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 Federal  Communications  Commission  FCC  03-  120 
 Before  the  Federal  Communications  Commission 
 Washington,  D.  C.  20554 

 In  the  Matter  of 
 Lifeline  and  Link-  Up 
 )  ) 
 )  ) 
 )  ) 
 WC  Docket  No.  03-  109 

 NOTICE  OF  PROPOSED  RULEMAKING 
 Adopted:  May  23,  2003  Released:  June  9,  2003 
 Comment  Date:  30  days  after  publication  in  the  Federal  Register.  Reply  Comment  Date:  45  days  after  publication  in  the  Federal  Register. 

 By  the  Commission: 
 1.  In  this  Notice  of  Proposed  Rulemaking  (Notice),  we  seek  comment  on  the  Recommended  Decision  of  the  Federal-  State  Joint  Board  on  Universal  Service  (Joint  Board) 
 regarding  modifications  to  the  Lifeline  and  Link-  Up  programs.  1  In  its  Recommended  Decision,  the  Joint  Board  recommended  that  the  Commission  expand  the  default  federal  eligibility  criteria 
 to  include  an  income-  based  criterion  and  additional  means-  tested  programs.  2  In  addition,  the  Joint  Board  recommended  that  the  Commission  require  states,  under  certain  circumstances,  to 
 adopt  verification  procedures.  3  Finally,  to  more  effectively  target  low-  income  consumers,  the  Joint  Board  recommended  that  the  Commission  provide  outreach  guidelines  for  the 
 Lifeline/  Link-  Up  program.  4  We  seek  comment  regarding  the  Joint  Boards  recommendations. 
 2.  We  note  that  the  Joint  Board  recommended  that  the  Commission  specifically  seek  comment  on  several  issues.  In  particular,  the  Joint  Board  recommended  that  the  Commission 

 seek  more  information  about  the  reasons  for  differences  in  low-  income  penetration  rates  over  time  and  among  states.  5  The  Joint  Board  recommended  that  the  Commission  adopt  a  voluntary 

 1  Federal-  State  Joint  Board  on  Universal  Service,  CC  Docket  No.  96-  45,  Recommended  Decision,  18  FCC  Rcd 
 6589  (2003)  (Recommended  Decision).  2 
 Id.  at  paras.  10,  15,  20.  3 
 Id.  at  paras.  10,  32.  4 
 Id.  at  paras.  10,  50.  5 
 Id.  at  para.  6.  For  example,  between  1997  to  2001,  low-  income  telephone  penetration  rates  increased  by  15.  9%  in  Alaska,  but  decreased  by  2.4%  in  Illinois.  See  Industry  Analysis  and  Technology  Division,  Wireline  Competition 

 Bureau,  Federal  Communications  Commission,  Telephone  Penetration  By  Income  By  State  at  9,  Table  3  (rel.  Apr.  2002). 
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 information  collection  from  the  states  regarding  their  Lifeline/  Link-  Up  programs,  and  seek  comment  on  the  surveys  format  and  questions.  6  The  Joint  Board  also  recommended  that  the 
 Commission  seek  comment  on  whether  it  would  be  possible  to  modify  the  Link-  Up  program  to  directly  address  barriers  posed  by  outstanding  unpaid  balances  for  local  and  long  distance 
 services.  7  In  addition,  the  Joint  Board  recommended  that  the  Commission  obtain  more  information  about  how  an  appeals  process  for  the  termination  of  Lifeline  benefits  could  work  and 
 whether  60  days  was  an  appropriate  time  period  for  a  consumer  to  appeal.  8  Finally,  the  Joint  Board  recommended  that  the  Commission  seek  comment  on  whether  states  could  adopt 
 verification  of  continued  Lifeline  eligibility  procedures  within  one  year.  9  We  encourage  commenters  to  address  these  issues  in  their  comments. 

 3.  In  addition,  the  Commission  seeks  comment  on  several  minor  changes  to  clarify  and  streamline  our  rules.  Section  52.33  (a)(  1)(  i)(  C)  states  that  Lifeline  Assistance  Program 
 customers  shall  not  receive  the  monthly  number-  portability  charge.  10  However,  this  rule  is  not  referenced  in  section  54.401  where  Lifeline  is  defined.  11  We  propose  to  add  a  subsection  (e)  to 
 section  54.401  to  clarify  that  Lifeline  customers  are  exempt  from  the  monthly  number-  portability  charge,  cross-  referencing  section  52.33(  a)(  1)(  i)(  C).  Additionally,  in  the  1997  Universal  Service 
 Order,  the  Commission  adopted  the  Joint  Boards  recommendation  to  prohibit  service  deposit  requirements  for  customers  who  accept  toll  limitation.  12  Currently,  section  54.401(  c)  states  that, 
 [  e]  ligible  telecommunications  carriers  may  not  collect  a  service  deposit  in  order  to  initiate  Lifeline  service,  if  the  qualifying  low-  income  consumer  voluntarily  elects  toll  blocking  from  the 
 carrier,  where  available.  If  toll  blocking  is  unavailable,  the  carrier  may  charge  a  service  deposit.  13  We  propose  to  amend  this  section  by  replacing  toll  blocking  with  toll  limitation 
 to  make  this  rule  consistent  with  the  1997  Universal  Service  Order.  Finally,  subpart  G  of  Part  36  of  our  rules,  Lifeline  Connection  Assistance  Expense  Allocation,  states  that  [  t]  his  subpart  shall 
 be  effective  through  December  31,  1997.  On  January  1,  1998,  Lifeline  Connection  Assistance  shall  be  provided  in  accordance  with  part  54,  subpart  E  of  this  chapter.  14  Because  sections 
 36.701-  36.741  contained  in  this  subpart  are  no  longer  effective,  we  propose  to  delete  this  subpart  from  our  rules. 

 I.  PROCEDURAL  ISSUES 
 A.  Ex  Parte  Presentations 
 6  See  Recommended  Decision  at  para.  10. 
 7  See  id.  at  paras.  58-  59. 
 8  See  id.  at  paras.  29,  30. 
 9  See  id.  at  para.  46. 
 10  47  C.  F.  R.    52.33(  a)(  1)(  i)(  C). 
 11  See  47  C.  F.  R.    54.  401. 
 12  Federal-  State  Joint  Board  on  Universal  Service,  CC  Docket  No.  96-  45,  Report  and  Order,  12  FCC  Rcd  8776, 
 8951,  para.  328  (1997  Universal  Service  Order).  13 
 47  C.  F.  R.    54.401(  c)  (emphasis  added).  14 
 47  C.  F.  R.    36.701(  c). 
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 4.  This  is  a  permit  but  disclose  rulemaking  proceeding.  Ex  parte  presentations  are  permitted,  except  during  the  Sunshine  Agenda  period,  as  long  as  they  are  disclosed  as  provided 
 in  the  Commission's  rules.  15 
 B.  Initial  Paperwork  Reduction  Act  Analysis 
 5.  This  Notice  may  modify  an  information  collection.  As  part  of  a  continuing  effort  to  reduce  paperwork  burdens,  we  invite  the  general  public  and  the  Office  of  Management  and 

 Budget  (OMB)  to  take  this  opportunity  to  comment  on  the  information  collections  contained  in  this  Notice,  as  required  by  the  Paperwork  Reduction  Act  of  1995,  Public  Law  104-  13.  Public 
 and  agency  comments  are  due  at  the  same  time  as  other  comments  on  this  Notice;  OMB  comments  are  due  30  days  from  the  date  of  publication  of  this  Notice  in  the  Federal  Register. 
 Comments  should  address:  (a)  whether  the  proposed  collection  of  information  is  necessary  for  the  proper  performance  of  the  functions  of  the  Commission,  including  whether  the  information 
 shall  have  practical  utility;  (b)  the  accuracy  of  the  Commissions  burden  estimates;  (c)  ways  to  enhance  the  quality,  utility,  and  clarity  of  the  information  collected;  and  (d)  ways  to  minimize 
 the  burden  of  the  collection  of  information  on  the  respondents,  including  the  use  of  automated  collection  techniques  or  other  forms  of  information  technology. 

 C.  Initial  Regulatory  Flexibility  Analysis 
 6.  As  required  by  the  Regulatory  Flexibility  Act  (RFA),  16  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  this  Notice.  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  on  the  Notice  provided  below  in  section  I.  D.  The  Commission  will  send  a  copy  of  the  Notice,  including  this  IRFA,  to  the  Chief  Counsel  for 
 Advocacy  of  the  Small  Business  Administration.  17  In  addition,  the  Notice  and  IRFA  (or  summaries  thereof)  will  be  published  in  the  Federal  Register.  18 

 1.  Need  for  and  Objectives  of  the  Proposed  Rules 
 7.  On  December  21,  2000,  the  Commission  requested  the  Joint  Board  to  review  the  Lifeline/  Link-  Up  program  for  all  low-  income  consumers.  19  The  Joint  Board  subsequently 

 released  a  public  notice  seeking  comment  on  the  Lifeline/  Link-  Up  program.  20  On  April  2,  2003, 

 15  See  generally  47  C.  F.  R.    1.1202,  1.  1203,  and  1.1206. 
 16  See  5  U.  S.  C.    603.  The  RFA,  see  5  U.  S.  C.    601-  12  has  been  amended  by  the  Small  Business  Regulatory 
 Enforcement  Fairness  Act  of  1996  (SBREFA),  Pub.  L.  No.  104-  121,  Title  II,  110  Stat.  857  (1996).  17 
 See  5  U.  S.  C.    603(  a).  18 
 See  id.  19 
 See  Federal-  State  Joint  Board  on  Universal  Service,  CC  Docket  No.  96-  45,  Order,  15  FCC  Rcd  25257,  25258-  29,  paras.  3-  4  (2000). 

 20  See  Federal-  State  Joint  Board  on  Universal  Service  Seeks  Comment  on  Review  of  Lifeline  and  Link-  Up  Service 
 for  All  Low-  Income  Consumers,  CC-  Docket  96-  45,  Public  Notice,  16  FCC  Rcd  18407  (2001)  (Public  Notice). 
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 the  Joint  Board  released  its  recommendations  regarding  modifications  to  the  Lifeline/  Link-  Up  program.  21  This  Notice  seeks  comment  on  the  Joint  Boards  recommendations. 
 8.  Since  its  inception,  the  Lifeline/  Link-  Up  program  has  provided  support  for  telephone  service  to  millions  of  low-  income  consumers.  22  Despite  this  success,  we  believe  that  the 
 program  can  be  further  improved.  For  example,  expanding  the  current  federal  default  eligibility  criteria  to  add  an  income-  based  criterion  of  135%  of  the  Federal  Poverty  Guidelines  (FPG)  23  and 
 additional  means-  tested  programs  24  would  allow  the  Lifeline/  Link-  Up  program  to  adapt  to  the  changes  resulting  from  The  Personal  Responsibility  and  Work  Opportunity  Reconciliation  Act 
 (PROWRA)  25  and  would  otherwise  address  issues  associated  with  receiving  public  assistance.  26  Permitting  eligibility  based  solely  on  income  responds  to  concerns  that  PROWRA  has  caused 
 decreased  enrollment  in  welfare  assistance  programs.  Participants  in  means-  tested  programs  must  meet  income-  based  eligibility  criteria  that  vary  by  program.  Requiring  participation  in  such 
 programs  or  utilizing  income-  based  criteria  ensures  that  only  low-  income  consumers  are  eligible  for  Lifeline/  Link-  Up  support. 

 9.  Adding  certification  for  income-  based  eligibility  and  verification  requirements  for  program  and  income-  based  eligibility  would  ensure  that  only  eligible  low-  income  individuals 
 receive  benefits,  thereby  preventing  fraud  and  abuse.  27  Adopting  outreach  guidelines  would  facilitate  the  marketing  of  the  Lifeline/  Link-  Up  program  to  eligible  individuals  and  increase 
 telephone  subscribership  among  low-  income  households.  28  Finally,  issuing  a  survey  form  would  enable  the  Commission  to  gather  data  and  information  from  states  regarding  the  administration 
 of  Lifeline/  Link-  Up  programs.  29  The  Commission  believes  that  these  proposed  modifications  to  the  Lifeline/  Link-  Up  program  may  increase  Lifeline/  Link-  Up  subscription  rates  and  make  phone 
 service  affordable  to  more  low-  income  individuals  and  families. 
 2.  Legal  Basis 
 10.  The  legal  basis  as  proposed  for  this  Notice  is  contained  in  sections  4(  i),  4(  j),  201-  205,  214,  254,  and  403  of  the  Communications  Act  of  1934,  as  amended,  47  U.  S.  C.    4(  i),  4(  j),  201- 

 205,  214,  254,  403. 
 21  See  generally  Recommended  Decision. 
 22  See  Trends  in  Telephone  Service,  Industry  Analysis  and  Technology  Division,  Wireline  Competition  Bureau, 
 Federal  Communications  Commission,  Table  7.2,  7.  4  (rel.  May  22,  2002)  (Trends  Report)  (estimating  that  6.  2  million  people  paid  reduced  rates  under  the  Lifeline  program  in  2001  and  12.  1  million  people  paid  reduced  charges 

 under  Link-  Up  since  1987).  23 
 See  2003  Poverty  Guidelines  for  the  48  Contiguous  States  and  the  District  of  Columbia,  68  Fed.  Reg.  6456-  58  (2003).  See  also  Recommended  Decision  at  Appendix  D. 

 24  See  Recommended  Decision  at  paras.  20-  24. 
 25  Pub.  L.  No.  104-  193,  110  Stat.  2105  (Aug.  22,  1996). 
 26  See  Recommended  Decision  at  para.  16. 
 27  See  Recommended  Decision  at  paras.  31-  46. 
 28  See  Recommended  Decision  at  paras.  47-  56,  Appendix  E. 
 29  See  Recommended  Decision  at  paras.  10,  63,  Appendix  C. 
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 3.  Description  and  Estimate  of  the  Number  of  Small  Entities  to  Which  the  Proposed  Rules  Will  Apply 
 11.  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.  30  The 
 RFA  generally  defines  the  term  small  entity  as  having  the  same  meaning  as  the  terms  small  business,  small  organization,  and  small  governmental  jurisdiction.  31  In  addition,  the  term 
 small  business  has  the  same  meaning  as  the  term  small  business  concern  under  the  Small  Business  Act.  32  A  small  business  concern  is  one  which:  (1)  is  independently  owned  and 
 operated;  (2)  is  not  dominant  in  its  field  of  operation;  and  (3)  satisfies  any  additional  criteria  established  by  the  Small  Business  Administration  (SBA).  33 

 12.  The  Commissions  decision  to  adopt  certification  and  verification  requirements,  and  its  use  of  a  voluntary  survey,  would  apply  to  service  providers  that  provide  services  to  qualifying 
 low-  income  consumers  who  receive  Lifeline/  Link-  Up  support.  According  to  the  Universal  Service  Administrative  Companys  (USAC)  2002  Annual  Report,  only  local  exchange  carriers, 
 cellular/  personal  communications  services  (PCS)  providers,  and  competitive  access  providers  would  be  subject  to  these  requirements.  34  Because  many  of  these  service  providers  could  include 
 small  entities,  we  expect  that  the  proposal  in  this  proceeding  could  have  a  significant  economic  impact  on  local  exchange  carriers,  small  incumbent  local  exchange  carriers,  cellular/  PCS 
 providers,  and  competitive  access  providers  that  are  small  entities.  35 
 13.  Small  Incumbent  Local  Exchange  Carriers.  We  have  included  small  incumbent  local  exchange  carriers  in  this  present  RFA  analysis.  As  noted  above,  a  small  business  under  the 

 RFA  is  on  that,  inter  alia,  meets  the  pertinent  small  business  size  standard  (e.  g.,  a  telephone  communications  business  having  1,500  or  fewer  employees),  and  is  not  dominant  in  its  field  of 
 operation.  36  The  SBAs  Office  of  Advocacy  contends  that,  for  RFA  purposes,  small  incumbent  local  exchange  carriers  are  not  dominant  in  their  field  of  operation  because  any  such  dominance 
 is  not  national  in  scope.  37  We  have  therefore  included  small  incumbent  local  exchange  carriers 
 30  5  U.  S.  C.    603(  b)(  3). 
 31  5  U.  S.  C.    601(  6). 
 32  5  U.  S.  C.    601(  3)  (incorporating  by  reference  the  definition  of  small-  business  concern  in  the  Small  Business 
 Act,  15  U.  S.  C.    632).  Pursuant  to  5  U.  S.  C.  601(  3),  the  statutory  definition  of  a  small  business  applies  unless  an  agency,  after  consultation  with  the  Office  of  Advocacy  of  the  Small  Business  Administration  and  after  opportunity 

 for  public  comment,  establishes  one  or  more  definitions  of  such  term  which  are  appropriate  to  the  activities  of  the  agency  and  publishes  such  definition(  s)  in  the  Federal  Register.  5  U.  S.  C.    601(  3). 
 33  15  U.  S.  C.    632. 
 34  See  USAC  Annual  Report  2002,  Appendix  B  (2002). 
 35  The  most  reliable  source  of  information  regarding  the  total  numbers  of  common  carrier  and  related  providers 
 nationwide,  including  the  numbers  of  commercial  wireless  entities,  appears  to  be  data  the  Commission  publishes  annually  in  its  Trends  in  Telephone  Service  report.  See  Trends  Report  at  Table  16.3. 

 36  15  U.  S.  C.    632. 
 37  Letter  from  Jere  W.  Glover,  Chief  Counsel  for  Advocacy,  SBA,  to  William  E.  Kennard,  Chairman,  FCC  (May  27, 
 1999).  The  Small  Business  Act  contains  a  definition  of  small-  business  concern,  which  the  RFA  incorporates  into  (continued....) 
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 in  this  RFA  analysis,  although  we  emphasize  that  this  RFA  action  has  no  effect  on  Commission  analyses  and  determinations  in  other,  non-  RFA  contexts. 
 14.  Local  Exchange  Carriers,  Small  Incumbent  Local  Exchange  Carriers,  Competitive  Access  Providers.  Neither  the  Commission  nor  the  SBA  has  developed  a  size  standard 
 specifically  for  small  providers  of  local  exchange  services.  The  closest  applicable  size  standard  under  the  SBA  rules  is  for  wired  telecommunications  carriers.  38  This  provides  that  a  wired 
 telecommunications  carrier  is  a  small  entity  if  it  employs  no  more  than  1,500  employees.  39  According  to  the  most  recent  Commission  data  there  are  1,619  local  services  providers  with 
 1,500  or  fewer  employees.  40  Because  it  seems  certain  that  some  of  these  carriers  are  not  independently  owned  and  operated,  we  are  unable  at  this  time  to  estimate  with  greater  precision 
 the  number  of  these  carriers  that  would  qualify  as  small  business  concerns  under  SBA's  size  standard.  Of  the  1,619  local  service  providers,  1,024  are  incumbent  local  exchange  carriers,  411 
 are  Competitive  Access  Providers  (CAPs)  and  Competitive  Local  Exchange  Carriers  (CLECs),  131  are  resellers  and  53  are  other  local  exchange  carriers.  41  Consequently,  we  estimate  that  no 
 more  than  1,619  providers  of  local  exchange  service  are  small  entities  may  be  affected. 
 15.  Cellular  and  Other  Wireless  Telecommunications.  The  SBA  has  developed  a  small  business  size  standard  for  Cellular  and  Other  Wireless  Telecommunications,  which  consists  of 

 all  such  firms  having  1,500  or  fewer  employees.  42  According  to  data  for  1997,  a  total  of  977  such  firms  operated  for  the  entire  year.  43  Of  those,  965  firms  employed  999  or  fewer  persons  for 
 the  year,  and  12  firms  employed  of  1,000  or  more.  Therefore,  nearly  all  such  firms  were  small  businesses.  In  addition,  we  note  that  there  are  1,807  cellular  licenses;  however,  a  cellular 
 licensee  may  own  several  licenses.  44  According  to  Commission  data,  858  carriers  reported  that  they  were  engaged  in  the  provision  of  cellular  service,  Personal  Communications  Service  (PCS), 

 (...  continued  from  previous  page)  its  own  definition  of  small  business.  See  15  U.  S.  C.    632(  a)  (Small  Business  Act);  5  U.  S.  C.    601(  3)  (RFA). 
 SBA  regulations  interpret  small  business  concern  to  include  the  concept  of  dominance  on  a  national  basis.  13  C.  F.  R.    121.102(  b). 
 38  13  C.  F.  R.    121.201,  NAICS  Code  517110. 
 39  Id. 
 40  Estimates  are  based  upon  FCC  Form  499-  A  worksheets,  filed  April  1,  2001,  combined  with  public  employment 
 data  from  FCC  ARMIS  filings  and  Securities  and  Exchange  Commission  filings.  See  TrendsReport  at  Table  5.3  n.  1,  page  5-  5.  These  estimates  do  not  reflect  affiliates  that  do  not  provide  telecommunications  service  or  that  operate 

 solely  outside  the  United  States.  See  id.  41 
 Id.  42 
 13  C.  F.  R.    121.  201,  NAICS  code  517212.  43 
 U.  S.  Census  Bureau,  1997  Economic  Census,  Subject  Series;  Information,  Table  5,  Employment  Size  of  Firms  Subject  to  Federal  Income  Tax:  1997,  NAICS  code  513322  (October  2000). 

 44  See  Federal  Communications  Commission,  Universal  Licensing  System,  <http://  wireless.  fcc.  gov/  uls/>. 
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 or  Specialized  Mobile  Radio  telephony  service,  which  are  placed  together  in  the  data.  45  We  have  estimated  that  291  of  these  are  small  under  the  SBA  small  business  size  standard.  46 
 16.  Broadband  Personal  Communications  Service  (PCS).  The  broadband  PCS  spectrum  is  divided  into  six  frequencies  designated  A  through  F,  and  the  Commission  has  held  auctions  for 
 each  block.  The  Commission  defined  small  entity  for  Blocks  C  and  F  as  an  entity  that  has  average  gross  revenues  of  less  than  $40  million  in  the  three  previous  calendar  years.  47  For  Block 
 F,  an  additional  classification  for  very  small  business  was  added  and  is  defined  as  an  entity  that,  together  with  their  affiliates,  has  average  gross  revenues  of  not  more  than  $15  million  for 
 the  preceding  three  calendar  years.  48  These  regulations  defining  small  entity  in  the  context  of  broadband  PCS  auctions  have  been  approved  by  the  SBA.  49  No  small  businesses  within  the 
 SBA-  approved  definition  bid  successfully  for  licenses  in  Blocks  A  and  B.  There  were  90  winning  bidders  that  qualified  as  small  entities  in  the  Block  C  auctions.  A  total  of  93  small  and 
 very  small  business  bidders  won  approximately  40%  of  the  1,479  licenses  for  Blocks  D,  E,  and  F.  50  On  March  23,  1999,  the  Commission  re-  auctioned  347  C,  D,  E,  and  F  Block  licenses;  there 
 were  48  small  business  winning  bidders.  Based  on  this  information,  we  conclude  that  the  number  of  small  broadband  PCS  licensees  will  include  the  90  winning  C  Block  bidders  and  the 
 93  qualifying  bidders  in  the  D,  E,  and  F  blocks,  plus  the  48  winning  bidders  in  the  re-  auction,  for  a  total  of  231  small  entity  PCS  providers  as  defined  by  the  SBA  and  the  Commission's  auction 
 rules.  On  January  26,  2001,  the  Commission  completed  the  auction  of  422  C  and  F  Broadband  PCS  licenses  in  Auction  No.  35.  Of  the  35  winning  bidders  in  this  auction,  29  qualified  as  small 
 or  very  small  businesses. 
 4.  Description  of  Projected  Reporting,  Recordkeeping,  and  Other  Compliance  Requirements 

 17.  Currently,  carriers  that  receive  Lifeline/  Link-  Up  support  are  required  to  submit  FCC  Form  497  on  a  quarterly  basis  for  each  month.  51  Regardless  of  any  rule  changes,  carriers  will 
 continue  to  be  required  to  submit  this  form  to  USAC.  Should  the  Commission  decide  to  adopt  the  Joint  Boards  recommendation  to  require  states  to  implement  and  carriers  to  perform 
 certification  and  verification  procedures,  the  associated  rule  changes  could  require  carriers  to  retain  additional  records  to  document  compliance  with  performing  certification  and  verification 

 45  See  TrendsReport,  Table  5.3  -  Number  of  Telecommunications  Service  Providers  that  are  Small  Businesses. 
 46  Id.  See  also  note  33,  supra. 
 47  See  Amendment  of  Parts  20  and  24  of  the  Commissions  Rules    Broadband  PCS  Competitive  Bidding  and  the 
 Commercial  Mobile  Radio  Service  Spectrum  Cap,  Report  and  Order,  FCC  96-  278,  WT  Docket  No.  96-  59,  Sections  57-  60  (released  June  24,  1996),  61  FR  33859  (July  1,  1996)  (Broadband  PCS  Order);  see  also  47  C.  F.  R.   

 24.  720(  b).  48 
 See  Broadband  PCS  Order  at  Section  60.  49 
 See,  e.  g.,  Implementation  of  Section  309(  j)  of  the  Communications  Act    Competitive  Bidding,  PP  Docket  No.  93-  253,  Fifth  Report  and  Order,  9  FCC  Rcd  5532,  5581-  84  (1994). 

 50  FCC  News,  Broadband  PCS,  D,  E  and  F  Block  Auction  Closes,  No.  71744  (released  January  14,  1997). 
 51  See  FCC  Form  497. 
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 of  a  consumers  eligibility.  52  Without  more  certainty  about  which  options  we  will  or  will  not  adopt  as  rules,  we  cannot  accurately  estimate  the  cost  of  compliance  by  small  carriers,  including 
 whether  FCC  Form  497  will  require  carriers  to  provide  more  information  in  response  to  new  rule  changes.  In  this  Notice,  we  therefore  seek  comment  on  the  types  of  burdens  carriers  will  face  in 
 retaining  records  documenting  certification  and  verification  compliance,  and  in  submitting  reports  to  USAC.  We  also  seek  comment  on  whether  the  costs  of  such  recordkeeping  and 
 reporting  are  outweighed  by  the  potential  benefits  of  the  possible  reforms.  Entities,  especially  small  businesses,  are  encouraged  to  quantify,  if  possible,  the  costs  and  benefits  of  the  reporting 
 and  recordkeeping  requirement  proposals,  if  possible. 
 5.  Steps  Taken  to  Minimize  Significant  Economic  Impact  on  Small  Entities,  and  Significant  Alternatives  Considered 

 18.  The  RFA  requires  an  agency  to  describe  any  significant  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  or  reporting  requirements  under  the  rule  for  small  entities;  (3)  the  use  of  performance,  rather  than  design,  standards;  and  (4)  an  exemption  from 
 coverage  of  the  rule,  or  any  part  thereof,  for  small  entities.  53 
 19.  The  Notice  seeks  comment  on  how  to  reduce  the  administrative  burden  and  cost  of  compliance  for  small  telecommunications  service  providers.  The  Commission  has  accepted  the 

 statutory  requirement  that  an  alternative  be  considered  when  necessary  to  protect  the  interests  of  small  entities.  54  We  particularly  seek  comment  from  contributors  that  are  small  business 
 concerns  under  the  Small  Business  Act  on  the  following  proposals  contained  in  the  Recommended  Decision. 

 20.  We  seek  comment,  for  example,  on  the  Joint  Boards  recommendation  that  the  Commission  require  carriers  to  notify  consumers  of  their  impending  termination  of  Lifeline 
 benefits  when  the  carrier  initiates  termination  of  a  consumers  Lifeline  benefits.  The  consumer  could  have  up  to  60  days  to  appeal  to  their  carrier  before  Lifeline  support  is  discontinued.  We 
 seek  further  comment  on  how  such  an  appeals  process  would  work,  balancing  the  needs  of  Lifeline  recipients  with  the  administrative  burden  that  an  appeals  process  may  impose  on 
 carriers.  55  Without  such  an  appeals  process,  consumers  may  have  difficulty  maintaining  telephone  service  if  the  consumers  financial  situation  temporarily  fluctuates.  56  Telephone 

 52  See  Recommended  Decision  at  paras.  34,  41. 
 53  5  U.  S.  C.    603(  c). 
 54  5  U.  S.  C.    603(  c). 
 55  See  Recommended  Decision  at  para.  29. 
 56  See  Recommended  Decision  at  para.  29. 
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 service  is  necessary  for  finding  and  keeping  a  job,  thus  assisting  the  consumer  in  his/  her  climb  out  of  poverty  into  the  working  world.  57 
 21.  To  reduce  the  administrative  burden  on  states  to  adopt  certification  and  verification  procedures,  the  Joint  Board  compiled  an  appendix  of  state  certification  and  verification 
 procedures  to  provide  guidance  to  other  states  seeking  to  adapt  those  procedures  to  their  state  Lifeline/  Link-  Up  programs.  58  Although  these  requirements  may  impose  an  additional  burden  on 
 carriers  required  to  perform  the  certification  and  verification,  the  Joint  Board  believes  that  these  requirements  prevent  fraud  and  abuse,  maintain  the  integrity  of  the  Lifeline  universal  service 
 support  mechanism,  and  are  necessary  to  help  control  costs.  59 
 6.  Federal  Rules  that  May  Duplicate,  Overlap,  or  Conflict  with  the  Proposed  Rules 

 22.  None. 
 D.  Comment  Filing  Procedures 
 23.  We  invite  comment  on  the  issues  and  questions  set  forth  in  the  Notice  of  Proposed  Rulemaking  and  Initial  Regulatory  Flexibility  Analysis  contained  herein.  Pursuant  to  applicable 

 procedures  set  forth  in  sections  1.415  and  1.419  of  the  Commissions  rules,  60  interested  parties  may  file  comments  on  or  before  30  days  after  publication  in  the  Federal  Register  of  this  NPRM, 
 and  reply  comments  on  or  before  45  days  after  publication  in  the  Federal  Register  of  this  NPRM.  All  filings  should  refer  to  CC  Docket  No.  96-  45.  Comments  may  be  filed  using  the 
 Commissions  Electronic  Comment  Filing  System  (ECFS)  or  by  filing  paper  copies.  61 
 24.  Comments  filed  through  ECFS  can  be  sent  as  an  electronic  file  via  the  Internet  to  <http://  www.  fcc.  gov/  e-  file/  ecfs.  html>.  Generally,  only  one  copy  of  an  electronic  submission 

 must  be  filed.  In  completing  the  transmittal  screen,  commenters  should  include  their  full  name,  Postal  Service  mailing  address,  and  the  applicable  docket  number,  which  in  this  instance  is  CC 
 Docket  No.  96-  45.  Parties  may  also  submit  an  electronic  comment  by  Internet  e-  mail.  To  receive  filing  instructions  for  e-  mail  comments,  commenters  should  send  an  e-  mail  to 
 ecfs@  fcc.  gov,  and  should  include  the  following  words  in  the  body  of  the  message:  get  form  <your  e-  mail  address>.  A  sample  form  and  directions  will  be  sent  in  reply. 

 25.  Parties  who  choose  to  file  by  paper  must  file  an  original  and  four  copies  of  each  filing.  If  more  than  one  docket  or  rulemaking  number  appears  in  the  caption  of  this  proceeding, 
 commenters  must  submit  two  additional  copies  for  each  additional  docket  or  rulemaking  number. 
 57  See  Recommended  Decision  at  para.  29. 
 58  See  Recommended  Decision  at  paras.  32,  34,  41,  Appendix  E.  The  Joint  Board  recommended  that  states  be  given 
 the  flexibility  to  determine  the  certification  and  verification  procedures  and  that  carriers  should  be  required  to  perform  the  certification  and  verification.  See  Recommended  Decision  at  paras.  34,  41. 

 59  See  Recommended  Decision  at  paras.  34,  41. 
 60  47  C.  F.  R.    1.415,  1.  419. 
 61  See  Electronic  Filing  of  Documents  in  Rulemaking  Proceedings,  63  Fed.  Reg.  24121  (1998). 
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 Parties  who  choose  to  file  by  paper  are  hereby  notified  that  effective  December  18,  2001,  the  Commissions  contractor,  Vistronix,  Inc.,  will  receive  hand-  delivered  or  messenger-  delivered 
 paper  filings  for  the  Commissions  Secretary  at  a  new  location  in  downtown  Washington,  DC.  The  address  is  236  Massachusetts  Avenue,  NE,  Suite  110,  Washington,  DC,  20002.  The  filing 
 hours  at  this  location  will  be  8:  00  a.  m.  to  7:  00  p.  m.  All  hand  deliveries  must  be  held  together  with  rubber  bands  or  fasteners.  Any  envelopes  must  be  disposed  of  before  entering  the  building. 
 This  facility  is  the  only  location  where  hand-  delivered  or  messenger-  delivered  paper  filings  for  the  Commissions  Secretary  will  be  accepted.  Accordingly,  the  Commission  will  no  longer 
 accept  these  filings  at  9300  East  Hampton  Drive,  Capitol  Heights,  MD,  20743.  Other  messenger-  delivered  documents,  including  documents  sent  by  overnight  mail  (other  than  United 
 States  Postal  Service  (USPS)  Express  Mail  and  Priority  Mail),  must  be  addressed  to  9300  East  Hampton  Drive,  Capitol  Heights,  MD,  20743.  This  location  will  be  open  8:  00  a.  m.  to  5:  30  p.  m. 
 The  USPS  first-  class  mail,  Express  Mail,  and  Priority  Mail  should  continue  to  be  addressed  to  the  Commissions  headquarters  at  445  12th  Street,  SW,  Washington,  DC,  20554.  The  USPS 
 mail  addressed  to  the  Commissions  headquarters  actually  goes  to  our  Capitol  Heights  facility  for  screening  prior  to  delivery  at  the  Commission. 

 -------------------------------------------------------------------------------  If  you  are  sending  this  type  of  document  or  It  should  be  addressed  for  delivery  to... 
 using  this  delivery  method...  ------------------------------------------------------------------------------- 
 Hand-  delivered  or  messenger-  delivered  paper  236  Massachusetts  filings  for  the  Commission's  Secretary  Avenue,  NE,  Suite  110, 
 Washington,  DC  20002  (8:  00  a.  m.  to  7:  00  p.  m.) 
 -------------------------------------------------------------------------------  Other  messenger-  delivered  documents,  9300  East  Hampton  Drive, 
 including  documents  sent  by  overnight  mail  Capitol  Heights,  MD  20743  (other  than  United  States  Postal  Service  (8:  00  a.  m.  to  5:  30  p.  m.) 
 Express  Mail  and  Priority  Mail)  ------------------------------------------------------------------------------- 
 United  States  Postal  Service  first-  class  mail,  445  12th  Street,  SW  Express  Mail,  and  Priority  Mail  Washington,  DC  20554 
 ------------------------------------------------------------------------------- 
 All  filings  must  be  sent  to  the  Commissions  Secretary:  Marlene  H.  Dortch,  Office  of  the  Secretary,  Federal  Communications  Commission,  445  12th  Street,  SW,  Suite  TW-  A325, 
 Washington,  DC,  20554. 
 26.  Parties  who  choose  to  file  by  paper  should  also  submit  their  comments  on  diskette  to  Sheryl  Todd,  Telecommunications  Access  Policy  Division,  Wireline  Competition  Bureau, 
 Federal  Communications  Commission,  445  12th  Street,  SW,  Room  5-  B540,  Washington,  DC,  20554.  Such  a  submission  should  be  on  a  3.5  inch  diskette  formatted  in  an  IBM  compatible 
 format  using  Microsoft  Word  or  compatible  software.  The  diskette  should  be  accompanied  by  a  cover  letter  and  should  be  submitted  in  read  only  mode.  The  diskette  should  be  clearly  labeled 
 with  the  commenters  name,  proceeding  (including  the  docket  number,  in  this  case,  CC  Docket  No.  96-  45),  type  of  pleading  (comment  or  reply  comment),  date  of  submission,  and  the  name  of 
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 the  electronic  file  on  the  diskette.  The  label  should  also  include  the  following  phrase  Disk  Copy  -  Not  an  Original.  Each  diskette  should  contain  only  one  partys  pleading,  preferably  in  a 
 single  electronic  file.  In  addition,  commenters  must  send  diskette  copies  to  the  Commissions  copy  contractor,  Qualex  International,  Portals  II,  445  12th  Street,  SW,  Room  CY-  B402, 
 Washington,  DC,  20554. 
 27.  Regardless  of  whether  parties  choose  to  file  electronically  or  by  paper,  parties  should  also  file  one  copy  of  any  documents  filed  in  this  docket  with  the  Commissions  copy  contractor, 

 Qualex  International,  Inc.,  Portals  II,  445  12th  Street,  SW,  Room  CY-  B402,  Washington,  DC,  20554.  Comments  and  reply  comments  will  be  available  for  public  inspection  during  regular 
 business  hours  in  the  FCC  Reference  Center,  Room  CY-  A257,  445  12th  Street,  SW,  Washington,  DC,  20554.  In  addition,  the  full  text  of  this  document  is  available  for  public 
 inspection  and  copying  during  regular  business  hours  at  the  FCC  Reference  Information  Center,  Portals  II,  445  12th  Street,  SW,  Room  CY-  A257,  Washington,  DC,  20554.  This  document  may 
 also  be  purchased  from  the  Commissions  duplicating  contractor,  Qualex  International,  Portals  II,  445  12th  Street,  SW,  Room  CY-  B402,  Washington,  DC,  20554,  telephone  202-  863-  2893, 
 facsimile  202-  863-  2898,  or  via  e-  mail  qualexint@  aol.  com. 
 28.  Comments  and  reply  comments  must  include  a  short  and  concise  summary  of  the  substantive  arguments  raised  in  the  pleading.  Comments  and  reply  comments  must  also  comply 

 with  section  1.49  and  all  other  applicable  sections  of  the  Commissions  rules.  62  We  direct  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.  We  also  strongly  encourage  parties  to  track  the 
 organization  set  forth  in  the  NPRM  in  order  to  facilitate  our  internal  review  process. 
 E.  Further  Information 
 29.  To  request  materials  in  accessible  formats  for  people  with  disabilities  (braille,  large  print,  electronic  files,  audio  format),  send  an  e-  mail  to  fcc504@  fcc.  gov  or  call  the 

 Consumer  &  Governmental  Affairs  Bureau  at  202-  418-  0531  (voice),  202-  418-  7365  (tty). 
 30.  For  further  information,  contact  Shannon  Lipp  at  (202)  418-  7954  or  Diane  Law  Hsu  at  (202)  418-  1436  in  the  Telecommunications  Access  Policy  Division,  Wireline  Competition 

 Bureau. 
 II.  ORDERING  CLAUSES 
 31.  Accordingly,  IT  IS  ORDERED  that,  pursuant  to  the  authority  contained  in  sections  4(  i),  4(  j),  201-  205,  214,  254,  and  403  of  the  Communications  Act  of  1934,  as  amended,  this 

 Notice  of  Proposed  Rulemaking  IS  ADOPTED. 

 62  See  47  C.  F.  R.    1.49. 
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 32.  IT  IS  FURTHER  ORDERED  that  the  Commissions  Consumer  and  Governmental  Affairs  Bureau,  Reference  Information  Center,  SHALL  SEND  a  copy  of  this  Notice  of  Proposed 
 Rulemaking,  including  the  Initial  Regulatory  Flexibility  Analysis,  to  the  Chief  Counsel  for  Advocacy  of  the  Small  Business  Administration. 

 FEDERAL  COMMUNICATIONS  COMMISSION 

 Marlene  H.  Dortch  Secretary 
12