[Federal Register Volume 88, Number 159 (Friday, August 18, 2023)]
[Proposed Rules]
[Pages 56579-56587]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-17486]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[WC Docket Nos. 10-90, 14-58, 09-197, 16-271; RM 11868; FCC 23-60; FR 
ID 162168]


Connect America Fund: A National Broadband Plan for Our Future 
High-Cost Universal Service Support; ETC Annual Reports and 
Certifications; Telecommunications Carriers Eligible To Receive 
Universal Service Support; Connect America Fund--Alaska Plan; Expanding 
Broadband Service Through the ACAM Program

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In this document, the Federal Communications Commission (FCC 
or Commission) seeks comment on how to address the immediate needs of 
legacy rate-of return support mechanisms, while balancing the 
Commission's objectives of maintaining its commitment to supporting 
broadband at evolving levels of service and also avoiding unnecessary 
duplication of support in light of other available funding programs.

DATES: Comments are due on or before September 18, 2023, and reply 
comments are due on or before October 2, 2023.

ADDRESSES: You may submit comments, identified by WC Docket Nos. 10-90, 
14-58, 09-197 and 16-271, by any of the following methods:
     Electronic Filers: Comments may be filed electronically 
using the internet by accessing the ECFS: www.fcc.gov/ecfs.
     Paper Filers: Parties who choose to file by paper must 
file an original and one copy of each filing.
    [cir] Filings can be sent by commercial overnight courier, or by 
first-class or overnight U.S. Postal Service mail. All filings must be 
addressed to the Commission's Secretary, Office of the

[[Page 56580]]

Secretary, Federal Communications Commission.
    [cir] Commercial overnight mail (other than U.S. Postal Service 
Express Mail and Priority Mail) must be sent to 9050 Junction Drive, 
Annapolis Junction, MD 20701.
    [cir] U.S. Postal Service first-class, Express, and Priority mail 
must be addressed to 45 L Street NE, Washington, DC 20554.
    [cir] Effective March 19, 2020, and until further notice, the 
Commission no longer accepts any hand or messenger delivered filings. 
This is a temporary measure taken to help protect the health and safety 
of individuals, and to mitigate the transmission of COVID-19. See FCC 
Announces Closure of FCC Headquarters Open Window and Change in Hand-
Delivery Policy, Public Notice, 35 FCC Rcd 2788, 2788-89 (OS 2020).
    Interested parties may file comments and reply comments on or 
before the dates indicated in this document. Comments may be filed 
using the Commission's Electronic Comment Filing System (ECFS). See 
Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121 
(1998).
    Comments and reply comments exceeding ten pages must include a 
short and concise summary of the substantive arguments raised in the 
pleading. Comments and reply comments must also comply with Sec.  1.49 
and all other applicable sections of the Commission's rules. The 
Commission directs all interested parties to include the name of the 
filing party and the date of the filing on each page of their comments 
and reply comments. All parties are encouraged to utilize a table of 
contents, regardless of the length of their submission. The Commission 
also strongly encourages parties to track the organization set forth in 
the Notice of Proposed Rulemaking (NPRM) or the concurrently adopted 
Notice of Inquiry (NOI) in order to facilitate its internal review 
process.
    People with Disabilities. To request materials in accessible 
formats for people with disabilities (braille, large print, electronic 
files, audio format), send an email to [email protected] or call the 
Consumer & Governmental Affairs Bureau at (202) 418-0530.

FOR FURTHER INFORMATION CONTACT: For further information, please 
contact, Jesse Jachman, Telecommunications Access Policy Division, 
Wireline Competition Bureau, at [email protected] or Theodore 
Burmeister, Special Counsel, Telecommunications Access Policy Division, 
Wireline Competition Bureau, at [email protected] 
[email protected] or 202-418-7400.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice 
of Proposed Rulemaking (NPRM) in WC Docket Nos. 10-90, 14-58, 09-197, 
16-271; RM 11868; FCC 23-60, adopted on July 23, 2023 and released on 
July 24, 2023. The full text of this document is available at the 
following internet address: https://docs.fcc.gov/public/attachments/FCC-23-60A1.pdf.
    Ex Parte Presentations--Permit-But-Disclose. The proceedings these 
NPRM and concurrently adopted NOI initiates shall be treated as 
``permit-but-disclose'' proceedings in accordance with the Commission's 
ex parte rules. Persons making ex parte presentations must file a copy 
of any written presentation or a memorandum summarizing any oral 
presentation within two business days after the presentation (unless a 
different deadline applicable to the Sunshine period applies).
    In light of the Commission's trust relationship with Tribal Nations 
and its commitment to engage in government-to-government consultation 
with them, it finds the public interest requires a limited modification 
of the ex parte rules in these proceedings. Tribal Nations, like other 
interested parties, should file comments, reply comments, and ex parte 
presentations in the record to put facts and arguments before the 
Commission in a manner such that they may be relied upon in the 
decision-making process consistent with the requirements of the 
Administrative Procedure Act. However, at the option of the Tribe, ex 
parte presentations made during consultations by elected and appointed 
leaders and duly appointed representatives of federally recognized 
Indian Tribes and Alaska Native Villages to Commission decision makers 
shall be exempt from disclosure in permit-but-disclose proceedings and 
exempt from the prohibitions during the Sunshine Agenda period. To be 
clear, while the Commission recognizes consultation is critically 
important, it emphasizes that they will rely in its decision-making 
only on those presentations that are placed in the public record for 
these proceedings.
    Persons making oral ex parte presentations are reminded that 
memoranda summarizing the presentation must (1) list all persons 
attending or otherwise participating in the meeting at which the ex 
parte presentation was made, and (2) summarize all data presented and 
arguments made during the presentation. If the presentation consisted 
in whole or in part of the presentation of data or arguments already 
reflected in the presenter's written comments, memoranda, or other 
filings in the proceeding, the presenter may provide citations to such 
data or arguments in his or her prior comments, memoranda, or other 
filings (specifying the relevant page and/or paragraph numbers where 
such data or arguments can be found) in lieu of summarizing them in the 
memorandum. Documents shown or given to Commission staff during ex 
parte meetings are deemed to be written ex parte presentations and must 
be filed consistent with rule 1.1206(b). In proceedings governed by 
rule 1.49(f) or for which the Commission has made available a method of 
electronic filing, written ex parte presentations and memoranda 
summarizing oral ex parte presentations, and all attachments thereto, 
must be filed through the electronic comment filing system available 
for that proceeding, and must be filed in their native format (e.g., 
.doc, .xml, .ppt, searchable .pdf). Participants in these proceedings 
should familiarize themselves with the Commission's ex parte rules.

I. Introduction

    1. With the NPRM, the Commission takes significant next steps in 
achieving its goal of ensuring all consumers, even those living in the 
costliest areas in the nation, have access to affordable and reliable 
broadband service so that they can work, learn, engage, and obtain 
essential services no matter where they live. The Commission also 
focuses on the future and seeks comment on how to reform its high-cost 
programs so that it can continue to efficiently promote broadband 
deployment and meaningfully support networks long term in the face of a 
significantly changing broadband landscape.

II. Notice of Proposed Rulemaking

    2. In the NPRM, the Commission seeks comment on how to amend legacy 
rate-of-return mechanisms to align them with the current broadband 
deployment and support environment. The broadband landscape has changed 
significantly in recent years. Rural consumers expect to receive higher 
quality and faster broadband service, which they need for work, school, 
healthcare, and more. To expedite the deployment of broadband, for 
example, Congress passed the Infrastructure Investment and Jobs Act 
(Infrastructure Act) and appropriated funds for the Broadband, Equity, 
Access, and Deployment Program (BEAD Program) and other Federal 
programs to provide grants to pay for deployment. Many

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states have also instituted broadband deployment funding programs. In 
other areas, unsubsidized providers have deployed high-speed broadband 
alternatives. The Commission, meanwhile, maintains its commitment to 
promote deployment of broadband at evolving levels of service, while 
seeking to avoid unnecessary duplication of services that would be 
provided in the absence of high-cost universal service, whether by 
unsubsidized competitors or through awards made by other programs. 
Although reforms for legacy mechanisms are needed now, the Commission 
also explores in the concurrently adopted NOI ways that different 
support mechanisms can continue to provide meaningful support over the 
longer term once broadband networks have been ubiquitously deployed.
    3. To address immediate needs, the Commission seeks comment on 
three key areas. First, the Commission seeks comment on a variety of 
reforms to legacy support mechanisms and appropriate funding, so that 
rate-of-return carriers are subject to a smaller reduction when the 
budget control mechanism applies. The Commission then seeks comment 
regarding appropriate deployment obligations for carriers receiving 
Connect America Fund Broadband Loop Support (CAF BLS) when the current 
deployment term ends this year. Finally, the Commission seeks comment 
regarding methodologies for preventing duplication of support between 
legacy high-cost universal service support mechanisms and funding 
provided by other Federal and state agencies for the deployment of 
broadband.
    4. The Commission seeks comment on needed reforms to legacy support 
mechanisms, including the budget control mechanism, deployment 
obligations, and the effect of funding awards for broadband deployment 
from other Federal and state agencies. Considering these issues in a 
holistic manner will provide the best opportunity for the Commission to 
achieve its universal service goals. Accordingly, the Commission seeks 
comment on modifications to the budget control mechanism and measures 
to better target funding to mechanisms that support modern broadband. 
In doing so, the Commission notes that it has, through the concurrently 
adopted Enhanced Alternative Connect America Cost Model (A-CAM) offer, 
provided a pathway for legacy carriers to make an enforceable 
commitment to provide 100/20 Mbps or faster service to all locations in 
their service areas, and re-set the budget for legacy support to 
reflect the exit of electing carriers from the pool to which the budget 
control mechanism applies. The Commission seeks comment regarding 
additional reforms to guide support for carriers that remain subject to 
legacy mechanisms during this next phase of broadband deployment.
    5. The Commission first seeks comment on adjustments to the budget, 
and measures that would mitigate the impact of the budget control 
mechanism when applied. In considering such measures, the Commission 
seeks to balance the requirements to provide support that is sufficient 
to achieve the Commission's universal service goals, but also provides 
appropriate incentives for prudent and efficient expenditures. As the 
Commission has previously recognized, the cost of universal service is 
ultimately borne by American consumers and businesses. Support that is 
greater than necessary therefore violates the Commission's obligation 
to be a good steward of the universal service fund.
    6. For rate-of-return carriers that receive legacy support, the 
Commission has attempted to achieve the necessary balance in part 
through the budget control mechanism, which operates to reduce CAF BLS 
and High Cost Loop Support (HCLS) to the budgeted amount. The 
Commission, however, has repeatedly acted to waive the budget control 
mechanism, even after the 2018 reforms, to avoid potentially calamitous 
consequences. Specifically, the Commission waived the budget control 
mechanism for the 2021-22, 2022-23, and 2023-24 July 1 to June 30 
tariff years, in which, to meet the budget, legacy support was 
forecasted to be reduced by 8.6%, 14%, and 18.4% respectively. While 
carriers have the ability to make up most reductions to CAF BLS through 
higher consumer broadband-only loop (CBOL) rates, the progressively 
larger support reductions would have resulted in unduly excessive CBOL 
rates. For example, in the 2023 Budget Control Waiver Order, the 
Commission estimated that applying the budget control would require 
carriers to impute CBOL revenues equivalent to an average monthly CBOL 
rate of $73. The Commission seeks comment in the following on 
mitigating the effect of the budget control mechanism through increases 
to the budget, but also reducing demand for legacy support through 
other reforms and offsetting increases to the budget through reductions 
to Connect America Fund Intercarrier Compensation (CAF ICC), which is 
outside the budget.
    7. Budget Control Mechanism. The Commission seeks comment on the 
budget for legacy support and methods for reducing support when 
appropriate in light of the reforms adopted for the Enhanced A-CAM 
program. In this document, as part of the adjustments the Commission 
makes to remove support received by carriers electing Enhanced A-CAM 
from the legacy budget, it re-sets the budget to the level of 2023-24 
demand. This reset is consistent with the NTCA--The Rural Broadband 
Association's (NTCA) proposal to ``recalibrate'' the budget.
    8. The Commission seeks comment regarding whether other adjustments 
should be made to the budget control mechanism to better account for 
ongoing trends. NTCA has further proposed that future savings 
associated with the election of fixed support by legacy support 
recipients should accrue to the budget applied to the remaining, non-
electing legacy support recipients. Under NTCA's proposal, transitional 
support for Enhanced A-CAM electing carriers begins to phase down after 
six years and the savings associated with the phasedown would be 
applied to the legacy support budget. The Commission seeks comment on 
NTCA's proposal for future budget increases. Should the budget control 
mechanism reflect ongoing trends to CBOL conversions? In 2018, the 
Commission noted that the conversion of voice lines to CBOLs was a 
driver of increasing support because, for most carriers, CBOLs provided 
a higher per-line support amount than voice lines. Further, the number 
of CBOLs continues to grow rapidly: in their 2023-24 forecasts for CAF 
BLS, carriers forecasted that CBOLs would increase by 18% over 2022-23, 
even as voice and voice-broadband bundled lines declined by 9%. Because 
CBOLs provide higher per-line support than voice lines, the increasing 
number of CBOL lines remains a significant driver of increases to 
uncapped CAF BLS. Should the Commission adjust the budget control 
mechanism to address the high rates of CBOL adoption? Are there other 
trends the Commission should consider if it modifies the budget control 
mechanism? How can the budget control mechanism accommodate these 
trends while also maintaining the budget control mechanism's 
fundamental purpose of constraining growth in legacy support? In the 
following, the Commission seeks comment regarding deployment 
obligations for locations that remain unserved after the BEAD Program 
process. If the Commission concludes that additional deployment 
obligations should be required, how, if at all, should the Commission 
assess the

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impact on the budget control mechanism? Broadband funding from programs 
established by the Infrastructure Act and other Federal programs may 
have a significant impact on the need for legacy support. Should the 
Commission revisit the budget or the budget control mechanism after the 
completion of the BEAD Program process, or after a certain period of 
deployment commitments have been realized?
    9. Increased CBOL Revenue Imputation. The Commission seeks comment 
regarding whether it should undertake reforms that would reduce the 
amount of pre-budget control support. Reducing the amount of CAF BLS 
and HCLS before the application of the budget control would have a 
similar effect on total support as applying the budget control, but may 
result in a more stable and predictable reduction factor when the 
budget control is applied. For example, the Commission seeks comment 
regarding whether it should increase the amount of end-user revenue 
imputed to CBOL lines in the CAF BLS calculation. While the CAF BLS 
calculations initially assume CBOL revenues of $42 per line per month, 
the Commission's rules have always anticipated that the application of 
the budget control mechanism would result in increased CBOL rates. 
Increasing the imputed CBOL revenue amount from $42 per line per month 
in the initial CAF BLS calculation would mathematically decrease the 
demand for CAF BLS as reflected in the budget control analysis. This 
would result in a lower budget reduction factor, even if the budget 
were held constant.
    10. Should the Commission increase the CBOL revenue imputation to 
reflect inflation? For instance, the Commission set the imputed CBOL 
rate at $42 in 2016. If the rate had grown with inflation (as measured 
by the same rate used to index the budget amount) since that time, it 
would now be more than $48.21. Similarly, the Commission partially 
justified the $42 per line per month revenue imputation based on the 
10/1 Mbps urban rate benchmark, which has increased 17.3% since 2016. 
If the CBOL revenue imputation had grown similarly, it would be $49.28 
per line per month. Many CBOLs provide 25/3 Mbps or faster service. 
Should the Commission impute the urban rate benchmark for 25/3 Mbps for 
some fraction of CBOL rates, and similarly the urban rate benchmark for 
higher speeds? If so, how should the CBOL rate be weighted to reflect 
the proportions of CBOLs providing different speeds?
    11. What would be the impact of raising the CBOL revenue imputation 
on end-user broadband rates? The Commission recognized in 2016 that, 
because the CBOL encompassed only the local line portion of providing 
broadband, end-user rates would likely be higher than just the CBOL 
rate. That said, many carriers do not charge the maximum allowable CBOL 
rate. The Commission seeks comment on the effect raising the CBOL 
imputation would have on affordability and reasonable comparability of 
rates. Are there other concerns that the Commission should consider or 
address with respect to raising the CBOL imputation? Section 69.132(d) 
of the Commission's rules caps the monthly CBOL charge for A-CAM and 
Alaska Plan support recipients at $42. If the Commission increases the 
CBOL revenue imputation for CAF BLS, should the Commission also raise 
the cap on CBOLs for A-CAM and Alaska Plan carriers? Are there 
considerations the Commission should take in account for related to the 
imputation of CBOLs for carriers serving Tribal lands? For example, the 
Commission notes that it included a Tribal Broadband Factor for the 
Enhanced A-CAM mechanism it adopts today, as it did for A-CAM II and 
the Rural Digital Opportunity Fund. Would it be in the public interest 
to include a similar factor for imputed CBOL revenue?
    12. HCLS. Currently both CAF BLS and HCLS are subject to the budget 
control mechanism, but only CAF BLS is associated with broadband 
deployment obligations. Because HCLS is indexed to growth or loss of 
voice lines (as well as inflation), it is declining as voice lines are 
converted to CBOLs. Even with those declines, however, HCLS is likely 
to continue for many years as a financial benefit. Should the 
Commission take steps to reduce HCLS and target a larger share of the 
legacy support to CAF BLS, with its associated broadband deployment 
obligations? The Commission seeks comment on how HCLS should be phased 
down, if it concluded it would be appropriate to do so. One possibility 
would be for the HCLS indexed cap to decline in 10 regular annual 
increments until it reaches $0. Would a period longer or shorter than 
10 years be better? Are there alternative methods of phasing down HCLS 
that the Commission should consider?
    13. CAF ICC. Another avenue for increasing the legacy budget amount 
without further straining the contribution factor would be to shift 
support from other mechanisms. The Commission seeks comment on whether 
it should increase the budget for legacy carriers to account for 
reductions in CAF ICC support. At its inception, the budget control 
mechanism was set by first subtracting the amount of CAF ICC received 
by rate-of-return carriers (as well as any A-CAM support) from an 
overall $2 billion budget. In 2018, when the Commission re-set the 
budget and indexed it to inflation, however, it delinked CAF ICC from 
the budget for CAF BLS and HCLS. What benefits has unlinking CAF ICC 
from the budget provided? A-CAM and Alaska Plan carriers also receive 
CAF ICC. Would it be appropriate to link reductions to CAF ICC for 
those carriers to an increase in the legacy support budget? Is there 
another appropriate purpose for which reductions in CAF ICC for A-CAM 
and Alaska Plan carriers should be allocated?
    14. The Commission also seeks comment regarding whether it should 
adopt measures to accelerate the phase out of CAF ICC for rate-of-
return carriers. Unlike CAF BLS, CAF ICC does not have defined 
broadband deployment obligations. If the reductions to CAF ICC were 
linked to the budget for legacy universal service support, as discussed 
in this document, then an accelerated phase out would increase the 
portion of universal service support tied to enforceable deployment of 
modern broadband networks.
    15. Further, while the Commission recognized, at the time of 
adoption, that CAF ICC would phase out over a longer period for rate-
of-return carriers than for price cap carriers (who have received no 
CAF ICC since 2020), it did not intend the transition to be 
interminable. Rate-of-return carriers (including A-CAM I and II 
recipients and carriers subject to the Alaska Plan) received $351 
million in 2022, which is only 11% less than the $395 million those 
carriers received at CAF ICC's peak in 2016.
    16. In the USF/ICC Transformation FNPRM, 76 FR 78384, December 16, 
2011, the Commission sought comment regarding whether CAF ICC for rate-
of-return carriers should be subjected to a phase-out on a defined 
schedule. It also sought comment on accelerating the phasedown of 
support the initial five years by decreasing the Eligible Recovery 
amount at a faster rate than originally adopted by the Commission, 
which would also have the effect of accelerating CAF ICC reductions. 
The Commission seeks comment regarding whether either of these methods 
of accelerating CAF ICC reductions, or another method, would be 
appropriate.
    17. Finally, the Commission seeks comment on whether adjustments 
should be made to CAF ICC to reflect the growth of CBOLs. In order to 
avoid an unintentional increase in CAF ICC

[[Page 56583]]

due to the migration of voice customers to broadband-only service that 
would ``upset the careful balancing of burdens as between end-user 
Access Recovery Charge (ARC) and [CAF ICC],'' the Commission required 
rate-of-return carriers to impute an amount equal to the ARC charge 
they assess on voice lines to their CBOLs. While the residential ARC--
the portion of the Eligible Recovery amount that a carrier may collect 
from its residential voice subscribers--is capped at $3.00 per line per 
month for affordability reasons, it is also subject to the $30 per 
month Residential Rate Ceiling, and some carriers therefore charge less 
than $3.00 per line per month. Broadband-only customers who do not pay 
an ARC (or most of the other rates included in the Residential Rate 
Ceiling) because they do not receive voice service, therefore have 
imputed to them an ARC which, for affordability reasons, in many cases 
is less than $3.00, and can be as low as $0. Given that affordability 
considerations associated with the ARC do not directly apply to 
broadband-only customers (who do not pay an ARC because they do not 
receive voice service), would it be reasonable to impute a higher ARC 
for CBOLs, independent of the ARC charged for voice customers? Should 
there be any cap on the ARC imputed to broadband-only customers? In 
2018, the Commission sought comment on the relationship between CAF ICC 
and conversions of voice-broadband lines to CBOLs and asked, among 
other questions, whether there are circumstances in which some portion 
of revenues from interconnected voice over internet protocol (VoIP) 
service should be imputed against CAF ICC support. The Commission asks 
commenters to refresh the record regarding whether interconnected VoIP 
revenue should be imputed to reduce CAF ICC support. The Commission 
notes that carriers already have the opportunity to recover the full 
cost of serving their broadband-only customers through end-user rates 
and CAF BLS. Should the Commission impute any portion of such revenue 
to reduce CAF ICC?
    18. The Commission seeks comment regarding whether it should, 
alternatively, reduce Eligible Recovery or base period revenue amounts 
to reflect the conversion of voice lines to broadband-only lines. The 
Commission notes that consumer broadband-only loops were not an 
established category of service at the time it adopted CAF ICC, and it 
therefore did not consider the implications of consumers substituting 
broadband-only service for voice and voice-broadband service. Are 
carriers able to avoid the switched access service costs the ARC and 
CAF ICC are intended to recover as their customers convert their voice 
service to broadband-only lines? For example, among the rate-of-return 
carriers that reported costs for HCLS purposes in all years from 2007 
through 2021, the net plant-in-service for Central Office Switching 
Equipment (Account 2210) has declined from $963.4 million in 2011, when 
CAF ICC was adopted, to $507.1 million in 2016, when CBOLs were 
adopted, to $280.1 million in 2021. Is the amount of switched access 
net plant-in-service declining because demand for switched access 
service is declining and carriers are not replacing depreciated or 
retired switching plant as quickly as the plant is being depreciated or 
retired? Is there switched access plant that should be retired because 
it is no longer used and useful, which would suggest that switching 
costs should be even lower than reported? Are carriers able to replace 
switched access plant with cheaper plant in a modern network?
    19. The Commission next seeks comment regarding the deployment 
obligations for rate-of-return carriers receiving CAF BLS. In this 
document, the Commission adopts a voluntary pathway to model-based 
support for current CAF BLS recipients, pursuant to which the electing 
carriers would be required to deploy service of at least 100/20 Mbps to 
all required locations in their study areas. In addition, programs 
administered by other Federal agencies, as well as state programs, have 
made or will be awarding funding to broadband providers. Notably, the 
BEAD Program, created by the Infrastructure Act, is expected to begin 
awarding grants to carriers to provide 100/20 Mbps or faster in 
unserved or underserved areas (or an enforceable commitment to deploy 
100/20 Mbps or faster service). In considering whether to modify the 
deployment obligations for CAF BLS recipients, the Commission is 
mindful that, in order to minimize wasteful duplicative funding of 
broadband deployment, the deployment obligations should take into 
account the funding being provided by other government agencies, and 
the associated deployment obligations. In this section, the Commission 
seeks comment regarding updates to its rules to reflect the expected 
award of funding pursuant to BEAD and other Federal programs for areas 
within the service territories of legacy rate-of-return support 
recipients.
    20. CAF BLS recipients currently have defined obligations to deploy 
broadband with a minimum speed of 25/3 Mbps to a specified number of 
locations over a five-year term that runs through 2023. Under the 
Commission's rules, a second five-year term, with obligations 
determined to deploy additional 25/3 Mbps or faster service, as 
determined by a pre-set formula, will begin January 1, 2024.
    21. The Commission first asks whether it should continue to require 
deployment obligations for CAF BLS recipients. If the Commission does 
require deployment obligations, should it increase the obligations to 
100/20 Mbps, consistent with the Infrastructure Act and Enhanced A-CAM? 
Alternatively, should the Commission retain the existing 25/3 Mbps 
deployment obligations and methodology? If the Commission adopts an 
obligation to deploy 100/20 Mbps, how should the Commission determine 
the number of locations to which the carrier must deploy? Now that the 
Commission has a comprehensive list of locations and served areas from 
the Fabric and the Broadband Data Collection, should a carrier's 
buildout obligation correspond with unserved Fabric locations in its 
study area? Can the existing methodology be updated to determine the 
amount of 100/20 Mbps deployment that should be required? Currently, 
the Commission's rules use various statistics to calculate obligations, 
such as five-year CAF BLS forecasts, density groupings, and average 
cost per loop for carriers with 95% deployment. The Commission proposes 
to update those inputs to the formula and seeks comment on the 
proposal. The Commission notes that CAF BLS carriers are currently 
prohibited from deploying wireline technology to provide broadband if 
doing so would cause their high-cost support to exceed the monthly per-
line cap on support. How should the Commission reflect that prohibition 
in setting the deployment obligations?
    22. Next, the Commission notes that many locations served by CAF 
BLS recipients are likely to be eligible for BEAD and other programs. 
Should the Commission require deployment obligations for CAF BLS 
carriers that includes areas where they or competitors are subject to 
deployment obligations pursuant to awards from agencies? Alternatively, 
should the Commission limit deployment obligations to locations without 
enforceable commitments to deploy broadband? Under the alternative, 
what criteria should the Commission use to identify qualifying 
enforceable commitments? The Commission seeks comment on whether it 
should re-assess

[[Page 56584]]

or adjust deployment obligations. For example, if the new term for CAF 
BLS deployment obligations commences in 2025, but another agency makes 
a qualifying award with enforceable deployment obligations in 2026, how 
should the Commission adjust the CAF BLS carrier's obligations to 
reflect that new qualifying award? Should the CAF BLS deployment 
obligations be revisited mid-term? Alternatively, should obligations 
set at the beginning of the term continue, unadjusted, even if that 
results in some obligations that may be duplicative of deployment that 
results from funding awarded after the initial determination?
    23. The Commission seeks comment on deferring the commencement of 
the next five-year term, should it find it necessary, by one year, to 
January 1, 2025. This would enable the Commission to make an initial 
determination, prior to the commencement of the term, regarding areas 
for which new CAF BLS deployment obligations would be appropriate. On 
the other hand, deferring the commencement of the next term until 2025 
may further delay deployment of broadband in areas that currently lack 
high-quality broadband. Are there other benefits or disadvantages to 
deferring the commencement of the next term of deployment obligations? 
Deferring the next term of deployment obligations would not, in itself, 
affect support for legacy support recipients.
    24. The Commission seeks comment regarding measures to prevent 
duplication of support where a service provider other than the legacy 
rate-of-return carrier is awarded funding for broadband deployment. The 
Commission notes that Sec.  54.319 of the Commission's rules already 
eliminates CAF BLS in areas served by an unsubsidized competitor. The 
Commission seeks comment regarding whether it should similarly 
eliminate CAF BLS support in areas for which competitors have been 
awarded funding to provide broadband service. Under Sec.  54.319, a 
rate-of-return carrier loses CAF BLS for any census blocks in which an 
unsubsidized competitor, or a combination of unsubsidized competitors, 
provides qualifying service to at least 85 percent of the residential 
locations. Would it be appropriate to simply extend that standard to 
include locations served by competitors subject to awards made by 
Federal or state agencies? Is competitive service to ``at least 85 
percent of residential locations in a census block'' still the 
appropriate standard for disallowing legacy support for the incumbent 
carrier? Is there a different geographic area, including sets of 
locations below the census block level, that should be considered? Or 
is the census block the smallest unit for which the removal of support 
due to competition should be applied?
    25. The Commission seeks comment regarding what criteria should be 
used to determine a qualifying service. Section 54.319(d) defines 
qualifying service as ``voice and broadband service meeting the public 
interest obligations in Sec.  54.308(a)(2).'' If an award by another 
agency does not require voice service to be provided, should it 
nonetheless be treated as qualifying service? Section 54.308(a)(2) 
prescribes the broadband deployment requirements for CAF BLS 
recipients, and currently requires 25/3 Mbps service. If the Commission 
does not modify the speed associated with the deployment obligation, 
should Sec.  54.319 instead require a competitor's provision of or 
commitment to provide 100/20 Mbps or faster service as a condition of 
applying Sec.  54.319?
    26. The Commission seeks comment regarding how to reduce legacy 
support for areas that are served by an unsubsidized competitor or 
subject to a qualifying enforceable commitment to deploy broadband. 
Given the shared nature of the costs incurred by rate-of-return 
carriers and the long-established methods of recording costs pursuant 
to Part 32, the Commission does not believe it is feasible to calculate 
CAF BLS only for specific areas within a study area, while excluding 
other parts of the study area. Instead, the Commission tentatively 
concludes that support should be calculated for the entire study area, 
then ``disaggregated'' to various areas using some allocation method. 
The Commission seeks comment regarding this tentative conclusion. Under 
Sec.  54.319, when census blocks have been determined to be served by 
an unsubsidized competitor, the CAF BLS recipient is permitted to elect 
a disaggregation methodology from among three methods identified in the 
2016 Rate-of-Return Reform Order, 81 FR 24282, April 25, 2016: (1) 
based on the relative density of competitive and non-competitive areas; 
(2) based on the ratio of competitive to non-competitive square miles 
in a study area; or (3) based on the ratio of calculated A-CAM support 
for competitive areas to total study area support. The Commission seeks 
comment regarding whether these methods are appropriate for continued 
use in general, and specifically for the purpose of disallowing support 
where a competitor has an obligation to deploy pursuant to a funding 
award. Should any of these methodologies be discontinued or revised? 
Even under this disaggregation process, a rate-of-return carrier might 
have an incentive to continue incurring deployment expenses to serve 
the competitive areas because those costs could not be excluded from 
its cost study and therefore would still be incorporated in the CAF BLS 
calculation. Indeed, the disaggregation methods assume that the costs 
of service are distributed across both competitive and non-competitive 
areas. Are there alternative methods for disaggregating CAF BLS between 
competitor-served or -obligated areas and non-competitive areas?
    27. The Commission seeks comment regarding the timing of any 
support reductions associated with qualifying funding to competitors. 
Section 54.319 sets forth schedules for phased reductions where 
unsubsidized competitors provide service. Are phased reductions in 
support also appropriate where a competitor has received a qualifying 
award? When should the reductions, whether a graduated phase-down or 
flash-cut elimination of support, occur? When a qualifying award is 
identified by the Wireline Competition Bureau (the Bureau) review? The 
Commission notes that there may be cases where, due to default or other 
unforeseen issues, the required deployment is never made by the 
competitor. Would it therefore be better to eliminate support for the 
rate-of-return carrier only when the required competitive deployment is 
made?
    28. The Commission seeks comment regarding the process for making 
the determinations that a qualifying award has been made to a 
competitor. Pursuant to Sec.  54.319(h), the Bureau is instructed to 
update its analysis of competitive overlap by unsubsidized competitors 
every seven years. In the 2016 Rate-of-Return Reform Order, the 
Commission adopted a challenge process to be conducted for determining 
which census blocks are competitively served. The Commission seeks 
comment regarding updating this process generally and regarding changes 
necessary to address areas being served by competitors receiving 
qualifying awards. The Commission notes that the process as adopted 
relies on deployment data provided on FCC Form 477. Deployment data is 
now collected pursuant to the Broadband Data Collection (and depicted 
on the National Broadband Map) process, and Federal funding data is 
collected pursuant the National Broadband Funding Map process. Can the 
challenge process described in the 2016 Rate-of-Return Reform Order be 
improved or

[[Page 56585]]

simplified as a result of these recent data initiatives? Because the 
National Broadband Map and the National Broadband Funding Map will 
provide location-specific service data, would the Bureau be able to 
determine whether the 85 percent threshold has been met without first 
publishing a preliminary list of competitors serving census blocks and 
collecting certifications from unsubsidized competitors? While the 
Commission expects the National Broadband Funding Map data to include 
information regarding some awards, it may not be complete and may not, 
for example, include all awards made by state agencies. Should the 
Bureau adopt a process for collecting such data, permitting competitors 
that received awards and awarding agencies to identify census blocks 
for which qualifying awards have been made? Alternatively, if 
reductions to support are triggered only by actual deployment by the 
competitor receiving a qualifying award, should the Commission rely on 
the National Broadband Map to determine the areas in which legacy 
support should be discontinued?
    29. The Commission seeks comment regarding how often a review 
should be conducted. The current rule requires a review every seven 
years. Is this an appropriate schedule for review? Alternatively, 
should the Bureau conduct its review every five years, prior to the 
development of new deployment obligations for CAF BLS recipients? Or 
should a review be conducted each time a new versions of the National 
Broadband Map or the National Broadband Funding Map are released? Is 
there some other period the Commission should consider?
    30. Finally, the Commission notes that Sec.  54.319 only reduces 
the amount of CAF BLS received by rate-of-return carriers. Should it be 
extended to reduce HCLS or CAF ICC?
    31. Support Where the Rate-of-Return Carrier Receives Grants for 
Deployment. The Commission next seeks comment regarding the treatment 
of legacy support in areas where the incumbent rate-of-return carrier 
receives a grant for deployment from another Federal or state agency.
    32. Under the Commission's rules, rate-of-return carriers treat 
grants as capital contributions, which must be excluded from their Part 
32 property accounts. The grants are therefore excluded from the 
capital costs on which CAF BLS and HCLS are based, preventing double-
recovery of investment paid for with grants. The Commission seeks 
comment regarding whether further safeguards are necessary to ensure 
compliance with its existing rules. For example, should the Universal 
Service Administrative Company be required to collect information 
regarding grants received by legacy support recipient on CAF BLS-
related forms, or in annual compliance filings?
    33. The Commission also seeks comment regarding whether further 
measures should be adopted to address receipt of grants by recipients 
of legacy support. The Commission notes that many operating expenses 
are allocated among services based on relative amounts of capital (or, 
``plant-in-service'') in various cost categories. Might the exclusion 
of large amounts of plant associated with grants result in distortions 
in the allocation of expenses? For example, if a carrier receives a 
grant to deploy middle mile facilities and excludes that property from 
its cost study in accordance with Part 32, relatively more operating 
expenses would be allocated to local loop, and therefore recoverable 
through CAF BLS and HCLS, than would be recoverable if the carrier had 
financed the facilities through debt or equity. Conversely, a carrier 
receiving grants to deploy broadband-capable end-user lines may receive 
less support because the operating expenses that would otherwise be 
associated with the common line or CBOLs would be allocated to other 
cost categories. Is this issue likely to be significant, requiring 
further attention? If the Commission should address this issue, how 
would it do so?
    34. The Commission, as part of its continuing effort to advance 
digital equity for all, including people of color, persons with 
disabilities, persons who live in rural or Tribal areas, and others who 
are or have been historically underserved, marginalized, or adversely 
affected by persistent poverty or inequality, invites comment on any 
equity-related considerations and benefits (if any) that may be 
associated with the proposals and issues discussed herein. 
Specifically, the Commission seeks comment on how its proposals may 
promote or inhibit advances in diversity, equity, inclusion, and 
accessibility, as well the scope of the Commission's relevant legal 
authority.

III. Procedural Matters

A. Paperwork Reduction Act

    35. The NPRM contains proposed new and modified information 
collection requirements. The Commission as part of its continuing 
effort to reduce paperwork burdens, will invite the general public and 
the Office of Management and Budget to comment on the information 
collection requirements contained in this document, as required by the 
Paperwork Reduction Act of 1995, Public Law 104-13. In addition, 
pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 
107-198, see 44 U.S.C. 3506(c)(4), the Commission seeks specific 
comment on how it might further reduce the information collection 
burden for small business concerns with fewer than 25 employees.
    36. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), the Commission has prepared this Initial Regulatory 
Flexibility Analysis (IRFA) of the possible significant economic impact 
on small entities by the policies and rules proposed in the NPRM. 
Written public comments are requested on this IRFA. Comments must be 
identified as responses to the IRFA and must be filed by the deadlines 
for comments provided on the first page of the NPRM. The Commission 
will send a copy of the NPRM, including this IRFA, to the Chief Counsel 
for Advocacy of the Small Business Administration (SBA). In addition, 
the NPRM and IRFA (or summaries thereof) will be published in the 
Federal Register.
    37. In the NPRM, the Commission seeks comment on how to amend 
legacy rate-of-return mechanisms to align them with the current 
broadband deployment and support environment. The broadband landscape 
has changed significantly in recent years. The Commission, meanwhile, 
maintains its commitment to promote deployment of broadband at evolving 
levels of service, while seeking to avoid unnecessary duplication of 
services that would be provided in the absence of high-cost universal 
service, whether by unsubsidized competitors or through awards made by 
other programs.
    38. To address immediate needs, the Commission seeks comment on 
three key areas. First, the Commission seeks comment on a variety of 
reforms to legacy support mechanisms and appropriate funding, so that 
rate-of-return carriers are subject to a smaller reduction when the 
budget control mechanism applies. The Commission then seeks comment 
regarding appropriate deployment obligations for carriers receiving CAF 
BLS when the current deployment term ends this year. Finally, the 
Commission seeks comment regarding methodologies for preventing 
duplication of support between legacy high-cost universal service 
support mechanisms and funding provided by other Federal and state 
agencies for the deployment of broadband.

[[Page 56586]]

    39. The RFA directs agencies to provide a description of, and where 
feasible, an estimate of the number of small entities that may be 
affected by the proposed rules, if adopted. The RFA generally defines 
the term ``small entity'' as having the same meaning as the terms 
``small business,'' ``small organization,'' and ``small governmental 
jurisdiction.'' In addition, the term ``small business'' has the same 
meaning as the term ``small-business concern'' under the Small Business 
Act. A ``small-business concern'' is one that: (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.
    40. Small Businesses, Small Organizations, Small Governmental 
Jurisdictions. The Commission's actions, over time, may affect small 
entities that are not easily categorized at present. The Commission 
therefore describes, 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 SBA's 
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 33.2 million businesses.
    41. 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 2020, there were 
approximately 447,689 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.
    42. 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 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.''
    43. Small entities potentially affected herein include Wired 
Telecommunications Carriers, Local Exchange Carriers (LECs), Incumbent 
Local Exchange Carriers (Incumbent LECs), Competitive Local Exchange 
Carriers (LECs), Interexchange Carriers (IXCs), Local Resellers, Toll 
Resellers, Other Toll Carriers, Prepaid Calling Card Providers, 
Wireless Telecommunications Carriers (except Satellite), Cable and 
Other Subscription Programming, Cable Companies and Systems (Rate 
Regulation), Cable System Operators (Telecom Act Standard), All Other 
Telecommunications, Wired Broadband Internet Access Service Providers 
(Wired ISPs), Wireless Broadband Internet Access Service Providers 
(Wireless ISPs or WISPs), internet Service Providers (Non-Broadband), 
All Other Information Services.
    44. The Commission's proposal to reform legacy rate-of-return 
mechanisms to align these mechanisms with current broadband deployment 
and the specific issues to implement the reform upon which it seeks 
comment in the NPRM, may impose new or additional reporting or 
recordkeeping and/or other compliance obligations on small entities. 
For example, the Commission seeks comment regarding the deployment 
obligations for rate-of-return carriers receiving CAF BLS. The 
Commission seeks comment on whether it should continue to require CAF 
BLS recipients to meet broadband deployment obligations or increase the 
broadband speeds beyond their current obligations. If the Commission 
chooses to continue to require deployment obligations, small entities 
and other CAF BLS recipients will likely have to serve a certain number 
of locations with broadband service meeting certain performance 
requirements.
    45. The Commission also seeks comment on whether the Universal 
Service Administrative Company should collect information regarding 
grants received by legacy support recipients on CAF BLS-related forms, 
or in annual compliance forms to prevent double recovery of investment 
paid for with grants. This would require legacy support recipients, 
including small entities, to track and report the grants they receive 
from other funding programs. Additionally, the Commission seeks comment 
on updating a challenge process for determining which census blocks are 
competitively served. As part of this process, competitive carriers, 
that may include small entities, could be required to submit data to 
demonstrate that they are already serving a location or that they 
received awards from other programs to serve an area in order to 
prevent a rate-of-return carrier from receiving support from legacy 
support mechanisms to serve the same area. As an alternative, the 
Commission also seeks comment on relying on existing data sources 
instead of requiring competitors to submit information.
    46. At this time, the Commission is not in a position to determine 
whether, if adopted, its proposals and the matters upon which it seeks 
comment will require small entities to hire professionals to comply, 
and cannot quantify the cost of compliance with the potential rule 
changes discussed herein. The Commission anticipates the information it 
receives in comments including where requested, cost and benefit 
analyses, will help the Commission identify and evaluate relevant 
compliance matters for small entities, including compliance costs and 
other burdens that may result from the proposals and inquiries made in 
the NPRM.
    47. The RFA requires an agency to describe any significant, 
specifically small business, alternatives that it has considered in 
reaching its proposed 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 and 
reporting requirements under the rule for such small entities; (3) the 
use of performance rather than design standards; and (4) an exemption 
from coverage of the rule, or any part thereof, for such small 
entities.''
    48. In the NPRM, the Commission seeks to balance the requirement to 
provide support that is sufficient to achieve its universal service 
goals, but also provide appropriate incentives for prudent and 
efficient expenditures. With these goals in mind, the Commission seeks 
comment on measures related to the budget for CAF BLS and other legacy 
support mechanisms that could potentially benefit legacy support 
recipients, including small entities, by having their support shifted 
towards costs that are trending higher for such carriers. For

[[Page 56587]]

example, the Commission seeks comment on alternatives like resetting 
the budget amount to account for trends like the conversion of voice 
lines in CBOL, reducing HCLS and targeting the support to CAF BLS to 
account for broadband deployment costs, or shifting support from 
another mechanism like CAF ICC. The Commission also seeks comment on 
increasing the amount of end-user revenue imputed to CBOL lines in the 
CAF BLS calculation. While some of these proposals may have the 
consequence of reducing high-cost universal support to small entities, 
they may potentially result in more stable and predictable annual 
support when the budget control is applied, giving all legacy carriers, 
including small carriers, more certainty regarding their support. In 
considering these matters, the Commission notes that the costs of high-
cost universal service is ultimately borne by consumers, including 
small entities, through the contributions factors assessed on their 
bills.
    49. The Commission also considered and seeks comment on 
alternatives for specific deployment obligations for rate-of-return 
carriers receiving support through legacy support mechanisms. For 
example, the Commission considers whether it should increase the 
obligations to require the deployment of broadband at 100/20 Mbps 
consistent with the Infrastructure Act and the Enhanced A-CAM program, 
and what methodology to use to determine those obligations. 
Alternatively, the Commission seeks comment on retaining the existing 
requirement that legacy support recipients offer broadband at speeds of 
25/3 Mbps deployment obligations and the methodology for determining 
these obligations. The Commission also seeks comment on revisiting 
deployment obligations to account for another agency making a 
qualifying award with enforceable deployment obligations in the rate-
of-return carrier's service area. If the Commission were to adopt lower 
broadband speed obligations, like 25/3 Mbps, it might reduce costs for 
all legacy support recipients, including small entities. A carrier's 
costs may also be reduced if other funding programs award grants in the 
rate-of-return carrier's service area, and the legacy rate-of-return 
carrier is no longer required to serve the locations receiving the 
alternative funding. However, these scenarios may also result in the 
reduction of support for such carriers if the Commission adjusts 
support to account for the lower costs or duplicative funding.
    50. The Commission seeks comment on alternatives for reducing a 
rate-of-return carrier's support amount to reflect the availability of 
funding from other Federal and state programs in their service areas or 
to reflect that an unsubsidized competitor serves the area. For 
example, the Commission seeks comment on alternatives for identifying 
overlap, methods for disaggregating CAF BLS between competitor-served 
or -obligated areas, the timing for making support reductions, and the 
process for making the determinations that qualifying awards have been 
made to a competitor. In areas where the rate-of-return carrier 
receives a grant from another source, the Commission seeks comment on 
alternatives for how to account for the grant in the rate-of-return's 
cost recovery.
    51. More generally, the Commission expects to more fully consider 
the economic impact on small entities following its review of comments 
filed in response to the NPRM and the IRFA, including costs and 
benefits information and any alternative proposals. The matters 
discussed in the NPRM are designed to ensure the Commission has a 
complete understanding of the benefits and potential burdens associated 
with the different actions and methods before reaching its final. The 
Commission's evaluation of the comments filed in this proceeding will 
shape the final alternatives it considers, the final conclusions it 
reaches, and the actions it ultimately takes in this proceeding to 
minimize any significant economic impact that may occur on small 
entities as a result of any final rules that are adopted.

IV. Ordering Clauses

    52. It is further ordered that, pursuant to the authority contained 
in sections 4(i), 214, 218-220, 254, 303(r), and 403 of the 
Communications Act of 1934, as amended, 47 U.S.C. 154(i), 214, 218-220, 
254, 303(r), and 403, and Sec.  1.1, 1.411, and 1.412 of the 
Commission's rules, 47 CFR 1.1, 1.411, and 1.412, this Notice of 
Proposed Rulemaking is adopted. This Notice of Proposed Rulemaking will 
be effective upon publication in the Federal Register, with comment 
dates indicated therein.

Federal Communications Commission.
Aleta Bowers,
Information Management Specialist, Office of the Secretary.
[FR Doc. 2023-17486 Filed 8-17-23; 8:45 am]
BILLING CODE 6712-01-P