[Federal Register Volume 62, Number 237 (Wednesday, December 10, 1997)]
[Rules and Regulations]
[Pages 65036-65038]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-32178]


=======================================================================
-----------------------------------------------------------------------

FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[CC Docket No. 96-45, CC 97-21; FCC 97-400]


Universal Service Support Mechanisms

AGENCY: Federal Communications Commission.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Commission authorized the Administrator of the universal 
service support mechanisms to require payment of quarterly 
contributions to universal service in equal monthly installments. 
Allowing monthly payments will reduce the cash flow impact on 
contributors because their payments will be smaller. It also will 
better enable contributors to offset their contributions by payments 
from the support mechanisms. It will not jeopardize the sufficiency of 
the support mechanisms.

EFFECTIVE DATE: January 9, 1998.

FOR FURTHER INFORMATION CONTACT: Diane Law, (202) 418-7400.

SUPPLEMENTARY INFORMATION:

SECOND ORDER ON RECONSIDERATION in CC Docket No. 97-21

I. Background

    1. In the Universal Service Order, the Commission created new 
federal universal service support mechanisms and concluded that all 
telecommunications carriers that provide interstate telecommunications 
services, other providers of interstate telecommunications, and 
payphone service providers will contribute to universal service. (See 
Federal-State Joint Board on Universal Service, Report and Order, CC 
Docket No. 96-45, FCC 97-157, 62 FR 32862 (June 17, 1997)). In the NECA 
Report and Order, the Commission instructed the National Exchange 
Carrier Association (NECA) to create an independent subsidiary, the 
Universal Service Administrative Company (USAC or Administrator), to 
administer temporarily portions of the universal service support 
mechanisms. (See Changes to the Board of Directors of the National 
Exchange Carriers Association, Inc., Federal-State Joint Board on 
Universal Service, Report and Order and Second Order on 
Reconsideration, CC Docket No. 97-21, CC Docket No. 96-45, FCC 97-253, 
62 FR 41294 (August 1, 1997)). The Commission also instructed the 
Administrator to bill contributors and collect contributions to the 
federal universal service support mechanisms on a quarterly basis.
    2. USAC requests that it be authorized to collect universal service 
contributions on a monthly, as opposed to a quarterly, basis. USAC 
states that collecting contributions on a quarterly basis may create 
significant cash flow problems for contributors. USAC explains that, 
because of the delay between funds collection and funds distribution, 
monthly billing will not increase the likelihood that the Administrator 
will be required to borrow money to fund early requests for discounts 
by eligible schools and libraries. In addition, USAC notes that 
collecting contributions on a monthly basis will generate some interest 
income, albeit less than would be collected on a quarterly basis, that 
can be applied to meet program demands. NECA supports USAC's request.

II. Discussion

    3. Based on the Administrator's request, we reconsider, on our own 
motion, our requirement that the Administrator collect contributions on 
a quarterly basis. Allowing monthly payments would reduce the cash flow 
impact on contributors because their payments would be smaller. It also 
would better enable contributors to offset their contributions by 
payments from the support mechanisms. We conclude that permitting 
monthly as opposed to quarterly contributions will not jeopardize the 
sufficiency of the support mechanisms. The Commission reduced the 
estimated total contribution base by two percent when calculating the 
universal service contribution factors to take account of the 
possibility that contributions to the support mechanisms may fall short 
of estimated levels due to, for example, uncollectibles or higher-than-
foreseen demand. In addition, since March 20, 1998 appears to be the 
earliest date on which the Administrator could be required to make 
distributions under the schools, libraries, and rural health care 
programs,<SUP>1</SUP> we anticipate that, under our

[[Page 65037]]

revised billing schedule, the Administrator will have sufficient funds 
to meet initial demand for support for these and all other service 
programs. USAC has not requested that we revise the manner in which the 
amount of each contributor's obligation is determined and we see no 
reason to do so. Thus, as provided in Sec. 54.709 of the Commission's 
current rules, the Administrator will apply the quarterly contribution 
factors to determine the amount that contributors must remit to the 
Administrator. We amend Sec. 54.709 of our rules to authorize the 
Administrator to require payment of those quarterly contributions in 
equal monthly installments.
---------------------------------------------------------------------------

    \1\ We calculate that March 20, 1998 reflects the earliest date 
on which the Administrator will distribute funds under these 
programs, by starting with November 24, 1997 and adding to it a 75-
day period and two 20-day periods, derived from the requirements 
described below. The Schools and Libraries and Rural Health 
Corporations must authorize USAC to disburse the appropriate payment 
amounts as quickly as possible, but no later than 20 days following 
receipt of the requisite forms. USAC must distribute payments as 
quickly as possible, but no later than 20 days following receipt of 
authorization to disburse funds. In addition, the Schools and 
Libraries and Rural Health Care Corporations established 75-day 
window filing periods in which all requests will be treated with 
equal priority. The window period will begin to run when the Schools 
and Libraries and Rural Health Care Corporations begin to receive 
applications for support. Funds will not be committed until the 
closing of the 75-day window filing period. Thus, even assuming the 
window period were to begin on November 24, 1997, support would not 
begin to be distributed before March 20, 1998.
---------------------------------------------------------------------------

    4. We understand that USAC intended to begin sending out bills in 
December, 1997, which would require contributors to begin making 
payments in January, 1998. We find that both USAC and contributors need 
a reasonable opportunity to respond to the modification from a 
quarterly to a monthly billing schedule. We therefore direct USAC not 
to require contributors to make payments pursuant to the new universal 
service mechanisms set forth in section 254 prior to February 1998. 
This will provide USAC additional time to issue bills that are 
consistent with the billing modification set forth herein. The 
additional time will not delay disbursement of funds pursuant to the 
new universal service mechanisms, because distribution of funds 
pursuant to the schools and libraries and rural health care universal 
service programs will not begin before March 20, 1998 and distributions 
for the new high cost and low income universal service programs will 
not begin until February 1998.

III. Supplemental Final Regulatory Flexibility Analysis

    5. As required by Section 603 of the Regulatory Flexibility Act 
(RFA), 5 U.S.C. 603, an Initial Regulatory Flexibility Analysis (IRFA) 
was incorporated in the Notice of Proposed Rulemaking and Order 
Establishing Joint Board (NPRM). In addition, the Commission prepared 
an IRFA in connection with the Recommended Decision, seeking written 
public comment on the proposals in the NPRM and Recommended Decision. A 
Final Regulatory Flexibility Analysis (FRFA) was also included in the 
Order. The Commission's Supplemental Final Regulatory Flexibility 
Analysis (SFRFA) in this Order conforms to the RFA, as amended.

A. Need for and Objectives of This Report and Order and the Rules 
Adopted Herein

    6. The Commission is required by section 254 of the Act, as amended 
by the 1996 Act, to promulgate rules to implement promptly the 
universal service provisions of section 254. On May 8, 1997, the 
Commission adopted rules whose principle goal is to reform our system 
of universal service support mechanisms so that universal service is 
preserved and advanced as markets move toward competition. In this 
Order, we reconsider one aspect of those rules. Our reconsideration was 
prompted by ex parte letters filed by USAC and NECA suggesting that 
contributions to the universal service support mechanisms be collected 
on a monthly, rather than the quarterly basis currently specified in 
our rules. In addition, on our own motion, we adopt a rule in order to 
give contributors and USAC a reasonable opportunity to respond to the 
billing modification.

B. Summary and Analysis of the Significant Issues Raised by Public 
Comments in Response to the IRFA

    7. Other than those described in the Order, no additional comments 
were filed in response to the IRFAs described above. Nor were any 
comments filed in response to the ex parte letters from the 
Administrator and NECA.

C. Description and Estimates of the Number of Small Entities to Which 
the Rules Adopted in This Report and Order Will Apply

    8. In the FRFA at paragraphs 890-922 of the Order, we described and 
estimated the number of small entities that would be affected by the 
new universal service rules. The rule adopted here will apply to the 
same telecommunications carriers and entities affected by the universal 
service rules. We therefore adopt the provisions of paragraphs 890-922 
of the Order.

D. Summary Analysis of the Projected Reporting, Recordkeeping, and 
Other Compliance Requirements and Significant Alternatives and Steps 
Taken to Minimize the Significant Economic Impact on a Substantial 
Number of Small Entities Consistent with Stated Objectives

    9. In the FRFA to the Order, we described the projected reporting, 
recordkeeping, and other compliance requirements and significant 
alternatives and steps taken to minimize significant economic impact on 
a substantial number of small entities consistent with stated 
objectives associated with the Administration section of the Order. 
Because the rule adopted herein will only marginally affect those 
requirements, we adopt the provisions of paragraphs 980-981 of the 
Order, which describe those requirements and provide the following 
analysis of the new requirements adopted herein. Under the rule adopted 
herein, telecommunications carriers and providers must submit their 
quarterly contributions on a monthly basis. Although monthly 
contributions may slightly increase the paperwork burdens imposed on 
small entities, this payment scheme may reduce their cash flow burdens 
and thus provides an offsetting benefit. We also adopt a rule herein to 
provide contributors, including small entities, a reasonable 
opportunity to respond to the billing change.

IV. Ordering Clauses

    10. Accordingly, It is ordered that, pursuant to the authority 
contained in sections 1-4, 201-205, 254, and 405 of the Communications 
Act of 1934, as amended, 47 U.S.C. 151-154, 201-205, 254, and 405, 
Sec. 1.108 of the Commission's rules, 47 CFR 1.108, and section 553 of 
the Administrative Procedure Act, 5 U.S.C. 553, this Order is adopted, 
effective 30 days from publication of the text in the Federal Register.
    11. It is further ordered that part 54 of the Commission's rules, 
47 CFR 54.709, is amended, effective January 9, 1998.

List of Subjects in 47 CFR Part 54

    Communications common carriers, Health facilities, Libraries, 
Reporting and recordkeeping requirements, Schools, Telecommunications, 
Telephone.


[[Page 65038]]


Federal Communications Commission.
Magalie Roman Salas,
Secretary.

Rule Changes

    Part 54 of title 47 of the Code of Federal Regulations is amended 
as follows:

PART 54--UNIVERSAL SERVICE

    1. The authority citation for part 54 continues to read as follows:

    Authority: 47 U.S.C. 1, 4(i), 201, 205, 214, and 254 unless 
otherwise noted.

    2. Section 54.709 is amended by revising paragraph (a)(4) and 
adding a new paragraph (a)(5) to read as follows:


Sec. 54.709  Computations of required contributions to universal 
service support mechanisms.

    (a) * * *
    (4) For each quarter, the Administrator shall bill contributors 
monthly and require payment of contributions in equal monthly 
installments.
    (5) The Administrator shall not require contributors to make 
payments pursuant to the universal service mechanisms set forth in 47 
U.S.C. 254 prior to February 1998.
* * * * *
[FR Doc. 97-32178 Filed 12-9-97; 8:45 am]
BILLING CODE 6712-01-P