[Federal Register Volume 77, Number 42 (Friday, March 2, 2012)]
[Proposed Rules]
[Pages 12784-12791]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-5142]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[WC Docket Nos. 11-42, 03-109, 12-23, and CC Docket No. 96-45; FCC 12-
11]


Lifeline and Link Up Reform and Modernization, Advancing 
Broadband Availability Through Digital Literacy Training

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In this document, the Federal Communications Commission 
(Commission) seeks further focused comment on a number of issues 
related to the Lifeline program, including establishing an eligibility 
database, advancing broadband availability through digital literacy 
training, limiting section 251 resale of Lifeline-supported services, 
establishing a permanent support amount for voice service support, 
reforming Lifeline and Link Up support on Tribal lands, adding Women, 
Infants and Children (WIC) to the list of qualifying programs for 
Lifeline, establishing eligibility for homeless veterans, determining 
whether ETCs should be required to apply the Lifeline discount on all 
of their voice and data packages, examining whether the Commission 
should further clarify the own facilities requirement, determining 
whether ILECs should have the ability to opt out of the Lifeline 
program as well as whether the record retention requirement should be 
lengthened from three years to ten years.

DATES: Comments are due April 2, 2012 reply comments are due May 1, 
2012.

ADDRESSES: You may submit comments, identified by WC Docket Nos. 11-42, 
03-109, 12-23, and CC Docket No. 96-45; FCC 12-11, by any of the 
following methods:
    <bullet> Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
    <bullet> Federal Communications Commission's Web Site: http://fjallfoss.fcc.gov/ecfs2/. Follow the instructions for submitting 
comments.
    <bullet> People with Disabilities: Contact the FCC to request 
reasonable accommodations (accessible format documents, sign language 
interpreters, CART, etc.) by email: <a href="/cdn-cgi/l/email-protection#7d3b3e3e484d493d1b1e1e531a120b"><span class="__cf_email__" data-cfemail="3b7d78780e0b0f7b5d5858155c544d">[email protected]</span></a> or phone: (202) 418-
0530 or TTY: (202) 418-0432.
    For detailed instructions for submitting comments and additional 
information on the rulemaking process, see the SUPPLEMENTARY 
INFORMATION section of this document.

[[Page 12785]]


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

SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's 
Further Notice of Proposed Rulemaking (FNPRM) in WC Docket Nos. 11-42, 
03-109, 12-23, and CC Docket No. 96-45; FCC 12-11, adopted January 31, 
2012 and released February 6, 2012. There was also a companion document 
released with this item. The complete text of this document is 
available for inspection and copying during normal business hours in 
the FCC Reference Information Center, Portals II, 445 12th Street SW., 
Room CY-A257, Washington, DC 20554. The document may also be purchased 
from the Commission's duplicating contractor, Best Copy and Printing, 
Inc., 445 12th Street SW., Room CY-B402, Washington, DC 20554, 
telephone (800) 378-3160 or (202) 863-2893, facsimile (202) 863-2898, 
or via the Internet at http://www.bcpiweb.com. It is also available on 
the Commission's Web site at http://www.fcc.gov.
    Pursuant to Sec. Sec.  1.415 and 1.419 of the Commission's rules, 
47 CFR 1.415, 1.419, interested parties may file comments and reply 
comments on or before the dates indicated on the first page of this 
document. Comments may be filed using the Commission's Electronic 
Comment Filing System (ECFS). See Electronic Filing of Documents in 
Rulemaking Proceedings, 63 FR 24121, May 1, 1998.
    [ssquf] Electronic Filers: Comments may be filed electronically 
using the Internet by accessing the ECFS: http://fjallfoss.fcc.gov/ecfs2/.
    [ssquf] Paper Filers: Parties who choose to file by paper must file 
an original and one copy of each filing. If more than one docket or 
rulemaking number appears in the caption of this proceeding, filers 
must submit two additional copies for each additional docket or 
rulemaking number.
    Filings can be sent by hand or messenger delivery, by commercial 
overnight courier, or by first-class or overnight U.S. Postal Service 
mail. All filings must be addressed to the Commission's Secretary, 
Office of the Secretary, Federal Communications Commission.
    [ssquf] All hand-delivered or messenger-delivered paper filings for 
the Commission's Secretary must be delivered to FCC Headquarters at 445 
12th St. SW., Room TW-A325, Washington, DC 20554. The filing hours are 
8 a.m. to 7 p.m. All hand deliveries must be held together with rubber 
bands or fasteners. Any envelopes and boxes must be disposed of before 
entering the building.
    [ssquf] Commercial overnight mail (other than U.S. Postal Service 
Express Mail and Priority Mail) must be sent to 9300 East Hampton 
Drive, Capitol Heights, MD 20743.
    [ssquf] U.S. Postal Service first-class, Express, and Priority mail 
must be addressed to 445 12th Street SW., Washington DC 20554.
    People with Disabilities: To request materials in accessible 
formats for people with disabilities (braille, large print, electronic 
files, audio format), send an email to <a href="/cdn-cgi/l/email-protection" class="__cf_email__" data-cfemail="b9dfdada8c898df9dfdada97ded6cf">[email protected]</a> or call the 
Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-
418-0432 (tty).

I. Introduction

    1. In this Order, we comprehensively reform and begin to modernize 
the Universal Service Fund's Lifeline program (Lifeline or the 
program). Building on recommendations from the Federal-State Joint 
Board on Universal Service (Joint Board), proposals in the National 
Broadband Plan, input from the Government Accountability Office (GAO), 
and comments received in response to the Commission's March Notice of 
Proposed Rulemaking, the reforms adopted in this Order substantially 
strengthen protections against waste, fraud, and abuse; improve program 
administration and accountability; improve enrollment and consumer 
disclosures; initiate modernization of the program for broadband; and 
constrain the growth of the program in order to reduce the burden on 
all who contribute to the Universal Service Fund (USF or the Fund). We 
take these significant actions, while ensuring that eligible low-income 
consumers who do not have the means to pay for telephone service can 
maintain their current voice service through the Lifeline program and 
those who are not currently connected to the network will have the 
opportunity to benefit from the numerous opportunities and security 
that telephone service affords.
    2. This Order is another step in the Commission's ongoing efforts 
to overhaul all USF programs to promote the availability of modern 
networks and the capability of all American consumers to access and use 
those networks. Consistent with previous efforts, we act here to 
eliminate waste and inefficiency, increase accountability, and 
transition the Fund from supporting standalone telephone service to 
broadband. In June 2011, the Commission adopted the Duplicative Program 
Payments Order, 76 FR 38040, June 29, 2011, which made clear that an 
eligible consumer may only receive one Lifeline-supported service, 
established procedures to detect and de-enroll subscribers receiving 
duplicative Lifeline-supported services, and directed the Universal 
Service Administrative Company (USAC) to implement a process to detect 
and eliminate duplicative Lifeline support--a process now completed in 
12 states and expanding to other states in the near future. Building on 
those efforts, the unprecedented reforms adopted in today's Order could 
save the Fund up to an estimated $2 billion over the next three years, 
keeping money in the pockets of American consumers that otherwise would 
have been wasted on duplicative benefits, subsidies for ineligible 
consumers, or fraudulent misuse of Lifeline funds.
    3. These savings will reduce growth in the Fund, while providing 
telephone service to consumers who remain disconnected from the voice 
networks of the twentieth century. Moreover, by using a fraction of the 
savings from eliminating waste and abuse in the program to create a 
broadband pilot program, we explore how Lifeline can best be used to 
help low-income consumers access the networks of the twenty-first 
century by closing the broadband adoption gap. This Order complements 
the recent USF/ICC Transformation Order, 76 FR 76623, December 8, 2011, 
which reoriented intercarrier compensation and the high-cost fund 
toward increasing the availability of broadband networks, as well as 
the recently launched ``Connect to Compete'' private-sector initiative 
to increase access to affordable broadband service for low-income 
consumers.
    4. To make the program more accountable, the Order establishes 
clear goals and measures and establishes national eligibility criteria 
to allow low-income consumers to qualify for Lifeline based on either 
income or participation in certain government benefit programs. The 
Order adopts rules for Lifeline enrollment, including enhanced initial 
and annual certification requirements, and confirms the program's one-
per-household requirement. The Order simplifies Lifeline reimbursement 
and makes it more transparent. The Commission adopts a number of 
reforms to eliminate waste, fraud and abuse in the program, including 
creating a National Lifeline Accountability Database to prevent 
multiple carriers from receiving support for the same subscribers; 
phasing out toll limitation service support; eliminating Link Up 
support except for recipients on Tribal

[[Page 12786]]

lands that are served by eligible telecommunications carriers (ETCs) 
that participate in the high-cost program; reducing the number of 
ineligible subscribers in the program; and imposing independent audit 
requirements on carriers receiving more than $5 million in annual 
support. These reforms are estimated to save the Fund up to $2 billion 
over the next three years. As part of these reforms, we establish a 
savings target of $200 million in 2012 versus the program's status quo 
path in the absence of reform, create a mechanism for ensuring that 
target is met, and put the Commission in a position to determine the 
appropriate budget for Lifeline in early 2013 after monitoring the 
impact of today's fundamental overhaul of the program and addressing 
key issues in the FNPRM, including the appropriate monthly per-line 
support for the program. Using savings from the reforms, the Order 
establishes a Broadband Adoption Pilot Program to test and determine 
how Lifeline can best be used to increase broadband adoption among 
Lifeline-eligible consumers. We also establish an interim base of 
uniform support amount of $9.25 per month for non-Tribal subscribers to 
simplify program administration.

II. Further Notice

A. Eligibility Database

    5. We conclude that establishing a fully automated means for 
verifying consumers' initial and ongoing Lifeline eligibility from 
governmental data sources would both improve the accuracy of 
eligibility determinations and ensure that only eligible consumers 
receive Lifeline benefits, and reduce burdens on consumers as well as 
ETCs. We conclude that it is important to speed-up adoption of a 
widespread, automated means of verifying program eligibility. We 
therefore direct the Bureau and USAC to take all necessary actions so 
that, as soon as possible and no later than the end of 2013, there will 
be an automated menas to determine Lifeline eligibility for, at a 
minimum, the three most common programs through which consumers qualify 
for Lifeline. To ensure that the Commission has sufficient information 
to implement such a solution, we seek focused comment on issues in a 
FNPRM. The Commission directs the Bureau to reach out to the relevant 
federal agencies (e.g., HHS and Agriculture) and their state 
counterparts to determine whether and to what extent program 
eligibility information can be shared among agencies.

B. Digital Literacy

    6. To support broadband adoption, the FNPRM seeks comment on 
dedicating a certain amount of USF funding for four years to support 
formal digital literacy training for consumers at libraries and schools 
across the United States. The Commission also seeks comment on its 
statutory authority to use USF funds for this purpose.

C. Resale

    7. The FNPRM proposes that only ETCs who provide Lifeline directly 
to subscribers will be eligible to receive reimbursement from the Fund. 
Moreover, the FNPRM proposes that the entity with the relationship with 
the end-user be required to populate the duplicates database with the 
necessary subscriber information. As an alternative to the foregoing 
proposals, the FNPRM proposes forbearing from the incumbent LECs' 
resale obligation under section 251(c)(4).

D. Lifeline Support Amounts for Voice Service

    8. The FNPRM seeks comment on number of issues, including whether 
to continue with a flat-rate of reimbursement, and if, so, whether the 
current interim $9.25 per line support amount should be made permanent. 
The FNRPM also seeks comment on and information for a demand estimation 
study to determine the effect of different support amounts on demand 
for the program.

E. Tribal Lands Support

    9. The FNPRM seeks comment on whether to adopt a rule permitting 
eligible residents of Tribal lands to apply their allotted Tribal Lands 
discount amount to more than one supported service per household (e.g., 
a household would be permitted to ``split'' their Lifeline discount 
between a wireline and a mobile phone service or between two mobile 
services and receive a discount off of the cost of each service). The 
FNPRM seeks comment on how such a rule could be administered, including 
ways to prevent waste, fraud, and abuse if this rule is adopted. In 
addition, the FNPRM seeks comment on whether the Link Up program for 
residents of Tribal lands is currently implemented effectively, or 
whether the program should be altered or eliminated given the recent 
reforms in high-cost support, including establishment of the Tribal 
Mobility Fund.

F. WIC

    10. The FNPRM seeks comment on whether to include the Supplemental 
Nutrition Assistance Program for Women, Infants and Children, 
administered by the Department of Agriculture, as a program conferring 
Lifeline eligibility upon participants.

G. Homeless Veterans Programs Inclusion for Purposes of Eligibility

    11. The FNPRM seeks comment on measures that would enable veterans 
who lack any income (and therefore cannot document whether their income 
is below the income-based program threshold) but are not otherwise 
enrolled in a qualifying program, to demonstrate eligibility for 
Lifeline. The FNPRM asks whether additional measures should be 
implemented to ensure program access while limiting waste, fraud and 
abuse in situations where an eligible veteran has no documentation of 
income.

H. Mandatory Application of Lifeline Discount to Bundled Service 
Offerings

    12. The FNPRM seeks comment on whether to require ETCs to permit 
subscribers to apply their Lifeline discount to any bundle that 
includes a voice component. The FNPRM also seeks comment on whether 
there should be any limitations on this requirement (e.g., should ETCs 
be obligated to offer a Lifeline discount on all of their service 
plans, including premium plans and packages that contain services other 
than voice and broadband, such as video).

I. ``Own Facilities'' Requirements

    13. The FNPRM seeks further comment on whether the Commission 
should consider any additional requirements for a carrer to receive 
support if that carrier does not own network assets or meet the 
requirements of section 214(e)(1)(A). Specifically, the FNPRM seeks 
comment on whether the Commission should amend its rules to clarify the 
term ``combination of its own facilities'' with respect to the 
facilities a carrier must own and use to provide USF supported 
services. The FNPRM also asks for comment on whether there should be a 
minimum combination of facilities that the carrier should own and use 
in order to qualify as a facilities-based ETC under section 
254(e)(1)(A).

J. Eligible Telecommunications Carrier Requirements

    14. The FNPRM seeks comment on whether incumbent LECs can choose 
whether to participate in the Lifeline program. In addition, the FNPRM 
seeks comment on whether the program should move to a voucher-based 
system.

[[Page 12787]]

K. Record Retention Requirements

    15. The FNRPM proposes to amend the current three year record 
retention requirement to a ten year requirement.

III. Procedural Matters

A. Filing Requirements

    16. Pursuant to Sec. Sec.  1.415 and 1.419 of the Commission's 
rules, 47 CFR 1.415, 1.419, interested parties may file comments and 
reply comments on or before the dates indicated on the first page of 
this document. Comments may be filed using the Commission's Electronic 
Comment Filing System (ECFS). See Electronic Filing of Documents in 
Rulemaking Proceedings, 63 FR 24121, May 1, 1998.
    [ssquf] Electronic Filers: Comments may be filed electronically 
using the Internet by accessing the ECFS: http://fjallfoss.fcc.gov/ecfs2/.
    [ssquf] Paper Filers: Parties who choose to file by paper must file 
an original and one copy of each filing. If more than one docket or 
rulemaking number appears in the caption of this proceeding, filers 
must submit two additional copies for each additional docket or 
rulemaking number. Filings can be sent by hand or messenger delivery, 
by commercial overnight courier, or by first-class or overnight U.S. 
Postal Service mail. All filings must be addressed to the Commission's 
Secretary, Office of the Secretary, Federal Communications Commission.
    [ssquf] All hand-delivered or messenger-delivered paper filings for 
the Commission's Secretary must be delivered to FCC Headquarters at 445 
12th St. SW., Room TW-A325, Washington, DC 20554. The filing hours are 
8 a.m. to 7 p.m. All hand deliveries must be held together with rubber 
bands or fasteners. Any envelopes and boxes must be disposed of before 
entering the building.
    [ssquf] Commercial overnight mail (other than U.S. Postal Service 
Express Mail and Priority Mail) must be sent to 9300 East Hampton 
Drive, Capitol Heights, MD 20743.
    [ssquf] U.S. Postal Service first-class, Express, and Priority mail 
must be addressed to 445 12th Street SW., Washington, DC 20554.
    People with Disabilities: To request materials in accessible 
formats for people with disabilities (braille, large print, electronic 
files, audio format), send an email to <a href="/cdn-cgi/l/email-protection" class="__cf_email__" data-cfemail="076164643237334761646429606871">[email protected]</a> or call the 
Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-
418-0432 (tty).

B. Paperwork Reduction Act Analysis

    17. The Further Notice of Proposed Rulemaking (FNPRM) contains 
proposed new information collection requirements subject to the 
Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. The proposed 
requirements will be submitted to the Office of Management and Budget 
(OMB). The Commission, as part of its continuing effort to reduce 
paperwork burdens, invites the OMB, general public, and other Federal 
agencies to comment on the information collection requirements 
contained in this document, as required by PRA. In addition, pursuant 
to the Small Business Paperwork Relief Act of 2002, we seek specific 
comment on how we might ``further reduce the information collection 
burden for small business concerns with fewer than 25 employees.

C. Initial Regulatory Flexibility Analysis

    18. As Required by the Regulatory Flexibility Act if 1980, as 
amended (RFA), the Commission has prepared this Initial Regulatory 
Flexibility analysis (IRFA) of the possible significant economic impact 
on a substantial number of small entities by the policies and rules 
proposed in this Further Notice of Proposed Rulemaking (FNPRM). Written 
comments are requested on this IRFA. Comments must be identified as 
responses to the IRFA and must be filed by the deadlines for comments 
on the FNPRM. The Commission will send a copy of the FNPRM, including 
this IRFA, to the Chief Counsel for Advocacy of the Small Business 
Administration (SBA). In addition, the FNPRM and IRFA (or summaries 
thereof) will be published in the Federal Register.

A. Need for, and Objectives of, the Proposed Rulemaking

    19. The FNPRM seeks comment on a variety of issues relating to the 
comprehensive reform and modernization of the Universal Service Fund's 
Lifeline program. As discussed in the Order accompanying the FNPRM, the 
Commission believes that such reform will strengthen protections 
against waste, fraud, and abuse; improve program administration and 
accountability; improve enrollment and consumer disclosures; modernize 
the program for broadband; and constrain the growth of the program. In 
proposing these reforms, the Commission seeks comment on various 
reporting, recordkeeping, and other compliance requirements that may 
apply to all carriers, including small entities. We seek comment on any 
costs and burdens on small entities associated with the proposed rules, 
including data quantifying the extent of those costs or burdens.
    20. This FNPRM is one of a series of rulemaking proceedings 
designed to implement the National Broadband Plan's (NBP) vision of 
improving and modernizing the universal service programs. In this 
FNPRM, we propose and seek comment on comprehensive reforms to the 
universal service low-income support mechanism.
    21. Specifically, we propose and seek comment on the following 
eight reforms and modernizations that may be implemented in funding 
year 2012 (July 1, 2012-June 30, 2013).
    22. In the FNPRM, we recommend the creation of a centralized 
database for online certification and verification on Lifeline 
consumers' eligibility to participate in the low-income program. In the 
FNPRM, we seek comment on the methods of creating the database 
including whether, how, and with what information ETCs should populate 
the eligibility database.
    23. Additionally, we seek comment on establishing a digital 
literacy training program, and specifically, we seek comment on what 
entities are best suited to provide such training (i.e., schools and 
libraries), including ETCs.
    24. As part of the effort to reduce waste, fraud, and abuse in the 
program, the Commission proposes to allow only ETCs with a direct 
relationship with the end-user Lifeline subscriber to seek 
reimbursement from the Fund. In addition we propose that the ETC with 
the direct relationship with the end-user be responsible for populating 
the duplicates database. How would this proposal affect entities 
economically? We seek comment on the matter. We seek comment on 
procedures that should be implemented to ensure that Lifeline 
wholesalers are not seeking Fund reimbursement for resold Lifeline 
offerings including self-certification, record keeping, and audit 
requirements. We also seek comment on which ETC, the wholesaler or the 
reseller, should be responsible for complying with the other 
certification and verification requirements in the Order. Compliance 
with the proposed rule would require current Lifeline resellers who are 
not designated ETCs to either (1) obtain ETC designation or (2) 
purchase Lifeline for resale at wholesale rates and be prevented from 
seeking Fund reimbursement. As an alternative, we seek comment on 
whether the Commission should forbear, on its own motion, on incumbent 
LECs' obligation to resell Lifeline services. In addition, we seek 
comment on how, if at all,

[[Page 12788]]

incumbent LECs would be required to amend tariffs to separate the 
amount of the Lifeline subsidy from the wholesale price of the 
underlying Lifeline service being resold. We seek further comment on 
how the proposed rule would impact existing contractual relationships 
between incumbent LECs and Lifeline resellers.
    25. In the Order, we establish an interim amount of $9.25 per month 
for Lifeline reimbursement. In the FNPRM, we seek comment on whether 
the interim reimbursement amount of $9.25 is appropriate and should be 
made permanent. We also seek comment on how to best determine a flat 
rate of reimbursement. In furtherance of that, we seek comment on the 
best method of obtaining the necessary information to perform a demand 
estimation study. Finally, we seek comment on whether the discount 
should be reduced over time as voice becomes a secondary application 
compared to broadband service.
    26. In the FNPRM, we seek comment on whether to adopt a rule 
permitting eligible residents of Tribal lands to apply their allotted 
Tribal Lands discount amount to more than one supported service per 
household (e.g., a household would be permitted to ``split'' their 
Lifeline discount between a wireline and a mobile phone service and 
receive a discount off of the cost of each service). The Commission 
seeks comment on how such a rule could be administered and how to 
prevent waste, fraud, and abuse if this rule is adopted.
    27. The Commission seeks comment in the FNPRM on whether to include 
three additional programs in its eligibility criteria: the Supplemental 
Nutrition Assistance Program for Women, Infants and Children, 
administered by the Department of Agriculture; the Veterans Benefits 
Administration-Veterans Health Administration Special Outreach and 
Benefits Assistance program; and the Healthcare for Homeless Veterans 
program.
    28. The Commission seeks comment regarding mandatory application of 
the Lifeline discount to bundled service offerings. Specifically, we 
seek comment on whether to require ETCs to permit subscribers to apply 
their Lifeline discount to any bundle that includes a voice component 
and whether there should be any limitations on this requirement. We ask 
whether there should be limitations on this potential requirement, 
should such a rule be adopted. Should ETCs be obligated to offer a 
Lifeline discount on all of their service plans, including premium 
plans and packages that contain services other than voice and 
broadband? We also seek comment on various implementation issues 
regarding any such rule (i.e., would Lifeline subscribers face loss of 
voice service based on their inability to pay the entirety of a bundled 
service bill; can carriers limit Lifeline consumers' use of premium 
services).
    29. Finally, we propose to update our rules to extend the retention 
period for Lifeline documentation, including subscriber-specific 
eligibility documentation, from three years to at least ten years, 
because the current requirements are inadequate for purposes of 
litigation under the False Claims Act.

B. Legal Basis

    30. The Further Notice of Proposed Rulemaking, including 
publication of proposed rules, is authorized under sections 1, 2, 4(i)-
(j), 201(b), 254, 257, 303(r), and 503 of the Communications Act of 
1934, as amended, and section 706 of the Telecommunications Act of 
1996, as amended, 47 U.S.C. 151, 152, 154(i)-(j), 201(b), 254, 257, 
303(r), 503, and 1302.

C. Description and Estimate of the Number of Small Entities to Which 
the Proposed Rules Will Apply

    31. The RFA directs agencies to provide a description of and, where 
feasible, an estimate of the number of small entities that may be 
affected by the proposed rules, if adopted. The RFA generally defines 
the term ``small entity'' as having the same meaning as the terms 
``small business,'' ``small organization,'' and ``small governmental 
jurisdiction.'' In addition, the term ``small business'' has the same 
meaning as the term ``small business concern'' under the Small Business 
Act. A small business concern is one that: (1) Is independently owned 
and operated; (2) is not dominant in its field of operation; and (3) 
satisfies any additional criteria established by the Small Business 
Administration (SBA). Nationwide, there are a total of approximately 
29.6 million small businesses, according to the SBA. A ``small 
organization'' is generally ``any not-for-profit enterprise which is 
independently owned and operated and is not dominant in its field.'' 
Nationwide, as of 2002, there were approximately 1.6 million small 
organizations. The term ``small governmental jurisdiction'' is defined 
generally as ``governments of cities, towns, townships, villages, 
school districts, or special districts, with a population of less than 
fifty thousand.'' Census Bureau data for 2002 indicate that there were 
87,525 local governmental jurisdictions in the United States. We 
estimate that, of this total, 84,377 entities were ``small governmental 
jurisdictions.'' Thus, we estimate that most governmental jurisdictions 
are small.
1. Wireline Providers
    32. Incumbent Local Exchange Carriers (Incumbent LECs). Neither the 
Commission nor the SBA has developed a small business size standard 
specifically for incumbent local exchange services. The appropriate 
size standard under SBA rules is for the category Wired 
Telecommunications Carriers. Under that size standard, such a business 
is small if it has 1,500 or fewer employees. Census Bureau data for 
2007, which now supersede data from the 2002 Census, show that there 
were 3,188 firms in this category that operated for the entire year. Of 
this total, 3,144 had employment of 999 or fewer and 44 firms had had 
employment of 1,000 or more. According to Commission data, 1,307 
carriers reported that they were incumbent local exchange service 
providers. Of these 1,307 carriers, an estimated 1,006 have 1,500 or 
fewer employees and 301 have more than 1,500 employees. Consequently, 
the Commission estimates that most providers of local exchange service 
are small entities that may be affected by the rules and policies 
proposed in the Notice. Thus under this category and the associated 
small business size standard, the majority of these incumbent local 
exchange service providers can be considered small providers.
    33. Competitive Local Exchange Carriers (Competitive LECs), 
Competitive Access Providers (CAPs), Shared-Tenant Service Providers, 
and Other Local Service Providers. Neither the Commission nor the SBA 
has developed a small business size standard specifically for these 
service providers. The appropriate size standard under SBA rules is for 
the category Wired Telecommunications Carriers. Under that size 
standard, such a business is small if it has 1,500 or fewer employees. 
Census Bureau data for 2007, which now supersede data from the 2002 
Census, show that there were 3,188 firms in this category that operated 
for the entire year. Of this total, 3,144 had employment of 999 or 
fewer and 44 firms had had employment of 1,000 employees or more. Thus 
under this category and the associated small business size standard, 
the majority of these Competitive LECs, CAPs, Shared-Tenant Service 
Providers, and Other Local Service Providers can be considered small 
entities. According to

[[Page 12789]]

Commission data, 1,442 carriers reported that they were engaged in the 
provision of either competitive local exchange services or competitive 
access provider services. Of these 1,442 carriers, an estimated 1,256 
have 1,500 or fewer employees and 186 have more than 1,500 employees. 
In addition, 17 carriers have reported that they are Shared-Tenant 
Service Providers, and all 17 are estimated to have 1,500 or fewer 
employees. In addition, 72 carriers have reported that they are Other 
Local Service Providers. Seventy of which have 1,500 or fewer employees 
and two have more than 1,500 employees. Consequently, the Commission 
estimates that most providers of competitive local exchange service, 
competitive access providers, Shared-Tenant Service Providers, and 
Other Local Service Providers are small entities that may be affected 
by rules adopted pursuant to the Notice.
    34. Interexchange Carriers. Neither the Commission nor the SBA has 
developed a small business size standard specifically for providers of 
interexchange services. The appropriate size standard under SBA rules 
is for the category Wired Telecommunications Carriers. Under that size 
standard, such a business is small if it has 1,500 or fewer employees. 
Census Bureau data for 2007, which now supersede data from the 2002 
Census, show that there were 3,188 firms in this category that operated 
for the entire year. Of this total, 3,144 had employment of 999 or 
fewer, and 44 firms had had employment of 1,000 employees or more. Thus 
under this category and the associated small business size standard, 
the majority of these Interexchange carriers can be considered small 
entities. According to Commission data, 359 companies reported that 
their primary telecommunications service activity was the provision of 
interexchange services. Of these 359 companies, an estimated 317 have 
1,500 or fewer employees and 42 have more than 1,500 employees. 
Consequently, the Commission estimates that the majority of 
interexchange service providers are small entities that may be affected 
by rules adopted pursuant to the Notice.
    35. Operator Service Providers (OSPs). Neither the Commission nor 
the SBA has developed a small business size standard specifically for 
operator service providers. The appropriate size standard under SBA 
rules is the category Wired Telecommunications Carriers. Under that 
size standard, such a business is small if it has 1,500 or fewer 
employees. Under that size standard, such a business is small if it has 
1,500 or fewer employees. Census Bureau data for 2007, which now 
supersede 2002 Census data, show that there were 3,188 firms in this 
category that operated for the entire year. Of the total, 3,144 had 
employment of 999 or fewer, and 44 firms had had employment of 1,000 
employees or more. Thus under this category and the associated small 
business size standard, the majority of these interexchange carriers 
can be considered small entities. According to Commission data, 33 
carriers have reported that they are engaged in the provision of 
operator services. Of these, an estimated 31 have 1,500 or fewer 
employees and 2 have more than 1,500 employees. Consequently, the 
Commission estimates that the majority of OSPs are small entities that 
may be affected by our proposed action.
    36. Local Resellers. The SBA has developed a small business size 
standard for the category of Telecommunications Resellers. Under that 
size standard, such a business is small if it has 1,500 or fewer 
employees. Census data for 2007 show that 1,523 firms provided resale 
services during that year. Of that number, 1,522 operated with fewer 
than 1,000 employees and one operated with more than 1,000. Thus under 
this category and the associated small business size standard, the 
majority of these local resellers can be considered small entities. 
According to Commission data, 213 carriers have reported that they are 
engaged in the provision of local resale services. Of these, an 
estimated 211 have 1,500 or fewer employees and two have more than 
1,500 employees. Consequently, the Commission estimates that the 
majority of local resellers are small entities that may be affected by 
rules adopted pursuant to the Notice.
    37. Toll Resellers. The SBA has developed a small business size 
standard for the category of Telecommunications Resellers. Under that 
size standard, such a business is small if it has 1,500 or fewer 
employees. Census data for 2007 show that 1,523 firms provided resale 
services during that year. Of that number, 1,522 operated with fewer 
than 1,000 employees and one operated with more than 1,000. Thus under 
this category and the associated small business size standard, the 
majority of these resellers can be considered small entities. According 
to Commission data, 881 carriers have reported that they are engaged in 
the provision of toll resale services. Of these, an estimated 857 have 
1,500 or fewer employees and 24 have more than 1,500 employees. 
Consequently, the Commission estimates that the majority of toll 
resellers are small entities that may be affected by our action.
    38. Pre-paid Calling Card Providers. Neither the Commission nor the 
SBA has developed a small business size standard specifically for pre-
paid calling card providers. The appropriate size standard under SBA 
rules is for the category Telecommunications Resellers. Under that size 
standard, such a business is small if it has 1,500 or fewer employees. 
Census data for 2007 show that 1,523 firms provided resale services 
during that year. Of that number, 1,522 operated with fewer than 1,000 
employees and one operated with more than 1,000. Thus under this 
category and the associated small business size standard, the majority 
of these pre-paid calling card providers can be considered small 
entities. According to Commission data, 193 carriers have reported that 
they are engaged in the provision of pre-paid calling cards. Of these, 
an estimated all 193 have 1,500 or fewer employees and none have more 
than 1,500 employees. Consequently, the Commission estimates that the 
majority of pre-paid calling card providers are small entities that may 
be affected by rules adopted pursuant to the Notice.
2. Wireless Carriers and Service Providers
    39. Below, for those services subject to auctions, the Commission 
notes that, as a general matter, the number of winning bidders that 
qualify as small businesses at the close of an auction does not 
necessarily represent the number of small businesses currently in 
service. Also, the Commission does not generally track subsequent 
business size unless, in the context of assignments or transfers, 
unjust enrichment issues are implicated.
    40. Wireless Telecommunications Carriers (except Satellite). Since 
2007, the Census Bureau has placed wireless firms within this new, 
broad, economic census category. Prior to that time, such firms were 
within the now-superseded categories of ``Paging'' and ``Cellular and 
Other Wireless Telecommunications.'' Under the present and prior 
categories, the SBA has deemed a wireless business to be small if it 
has 1,500 or fewer employees. For the category of Wireless 
Telecommunications Carriers (except Satellite), Census data for 2007, 
which supersede data contained in the 2002 Census, show that there were 
1,383 firms that operated that year. Of those 1,383, 1,368 had fewer 
than 100 employees, and 15 firms had more than 100 employees. Thus 
under this category and the associated small

[[Page 12790]]

business size standard, the majority of firms can be considered small. 
Similarly, according to Commission data, 413 carriers reported that 
they were engaged in the provision of wireless telephony, including 
cellular service, Personal Communications Service (PCS), and 
Specialized Mobile Radio (SMR) Telephony services. Of these, an 
estimated 261 have 1,500 or fewer employees and 152 have more than 
1,500 employees. Consequently, the Commission estimates that 
approximately half or more of these firms can be considered small. 
Thus, using available data, we estimate that the majority of wireless 
firms can be considered small.
    41. Wireless Communications Services. This service can be used for 
fixed, mobile, radiolocation, and digital audio broadcasting satellite 
uses. The Commission defined ``small business'' for the wireless 
communications services (WCS) auction as an entity with average gross 
revenues of $40 million for each of the three preceding years, and a 
``very small business'' as an entity with average gross revenues of $15 
million for each of the three preceding years. The SBA has approved 
these definitions. The Commission auctioned geographic area licenses in 
the WCS service. In the auction, which commenced on April 15, 1997 and 
closed on April 25, 1997, seven bidders won 31 licenses that qualified 
as very small business entities, and one bidder won one license that 
qualified as a small business entity.
    42. Satellite Telecommunications Providers. Two economic census 
categories address the satellite industry. The first category has a 
small business size standard of $15 million or less in average annual 
receipts, under SBA rules. The second has a size standard of $25 
million or less in annual receipts.
    43. The category of Satellite Telecommunications ``comprises 
establishments primarily engaged in providing telecommunications 
services to other establishments in the telecommunications and 
broadcasting industries by forwarding and receiving communications 
signals via a system of satellites or reselling satellite 
telecommunications.'' Census Bureau data for 2007 show that 512 
Satellite Telecommunications firms that operated for that entire year. 
Of this total, 464 firms had annual receipts of under $10 million, and 
18 firms had receipts of $10 million to $24,999,999. Consequently, the 
Commission estimates that the majority of Satellite Telecommunications 
firms are small entities that might be affected by our action.
    44. The second category, i.e. ``All Other Telecommunications'' 
comprises ``establishments primarily engaged in providing specialized 
telecommunications services, such as satellite tracking, communications 
telemetry, and radar station operation. This industry also includes 
establishments primarily engaged in providing satellite terminal 
stations and associated facilities connected with one or more 
terrestrial systems and capable of transmitting telecommunications to, 
and receiving telecommunications from, satellite systems. 
Establishments providing Internet services or voice over Internet 
protocol (VoIP) services via client-supplied telecommunications 
connections are also included in this industry.'' For this category, 
Census Bureau data for 2007 show that there were a total of 2,383 firms 
that operated for the entire year. Of this total, 2,347 firms had 
annual receipts of under $25 million and 12 firms had annual receipts 
of $25 million to $49,999,999. Consequently, the Commission estimates 
that the majority of All Other Telecommunications firms are small 
entities that might be affected by our action.
    45. Common Carrier Paging. The SBA considers paging to be a 
wireless telecommunications service and classifies it under the 
industry classification Wireless Telecommunications Carriers (except 
satellite). Under that classification, the applicable size standard is 
that a business is small if it has 1,500 or fewer employees. For the 
general category of Wireless Telecommunications Carriers (except 
Satellite), Census data for 2007, which supersede data contained in the 
2002 Census, show that there were 1,383 firms that operated that year. 
Of those 1,383, 1,368 had fewer than 100 employees, and 15 firms had 
more than 100 employees. Thus under this category and the associated 
small business size standard, the majority of firms can be considered 
small. The 2007 census also contains data for the specific category of 
``Paging'' ``that is classified under the seven-number North American 
Industry Classification System (NAICS) code 5172101. According to 
Commission data, 291 carriers have reported that they are engaged in 
Paging or Messaging Service. Of these, an estimated 289 have 1,500 or 
fewer employees, and 2 have more than 1,500 employees. Consequently, 
the Commission estimates that the majority of paging providers are 
small entities that may be affected by our action. In addition, in the 
Paging Third Report and Order, the Commission developed a small 
business size standard for ``small businesses'' and ``very small 
businesses'' for purposes of determining their eligibility for special 
provisions such as bidding credits and installment payments. A ``small 
business'' is an entity that, together with its affiliates and 
controlling principals, has average gross revenues not exceeding $15 
million for the preceding three years. Additionally, a ``very small 
business'' is an entity that, together with its affiliates and 
controlling principals, has average gross revenues that are not more 
than $3 million for the preceding three years. The SBA has approved 
these small business size standards. An auction of Metropolitan 
Economic Area licenses commenced on February 24, 2000, and closed on 
March 2, 2000. Of the 985 licenses auctioned, 440 were sold. Fifty-
seven companies claiming small business status won.
    46. Wireless Telephony. Wireless telephony includes cellular, 
personal communications services, and specialized mobile radio 
telephony carriers. As noted, the SBA has developed a small business 
size standard for Wireless Telecommunications Carriers (except 
Satellite). Under the SBA small business size standard, a business is 
small if it has 1,500 or fewer employees. According to the 2008 Trends 
Report, 434 carriers reported that they were engaged in wireless 
telephony. Of these, an estimated 222 have 1,500 or fewer employees and 
212 have more than 1,500 employees. We have estimated that 222 of these 
are small under the SBA small business size standard.
3. Internet Service Providers
    47. The 2007 Economic Census places these firms, whose services 
might include voice over Internet protocol (VoIP), in either of two 
categories, depending on whether the service is provided over the 
provider's own telecommunications facilities (e.g., cable and DSL 
ISPs), or over client-supplied telecommunications connections (e.g., 
dial-up ISPs). The former are within the category of Wired 
Telecommunications Carriers, which has an SBA small business size 
standard of 1,500 or fewer employees. The latter are within the 
category of All Other Telecommunications, which has a size standard of 
annual receipts of $25 million or less. The most current Census Bureau 
data for all such firms, however, are the 2002 data for the previous 
census category called Internet Service Providers. That category had a 
small business size standard of $21 million or less in annual receipts, 
which was revised in late 2005 to $23 million. The

[[Page 12791]]

2002 data show that there were 2,529 such firms that operated for the 
entire year. Of those, 2,437 firms had annual receipts of under $10 
million, and an additional 47 firms had receipts of between $10 million 
and $24,999,999. Consequently, we estimate that the majority of ISP 
firms are small entities.

D. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements

    48. Tribal Lands Lifeline Support. If we permit eligible residents 
of Tribal lands to apply their allotted Tribal Lands discount amount to 
more than one supported service per household, postpaid carriers may 
need to update their billing systems to reflect that more than one 
supported service may be received per Tribal household. Additionally, 
several carriers currently allow consumers to apply their Lifeline 
discount to the purchase of family shared calling plans, and, if such a 
rule were adopted, a similar billing functionality could be used by 
postpaid carriers serving eligible residents of Tribal lands. The 
Commission is continuing to evaluate the potential costs and benefits 
of this proposal and will take the steps necessary to mitigate the 
costs to small businesses.
    49. Mandatory Application of Lifeline Discount to Bundled Service 
Offerings. The FNPRM seeks comment on whether to require ETCs to permit 
subscribers to apply their Lifeline discount to any bundle that 
includes a voice component. The FNPRM also seeks comment on whether 
there should be any limitations on this requirement (e.g., should ETCs 
be obligated to offer a Lifeline discount on all of their service 
plans, including premium plans and packages that contain services other 
than voice and broadband, such as video). While we do not anticipate 
that these proposals will have an impact on small businesses at this 
time, we recognize that small entities may incur costs due to a need to 
update their internal systems to comply with the rule.
    50. Record Retention Requirements. The Commission proposes to amend 
Sec.  54.417 of the Commission's rules to extend the retention period 
for Lifeline documentation, including subscriber-specific eligibility 
documentation, from three years to at least ten years. ETCs will 
continue to maintain documentation of consumer eligibility for at least 
ten years and for as long as the consumer receives Lifeline service 
from that ETC, even if that period extends beyond ten years. The 
amended recordkeeping requirement will continue to apply equally to all 
ETCs, all of whom are currently required to maintain Lifeline 
documentation, including subscriber-specific eligibility documentation, 
for at least three years.

E. Steps Taken To Minimize Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered

    51. Eligibility database. For the period prior to the 
implementation of a national eligibility database, in the FNPRM we 
consider the alternative of having third-party administrators, as 
opposed to the ETCs, be responsible for verifying Lifeline consumers' 
eligibility in the program. Accordingly, we seek comment on how to 
minimize or mitigate extra costs to the Fund caused by the selection of 
third-party administrators.
    52. Limitations on the Resale of Lifeline-Supported Services. As 
part of the effort to reduce waste, fraud, and abuse in the program, 
the Commission proposes to allow only ETCs with a direct relationship 
with the end-user Lifeline subscriber to seek reimbursement from the 
Fund. To the extent that a reseller who is not an ETC is receiving 
support from the Fund, there could be an economic impact should this 
change be adopted, but the Commission believes that the need to protect 
the Fund from abuse outweighs any concerns with existing carriers 
raising concerns with the economic impact of the proposed rule. 
Furthermore, if there is an economic impact from this proposal, we seek 
comment on how to minimize the burdens of such a requirement on small 
entities. Accordingly, we seek comment on the potential economic impact 
of these requirements.

F. Federal Rules That May Duplicate or Conflict With Proposed Rules

    53. None.

IV. Ordering Clauses

    54. It is further ordered that, pursuant to the authority contained 
in sections 1, 2, 4(i), 10, 201-206, 214, 218-220, 251, 252, 254, 256, 
303(r), 332, and 403 of the Communications Act of 1934, as amended, and 
section 706 of the Telecommunications Act of 1996, 47 U.S.C. 151, 152, 
154(i), 160, 201-206, 214, 218-220, 251, 252, 254, 256, 303(r), 332, 
403, 1302, and Sec. Sec.  1.1 and 1.421 of the Commission's rules, 47 
CFR 1.1, 1.421, this Further Notice of Proposed Rulemaking is adopted.
    55. It is further ordered that, pursuant to applicable procedures 
set forth in Sec. Sec.  1.415 and 1.419 of the Commission's Rules, 47 
CFR 1.415, 1.419, interested parties may file comments on the Further 
Notice of Proposed Rulemaking April 2, 2012, and reply comments on or 
before May 1, 2012.
    56. It is further ordered that the Commission shall send a copy of 
this Further Notice of Proposed Rulemaking to Congress and to the 
Government Accountability Office pursuant to the Congressional Review 
Act, see 5 U.S.C. 801(a)(1)(A).
    57. It is further ordered that the Commission's Consumer and 
Governmental Affairs Bureau, Reference Information Center, shall send a 
copy of this Further Notice of Proposed Rulemaking, including the 
Initial Regulatory Flexibility Analysis, to the Chief Counsel for 
Advocacy of the Small Business Administration.

List of Subjects in 47 CFR Part 54

    Communications common carriers, Reporting and recordkeeping 
requirements, Telecommunications, Telephone.

Federal Communications Commission.
Bulah P. Wheeler,
Deputy Manager.

Proposed Rules

    For the reasons discussed in the preamble, the Federal 
Communications Commission proposes to amend 47 CFR part 54 to read as 
follows:

PART 54--UNIVERSAL SERVICE

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

    Authority:  47 U.S.C. 151, 154(i), 201, 205, 214, 219, 220, 254, 
303(r), 403, and 1302 unless otherwise noted.

    2. Revise Sec.  54.417 to read as follows:


Sec.  54.417  Recordkeeping requirements

    Eligible telecommunications carriers must maintain records to 
document compliance with all Commission and state requirements 
governing the Lifeline/Link Up programs for the ten full preceding 
calendar years and provide that documentation to the Commission or 
Administrator upon request. Notwithstanding the preceding sentence, 
eligible telecommunications carriers must maintain the documentation 
required in Sec. Sec.  54.409(d) and 54.410(b)(3) for as long as the 
consumer receives Lifeline service from that eligible 
telecommunications carrier.

[FR Doc. 2012-5142 Filed 3-1-12; 8:45 am]
BILLING CODE 6712-01-P


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