[Federal Register Volume 83, Number 114 (Wednesday, June 13, 2018)]
[Rules and Regulations]
[Pages 27515-27518]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-12488]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[WC Docket Nos. 18-143, 10-90, 14-58; FCC 18-57]


The Uniendo a Puerto Rico Fund and the Connect USVI Fund, Connect 
America Fund, ETC Annual Reports and Certifications

AGENCY: Federal Communications Commission.

ACTION: Final action.

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SUMMARY: In this document, the Federal Communications Commission 
(Commission) establishes the Uniendo a Puerto Rico Fund and the Connect 
USVI Fund to rebuild, improve and expand voice and broadband networks 
in Puerto Rico and the U.S. Virgin Islands. Through the Uniendo a 
Puerto Rico Fund, the Commission will make available up to $750 million 
of funding to carriers in Puerto Rico, including an immediate infusion 
of $51.2 million for restoration efforts in 2018. Through the Connect 
USVI Fund, the Commission will make available up to $204 million of 
funding to carriers in the U.S. Virgin Islands, including an immediate 
infusion of $13 million for restoration efforts in 2018. As a result of 
these Funds, as well as the Commission's decision not to offset more 
than $65 million in advance payments it made to carriers last year, it 
will make available up to $256 million in additional high-cost support 
for rebuilding, improving, and expanding broadband-capable networks in 
Puerto Rico and the Virgin Islands.

DATES: This action is effective June 13, 2018.

FOR FURTHER INFORMATION CONTACT: Alexander Minard, Wireline Competition 
Bureau, (202) 418-7400 or TTY: (202) 418-0484.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Order 
in WC Docket Nos. 18-143, 10-90, 14-58; FCC 18-57, adopted on May 8, 
2018 and released on May 29, 2018. The full text of this document is 
available for public inspection during regular business hours in the 
FCC Reference Center, Room CY-A257, 445 12th Street SW, Washington, DC 
20554 or at the following internet address: https://docs.fcc.gov/public/attachments/FCC-18-57A1.pdf.

I. Introduction

    1. The 2017 hurricane season caused widespread devastation to 
Puerto Rico and the U.S. Virgin Islands, destroying thousands of homes 
and causing near total destruction of critical infrastructure. 
Hurricane Maria, the strongest storm to hit Puerto Rico in almost a 
century, ripped through the island as a Category 4 storm with 155-mph 
winds. Following on the heels of Hurricane Irma, Maria's damage to the 
communications network proved particularly devastating. The government 
of Puerto Rico estimates that the two hurricanes caused approximately 
$1.5 billion of damage to the communications network. Similarly, Maria 
``decimat[ed] the communications and power grid'' across St. Croix, the 
largest of the U.S. Virgin Islands. And the ``[t]wo other main islands, 
St. John and St. Thomas, [had been] pummeled by Hurricane Irma just 14 
days earlier.'' Recovery of the communications networks in Puerto Rico 
and the U.S. Virgin Islands has proven especially challenging, 
particularly compared to other locations in the United States impacted 
by this season's hurricanes,

[[Page 27516]]

due to their isolation from the mainland, which has caused logistical 
difficulties and contributed to ongoing electrical power outages.
    2. Restoring communications networks is a critical element of 
recovery. The Commission establishes the Uniendo a Puerto Rico Fund and 
the Connect USVI Fund to rebuild, improve and expand voice and 
broadband networks in Puerto Rico and the U.S. Virgin Islands.
    3. Through the Uniendo a Puerto Rico Fund, the Commission will make 
available up to $750 million of funding to carriers in Puerto Rico, 
including an immediate infusion of $51.2 million for restoration 
efforts in 2018. Of the remainder, the Commission anticipates that 
about $444.5 million would be made available over a 10-year term for 
fixed voice and broadband (an $84 million increase over current funding 
levels) and that about $254 million would be made available over a 3-
year term for 4G Long-Term Evolution (LTE) mobile voice and broadband 
(a $16.8 million increase).
    4. Through the Connect USVI Fund, the Commission will make 
available up to $204 million of funding to carriers in the U.S. Virgin 
Islands, including an immediate infusion of $13 million for restoration 
efforts in 2018. Of the remainder, the Commission anticipates that 
about $186.5 million would be made available over a 10-year term for 
fixed broadband (a $21 million increase) and that about $4.4 million 
would be made available over a 3-year term for 4G LTE mobile voice and 
broadband (a $4.2 million increase).
    5. As a result of these Funds, as well as the Commission's decision 
not to offset more than $65 million in advance payments it made to 
carriers last year, the Commission will make available up to $256 
million in additional high-cost support for rebuilding, improving, and 
expanding broadband-capable networks in Puerto Rico and the Virgin 
Islands. The Commission intends to target high-cost support over the 
next several years in a tailored and cost-effective manner, using 
competitive processes where appropriate.

II. Order: No Offset of Advance Payments

    6. At the outset, the Commission now declines to offset the 
approximately $65.8 million in emergency high-cost support provided 
immediately following the hurricanes against future payments. Although 
the Commission had previously anticipated offsetting the advance 
payments against future support, it no longer believes that to be a 
prudent course. The continuing difficulties in bringing service and 
power back to Puerto Rico and the U.S. Virgin Islands have impeded and 
delayed restoration efforts so that conditions on the islands have not 
improved sufficiently to justify reducing future support payments. 
Restoration efforts are still ongoing rather than largely complete and 
persistent power outages and other logistical challenges have made the 
continued operation of restored networks more expensive than some 
expected. As such, requiring the offset of advance payments would 
substantially delay, if not prevent, further restoration efforts--and 
the Commission finds that the public interest is best served by 
allowing carriers to continue their critical work to restore their 
communications networks. The Commission therefore declines to offset 
future payments against the emergency relief granted by the 2017 
Hurricane Funding Order.
    7. As a result, the Commission will continue in 2018 to provide, at 
a minimum, current levels of high-cost support to carriers in Puerto 
Rico and the U.S. Virgin Islands. This means that in Puerto Rico, the 
fixed carrier (PRTC) will continue to receive approximately $3 million 
each month (or $36 million annualized) and mobile carriers (Centennial 
Puerto Rico Operations Corp., Suncom Wireless Puerto Rico Operating 
Co., Cingular Wireless, Puerto Rico Telephone Company, PR Wireless 
Inc., and Worldnet Telecommunications, Inc.) will continue to receive 
approximately $6.6 million each month (or $79.2 million annualized) in 
frozen support in the near term. In the U.S. Virgin Islands, the fixed 
carrier (Viya) will continue to receive approximately $1.4 million each 
month (or $16.5 million annualized) and the mobile carrier (Choice 
Communications, LLC) will continue to receive approximately $5,600 each 
month (or $67,000 annualized) in frozen support in the near term.
    8. Also as a result of this decision, the advance payments should 
be considered a new, one-time source of high-cost support provided in 
the immediate aftermath of the hurricanes. The same rules and 
accountability measures as currently govern the frozen high-cost 
support these carriers receive will continue to apply. The Commission 
will also apply its accounting and audit rules to prevent waste, fraud, 
and abuse. For the reasons given in section III, paras. 22-23 in the 
following, the Commission finds good cause to forego the usual notice-
and-comment procedure for this Order.

III. The Uniendo A Puerto Rico Fund and the Connect USVI Fund

    9. The Commission will establish the Uniendo a Puerto Rico Fund and 
the Connect USVI Fund in two stages. In stage one, the Commission makes 
$51.2 million in new funding available to Puerto Rico and $13 million 
to the U.S. Virgin Islands to help restore voice and broadband service. 
The Commission provides this immediate relief to allow impacted 
carriers to rebuild more quickly in 2018 and set the stage for the 
longer-term plan. In stage two, the Commission intends to make about 
$699 million available in the Uniendo a Puerto Rico Fund and about $191 
million available in the Connect USVI Fund to rebuild, improve, and 
expand voice and broadband networks on the islands in the longer term.
    10. The Commission finds that it is in the public interest to 
provide new funding in the short term to restore service in Puerto Rico 
and the U.S. Virgin Islands. Given the devastation wrought by these two 
back-to-back hurricanes, which collectively were unprecedented in their 
severity and in the protracted duration of damage they caused, the 
Commission decides to make available up to $64.2 million of new 
funding--roughly equal to the amount it has decided not to offset 
against existing support payments--to bolster the ability of existing 
carriers to restore their facilities across the islands. This 
additional support should help restore and maintain service as quickly 
as possible for as many people as possible during that interim period.
    11. Specifically, the Commission directs a one-time infusion of 
$51.2 million through the Uniendo a Puerto Rico Fund and $13 million 
through the Connect USVI Fund to support any facilities-based providers 
of voice and broadband services even if they have not previously 
received universal service support. The Commission finds this 
allocation of support (in addition to existing support streams) to be 
likely sufficient to cover the short-term costs of restoration while 
the Commission considers further reforms and funding over the longer 
term. In so finding, the Commission takes into account, among other 
factors, differences in landmass, geography, topography, and population 
between Puerto Rico and the U.S. Virgin Islands, the significant 
financial and operational challenges faced by carriers in both areas, 
and the past and current availability of high-cost support to carriers.
    12. The Commission distributes the Stage 1 funding for each 
territory through a three-step process. First, any

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facilities-based provider of voice and broadband internet access 
service may elect to participate in this opportunity for new 
restoration funding. To participate, a facilities-based provider must 
submit a certification regarding the number of subscribers (voice or 
broadband internet access service) it served in the territory as of 
June 30, 2017 (before the hurricanes), along with accompanying 
evidence, to the Commission within 14 days of the publication of this 
Order. A voice-only subscriber, a broadband-only subscriber, and a 
voice-and-broadband subscriber each count as one subscriber. For mobile 
network operators, each line in a multi-line plan counts as one 
subscriber. For fixed network operators, each enterprise location 
served counts as one subscriber; such treatment reflects the high fixed 
costs of deploying service to any one location as well as the higher 
revenue potential of enterprise customers. The Commission uses the same 
definition of voice and broadband subscribers as applies to FCC Form 
477 reporting. Providers also must file a copy of the certification and 
accompanying evidence through the Commission's Electronic Comment 
Filing System (ECFS) as well as email a copy to <a href="/cdn-cgi/l/email-protection#fab99594949f998ebb979f8893999bba9c9999d49d958c"><span class="__cf_email__" data-cfemail="a8ebc7c6c6cdcbdce9c5cddac1cbc9e8cecbcb86cfc7de">[email protected]</span></a>. 
The Commission will then verify eligibility using various data sources, 
including FCC Form 477 data.
    13. Second, the Commission allocates 60 percent of the funding 
available to the territory to fixed network operators and 40 percent to 
mobile network operators. The Commission does so for two reasons. For 
one, allocating more to fixed service providers is appropriate in light 
of the relatively higher costs of restoring fixed services. For 
another, the Commission expects that restoring and improving the fixed 
network will facilitate more reliable and faster backhaul for the 
mobile services. In other words, new funding for fixed networks may in 
fact decrease at least some of the need for funding of mobile networks.
    14. Third, the Commission directs the Wireline Competition Bureau 
(WCB) and the Wireless Telecommunications Bureau (WTB) to allocate 
these amounts among qualifying providers of each territory and type 
according to the number of subscribers (voice or broadband internet 
access service) each served as of June 30, 2017. The Bureaus shall make 
public these allocations via a Public Notice as soon as practicable.
    15. The Commission notes that to be eligible for funding, the 
provider must be willing at the time of certification to be designated 
an eligible telecommunications carrier (ETC) by the relevant 
commission, must in fact become an ETC and submit that designation to 
the Universal Service Administrative Company (USAC) before receiving 
any funding, and must remain an ETC for at least one year after first 
receiving funding. Given the importance of conducting restoration 
operations as quickly as possible, the Commission expects local 
regulators and providers to work together to designate ETCs as quickly 
as possible. If a provider has not been designated an ETC within 60 
days of the Bureaus' announcement of support allocations, the 
Commission reserves the right to redirect that provider's allocation 
toward other universal service purposes, such as increasing the funding 
available for long-term rebuilding of voice and broadband-capable 
networks in Puerto Rico and the U.S. Virgin Islands.
    16. The Commission reminds providers that section 254(e) of the Act 
and Sec.  54.7 of the Commission's rules provide that carriers 
receiving federal universal service support ``shall use that support 
only for the provision, maintenance, and upgrading of facilities and 
services for which the support is intended.'' Carriers must therefore 
use this additional funding to help restore and improve coverage and 
service quality to pre-hurricane levels and to help safeguard their 
equipment against future natural disasters. Appropriate uses include 
repairing, removing, reinforcing or relocating network elements damaged 
during the hurricanes; repairing or restoring customer premise 
equipment; replacing, rebuilding, and reinforcing the physical outside 
plant (poles, fiber, nodes, coaxial cables, and the like); hardening 
networks against future disasters; and increasing network resiliency to 
power outages or other potential service interruptions due to natural 
disasters. To help ensure that support is targeted towards short-term 
restoration and rebuilding expenses, the Commission limits eligible 
expenditures to those incurred through June 30, 2019, beginning from 
the date that the affected areas were declared a disaster by the 
Federal Emergency Management Agency following Hurricanes Irma and 
Maria. Carriers will be required to certify both at the time of 
acceptance of support and after support is spent that all support was 
used for the intended purpose. The Commission also notes that, during 
the short term when networks are still being restored, backhaul from 
fixed-service providers is essential to the provision of mobile 
services and it requires providers seeking restoration funding to offer 
backhaul to all interested parties on nondiscriminatory terms for a 
period of one year after first receiving funds. Failure to abide by 
these conditions may result in the loss of some or all restoration 
funding. The Commission reminds Puerto Rico and the U.S. Virgin Islands 
that the Act prohibits the territories from adopting regulations 
related to funding that are ``inconsistent with the Commission's rules 
to preserve and advance universal service.''
    17. To protect against duplicative recovery and guard against 
waste, fraud, and abuse, carriers may not use this support for costs 
that are (or will be) reimbursed by other sources of funding inclusive 
of federal or local government aid or insurance reimbursements. 
Moreover, carriers are prohibited from using Stage 1 support for other 
purposes, such as the retirement of company debt unrelated to eligible 
expenditures, or other expenses not directly related to hurricane 
restoration and improvement. The Commission reminds carriers that high-
cost support recipients ``are subject to random compliance audits and 
other investigations to ensure compliance with program rules and 
orders.'' Carriers must retain for at least ten years the records 
required to demonstrate that their use of this support complied with 
this Order and other Commission rules. The Commission directs USAC to 
initiate audits of Stage 1 disbursements in conjunction with its 2018 
audits.
    18. The Commission acknowledges that they are not allocating the 
new funding in proportion to frozen high-cost support. That is in large 
part because those frozen allocations were by and large established at 
least seven years ago and do not necessarily reflect the costs of 
providing or restoring service or the extent of today's networks. 
Indeed, if the Commission were to follow such allocation, wireless 
carriers in Puerto Rico would receive approximately 1,177 times the 
support of such carriers in the U.S. Virgin Islands--a strange result 
given that Puerto Rico is only 33 times larger than the U.S. Virgin 
Islands. And networks owned by those not historically universal-service 
recipients would be entirely excluded--despite the damage they incurred 
from the hurricanes. Instead, the Commission believes the relative size 
of each network, coupled with a recognition that fixed service networks 
generally require greater funding for restoration efforts and the need 
to provide non-contiguous service in the U.S. Virgin Islands, better 
reflect the likely costs of restoration.
    19. The Commission finds that using notice and comment procedures 
for this interim and one-time relief, and thereby

[[Page 27518]]

delaying its effectiveness by at least several months, would be 
impracticable and contrary to the public interest. The good cause 
exception to the notice and comment procedures of the Administrative 
Procedures Act ``excuses notice and comment in emergency situations, or 
where delay could result in serious harm.''
    20. Given the emergency situation and the devastation to 
communications networks caused by the hurricanes, the sooner providers 
receive additional funds, the sooner service can be restored to the 
people of Puerto Rico and the U.S. Virgin Islands. As noted above, 
Hurricane Maria was a once-in-a-century storm that caused devastating 
damage. Even after months of recovery efforts, ``the majority of 
citizens in Puerto Rico lack access to continuous and reliable 
telecommunications services.'' Similarly, ``only a small percentage of 
Viya's wireline customers have had their voice, broadband, and cable 
service restored, and there are still significant gaps in Viya's USVI 
wireless coverage.'' Voice and broadband-capable networks, of course, 
serve important public safety goals (including allowing the public to 
quickly notify first responders of emergencies). And the next hurricane 
season commences on June 1, 2018. Delaying these funds could result in 
serious harm if carriers are not able to restore and fortify their 
service before the start of the next hurricane season. Such efforts 
will take significant time, and the Commission wishes to help the 
carriers proceed as rapidly as possible.
    21. The Commission is also concerned that some carriers might 
choose cheaper restoration plans that leave equipment vulnerable to 
another hurricane over more costly restoration plans that better 
protect against future natural disasters. Further, unlike other 
affected areas, Puerto Rico and the U.S. Virgin Islands have struggled 
to restore electrical power. One provider explains that ``[t]he 
principal cause of communications outages and network unreliability in 
Puerto Rico undoubtedly has been the continued lack of commercial power 
and long-term reliance on backup generators.'' Based on these unique 
circumstances, the Commission finds that the need for rapid action 
provides good cause for forgoing the usual administrative procedures in 
this unique situation.
    22. The Commission further finds good cause to make this relief 
effective immediately upon publication in the Federal Register. ``In 
determining whether good cause exists, an agency should `balance the 
necessity for immediate implementation against principles of 
fundamental fairness which require that all affected persons be 
afforded a reasonable amount of time to prepare for the effective date 
of its ruling.' '' This interim relief imposes no regulatory burden on 
any carrier but merely offers funds to help their restoration efforts. 
The Commission therefore does not believe it would violate fundamental 
fairness to make the action effective immediately, particularly given 
the substantial need for immediate implementation of the relief, which 
only exists during calendar year 2018. Indeed, waiting 30 days to make 
this relief available ``would undermine the public interest by 
delaying'' restoration of service in hurricane-ravaged areas.
    23. Finally, given the urgent need to bring service back to pre-
hurricane levels as soon as possible, the Commission finds good cause 
to extend its previous waiver of Sec.  54.313(c)(4) of the Commission's 
rules, which requires carriers receiving frozen support to certify that 
all support is used ``to build and operate broadband-capable networks 
used to offer the provider's own retail broadband service in areas 
substantially unserved by an unsubsidized competitor.''

IV. Procedural Matters

A. Paperwork Reduction Act

    24. This document does not contain new information collection 
requirements subject to the Paperwork Reduction Act of 1995 (PRA), 
Public Law 104-13. In addition, therefore, it does not contain any new 
or information collection burden for small business concerns with fewer 
than 25 employees, pursuant to the Small Business Paperwork Relief Act 
of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4).

B. Congressional Review Act

    25. The Commission will send a copy of this Order to Congress and 
the Government Accountability Office pursuant to the Congressional 
Review Act, see 5 U.S.C. 801(a)(1)(A).
    26. Final Regulatory Flexibility Certification. Because the Order 
relies upon the good cause exception to notice and comment procedures, 
no final regulatory flexibility analysis is required under 5 U.S.C. 
604.

V. Ordering Clauses

    27. Accordingly, it is ordered, pursuant to the authority contained 
in sections 4(i), 214, 254, 303(r), and 403 of the Communications Act 
of 1934, as amended, 47 U.S.C. 154(i), 214, 254, 303(r), and 403, and 
Sec. Sec.  1.1, 1.3, and 1.412 of the Commission's rules, 47 CFR 1.1, 
1.3, and 1.412, that this Order is adopted. The Order is effective upon 
publication in the Federal Register.
    28. It is further ordered that, pursuant to Sec.  1.3 of the 
Commission's rules, 47 CFR 1.3, that Sec.  54.313(c)(4) of the 
Commission's rules, 47 CFR 54.313(c)(4), is waived to the extent 
described in this document.


Federal Communications Commission.
Marlene Dortch,
Secretary.
[FR Doc. 2018-12488 Filed 6-12-18; 8:45 am]
 BILLING CODE 6712-01-P


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