each eligible census tract, by the Year Six Final Service 
Milestone..
    (i) For Year One of a support recipient's support term, it must 
obtain a letter of credit valued at an amount equal to one year of 
support.
    (ii) For Year Two of a support recipient's support term, it must 
obtain a letter of credit valued at an amount equal to eighteen months 
of support.
    (iii) For Year Three of a support recipient's support term, it must 
obtain a letter of credit valued at an amount equal to two years of 
support.
    (iv) For Year Four of a support recipient's support term, and for 
each year thereafter unless the support recipient is allowed to reduce 
it pursuant to Sec.  54.1015(b), it must obtain a letter of credit 
valued at an amount equal to three years of support.
    (v) A support recipient may obtain a new letter of credit or renew 
its existing letter of credit so that it is valued at an amount equal 
to one year of support once it meets its optional or required service 
milestones as specified in Sec.  54.1015(b). The recipient may obtain 
or renew this letter of credit upon verification by the Administrator 
that it has deployed service that meets the 5G Fund deadlines as 
specified in Sec.  54.1015(b) and performance requirements as specified 
in Sec.  54.1015(c). The recipient may maintain its letter of credit at 
this level for the remainder of its deployment term, so long as the 
Administrator verifies that the recipient successfully and timely meets 
its remaining required interim and final service milestones.
    (vi) A support recipient that fails to meet its required interim 
service milestones must obtain a new letter of credit or renew its 
existing letter of credit valued at an amount equal to its existing 
letter of credit, plus an additional year of support, up to a maximum 
of three years of support.
    (vii) A support recipient that fails to meet two or more required 
interim service milestones must maintain a letter of credit valued at 
an amount equal to three years of support and may

[[Page 75826]]

be subject to additional noncompliance penalties as set forth in Sec.  
54.1020.
    (2) The bank issuing the letter of credit shall be acceptable to 
the Commission. A bank that is acceptable to the Commission is:
    (i) Any United States bank:
    (A) That is insured by the Federal Deposit Insurance Corporation, 
and
    (B) That has a bank safety rating issued by Weiss of B-or better; 
or
    (ii) CoBank, so long as it maintains assets that place it among the 
100 largest United States Banks, determined on basis of total assets as 
of the calendar year immediately preceding the issuance of the letter 
of credit and it has a long-term unsecured credit rating issued by 
Standard & Poor's of BBB- or better (or an equivalent rating from 
another nationally recognized credit rating agency); or
    (iii) The National Rural Utilities Cooperative Finance Corporation, 
so long as it maintains assets that place it among the 100 largest 
United States Banks, determined on basis of total assets as of the 
calendar year immediately preceding the issuance of the letter of 
credit and it has a long-term unsecured credit rating issued by 
Standard & Poor's of BBB- or better (or an equivalent rating from 
another nationally recognized credit rating agency); or
    (iv) Any non-United States bank:
    (A) That is among the 100 largest non-U.S. banks in the world, 
determined on the basis of total assets as of the end of the calendar 
year immediately preceding the issuance of the letter of credit 
(determined on a U.S. dollar equivalent basis as of such date);
    (B) Has a branch office
    (i) Located in the District of Columbia; or
    (ii) Located in New York City, New York, or such other branch 
office agreed to by the Commission, that will accept a letter of credit 
presentation from the Administrator via overnight courier, in addition 
to in-person presentations; and
    (C) Has a long-term unsecured credit rating issued by a widely 
recognized credit rating agency that is equivalent to a BBB- or better 
rating by Standard & Poor's; and
    (D) Issues the letter of credit payable in United States dollars.
    (b) Before being authorized to receive 5G Fund support, a winning 
bidder shall obtain an opinion letter from its outside legal counsel 
clearly stating, subject only to customary assumptions, limitations, 
and qualifications, that in a proceeding under Title 11 of the United 
States Code, 11 U.S.C. 101 et seq. (the ``Bankruptcy Code''), that the 
bankruptcy court would not treat the letter of credit or proceeds of 
the letter of credit as property of the winning bidder's bankruptcy 
estate, or the bankruptcy estate of any other winning bidder-related 
entity requesting issuance of the letter of credit, under section 541 
of the Bankruptcy Code.
    (c) Authorization to receive 5G Fund support is conditioned upon 
full and timely performance of all of the performance requirements set 
forth in Sec.  54.1015(c), and any additional terms and conditions upon 
which the support was granted.
    (1) Failure by a 5G Fund support recipient to meet any of the 
service milestones set forth in Sec.  54.1015(b) will trigger reporting 
obligations and the withholding of support as described in Sec.  
54.1020. Failure to come into full compliance during the relevant cure 
period as described in Sec.  54.1020(b)(4)(ii) or Sec.  54.1020(c) will 
trigger a recovery action by the Administrator set forth in Sec.  
54.1020(b)(4)(ii) or Sec.  54.1020(c), as applicable. If the recipient 
authorized to receive 5G Fund support does not repay the requisite 
amount of support within six months, the Administrator will be entitled 
to draw upon the entire amount of the letter of credit and may 
disqualify the 5G Fund support recipient from the receipt of 5G Fund 
support or additional universal service support.
    (2) The default will be evidenced by a letter issued by the Chief 
of the Wireline Competition Bureau, or its respective designees, which 
letter, describing the performance default and attached to a standby 
letter of credit draw certificate, shall be sufficient for a draw on 
the standby letter of credit for the entire amount of the standby 
letter of credit.


Sec.  54.1017  5G Fund support disbursements.

    (a) A winning bidder of 5G Fund support will be advised by public 
notice whether it has been authorized to receive support.
    (b) 5G Fund support will be disbursed on a monthly basis to a 
recipient for ten (10) years following the date on which it is 
authorized to receive support.
    (c) If a 5G Fund support recipient fails to comply with the 
performance requirements of the 5G Fund, the Administrator shall 
reduce, pause, or freeze, the monthly payments to the recipient until 
the recipient cures the non-compliance, as provided in Sec.  54.1020. 
As set forth in Sec.  54.1015(g), if a support recipient fails to 
comply with the public interest obligations or any other terms and 
conditions associated with receiving 5G Fund support, it may be subject 
reductions or suspension of support amounts.
    (d) A winning bidder of 5G Fund support may not use such support to 
fulfill any enforceable commitments with the Commission to deploy 5G 
service.


Sec.  54.1018  Annual reports.

    (a) A 5G Fund support recipient authorized to receive 5G Fund 
support shall submit an annual report to the Administrator no later 
than July 1 of each year after the year in which it was authorized to 
receive support. Each support recipient shall certify in its annual 
report that it is in compliance with the public interest obligations, 
performance requirements, and all of the terms and conditions 
associated with the receipt of 5G Fund support in order to continue 
receiving 5G Fund support disbursements.
    (b) All 5G Fund support recipients shall supplement the information 
provided in an annual report to the Administrator within 10 business 
days from the onset of any reduction in the percentage of the total 
eligible square kilometers being served in a state after the filing of 
an annual certification report or in the event of any failure to comply 
with any of the 5G Fund requirements.
    (c) The party submitting the annual report must certify that it has 
been authorized to do so by the 5G Fund support recipient.
    (d) Each annual report shall be submitted solely via the 
Administrator's online portal.
    (1) The Commission and the Administrator shall treat infrastructure 
data submitted as part of such a report as presumptively confidential.
    (2) The Administrator shall make such reports available to the 
Commission and to the relevant state, territory, and Tribal 
governmental entities, as applicable.
    (e) A 5G Fund support recipient shall have a continuing obligation 
to maintain the accuracy and completeness of the information provided 
in its annual reports. Any substantial change in the accuracy or 
completeness of any annual report must be reported as an update to the 
submitted annual report within ten (10) business days after the 
reportable event occurs.
    (f) The Commission shall retain the authority to look behind 5G 
Fund support recipients' annual reports and to take action to address 
any violations.


Sec.  54.1019  Interim service and final service milestone reports.

    (a) A recipient authorized to receive 5G Fund support shall submit 
a report to the Administrator on or before March 1 after the third, 
fourth, fifth, and sixth

[[Page 75827]]

service milestone deadlines established in Sec.  54.1015(b) 
demonstrating that it has deployed service meeting the 5G Fund 
performance requirements specified in Sec.  54.1015(c), which shall 
include the following:
    (1) Certifications to representative data submitted in the Digital 
Opportunity Data Collection or as part of FCC Form 477, as applicable, 
demonstrating mobile transmissions to and from the network that 
establish compliance with the 5G Fund coverage, speed, and latency 
requirements;
    (2) On-the-ground measurement tests to substantiate 5G broadband 
coverage data:
    (i) With at least three tests conducted per square kilometer, 
measured by overlaying a uniform grid of one square kilometer (1 km by 
1 km) on the recipient's submitted in-vehicle 5G coverage maps within 
the area for which 5G Fund support was awarded;
    (ii) For a subset of drive-testable grid cells, such that the 
minimum percentage of drive-testable grid cells tested equals the 
minimum percentage of coverage required for each service buildout 
milestone (i.e., interim milestones of 40 percent, 60 percent, and 80 
percent, and the final milestone of 85 percent), with previously 
reported testing being cumulative; and
    (iii) Where a drive-testable grid cell is any grid cell that has 
more than the de minimis amount of total roads specified in a public 
notice, based upon the most recent roadway data from the U.S. Census 
Bureau available for this purpose, considering roads classified in the 
primary road (S1100), secondary road (S1200), local road (S1400), and 
service drive (S1640) categories.
    (3) Detailed cell-site and sector infrastructure information; and
    (4) Additional information as required by the Commission in a 
public notice.
    (b) All data submitted and certified to in compliance with a 
recipient's public interest obligations in the milestone report shall 
be in compliance with standards set forth in the applicable public 
notice and shall be certified by a professional engineer.
    (c) Each service milestone report shall be submitted solely via the 
Administrator's online portal.
    (d) All data submitted in and certified to in any service milestone 
report shall be subject to verification by the Administrator for 
compliance with the 5G Fund performance requirements specified in Sec.  
54.1015(c).


Sec.  54.1020  Non-compliance measures for 5G Fund support recipients.

    (a) General. A 5G Fund support recipient that has not deployed 
service that meets the 5G Fund performance requirements specified in 
Sec.  54.1015(c) to at least 20 percent of the total square kilometers 
associated with the eligible areas for which it is authorized to 
receive support in a state by the Year Three Interim Service Milestone 
deadline must notify the Commission and the Administrator within ten 
(10) business days after the Year Three Interim Service Milestone 
deadline that it failed to meet this milestone. Upon such notification, 
the support recipient will be deemed to be in default. The Wireline 
Competition Bureau will issue a letter evidencing the default and the 
support recipient will be subject to full support recovery. The 
provisions of paragraph (b) of this section will not be applicable to 
such a support recipient.
    (b) Interim service milestones. A 5G Fund support recipient must 
notify the Commission, the Administrator, and the relevant state, U.S. 
Territory, or Tribal government, if applicable, within ten (10) 
business days after the applicable interim service milestone deadline 
if it has failed to meet an interim milestone. Upon notification that a 
support recipient has defaulted on an interim service milestone, the 
Wireline Competition Bureau will issue a letter evidencing the default. 
For purposes of determining whether a default has occurred, the support 
recipient must be offering service meeting the requisite performance 
requirements specified in Sec.  54.1015(c). The issuance of this letter 
shall initiate reporting obligations and withholding of a percentage of 
the 5G Fund support recipient's total monthly 5G Fund support, if 
applicable, starting the month after issuance of the letter:
    (1) Tier 1. If a support recipient has a compliance gap of at least 
five percent but less than 15 percent of the total square kilometers 
associated with the eligible areas in a state for which it is to have 
deployed service that meets the 5G Fund performance requirements 
specified in Sec.  54.1015(c) by the interim service milestone, the 
Wireline Competition Bureau will issue a letter to that effect. 
Starting three months after the issuance of this letter, a support 
recipient will be required to file a report with the Administrator 
every three months that identifies the eligible square kilometers to 
which the support recipient has newly deployed facilities capable of 
delivering service that meets the requisite 5G Fund performance 
requirements in the previous quarter. The support recipient must 
continue to file quarterly reports until it has reported, and the 
Administrator has verified, that it has reduced the compliance gap to 
less than five percent of the total square kilometers associated with 
the eligible areas for which it is authorized to receive support in a 
state by that interim service milestone and the Wireline Competition 
Bureau issues a letter to that effect. A support recipient that files a 
quarterly report late, but within seven days after the due date 
established by the letter issued by the Wireline Competition Bureau for 
filing the report, will have its 5G Fund support reduced by an amount 
equivalent to seven days of support. If a support recipient does not 
file a report within seven days after the report's due date, it will 
have its 5G Fund support reduced on a pro-rata daily basis equivalent 
to the period of non-compliance, plus the minimum seven-day reduction, 
until such time as the quarterly report is filed.
    (2) Tier 2. If a support recipient has a compliance gap of at least 
15 percent but less than 25 percent of the total square kilometers 
associated with the eligible areas in a state for which it is to have 
deployed service that meets the 5G Fund performance requirements 
specified in Sec.  54.1015(c) by the interim service milestone, the 
Administrator will withhold 15 percent of the support recipient's 
monthly support for that state and the support recipient will be 
required to file quarterly reports with the Administrator. Once the 
support recipient has reported, and the Administrator has verified, 
that it has reduced the compliance gap to less than 15 percent of the 
required eligible square kilometers for that interim service milestone 
for that state, the Wireline Competition Bureau will issue a letter to 
that effect, the Administrator will stop withholding support, and the 
support recipient will receive all of the support that had been 
withheld. The support recipient will then move to Tier 1 status.
    (3) Tier 3. If a support recipient has a compliance gap of at least 
25 percent but less than 50 percent of the total square kilometers 
associated with the eligible areas in a state for which it is to have 
deployed service that meets the 5G Fund performance requirements 
specified in Sec.  54.1015(c) by the interim service milestone, the 
Administrator will withhold 25 percent of the support recipient's 
monthly support for that state and the support recipient will be 
required to file quarterly reports with the Administrator. Once the 
support recipient has reported, and the Administrator has verified, 
that it has reduced the compliance gap to less than 25 percent of the 
required eligible square kilometers for that interim service milestone 
for that state, the Wireline Competition Bureau will issue a letter to 
that effect, and the support

[[Page 75828]]

recipient will move to Tier 2 or Tier 1 status, as applicable.
    (4) Tier 4. If a support recipient has a compliance gap of 50 
percent or more of the total square kilometers associated with the 
eligible areas in a state for which it is to have deployed service that 
meets the 5G Fund performance requirements specified in Sec.  
54.1015(c) by the interim service milestone:
    (i) The Administrator will withhold 50 percent of the support 
recipient's monthly support for that state and the support recipient 
will then be required to file quarterly reports with the Administrator. 
As with the other tiers, as the support recipient reports, and the 
Administrator verifies, that it has lessened the extent of its non-
compliance, and the Wireline Competition Bureau issues a letter to that 
effect, it will move through the tiers until it reaches Tier 1 (or no 
longer is out of compliance with the applicable interim service 
milestone).
    (ii) If after having 50 percent of its support withheld for six 
months, the support recipient has not reported that it is eligible for 
Tier 3 status (or one of the lower tiers), the Administrator will 
withhold 100 percent of the support recipient's forthcoming monthly 
support for that state and will commence a recovery action for a 
percentage of support that is equal to the support recipient's 
compliance gap plus 10 percent of the support recipient's support in 
that state that has been disbursed to that date.
    (5) If at any point prior to the Year Six Final Service Milestone 
the support recipient reports, and the Administrator verifies, that it 
is eligible for Tier 1 status or that it is no longer out of compliance 
with the 5G Fund performance requirements specified in Sec.  
54.1015(c), it will have its support fully restored and the 
Administrator will repay any funds that were recovered or withheld.
    (c) Year six final service milestone. A 5G Fund support recipient 
must notify the Commission, the Administrator, and the relevant state, 
U.S. Territory, or Tribal government, if applicable, within 10 business 
days if it has failed to meet the Year Six Final Milestone. Upon 
notification that the support recipient has not met the Year Six Final 
Service Milestone, the support recipient will have twelve months from 
the date of the Year Six Final Milestone deadline to come into full 
compliance with this milestone. If the support recipient does not 
report that it has come into full compliance with the Year Six Final 
Milestone within twelve months, as verified by the Administrator, the 
Wireline Competition Bureau will issue a letter to this effect. 
Recipients of 5G Fund support shall be subject to the following non-
compliance measures related to the recovery of support after this grace 
period:
    (1) If a support recipient has deployed service that meets the 5G 
Fund performance requirements specified in Sec.  54.1015(c) to at least 
80 percent of the total eligible square kilometers in a state, but less 
than the required 85 percent of the total eligible square kilometers in 
that state, the Administrator will recover an amount of support that is 
equal to 1.25 times the average amount of support per square kilometer 
that the support recipient has received in the state times the number 
of square kilometers unserved up to the 85 percent requirement;
    (2) If a support recipient has deployed service that meets the 5G 
Fund performance requirements specified in Sec.  54.1015(c) to at least 
75 percent, but less than 80 percent, of the total eligible square 
kilometers in that state, the Administrator will recover an amount of 
support that is equal to 1.5 times the average amount of support per 
square kilometer that the support recipient has received in the state 
times the number of square kilometers unserved up to the 85 percent 
requirement, plus 5 percent of the support recipient's total 5G Fund 
support for the 10 year support term for that state;
    (3) If a support recipient has deployed service that meets the 5G 
Fund performance requirements specified in Sec.  54.1015(c) to less 
than 75 percent of the total eligible square kilometers in a state, the 
Administrator will recover an amount of support that is equal to 1.75 
times the average amount of support per square kilometer that the 
support recipient has received in the state times the number of square 
kilometers unserved up to the 85 percent requirement, plus 10 percent 
of the support recipient's total 5G Fund support for the 10 year 
support term for that state.
    (d) Additional evidence required at year six final service 
milestone deadline. At the Year Six Final Service Milestone deadline, a 
5G Fund support recipient is also required to provide evidence, which 
is subject to verification by the Administrator, that it has provided 
service that meets the 5G Fund performance requirements specified in 
Sec.  54.1015(c) to at least 75 percent of the total square kilometers 
for each census tract or census tract group in which it was authorized 
to receive support. If after the grace period permitted in paragraph 
(c) of this section the Administrator has not verified based on the 
evidence provided that the support recipient has provided service that 
meets the 5G Fund performance requirements specified in Sec.  
54.1015(c) to at least 75 percent of the total square kilometers for 
each census tract or census tract group in which it was authorized to 
receive support, the Administrator will recover an amount of support 
that is equal to 1.5 times the average amount of support per square 
kilometer that the support recipient had received in the eligible area 
times the number of square kilometers unserved within that eligible 
area, up to the 75 percent requirement.
    (e) Compliance reviews. If the Administrator determines subsequent 
to the Year Six Final Service Milestone that a support recipient does 
not have sufficient evidence to demonstrate that it continues to offer 
service that meets the 5G Fund performance requirements specified in 
Sec.  54.1015(c) to all of the eligible square kilometers in the state 
as required by the Year Six Final Service Milestone, the Administrator 
shall immediately recover a percentage of support from the support 
recipient as specified in paragraphs (c)(1) through(c)(3) and (d) of 
this section.


Sec.  54.1021  Record retention for the 5G Fund.

    A recipient authorized to receive 5G Fund support and its agents 
are required to retain any documentation prepared for, or in connection 
with, the award of the 5G Fund support for a period of not less than 
ten (10) years after the date on which the recipient receives its final 
disbursement of 5G Fund support.

0
15. Amend Sec.  54.1508 by revising paragraph (c)(4)(ii) to read as 
follows:


Sec.  54.1508  Letter of credit for stage 2 fixed support recipients.

* * * * *
    (c) * * *
    (4) * * *
    (ii) Has a branch office:
    (A) Located in the District of Columbia, or
    (B) Located in New York City, New York, or such other branch office 
agreed to by the Commission, that will accept a letter of credit 
presentation from the Administrator via overnight courier, in addition 
to in-person presentations;
* * * * *
[FR Doc. 2020-24486 Filed 11-24-20; 8:45 am]
BILLING CODE 6712-01-P