Federal Register / Vol. 62, No. 209 / Wednesday, October 29, 1997 / Rules and Regulations 56111

§ 489.23 Specific limitation on charges for

services provided to certain enrollees of

fee-for-service FEHB plans.

A provider that furnishes inpatient

hospital services to a retired Federal

worker age 65 or older who is enrolled

in a fee-for-service FEHB plan and who

is not covered under Medicare Part A,

must accept, as payment in full, an

amount that approximates as closely as

possible the Medicare inpatient hospital

prospective payment system (PPS) rate

established under part 412. The

payment to the provider is composed of

a payment from the FEHB plan and a

payment from the enrollee. This

combined payment approximates the

Medicare PPS rate. The payment from

the FEHB plan approximates, as closely

as possible, the Medicare PPS rate

minus any applicable enrollee

deductible, coinsurance, or copayment

amount. The payment from the enrollee

is equal to the applicable deductible,

coinsurance, or copayment amount.

3. In § 489.53, the introductory text to

paragraph (a) is republished and a new

paragraph (a)(14) is added to read as

follows:

§ 489.53 Termination by HCFA.

(a) Basis for termination of agreement

with any provider. HCFA may terminate

the agreement with any provider if

HCFA finds that any of the following

failings is attributable to that provider:

* * * * *

(14) The hospital knowingly and

willfully fails to accept, on a repeated

basis, an amount that approximates the

Medicare rate established under the

inpatient hospital prospective payment

system, minus any enrollee deductibles

or copayments, as payment in full from

a fee-for-service FEHB plan for inpatient

hospital services provided to a retired

Federal enrollee of a fee-for-service

FEHB plan, age 65 or older, who does

not have Medicare Part A benefits.

* * * * *

(Catalog of Federal Domestic Assistance

Program No. 93.773, Medicare—Hospital

Insurance)

Dated: October 17, 1997.

Nancy-Ann Min DeParle,

Deputy Administrator, Health Care Financing

Administration.

[FR Doc. 97–28594 Filed 10–28–97; 8:45 am]

BILLING CODE 4120–01–P

FEDERAL COMMUNICATIONS

COMMISSION

47 CFR Chapter I

[CC Docket No. 96–61; FCC 97–366]

Petition for Rulemaking to Reclassify

AT&T Corp. as Having Dominant

Carrier Status

AGENCY: Federal Communications

Commission.

ACTION: Final rule.

SUMMARY: The Order on

Reconsideration, Order Denying Petition

for Rulemaking, and Second Order on

Reconsideration in CC Docket No. 96–61

(Order) released October 9, 1997 finds

no new evidence or arguments that

demonstrate that a new examination of

AT&T’s regulatory status is warranted.

The Order also finds no basis to impose

on AT&T a service requirement not

imposed on other carriers subject to the

rate averaging and rate integration rules,

and that the Commission properly

included AT&T/Alascom within the

scope of the reclassification of AT&T as

non-dominant in the provision of

interstate, domestic, interexchange

services. Finally, the Order clarifies

that, to the extent AT&T/Alascom has

been found to be dominant in the

provision of certain interstate common

carrier services (which the Commission

has previously defined as ‘‘all interstate

interexchange transport and switching

services that are necessary for other

interexchange carriers to provide

services in Alaska up to the point of

interconnection with each Alaska local

exchange carrier.’’), AT&T/Alascom’s

regulatory obligations with respect to

those services remain unchanged.

EFFECTIVE DATE: November 28, 1997.

FOR FURTHER INFORMATION CONTACT:

Christopher Heimann, Attorney,

Common Carrier Bureau, Policy and

Program Planning Division, (202) 418–

1580. For additional information

concerning the information collections

contained in this Order contact Judy

Boley at (202) 418–0214, or via the

Internet at jboley@fcc.gov.

SUPPLEMENTARY INFORMATION: This is a

summary of the Commission’s Order

adopted October 8, 1997, and released

October 9, 1997. The full text of this

Order is available for inspection and

copying during normal business hours

in the FCC Reference Center, 1919 M

St., N.W., Room 239, Washington, D.C.

The complete text also may be obtained

through the World Wide Web, at http:/

/www.fcc.gov/Bureaus/Common

Carrier/Orders/fcc97–366.wp, or may be

purchased from the Commission’s copy

contractor, International Transcription

Service, Inc., (202) 857–3800, 1231 20th

St., N.W., Washington, D.C. 20036.

SYNOPSIS OF ORDER ON

RECONSIDERATION

I. Introduction

1. On October 23, 1995, the

Commission issued an order granting

AT&T Corporation’s (AT&T’s) motion to

be reclassified as a non-dominant carrier

under Part 61 of the Commission’s rules

and regulations. On November 22, 1995,

the State of Hawaii (Hawaii) and

General Communications, Inc. (GCI)

timely filed Petitions for

Reconsideration of the Commission’s

AT&T Reclassification Order. For the

reasons stated below, we deny the

petitions of both Hawaii and GCI.

2. On January 23, 1996, more than two

months past the statutory deadline,

Total Telecommunications Services,

Inc. (TTS) also filed a Petition For

Reconsideration, and a Motion For

Acceptance of Petition For

Reconsideration. As discussed below,

we deny TTS’s motion and dismiss its

petition as untimely, and therefore do

not address the merits of its petition.

3. On December 23, 1996, GCI filed a

Petition for Reconsideration or

Clarification of the Commission’s Tariff

Forbearance Order (61 FR 59340

(November 22, 1996)). For the reasons

discussed below, we grant GCI’s petition

for clarification of the Tariff

Forbearance Order.

4. Finally, on December 31, 1996, the

United Homeowners Association and

the United Seniors Health Cooperative

(UHA), filed a Petition for Rulemaking

to Reclassify AT&T as Having Dominant

Carrier Status. For the reasons discussed

below, we deny UHA’s petition.

II. Petitions for Reconsideration

A. Background

5. In the AT&T Reclassification Order,

the Commission reclassified AT&T as a

non-dominant carrier, based on the

Commission’s finding that AT&T no

longer possessed individual market

power in the interstate, domestic,

interexchange market taken as a whole.

The Commission acknowledged that

there was evidence in the record that

AT&T, MCI and Sprint had increased

basic schedule rates in lock-step, but

found that that evidence did not support

a finding that AT&T retained the power

unilaterally to raise residential prices

above competitive levels. In addition,

the Commission found that, to the

extent that tacit price coordination with

respect to basic schedule or residential

rates in general was occurring, the

problem was generic to the
56112 Federal Register / Vol. 62, No. 209 / Wednesday, October 29, 1997 / Rules and Regulations

interexchange industry and not specific

to AT&T. The Commission concluded

that concerns regarding such pricing

would be better addressed by removing

regulatory requirements that may have

facilitated such conduct, such as the

longer advance notice period for tariff

changes then applicable only to AT&T,

and by addressing the issues raised by

these concerns in the context of a

proceeding to examine the interstate,

domestic, interexchange market as a

whole. We recently reiterated our

concern that ‘‘not all segments of [the

interstate, interexchange services]

market appear to be subject to vigorous

competition,’’ and expressed concern

about the ‘‘relative lack of competition

among carriers to serve low volume long

distance customers.’’

6. In assessing whether AT&T

possessed individual market power, the

Commission followed the relevant

product and geographic market

definitions adopted by the Commission

in the Competitive Carrier proceeding.

In that proceeding, the Commission

found, for purposes of assessing the

market power of interexchange carriers

covered by that proceeding, that: ‘‘(1)

Interstate, domestic, interexchange

telecommunications services comprise

the relevant product market, and (2) the

United States (including Alaska,

Hawaii, Puerto Rico, U.S. Virgin Islands,

and other U.S. off-shore points)

comprises the relevant geographic

market for this product, with no

relevant submarkets.’’ The Commission

concluded that it should apply the

foregoing market definitions in

assessing AT&T’s market power,

because those definitions were applied

in classifying all of AT&T’s competitors

as non-dominant carriers. The

Commission further stated that

examination of the substitutability of

supply for interstate, domestic,

interexchange services also indicated

that use of those definitions to evaluate

AT&T’s market power was appropriate.

7. As a non-dominant interexchange

carrier, AT&T is generally subject to the

same regulations as its long-distance

competitors. In the AT&T

Reclassification proceeding, however,

AT&T made certain voluntary

commitments that it described as

transitional provisions intended to

address concerns expressed by various

parties about possible adverse effects of

reclassifying AT&T. These commitments

concerned, among other things, service

to and from the States of Alaska and

Hawaii, and other regions subject to the

Commission’s rate integration policy,

and geographic rate averaging. In the

AT&T Reclassification Order, the

Commission accepted AT&T’s

commitments and ordered AT&T to

comply with those commitments.

8. On February 8, 1996, the

Telecommunications Act of 1996 (1996

Act) was enacted. The 1996 Act seeks

‘‘to provide for a pro-competitive, deregulatory national policy framework’’

designed to make available to ‘‘all

Americans’’ advanced

telecommunications and information

technologies and services ‘‘by opening

all telecommunications markets to

competition.’’ Consistent with the 1996

Act’s objective of ensuring that all

Americans benefit from the

liberalization of telecommunications

markets, the 1996 Act required the

Commission, within six months after

the date of enactment, to:

adopt rules to require that the rates charged

by providers of interexchange

telecommunications services to subscribers

in rural and high cost areas shall be no higher

than the rates charged by each such provider

to its subscribers in urban areas. Such rules

shall also require that a provider of interstate

interexchange telecommunications services

shall provide such services to its subscribers

in each State at rates no higher than the rates

charged to subscribers in any other State.

On August 7, 1996, the Commission

adopted a Report and Order

implementing these statutory

requirements.

9. On October 31, 1996, the

Commission released the Tariff

Forbearance Order. In that order, the

Commission determined that the

statutory criteria in section 10 of the

Communications Act, as amended, were

met to detariff completely interstate,

domestic, interexchange services offered

by nondominant interexchange carriers,

and, therefore, that the Commission

would no longer allow such carriers to

file tariffs for such services pursuant to

section 203 of the Communications Act.

B. Analysis

10. Petitioners raise three substantive

arguments in seeking reconsideration or

clarification of the Commission’s Order

granting AT&T’s motion to be

reclassified as a non-dominant carrier.

First, Hawaii argues that the

Commission should strengthen AT&T’s

voluntary commitments by requiring

AT&T to serve on Hawaii and the State

of Alaska (Alaska) copies of any

submissions that address the

Commission’s geographic rate averaging

and rate integration policies, in order to

ensure that Hawaii and Alaska have a

meaningful opportunity to participate in

pre-effective review proceedings.

Second, GCI maintains that the

reclassification of AT&T does not apply

to AT&T/Alascom, Inc. (AT&T/

Alascom), because AT&T/Alascom is

still dominant in the Alaska market.

Third, GCI argues that it is not clear

which of the obligations and conditions

imposed on AT&T and Alascom by the

Market Structure Order (59 FR 27496

(May 27, 1994)), the Final

Recommended Decision (58 FR 63345

(December 1, 1993)), and the Alascom

Authorization Order continue to apply

now that AT&T has been reclassified as

nondominant.

1. Whether the Commission Should

Strengthen AT&T’s Commitments

a. Positions of the Parties. 11. Hawaii

requests that the Commission strengthen

the commitments made by AT&T in the

AT&T Reclassification proceeding by

requiring AT&T to serve on Alaska and

Hawaii copies of any pleadings, tariff

revisions or other submissions to the

Commission that purport to seek

alteration or a specific interpretation of,

or otherwise affect, the Commission’s

rate integration and geographic rate

averaging policies, at the same time

AT&T files such submissions with the

Commission. Hawaii argues that the

historical importance of the

Commission’s rate integration and

geographic rate averaging policies to

Hawaii and Alaska, as well as the

alleged lack of reasonably priced

telecommunications to Hawaii, warrant

assurance that Hawaii and Alaska will

have the opportunity to voice their

concerns if AT&T proposes to depart

from these policies. Hawaii

acknowledges that AT&T informally

committed to give Hawaii notice of tariff

filings departing from geographic rate

averaging, but maintains that in some

situations more time would be needed

to ensure that it has an opportunity to

respond.

12. Alaska, CNMI, GTA, and Guam

support Hawaii’s request. Alaska argues

that requiring AT&T to serve Alaska and

Hawaii with copies of submissions

affecting the Commission’s rate

integration and geographic averaging

policies would not impose a significant

burden on AT&T, but would ensure that

the interests of citizens of Alaska and

Hawaii are heard before any action

affecting these policies goes into effect.

CNMI, GTA and Guam contend that the

Commission should require AT&T to

serve on all interested parties, not just

Alaska and Hawaii, copies of

submissions that would alter the

Commission’s rate integration or

geographic rate averaging policies.

Similarly, the LEC Associations argue

that AT&T should be required to serve

copies of submissions that depart from

the Commission’s established

geographic averaging policies in other

states and in U.S. territories, because
Federal Register / Vol. 62, No. 209 / Wednesday, October 29, 1997 / Rules and Regulations 56113

geographic averaging is essential for

maintaining universal service. They also

urge the Commission to commence a

proceeding to codify its geographic

averaging polices.

13. AT&T responds that Hawaii’s

petition relates solely to AT&T’s

voluntary commitments concerning rate

integration and geographic rate

averaging, and that, since the

commitments were not offered, or used,

to support the Commission’s finding

that AT&T lacks market power in the

overall interstate, domestic,

interexchange market, the

reclassification of AT&T is appropriate.

AT&T argues that the Commission

cannot modify voluntary commitments

that were not the basis for its ruling, and

cannot create or impose new rules on

AT&T in this non-rulemaking

proceeding. AT&T also contends that

the relief sought by the parties

supporting Hawaii’s petition would

impose significantly greater burdens on

AT&T than are required under the

Commission’s tariff filing rules for

dominant carriers. AT&T concludes that

the requested relief should be rejected

as unnecessary and overly burdensome,

in light of the fact that all such filings

are made on the public record at the

Commission. AT&T also argues that the

relief sought would exceed the

Commission’s authority by requiring

AT&T to make public tariff filings not

only with the Commission, but with

Hawaii, Alaska, the Northern Mariana

Islands, and other state jurisdictions and

U.S. territories.

14. In reply, Hawaii argues that its

petition is consistent with the

Commission’s stated commitment to

rate integration and geographic

averaging, and the Commission’s

decision to incorporate AT&T’s

commitments into the AT&T

Reclassification Order. It adds that its

request is also consistent with AT&T’s

pledge to ‘‘work very closely on an

informal basis with representatives of

the State of Hawaii on matters affecting

telecommunications there.’’ Hawaii

claims it is merely seeking assurance

that AT&T will honor its pledge. Hawaii

concludes that the relief it seeks would

not burden AT&T or the Commission,

but would ensure that citizens of Hawaii

have a meaningful opportunity to

participate in the pre-effective review of

any filings that affect these policies.

b. Discussion. 15. As noted above, on

August 7, 1996, the Commission

adopted the Geographic Averaging

Order (61 FR 42558 (August 16, 1996)),

which implemented the geographic rate

averaging and rate integration

requirements of the 1996 Act. In that

Order, we adopted a rule requiring that

‘‘the rates charged by all providers of

interexchange telecommunications

services to subscribers in rural and high

cost areas shall be no higher than the

rates charged by each such provider to

its subscribers in urban areas.’’ The

Commission stated that this rule

‘‘codifies our existing geographic rate

averaging policy.’’ The LEC

Associations’’ request that the

Commission initiate a proceeding to

codify its geographic rate averaging

policies is therefore moot. The

Commission also adopted a rule

‘‘requiring that ‘a provider of interstate

interexchange telecommunications

services shall provide such services to

its subscribers in each State at rates no

higher than the rates charged to its

subscribers in any other State.’’’ As

required by the 1996 Act, the

Commission found that the geographic

rate averaging rule applies ‘‘to all

providers of interexchange

telecommunications services, and to all

interexchange ‘telecommunications

services,’ as defined by the Act.’’

Similarly, the Commission found that

the rate integration rule applies ‘‘to all

domestic interstate interexchange

telecommunications services as defined

in the 1996 Act, and all providers of

such services.’’

16. In the Geographic Averaging

Order, the Commission also determined

that the rules adopted in that

proceeding superseded the rate

averaging and rate integration

commitments AT&T voluntarily made

in the AT&T Reclassification

proceeding. We based this

determination on the grounds that the

rules we adopted in Geographic

Averaging Order would require AT&T to

provide interexchange service at

geographically averaged and integrated

rates, and that these requirements

incorporated the Commission’s rate

averaging and rate integration policies

then in effect. We therefore released

AT&T from the commitment to comply

with the Commission’s earlier orders

regarding rate integration and the

commitment to file any tariff containing

a geographically deaveraged rate on five

business days’ notice.

17. In light of Congress’s codification

of the Commission’s rate averaging and

rate integration policies in section

254(g) of the Communications Act, the

Commission’s rules implementing that

section, and the other actions taken in

the Geographic Averaging Order, we

find that Hawaii’s request that we

impose a service requirement on AT&T

has been superseded and is now moot

because AT&T cannot deaverage its

rates consistent with federal law. We

also find no basis to impose on AT&T

a service requirement not imposed on

other carriers subject to the rate

averaging and rate integration rules.

Accordingly, for the foregoing reasons,

we find that the relief sought by Hawaii

is unnecessary in light of the

Commission’s implementation of the

geographic rate averaging and rate

integration requirements of the

Communications Act, and of AT&T’s

specific voluntary commitments

concerning service to Hawaii and

Alaska. We therefore deny Hawaii’s

petition.

2. Whether Reclassification of AT&T

Applies to AT&T/Alascom

a. Position of the Parties. 18. GCI asks

the Commission either to clarify that the

reclassification of AT&T does not apply

to AT&T/Alascom, Inc., or to reconsider

and reverse any finding that AT&T/

Alascom is no longer dominant. GCI

justifies its request on the grounds that

AT&T did not seek to reclassify

Alascom as non-dominant, and that the

Commission did not address the

reclassification of Alascom in the AT&T

Reclassification Order. GCI argues that

the Commission found Alascom

dominant in the Alaska market in the

Competitive Carrier Fifth Report and

Order (49 FR 34824 (September 4,

1984)), and has never reversed that

finding. It also contends that this

finding could not be reversed, in light

of AT&T/Alascom’s legally enforced

monopoly in the Alaska Bush. GCI

argues that AT&T/Alascom is able to

leverage its market power beyond the

Bush because of Commission policies

requiring other carriers serving Alaska

to purchase Bush distribution services

from AT&T/Alascom. GCI also argues

that it is unclear how long AT&T/

Alascom’s market power in the Alaska

Bush will persist. GCI adds that, even if

the Alaska Bush were opened

immediately, it would take significant

time for the market to become workably

competitive, because of the time

necessary to construct a competing

network.

19. Alaska and MCI likewise claim

that the Commission’s reclassification of

AT&T does not affect AT&T/Alascom’s

classification as a dominant carrier.

Alaska argues that, in reclassifying

AT&T, the Commission noted that

Alascom continues to be ‘‘governed by

dominant carrier rules where it has a

facilities monopoly, namely the Bush

areas,’’ and therefore that the AT&T

Reclassification Order does not affect

the classification of AT&T Alascom, Inc.

MCI argues that the Commission’s

reclassification of AT&T as nondominant in the domestic market was

based on market characteristics in the
56114 Federal Register / Vol. 62, No. 209 / Wednesday, October 29, 1997 / Rules and Regulations

‘‘lower 48’’ states, which are not

representative of the Alaska market. It

adds that a separate finding that AT&T/

Alascom does not possess market power

in Alaska is therefore required, but that

such a determination is impossible to

make and support at this time.

20. AT&T responds that there is no

basis for excluding AT&T/Alascom from

the ambit of the AT&T Reclassification

Order, because the Commission

expressly found that AT&T lacked

market power in the domestic

interexchange market as a whole, which

AT&T claims is the only relevant market

for this purpose. AT&T argues that the

fact that AT&T (or AT&T/Alascom) may

be the major supplier of specific

services does not alter the analysis, and

that the Commission has never

definitively held that a carrier must lack

the ability to control the price of every

service in the relevant market before it

can be classified as non-dominant.

AT&T maintains that its voluntary

commitments to continue rate

integration for Alaska and to comply

with the Commission’s orders relating to

Alaska necessarily apply to AT&T/

Alascom, and that the commitments

assume that AT&T/Alascom is included

within the scope of the AT&T

Reclassification Order.

21. AT&T further responds that the

Commission found that, to the extent

AT&T is able to control price at all, it

is only with respect to specific service

segments that are either de minimis in

relation to the overall market, or

exposed to increasing competition so as

not to affect materially the overall

market. AT&T argues that these

conditions apply to the Alaska Bush,

which generates less than five onehundredths of one percent (0.0005) of

total industry revenue, an amount that

AT&T claims is de minimis and affords

AT&T/Alascom no power in the overall

relevant market. AT&T concludes there

is therefore no basis to treat AT&T

differently from its competitors, or to

treat AT&T/Alascom differently from

the rest of AT&T.

22. GCI counters that AT&T does not

rebut GCI’s claim that AT&T retains an

absolute monopoly, and thus market

power, in the Alaska market. GCI

maintains that AT&T’s suggestion that

Alascom’s market power in Alaska can

be ignored as ‘‘de minimis’’ is contrary

to prior Commission rulings and

AT&T’s own statements. Specifically,

GCI contends that, in classifying

Alascom as a dominant interexchange

carrier, the Commission focused solely

on Alascom’s position in the Alaska

market, and did not require Alascom to

be dominant throughout the U.S. market

as a whole. GCI adds that, as recently as

August 1995, the Commission identified

Alaska as a separate relevant

interexchange market. Specifically, GCI

maintains that, while the Commission

spoke of a single national market, the

Commission identified that market as

distinct from the Alaska market

occupied by Alascom and in which

Alascom retained market power. GCI

also claims that AT&T’s own pleadings

in the Alaska Joint Board Proceeding

contemplate that AT&T could be

classified as dominant in the lower 48

states, but non-dominant in Alaska,

because of different market

characteristics and circumstances. GCI

concludes that the Commission

classified Alascom as a dominant carrier

based on its legally protected monopoly

position in the Alaska market, which it

alleges has never changed, and that

AT&T’s purchase of Alascom did

nothing to reduce Alascom’s market

power in Alaska.

23. In its petition for reconsideration

or clarification of the Commission’s

Tariff Forbearance Order, GCI requests

the Commission either to clarify that the

Tariff Forbearance Order did not

detariff AT&T/Alascom’s provision of

‘‘common carrier’’ services, (The

Commission has defined Alascom’s

‘‘common carrier’’ services as ‘‘all

interstate interexchange transport and

switching services that are necessary for

other interexchange carriers to provide

services in Alaska up to the point of

interconnection with each Alaska local

exchange carrier.’’) or to reconsider and

reverse any finding that AT&T/Alascom

is not required to file a tariff for such

services. In support of its petition, GCI

argues that AT&T, in the AT&T

Reclassification proceeding, made

certain voluntary commitments,

including a commitment that AT&T/

Alascom would provide ‘‘common

carrier’’ services under tariff. In

response to GCI’s petition, AT&T states

that it ‘‘does not interpret the [Tariff

Forbearance Order] to require the

detariffing of Alascom’s Common

Carrier Services.’’ The American

Petroleum Institute (API) disagrees with

GCI and argues that, to the extent

AT&T/Alascom’s services are interstate,

domestic, interexchange services offered

by a nondominant interexchange carrier,

the Tariff Forbearance Order completely

detariffed those services.

b. Discussion. 24. AT&T/Alascom

offers certain interstate ‘‘common

carrier’’ services. As noted above, in the

Market Structure Order, the

Commission defined Alascom’s

‘‘common carrier’’ services as ‘‘all

interstate interexchange transport and

switching services that are necessary for

other interexchange carriers to provide

services in Alaska up to the point of

interconnection with each Alaska local

exchange carrier.’’ For purposes of our

discussion here, we refer to AT&T/

Alascom’s ‘‘common carrier’’ services as

those services were defined in the

Market Structure Order. In the Market

Structure Order, the Commission

adopted the recommendation of the

Federal-State Alaska Joint Board in the

Final Recommended Decision that

Alascom be required to provide such

services to interexchange carriers under

tariff on a nondiscriminatory basis at

rates that reflect the cost of the services

(i.e., on dominant carrier basis). AT&T

concedes that, to the extent that AT&T/

Alascom’s ‘‘common carrier’’ services

are not interstate, domestic,

interexchange telecommunications

services as addressed in the AT&T

Reclassification Order, the classification

of those services is not affected by that

Order. AT&T further concedes that the

Tariff Forbearance Order does not

require the detariffing of AT&T/

Alascom’s ‘‘common carrier’’ services.

Indeed, the Commission noted in the

AT&T Reclassification Order, and we

clarify here, that, to the extent AT&T/

Alascom has been found to be dominant

in the provision of ‘‘common carrier’’

services, as defined above, AT&T/

Alascom’s regulatory obligations with

respect to those services remain

unchanged, and therefore AT&T/

Alascom is required to file tariffs for

such services on a dominant carrier

basis.

25. In addition to the foregoing

‘‘common carrier’’ services offered to

interexchange carriers, AT&T/Alascom

provides interstate, domestic,

interexchange services to end-user

customers in Alaska. For the reasons set

forth below, we reject GCI’s petition for

reconsideration and find no basis to

exclude AT&T/Alascom’s provision of

these services from the scope of the

AT&T Reclassification Order.

26. We reject the suggestion by GCI,

MCI and Alaska, that, in order to

reclassify AT&T/Alascom as a nondominant carrier with respect to its

provision of interstate, domestic,

interexchange services, the Commission

must assess AT&T/Alascom’s market

power in the Alaska market, rather than

in the overall interstate, domestic,

interexchange services market. The

Commission’s decision in the

Competitive Carrier Fifth Report and

Order to regulate Alascom as a

dominant carrier did not, as GCI

implies, disavow or modify the ‘‘all

interstate, domestic, interexchange

services’’ market definition adopted in

the Competitive Carrier Fourth Report

and Order (48 FR 52452 (November 18,
Federal Register / Vol. 62, No. 209 / Wednesday, October 29, 1997 / Rules and Regulations 56115

1983)) by ‘‘focus[ing] solely on

Alascom’s position within the Alaska

market.’’ Rather, the Commission

concluded that Alascom should be

regulated as dominant, without reaching

the issue of relevant market definitions,

because it was concerned that the

Commission’s rate-integration policy for

interstate MTS and WATS services to

noncontiguous domestic points, which

limited rate-integration payments only

to Alascom, might limit the ability of

other carriers to compete in serving

Alaska.

27. In addition, we find that GCI

mischaracterizes the Alascom

Authorization Order, in arguing that the

Commission there identified Alaska as a

separate relevant interexchange market

and therefore that we are required to

analyze separately AT&T/Alascom’s

market power in Alaska, for purposes of

classifying AT&T/Alascom as nondominant in the interstate, domestic,

interexchange market. While, in the

Alascom Authorization Order, the

Commission did identify two relevant

product markets for purposes of

evaluating the proposed merger of

AT&T and Alascom, the markets it

identified were: (1) ‘‘interexchange

telecommunications services within

Alaska (the ‘Alaska market’),’’ which

was the principal business of Alascom;

and (2) ‘‘interstate interexchange

telecommunications (‘the All

Interexchange Market’),’’ which AT&T

provided, and which included

Alascom’s and Alaska Telecom’s

proposed undersea fiber cable services.

In that Order, the Commission did not

identify the provision of interstate,

domestic, interexchange services to

Alaska as a separate relevant product or

geographic market. Indeed, the

Commission specifically noted that its

identification of interstate interexchange

telecommunications (including

Alascom’s and Alaska Telecom’s

proposed undersea fiber cable services)

as a relevant product market was

‘‘consistent with the Commission’s

earlier findings of a single market for all

interstate interexchange services.’’ We

note that GCI, in quoting the foregoing

sentence, failed to include the word

‘‘interstate,’’ which qualified the term

‘‘interexchange services.’’ We believe

that the Commission’s reference to

‘‘interstate interexchange services,’’ and

not to ‘‘interexchange services’’

generally, is central to the meaning of

the Commission’s statement and hence

to a complete understanding of this

statement’s relevance in the present

context. Thus, the Commission did not,

in the Alascom Authorization Order,

disavow or modify in any way, the ‘‘all

interstate, domestic, interexchange

services’’ market definition adopted in

the Competitive Carrier Fourth Report

and Order.

28. Accordingly, we reject GCI’s

argument that, based on the Alascom

Authorization Order and the

Competitive Carrier Fifth Report and

Order, the Commission must analyze

separately AT&T/Alascom’s market

power in Alaska for purposes of

classifying AT&T/Alascom as nondominant in the interstate, domestic,

interexchange market. Rather, we affirm

our determination in the AT&T

Reclassification Order that, consistent

with the conclusions reached in

Competitive Carrier Fifth Report and

Order, the appropriate relevant

geographic market for purposes of

assessing AT&T’s market power was a

‘‘’single national relevant geographic

market (including Alaska, Hawaii,

Puerto Rico, U.S. Virgin Islands, and

other U.S. offshore points).’’’ We

conclude that, pursuant to Commission

policy in effect at the time of the AT&T

Reclassification Order, the Commission

properly included AT&T/Alascom

within the scope of the classification of

AT&T as non-dominant in the provision

of interstate, domestic, interexchange

services.

29. Subsequent to GCI’s filing of its

Petition for Reconsideration, the

Commission adopted the LEC

Interexchange Order (62 FR 35974 (July

3, 1997)), which revises the

Commission’s approach to defining

relevant geographic and product

markets for purposes of determining

whether a carrier should be regulated as

dominant or non-dominant in the

provision of interstate, domestic,

interexchange services. Specifically, in

the LEC Interexchange Order, we

defined the relevant geographic market

for interstate, domestic, interexchange

services as ‘‘all possible routes that

allow for a connection from one

particular location to another particular

location (i.e., a point-to-point market).’’

We clarified, however, that we would

treat, in general, interstate, long distance

calling as a single national market unless

there is credible evidence suggesting that

there is or could be a lack of competition in

a particular point-to-point market or group of

point-to-point markets, and there is a

showing that geographic rate averaging will

not sufficiently mitigate the exercise of

market power, we will refrain from

employing the more burdensome approach of

analyzing separately data from each point-topoint market.

30. Considering GCI’s Petition for

Reconsideration according to the market

definition approach established in the

recent LEC Interexchange Order, we

conclude that, even assuming arguendo

that GCI’s petition presents credible

evidence suggesting a lack of

competition with respect to domestic,

interstate, interexchange service in

Alaska, GCI’s petition fails to

demonstrate that geographic rate

averaging will not sufficiently mitigate

the exercise of market power, if any, by

AT&T/Alascom in Alaska.

31. In the Geographic Averaging

Order, we found that the 1996 Act

required the Commission to mandate

rate integration among all states,

territories and possessions, and held

that ‘‘this goal is best achieved by

interpreting ‘provider’ to include parent

companies that, through affiliates,

provide service in more than one state.’’

We stated that ‘‘nothing in the record

supports a finding that Congress

intended to allow [interexchange

carriers] to avoid rate integration by

establishing subsidiaries that provide

service in limited areas.’’ Applying this

general rule in a specific context, we

held that GTE, for purposes of section

254(g), was required to integrate its rates

for domestic, interstate, interexchange

services across affiliates. We find that,

pursuant to the rule established in the

Geographic Averaging proceeding,

AT&T, like GTE, is required to integrate

and average its rates across affiliates,

including AT&T/Alascom.

32. Because AT&T is required to

integrate and average its rates

geographically for interstate, domestic,

interexchange services across all of its

affiliates, including AT&T/Alascom, we

believe that AT&T/Alascom could not

raise and sustain prices for such

services above the competitive level in

Alaska, unless AT&T were able

profitably to charge supracompetitive

prices in the ‘‘lower 48’’ states. Nothing

in the record of this reconsideration

proceeding supports a reversal of our

determination in the AT&T

Reclassification Order, that ‘‘AT&T

neither possesses nor can unilaterally

exercise market power within the

interstate, domestic, interexchange

market taken as a whole,’’ which

includes the ‘‘lower 48’’ states. Nor is

there any evidence in the record on

reconsideration to support a finding that

geographic rate averaging, together with

AT&T’s lack of market power in the

‘‘lower 48,’’ will not mitigate the

exercise of market power, if any, by

AT&T/Alascom in Alaska. Therefore, we

find no reason to analyze separately

AT&T/Alascom’s market power in

Alaska. Accordingly, we find that

AT&T/Alascom is appropriately

classified, as established in the AT&T

Reclassification Order, as non-dominant
56116 Federal Register / Vol. 62, No. 209 / Wednesday, October 29, 1997 / Rules and Regulations

in the provision of interstate, domestic,

interexchange services.

3. Whether the Commission Should

Clarify the Requirements of the Alaska

Orders That Continue to Apply to AT&T

and AT&T/Alascom

a. Position of the Parties. 33. GCI

requests that the Commission clarify

which requirements of the

Commission’s Alaska Orders continue

to apply to AT&T and AT&T/Alascom.

GCI argues that, while AT&T made a

generalized promise to comply with

outstanding Commission orders relating

to Alaska in the AT&T Reclassification

proceeding, it is impossible to

determine which requirements of the

Alaska Orders AT&T has specifically

agreed to follow, and which it will try

to contest or ignore.

34. GCI adds that, as a non-dominant

carrier, AT&T may be able to

discriminate and to deaverage its Alaska

rates by providing Alaska services

through two entities—AT&T and AT&T/

Alascom. GCI argues that, although the

Final Recommended Decision provided

that AT&T would remain subject to

Section 214 entry and exit certification

requirements, non-dominant status

removes the requirement that AT&T

obtain Section 214 authority to serve the

Alaska market. GCI further argues that,

if AT&T provides separate service to

Alaska pursuant to separate tariffs from

those filed by AT&T/Alascom, AT&T

will be able to discriminate between

customers served by AT&T and

customers served by AT&T/Alascom.

GCI also claims that it will be

impossible to determine whether AT&T

is integrating Alaska rates into its

domestic rate schedule, and that any

difference in rates or offerings between

AT&T and AT&T/Alascom would call

into question which rate is appropriate

for purposes of judging rate integration.

35. Finally, GCI argues that separate

service by AT&T would disadvantage

captive monopoly customers that buy

service under the AT&T/Alascom

common carrier services tariff, because,

to the extent AT&T provides separate

service to Alaska and does not use the

carrier services of AT&T/Alascom,

AT&T will reduce traffic on the AT&T/

Alascom network and drive up rates for

AT&T/Alascom’s captive monopoly

customers. GCI states that all carriers,

including AT&T, are required to buy

Alaska distribution services under the

AT&T/Alascom carrier services tariff.

36. Alaska, supporting GCI’s request

for clarification, notes that AT&T

committed to comply with the

Commission’s orders regarding rate

integration and with all the obligations

and conditions set forth in the Alaska

Joint Board Proceeding and the Alascom

Authorization Order. Alaska requests

the Commission to clarify the AT&T

Reclassification Order if there is any

uncertainty on these points.

37. AT&T responds that GCI’s request

for clarification is inappropriate,

because it seeks to inject into this

proceeding issues already litigated in

other dockets. AT&T adds that its

voluntary commitments assume that

both AT&T and its AT&T/Alascom

affiliate will continue to adhere to the

Commission’s orders regarding the

restructuring of the Alaska market. In

addition, AT&T notes that the

Commission defined Alascom’s

‘‘common carrier’’ services as interstate

interexchange transport and switching

services necessary for other

interexchange carriers to provide service

in Alaska up to the point of

interconnection with LECs. As

previously noted, AT&T concedes that,

to the extent AT&T/Alascom’s

‘‘common carrier’’ services are not

domestic interstate interexchange

services as addressed in the AT&T

Reclassification Order, the classification

of those ‘‘common carrier’’ services is

not affected by that Order, and,

therefore, that, to the extent Alascom’s

‘‘common carrier’’ services have been

found to be dominant, AT&T/Alascom’s

regulatory obligations relating to those

services remain unchanged.

b. Discussion. 38. We believe that

there is no ambiguity concerning the

requirements of the Alaska Orders that

continue to apply to AT&T and AT&T/

Alascom, but for the sake of clarity we

note that the AT&T Reclassification

Order contains a lengthy and detailed

statement of both AT&T’s and AT&T/

Alascom’s obligations with respect to

Alaska. In addition, AT&T has

committed to comply voluntarily with

all the conditions and obligations set

forth in the Alaska Orders, and has

specifically acknowledged that AT&T’s

commitment applies to AT&T/Alascom.

Moreover, as the Commission noted in

the AT&T Reclassification Order, any

failure by AT&T or AT&T/Alascom to

comply with any of the conditions and

obligations in the Alaska Orders may

result in the imposition of forfeitures on

AT&T or AT&T/Alascom, or a

revocation of their Commission licenses.

In addition, if GCI believes that either

AT&T or AT&T/Alascom has failed to

honor the commitment to comply with

all of the conditions and obligations in

the Alaska Orders, GCI may seek relief

under Section 208 of the

Communications Act.

39. We also reject GCI’s claim that

AT&T may be able to deaverage its

Alaska rates by providing Alaska

services through two entities. As an

initial matter, we note that, contrary to

GCI’s suggestion, the reclassification of

AT&T as a non-dominant carrier did not

remove the requirement that AT&T

obtain Section 214 authority to serve the

Alaska market. As we stated in the

AT&T Reclassification Order, AT&T

may build or lease facilities to serve the

Alaska market subject to dominant

carrier authorization rules. Moreover, as

discussed above, in the Geographic

Averaging Order, we found that

Congress did not intend to allow

interexchange carriers to avoid the rate

integration requirements of the 1996 Act

by establishing subsidiaries that provide

service in limited areas. As noted above,

we find that, pursuant to the rule

established in the Geographic Averaging

Order, AT&T must integrate and average

its rates across its affiliates.

Accordingly, AT&T may not deaverage

its Alaska rates by providing services to

Alaska through two entities.

4. Other Matters

40. On January 23, 1996, well after the

statutory deadline for filing petitions for

reconsideration of the AT&T

Reclassification Order, TTS filed a

Petition for Reconsideration requesting

that the Commission reclassify AT&T as

dominant on the grounds that AT&T

retains a dominant position in the

interstate, domestic, interexchange

market, and has abused, and is likely to

continue to abuse, its dominant position

in the market. On the same date, TTS

filed a motion for acceptance of its latefiled petition for reconsideration. TTS

states that it was unable to file its

petition before the statutory deadline

because AT&T’s ‘‘bad acts,’’ on which

TTS’s petition is based, did not occur

until November 22, 1995, the due date

for filing petitions. TTS alleges that its

petition was delayed further by its

attempt to negotiate with AT&T to

resolve their dispute, and by the

blizzard in Washington, D.C., in

January, 1996. TTS maintains that these

facts establish substantial justification

and good cause for the Commission to

accept TTS’s late-filed petition.

41. On April 15, 1997, TTS filed, in

the record of the UHA Petition for

Rulemaking proceeding, a Supplement

to Petition for Reconsideration and a

Motion to Accept Supplement to

Petition for Reconsideration. TTS states

that the information in its supplement

was not available to TTS at the time it

filed its petition for reconsideration and

that the information is necessary in

order for the Commission to have a

complete record.

42. Section 405 of the

Communications Act, provides, in
Federal Register / Vol. 62, No. 209 / Wednesday, October 29, 1997 / Rules and Regulations 56117

relevant part, that: ‘‘[a] petition for

reconsideration must be filed within

thirty days from the day upon which

public notice is given of the order,

decision, report, or action complained

of.’’ Section 1.4(b) of the Commission’s

rules defines the date of public notice of

the final Commission action. Section

1.4(b)(2) provides that, for ‘‘nonrulemaking documents released by the

Commission or staff, whether or not

published in the Federal Register, the

release date’’ is date of public notice.

Accordingly, public notice in this case

was given on October 23, 1995, the date

on which the AT&T Reclassification

Order was released. Therefore, petitions

to reconsider that decision were, as TTS

concedes, due on or before November

22, 1995.

43. Because the period for filing

petitions for reconsideration is

prescribed by statute, the Commission

may not, with one narrow exception

articulated by the courts, waive or

extend the filing period. The narrow

exception to this statutory filing period

allows the Commission to extend or

waive the 30-day filing period only in

an ‘‘extraordinary case,’’ such as where

the late-filing is due to the

Commission’s failure to give a party

timely notice of the action for which

reconsideration is sought. In such

circumstances, the petitioner must

demonstrate that the delay in filing is

attributable to Commission error in

giving notice and that it acted promptly

upon discovering the adoption of the

Commission’s decision.

44. TTS has not demonstrated that its

delay in filing is attributable to

Commission error in giving notice.

Indeed, TTS does not dispute that the

Commission gave appropriate notice by

the release of the AT&T Reconsideration

Order on October 23, 1995. As noted

above, TTS states only that its petition

was delayed because the alleged actions

on which TTS’s petition is based, did

not occur until the due date for filing

petitions for reconsideration, and that

its petition was further delayed by its

attempt to negotiate with AT&T as well

as by the blizzard in Washington, D.C.,

in January, 1996. Accordingly, we find

that TTS does not meet the narrow

exception of an ‘‘extraordinary case’’ in

which the Commission may extend or

waive the statutory deadline for filing

petitions for reconsideration. We,

therefore, deny TTS’s Motion for

Acceptance of Petition for

Reconsideration, and dismiss its

petition as untimely. Because we

dismiss TTS’s petition for

reconsideration, we also deny TTS’s

Motion to Accept Supplement to

Petition for Reconsideration and dismiss

TTS’s Supplement to Petition for

Reconsideration.

III. Petition for Rulemaking

45. On December 31, 1996, the United

Homeowners Association and the

United Seniors Health Cooperative

(UHA) filed with the Commission a

Petition for Rulemaking to Reclassify

AT&T as Having Dominant Carrier

Status. UHA requests that the

Commission undertake a review and

‘‘reinstate AT&T’s dominant carrier

status.’’ We note that UHA refers

generally to AT&T’s status as a carrier

of ‘‘long distance service,’’ rather than

more specifically to AT&T’s status as a

provider of domestic, interstate,

interexchange service. Because UHA

consistently refers in its petition only to

the Commission’s October 23, 1995,

decision, we are treating the petition as

applying only to AT&T’s regulatory

status with respect to domestic,

interstate, interexchange service, and

not international services. In support of

its petition, UHA argues that consumers

are adversely affected by the

classification of AT&T as a nondominant interexchange carrier, as

demonstrated by a rate increase AT&T

instituted in November 1996. UHA

argues that, ‘‘without regulatory

supervision, AT&T consumers will have

no protection from unjust rates

increases,’’ and that classifying AT&T as

dominant is necessary in order to

monitor AT&T’s rate increases until

there is meaningful competition in the

long-distance market. UHA also points

to what it alleges is AT&T’s 54.2 percent

market share as evidence that AT&T has

market power in the long distance

market and therefore should be

classified as dominant.

46. TTS submitted comments in

support of UHA’s petition. TTS cites to

alleged discriminatory conduct by

AT&T against TTS as evidence of

AT&T’s abuse of its market power and

the need therefore to reclassify AT&T as

a dominant carrier.

47. In opposition to UHA’s petition,

AT&T argues that the Petition for

Rulemaking should be denied because

UHA’s arguments already were

addressed and properly rejected in the

orders classifying AT&T as nondominant for domestic and international

services. AT&T also maintains that

UHA’s allegations, even if true, are

immaterial under the Commission’s

rules defining dominant carriers. AT&T

notes that the Commission examined

and found in the AT&T Reclassification

Order that AT&T does not retain market

power in the domestic, interstate,

interexchange market. In addition,

AT&T maintains that UHA is mistaken

in arguing that a change in AT&T’s

regulatory classification would affect

AT&T’s ability to make the price

changes referenced by UHA. AT&T

claims that, even as a dominant carrier

subject to price cap regulation, AT&T

did not need Commission approval to

raise rates within price cap limits.

AT&T further argues that UHA’s

‘‘unsupported claims of ‘tacit

collusion’ ’’ among various

interexchange carriers does not support

regulatory action aimed solely at AT&T,

and that ‘‘any attempt to paint the long

distance industry as an oligopoly must

fail.’’ Finally, relying on the

Commission’s AT&T Reclassification

Order, AT&T maintains that market

share is not the sole determining factor

of whether a firm possesses market

power, and that the 54.2 percent market

share figure referenced by UHA ‘‘is even

lower than the market share cited in the

[AT&T Reclassification Order], and

shows a further erosion of AT&T’s

market share since the Order was

released.’’

48. In reply to AT&T’s Opposition,

Pacific takes no position on whether

AT&T should be reclassified as a

dominant carrier. Pacific only responds

to AT&T’s argument that there is no

evidence of tacit collusion among the

big interexchange carriers. Pacific

argues that the evidence of tacit

collusion ‘‘is not ‘inconclusive’

anymore,’’ that AT&T has continued to

raise prices after reclassification, and

that new facilities-based entry by the

Regional Bell Operating Companies is

the best solution to rising prices.

49. We find that the arguments raised

by UHA’s petition were addressed and

decided in the AT&T Reclassification

Order. Neither UHA, Pacific nor TTS

has presented any new evidence or

arguments that demonstrate that a new

examination of AT&T’s regulatory status

is warranted. We thus decline to initiate

a proceeding at this time to classify

AT&T as a dominant carrier. ‘‘Petitions

[for rulemaking] * * * which plainly do

not warrant consideration by the

Commission may be denied or

dismissed without prejudice to the

petitioner.’’ Accordingly, we deny

without prejudice UHA’s Petition for

Rulemaking.

IV. Ordering Clauses

50. Accordingly, it is ordered That

Hawaii’s Petition for Reconsideration is

hereby denied.

51. It is further ordered That GCI’s

Petition for Reconsideration or

Clarification of the AT&T

Reclassification Order is hereby denied.
56118 Federal Register / Vol. 62, No. 209 / Wednesday, October 29, 1997 / Rules and Regulations

52. It is further ordered That GCI’s

Petition for Clarification of the Tariff

Forbearance Order is granted.

53. It is further ordered That TTS’s

Motion for Acceptance of Petition for

Reconsideration is hereby denied, and

TTS’s Petition for Reconsideration is

hereby dismissed.

54. It is further ordered That TTS’s

Motion to Accept Supplement to

Petition for Reconsideration is hereby

denied, and TTS’s Supplement to

Petition for Reconsideration is hereby

dismissed.

55. It is further ordered That the

United Homeowners Association and

United Seniors Health Cooperative’s

Petition for Rulemaking is hereby

denied.

Federal Communications Commission.

William F. Caton,

Acting Secretary.

[FR Doc. 97–28613 Filed 10–28–97; 8:45 am]

BILLING CODE 6712–01–P

FEDERAL COMMUNICATIONS

COMMISSION

47 CFR Part 54

[CC Docket No. 96–45; FCC 97–380]

Universal Service

AGENCY: Federal Communications

Commission.

ACTION: Final rule.

SUMMARY: In this Order, we adopt a

filing window period that begins on the

date that the Schools and Libraries

Corporation and the Health Care

Corporation begin to receive

applications for support. We also

conclude that the administrative

corporations will determine the length

of the window and resolve other

administrative issues necessary to

implement our decision to adopt a

window filing period consistent with

our guidance set forth below. Therefore,

we amend our rules to implement this

change. In addition, we delegate

authority to the Chief, Common Carrier

Bureau to resolve unanticipated

technical and operational issues relating

to the new universal service

mechanisms that may arise in the

future.

EFFECTIVE DATE: All policies and rules

adopted herein shall be effective

November 28, 1997.

FOR FURTHER INFORMATION CONTACT:

Valerie Yates, Legal Counsel, Common

Carrier Bureau, (202) 418–1500, or

Sheryl Todd, Common Carrier Bureau,

(202) 418–7400.

SUPPLEMENTARY INFORMATION: This is a

summary of the Commission’s Third

Report and Order adopted on October

10, 1997 and released on October 14,

1997, including changes made in an

erratum released October 15, 1997. The

full text of the Third Report and Order

is available for inspection and copying

during normal business hours in the

FCC Reference Center (Room 239), 1919

M St., NW., Washington, DC. Pursuant

to the Telecommunications Act of 1996,

the Commission released a Notice of

Proposed Rulemaking and Order

Establishing Joint Board, Federal-State

Joint Board on Universal Service, CC

Docket No. 96–45 on March 8, 1996 (61

FR 10499 (March 14, 1996)), a

Recommended Decision on November 8,

1996 (61 FR 63778 (December 2, 1996)),

a Public Notice on November 18, 1996

(61 FR 63778 (December 2, 1996)), and

a Report and Order that was adopted on

May 7, 1997 and released on May 8,

1997 (62 FR 32862 (June 17, 1997))

implementing rules for §§ 254 and

214(e) of the Act relating to universal

service. Also pursuant to the

Telecommunications Act of 1996, the

Commission released a Report and

Order in CC Docket 97–21 on July 18,

1997 (62 FR 41294 (August 1, 1997)).

The Common Carrier Bureau released a

Public Notice seeking comment on

additional issues addressed in the Third

Report and Order on September 10,

1997 (62 FR 48280 (September 15,

1997)).

Summary of the Third Report and

Order

1. On March 8, 1996, as required by

the Telecommunications Act of 1996

(1996 Act), the Commission released a

Notice of Proposed Rulemaking and

Order Establishing a Joint Board on

Universal Service. As required by the

RFA, the NPRM included an Initial

Regulatory Flexibility Analysis (IRFA).

At that time, the Commission sought

written public comment on the

proposals in the NPRM, including

comment on the IRFA. On May 8, 1997

the Commission released a Report and

Order that included a Final Regulatory

Flexibility Analysis (FRFA). On

September 10, 1997, the Common

Carrier Bureau issued a Public Notice

seeking comment on several issues with

respect to the application process and

the distribution of federal universal

service support funds for schools,

libraries, and rural health care

providers. This FRFA supplements the

FRFA that was included in the First

Report and Order and incorporates the

comments with respect to the proposal

to adopt a filing window that were

received in response to the Bureau’s

September 10 Public Notice. This

present FRFA conforms to the RFA.

2. In the Universal Service Order, we

concluded that the Administrator would

commit funds to applicants on a firstcome first-served basis. We now

conclude, based on the nearly

unanimous comments received in

response to the September 10 Public

Notice, that all applications filed during

the window will be treated as if

simultaneously received. For the

reasons discussed below, we find that

adopting such a window period will

best serve the needs of applicants for

universal service discounts, and will

assist the administrative corporations in

processing these requests in a timely

manner.

3. In response to commenters’

requests, we clarify that an applicant’s

‘‘place in line,’’ or seniority, with

respect to funds will be determined by

the date on which an applicant submits

a contract to the applicable

administrative corporation. An

applicant’s submission of its initial

request for services, which one of the

administrative corporations will post on

its website, does not determine the

applicant’s seniority for the purposes of

allocating funding. We clarify that the

Schools and Libraries Corporation, as

administrator, will allocate funds

reasonably and in accordance with the

rules of priority set forth in § 54.507(g)

of our rules.

4. In light of our decision to adopt a

window filing period, we also conclude

that the administrative corporations

should determine the length of the

window and resolve other

administrative matters necessary to

implement a window filing period. We

conclude that this responsibility entails

‘‘administering the support mechanisms

for eligible schools and libraries and

rural health care providers,’’ a function

already within the scope of the

corporations’ general duties. We find

that the goals of the universal service

mechanisms will best be served if the

administrative corporations are

responsible for implementing the

window filing periods because they will

be performing the day-to-day functions

of the schools, libraries, and rural health

care universal service mechanisms and

thus are better able to determine an

appropriate window periods in light of

their needs and resources. We remain

committed to the general principle that

funds will be allocated to applicants on

a first-come first-served basis.

Consistent with this principle, we direct

the corporations to adopt a reasonable

window period that is of sufficient

duration to effectuate the administrative

purposes of the window, as set forth