Federal Register / Vol. 75, No. 88 / Friday, May 7, 2010 / Rules and Regulations 25113 

U.S.C. 272 note) directs agencies to use 

voluntary consensus standards in their 

regulatory activities unless the agency 

provides Congress, through the Office of 

Management and Budget, with an 

explanation of why using these 

standards would be inconsistent with 

applicable law or otherwise impractical. 

Voluntary consensus standards are 

technical standards (e.g., specifications 

of materials, performance, design, or 

operation; test methods; sampling 

procedures; and related management 

systems practices) that are developed or 

adopted by voluntary consensus 

standards bodies. 

This rule does not use technical 

standards. Therefore, we did not 

consider the use of voluntary consensus 

standards. 

Environment 

We have analyzed this rule under 

Department of Homeland Security 

Management Directive 0023.1 and 

Commandant Instruction M16475.lD, 

which guide the Coast Guard in 

complying with the National 

Environmental Policy Act of 1969 

(NEPA) (42 U.S.C. 4321–4370f), and 

have concluded this action is one of a 

category of actions which do not 

individually or cumulatively have a 

significant effect on the human 

environment. This rule is categorically 

excluded, under figure 2–1, paragraph 

(34)(g), of the Instruction. This rule 

involves establishing, disestablishing, or 

changing Regulated Navigation Areas 

and security or safety zones. 

An environmental analysis checklist 

and a categorical exclusion 

determination are available in the 

docket where indicated under 

ADDRESSES. 

List of Subjects in 33 CFR Part 165 

Harbors, Marine safety, Navigation 

(water), Reporting and recordkeeping 

requirements, Security measures, and 

Waterways. 

■ For the reasons discussed in the 

preamble, the Coast Guard amends 33 

CFR part 165 as follows: 

PART 165—REGULATED NAVIGATION 

AREAS AND LIMITED ACCESS AREAS 

■ 1. The authority citation for part 165 

continues to read as follows: 

Authority: 33 U.S.C. 1226, 1231; 46 U.S.C. 

Chapter 701; 50 U.S.C. 191, 195; 33 CFR 

1.05–1, 6.04–1, 6.04–6, and 160.5; Pub. L. 

107–295, 116 Stat. 2064; Department of 

Homeland Security Delegation No. 0170.1. 

■ 2. Add § 165.T11–306 to read as 

follows: 

§ 165.T11–306 Safety Zone; KFOG 

Kaboom, Fireworks Display, San Francisco, 

CA. 

(a) Location. This temporary safety 

zone is established for a portion of the 

waters of San Francisco Bay in San 

Francisco, CA. The fireworks launch 

sites are located in position: 

37°42′21.20′′ N, 122°23′3.46′′ W (NAD 

83). From 7:45 a.m. on May 20, 2010, 

until 9 p.m. on May 22, 2010, the 

temporary safety zone extends to the 

navigable waters around the fireworks 

launch sites within a radius of 100 feet. 

From 9 p.m. until 9:30 p.m. on May 22, 

2010, the area to which the temporary 

safety zones extends encompasses the 

navigable waters within a radius of 

1,000 feet around the fireworks launch 

sites. 

(b) Definitions. As used in this 

section, ‘‘designated representative’’ 

means a Coast Guard Patrol 

Commander, including a Coast Guard 

coxswain, petty officer, or other officer 

operating a Coast Guard vessel and a 

Federal, State, and local officer 

designated by or assisting the Captain of 

the Port San Francisco (COTP) in the 

enforcement of the safety zone. 

(c) Regulations. (1) Under the general 

regulations in § 165.23, entry into, 

transiting, or anchoring within this 

safety zone is prohibited unless 

authorized by the COTP or the COTP’s 

designated representative. 

(2) The safety zone is closed to all 

vessel traffic, except as may be 

permitted by the COTP or a designated 

representative. 

(3) Vessel operators desiring to enter 

or operate within the safety zone must 

contact the COTP or a designated 

representative to obtain permission to 

do so. Vessel operators given permission 

to enter or operate in the safety zone 

must comply with all directions given to 

them by the COTP or the designated 

representative. Persons and vessels may 

request permission to enter the safety 

zones on VHF–16 or through the 24- 

hour Command Center at telephone 

(415) 399–3547. 

(d) Effective period. This section is 

effective from 7:45 a.m. on May 20, 2010 

through 9:30 p.m. on May 22, 2010. 

Dated: April 16, 2010. 

P.M. Gugg, 

Captain, U.S. Coast Guard, Captain of the 

Port San Francisco. 

[FR Doc. 2010–10772 Filed 5–6–10; 8:45 am] 

BILLING CODE 9110–04–P 

FEDERAL COMMUNICATIONS 

COMMISSION 

47 CFR Part 54 

[WC Docket No. 05–337, CC Docket No. 96– 

45; FCC 10–57] 

High-Cost Universal Service Support, 

Federal-State Joint Board on Universal 

Service, Lifeline and Link-Up 

AGENCY: Federal Communications 

Commission. 

ACTION: Final rule. 

SUMMARY: In this document, the Federal 

Communications Commission 

(Commission) concludes that dramatic 

increases in telephone subscribership in 

Puerto Rico over the last several years 

make it unnecessary to adopt a new 

high-cost support mechanism for nonrural insular carriers as proposed by 

Puerto Rico Telephone Company. The 

Commission finds that the existing nonrural high-cost support mechanism, 

operating in conjunction with the 

Commission’s other universal service 

programs, is successfully increasing 

telephone subscribership in Puerto Rico 

and satisfies the requirements of the 

Communications Act of 1934, as 

amended, with respect to Puerto Rico. 

The Commission believes that the 

public would be best served by our 

focusing on comprehensive universal 

service reform, rather than developing a 

new non-rural insular high-cost support 

mechanism within the existing legacy 

universal service system. 

DATES: Effective June 7, 2010. 

FOR FURTHER INFORMATION CONTACT: Ted 

Burmeister, Wireline Competition 

Bureau, Telecommunications Access 

Policy Division, (202) 418–7389 or TTY: 

(202) 418–0484. 

SUPPLEMENTARY INFORMATION: This is a 

synopsis of the Commission’s Order in 

WC Docket No. 05–337, CC Docket No. 

96–45, WC Docket No. 03–109, FCC 10– 

57, adopted April 16, 2010, and released 

April 16, 2010. This Order was also 

released with a companion Proposed 

Rule document that is published 

elsewhere in this Federal Register issue. 

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 

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25114 Federal Register / Vol. 75, No. 88 / Friday, May 7, 2010 / Rules and Regulations 

http://www.bcpiweb.com. It is also 

available on the Commission’s Web site 

at http://www.fcc.gov. 

People with Disabilities: To request 

materials in accessible formats for 

people with disabilities (braille, large 

print, electronic files, audio format), 

send an e-mail to fcc504@fcc.gov or call 

the Consumer & Governmental Affairs 

Bureau at 202–418–0530 (voice), 202– 

418–0432 (tty). 

Synopsis of the Order 

I. Introduction 

1. In this Order, we conclude that 

dramatic increases in telephone 

subscribership in Puerto Rico over the 

last several years make it unnecessary to 

adopt a new high-cost support 

mechanism for non-rural insular carriers 

as proposed by Puerto Rico Telephone 

Company (PRTC). In 2005, the 

Commission considered creating a 

separate high-cost universal service 

support mechanism for non-rural 

insular areas. At that time, telephone 

subscribership in Puerto Rico (a nonrural insular area) was 73.8 percent, far 

below the national average of 94.8 

percent. By 2008—the most recent year 

for which data are available— 

subscribership in Puerto Rico had 

jumped to 91.9 percent. During the same 

period, Puerto Rico has experienced 

significant growth in disbursements 

from federal universal service support 

programs due in large part to changes 

the Commission made to its rules. Total 

high-cost support for Puerto Rico has 

risen from less than $140 million in 

1998 to more than $215 million in 2008, 

an increase of nearly 54 percent, and 

low-income support has jumped from 

$1.16 million in 2001 to $23.4 million 

in 2008. Although subscription rates in 

Puerto Rico are still lower than the 

national average (98.2 percent in 2008), 

the substantial growth in universal 

service support and the commensurate 

increase in telephone subscribership 

represent significant changed 

circumstances since we issued the 

NPRM, 71 FR 1721, January 11, 2006, in 

2005. 

2. In light of these positive 

developments, we find that the existing 

non-rural high-cost support mechanism, 

operating in conjunction with the 

Commission’s other universal service 

programs, is successfully increasing 

telephone subscribership in Puerto Rico 

and satisfies the requirements of section 

254 of the Communications Act of 1934, 

as amended (the Act), with respect to 

Puerto Rico. Telephone subscribership 

in Puerto Rico is not yet at the same 

level as in the mainland United States, 

but the data before us indicate that the 

gap is closing rapidly and may well be 

eliminated entirely in the near future. 

The Commission, moreover, recently 

adopted a Joint Statement on Broadband 

that recommends comprehensive reform 

of universal service, and delivered to 

Congress a National Broadband Plan 

that recommends, among other things, 

transitioning legacy high-cost universal 

service support to a new high-cost 

program that would support broadband 

as well as voice services. We believe 

that the public would be best served by 

our focusing on comprehensive 

universal service reform, rather than 

developing a new non-rural insular 

high-cost support mechanism within the 

existing legacy universal service system. 

As we comprehensively reform 

universal service and implement the 

National Broadband Plan 

recommendations, we will strive to 

further increase telephone 

subscribership rates in Puerto Rico and 

to ensure that high-quality voice and 

broadband services are available in 

insular areas. 

II. Order 

3. In response to a proposal PRTC had 

submitted, the Commission’s 2005 

NPRM sought comment on the adoption 

of a stand alone universal service 

support mechanism for non-rural 

insular carriers. PRTC argues that the 

Commission must adopt its proposed 

embedded cost-based mechanism 

because: (1) Section 254(b)(3) compels 

the agency to address the unique 

characteristics of non-rural insular 

carriers with regime that is distinct from 

the existing generally applicable nonrural high-cost support mechanism; (2) 

the existing mechanism does not 

provide support that is sufficient to 

ensure reasonably comparable service 

and affordable rates in Puerto Rico; and 

(3) the forward-looking economic cost 

model that currently is used to 

determine PRTC’s eligibility for highcost model support does not accurately 

measure its costs. As discussed below, 

we conclude that the statute does not 

require us to adopt a separate insular 

support mechanism as proposed by 

PRTC. 

1. Section 254 of the Act Does Not 

Require the Commission To Establish an 

Insular High-Cost Support Mechanism 

4. PRTC asserts that section 254(b)(3) 

of the Act imposes upon the 

Commission a clear, non-discretionary 

duty to adopt a separate universal 

service mechanism for insular areas. We 

disagree. Section 254(b)(3) provides that 

‘‘[c]onsumers in all regions of the Nation 

* * * should have access to 

telecommunications and information 

services that are ‘‘reasonably 

comparable’’ in terms of price and 

quality to ‘‘those services provided in 

urban areas.’’ That provision also gives 

examples of the ‘‘consumers in all 

regions of the Nation’’ that must have 

such reasonably comparable service; 

they ‘‘include[e] low-income consumers 

and those in rural, insular and high cost 

areas.’’ Nothing in the text or structure 

of the statute, however, requires the 

Commission to adopt a stand alone 

mechanism addressed to each of the 

enumerated examples of non-urban 

‘‘consumers in all regions of the Nation.’’ 

Congress in section 254 sought to 

achieve a result—reasonably 

comparable rates and services—but did 

not mandate that the Commission 

employ specific mechanisms to achieve 

that result. Rather, the statute leaves to 

the Commission’s discretion the task of 

developing one or more mechanisms 

successfully to implement the broad 

‘‘reasonable comparability’’ goal of 

section 254(b)(3). 

5. The Commission has taken 

multiple actions to implement section 

254(b)(3)—both by expanding lowincome (Lifeline and Link-Up) programs 

and by designing high-cost support 

mechanisms. Carriers in insular areas, 

just like carriers in non-insular areas, 

are eligible for support under the 

existing, generally applicable rural and 

non-rural high-cost support 

mechanisms. Indeed, carriers in Puerto 

Rico received $215.6 million in 

Interstate Common Line Support (a form 

of high-cost support) during 2008, and 

rural carriers in insular areas received 

$42.1 million in high-cost support. 

Likewise, Puerto Rico receives a 

substantial amount of low-income 

support—$23.4 million in 2008. As a 

result, Puerto Rico currently is the 

fourth largest recipient of federal highcost support, the seventh largest 

recipient of federal low-income support, 

and the third largest net recipient of 

universal service dollars among the U.S. 

states and territories. Instead of creating 

a specifically tailored program for 

insular areas, we have chosen to date to 

comply with the principle in section 

254(b)(3) by ensuring that carriers in 

insular areas are eligible for generally 

applicable support mechanisms. 

6. We must additionally disagree with 

PRTC’s reading of the 2005 NPRM. 

PRTC suggests that the language in the 

2005 NPRM acknowledges, as a 

practical matter, the existence of a duty 

to address insular support separately 

from a single high-cost mechanism. The 

NPRM merely confirms, however, that 

in the Commission’s view, section 

254(b)(3) may authorize the adoption of 

a separate insular mechanism, but does 

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Federal Register / Vol. 75, No. 88 / Friday, May 7, 2010 / Rules and Regulations 25115 

not mandate one. In particular, the 

Commission posited that ‘‘[t]here would 

be no need for a rural insular 

mechanism because all rural insular 

carriers already receive rural high-cost 

support.’’ And the Commission sought 

comment not on whether section 254(b) 

requires a separate mechanism for nonrural insular carriers, but whether that 

statute even ‘‘provides the Commission 

with authority’’ to adopt one. 

7. Although PRTC argues that we have 

failed to establish mechanisms to 

provide universal service support to 

non-rural insular areas, it appears that 

PRTC’s primary objection is that it does 

not receive high-cost model support 

under the non-rural mechanism. On 

three prior occasions, we have declined 

to adopt PRTC’s view that the non-rural 

high-cost support mechanism fails 

adequately to take into account cost 

characteristics and other conditions in 

Puerto Rico. Consistent with those prior 

decisions, we conclude that we have 

met our obligation under section 

254(b)(3) by ensuring that carriers in 

insular areas are eligible for generally 

applicable support mechanisms, and we 

address PRTC’s other objection further 

below. 

2. The Commission’s Universal Service 

Programs Provide Support That Is 

Sufficient To Ensure Reasonably 

Comparable Service and Affordable 

Rates in Puerto Rico 

8. The Commission has long 

measured the success of its universal 

service policies on the basis of 

telephone penetration rates. In 

tentatively concluding that a non-rural 

insular mechanism should be adopted, 

the Commission in the NPRM relied 

heavily on an apparent decline in 

overall telephone subscribership in 

Puerto Rico during the period PRTC 

transitioned to the non-rural high-cost 

support mechanism. That assumption 

by the Commission may have been 

made on the basis of incomplete 

information at the time we issued the 

NPRM. In any event, it has been 

rebutted by marketplace developments 

over the four-plus years since we 

adopted the NPRM. During that period, 

Puerto Rico’s telephone subscribership 

penetration rate has risen from 

approximately 73.8 percent in 2005 to 

91.9 percent in 2008. And over that 

same four-year period, the gap in 

telephone penetration between Puerto 

Rico and the nation as a whole has been 

dramatically narrowed—from a deficit 

of 21 percentage points to one of just 

over six percentage points. Given this 

substantial change in circumstances 

since we issued the NPRM, we find that 

the non-rural high-cost support 

mechanism, acting in conjunction with 

our other universal service programs, 

produces sufficient support to achieve 

reasonably comparable service in Puerto 

Rico and non-insular areas consistent 

with section 254. 

9. PRTC argues that a decrease in 

wireline telephone subscribership in 

Puerto Rico demonstrates that the nonrural high-cost support mechanism 

provides insufficient support. We 

disagree. The Commission measures 

telephone subscribership based on 

access to telecommunications service, 

regardless of whether such access is 

provided by traditional wireline service 

or by newer technologies, including 

wireless. This approach is consistent 

with our current universal service 

policies, which make high-cost support 

‘‘portable’’ to any carrier that serves a 

particular customer, regardless of the 

technology used. Thus, on this record, 

a decline in wireline subscribership (as 

measured solely by PRTC’s loss of 

switched access lines) is not 

determinative given the overall increase 

in telephone subscribership in Puerto 

Rico. Commission data show that 

competitive local exchange carriers 

served approximately 19 percent of all 

switched access lines in Puerto Rico as 

of June 2008, and the number of 

wireless subscribers in the 

Commonwealth more than doubled 

from approximately 1.1 million in 2001 

to more than 2.4 million in 2007. 

Indeed, PRTC’s own 2005 study 

concluded that ‘‘universal service is a 

virtual reality,’’ because 92.8 percent of 

households surveyed in Puerto Rico had 

wireline or wireless service, and 44 

percent of households had both. 

Accordingly, we believe it more likely 

that PRTC’s line losses have resulted 

from customer migration to new service 

providers, not from the decisions of 

customers to terminate service entirely 

because high-cost support levels have 

rendered local service rates 

unaffordable. This decision to ‘‘cut the 

cord’’ reflects a trend occurring 

throughout the country. 

10. PRTC further asserts that several 

communities and many customers in 

Puerto Rico have no access to 

telecommunications infrastructure (and, 

thus, no service) because PRTC has 

found it too costly to deploy facilities 

without federal high-cost loop support. 

We find that this claim does not justify 

the creation of PRTC’s preferred nonrural insular support mechanism, 

within the current high-cost support 

framework, for several reasons. First, it 

is not clear in the record before us how 

many households on Puerto Rico lack 

access to wireline infrastructure that 

delivers basic voice service. To the 

extent that PRTC believes unique 

circumstances in Puerto Rico warrant 

additional high-cost support in order to 

extend broadband infrastructure, those 

arguments are more appropriately raised 

in the context of upcoming proceedings 

to consider the recommendations of the 

National Broadband Plan to reform the 

legacy high-cost support mechanisms to 

support broadband. Second, 

establishing a non-rural insular 

mechanism would not guarantee that 

PRTC would deploy infrastructure to 

expand service. Third, we are not 

persuaded that areas unserved by PRTC 

are without access to basic local 

telephone service from any provider 

today. Data from American Roamer 

show that mobile wireless coverage in 

Puerto Rico is nearly ubiquitous, and 

that wireless subscribership has more 

than doubled since 2001. 

11. PRTC also claims that ‘‘[a]bsent 

sufficient federal support, carriers are 

forced to choose between fully investing 

in network development and expansion 

and raising rates to levels that could 

further diminish subscribership levels.’’ 

There are no data in the record 

supporting this position, however. As 

we found in 2003, PRTC offered no 

evidence that the elimination of its 

high-cost loop support caused rate 

shock or rate comparability problems. 

While PRTC asserts that any increase in 

rates would negatively affect telephone 

subscribership in Puerto Rico, PRTC has 

placed no rate data in the record. 

Moreover, recent rate data submitted by 

Verizon show that PRTC’s local service 

rates fall well below the national 

average urban rate, demonstrating that 

these rates are reasonably comparable to 

the rates paid by consumers in noninsular areas. We further note that PRTC 

submitted a study of telephone 

subscribership, which it claims is 

‘‘useful in demonstrating that increases 

in residential wireline rates’’ in Puerto 

Rico ‘‘would not be inconsistent with 

public policy. Moreover, the relevance 

of PRTC’s earlier (2004–2006) claim that 

it cannot invest in its network without 

additional high-cost support is 

substantially diminished, if not 

extinguished, by its later (2007) 

commitment—unqualified with respect 

to universal service support—to the 

Commission that it would invest more 

than $1 billion over five years to 

improve communications and 

information services in Puerto Rico. 

12. In short, PRTC has not shown that 

the subscribership levels in Puerto Rico 

are related to excessively high local 

rates or that providing additional highcost support would have any direct 

impact on facilities deployment or 

subscribership levels. 

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25116 Federal Register / Vol. 75, No. 88 / Friday, May 7, 2010 / Rules and Regulations 

13. Although most of the increase in 

high-cost support disbursements to 

Puerto Rico is attributable to support 

received by other providers, notably 

PRTC’s wireless affiliate and other 

mobile wireless service providers, those 

carriers (as much as PRTC) promote the 

universal service goals of the 1996 Act. 

The current universal service program 

does not embody a preference for 

service by any one carrier, or any one 

technology. Thus, the dramatic increase 

in high-cost support for wireless 

competitive ETCs in Puerto Rico relative 

to PRTC, the only wireline ETC, is 

entirely consistent with the high-cost 

program, as it is currently designed. As 

the Fifth Circuit explained, ‘‘the purpose 

of universal service is to benefit the 

customer, not the carrier,’’ so 

‘‘ ‘[s]ufficient’ funding of the customer’s 

right to adequate telephone service can 

be achieved regardless of which carrier 

ultimately receives the subsidy.’’ 

14. A similar lack of evidence caused 

the Fifth Circuit Court of Appeals to 

reject a challenge to a cap the 

Commission had imposed on certain 

ILEC high-cost support mechanisms. 

The court in that case held that a single 

provider’s reduced rate of return ‘‘does 

not establish that the cap [on certain 

ILEC high-cost support mechanisms] 

fails to provide sufficient service’’ to 

customers. ‘‘[T]he Act only promises 

universal service, and that is a goal that 

requires sufficient funding of customers, 

not providers.’’ So long as the 

mechanism in place enables 

‘‘customer[s] to receive basic 

telecommunications services, the FCC 

* * * is not further required to ensure 

sufficient funding of every local 

provider as well.’’ Faced with record 

evidence showing that universal service 

for customers has dramatically 

improved since we adopted the NPRM 

in 2005, we reject PRTC’s argument that 

the non-rural mechanism provides 

insufficient support to maintain 

affordable rates and reasonably 

comparable service in Puerto Rico. 

15. Comments challenging the 

sufficiency of universal service support 

in Puerto Rico also fail to give weight 

to efforts by the FCC, the Puerto Rico 

Telecommunications Regulatory Board 

(TRB), PRTC, and competitive ETCs that 

have significantly increased the number 

of recipients of federal low-income 

support in Puerto Rico since 2003 and, 

commensurately, increased telephone 

subscribership. The Commission has 

taken steps to improve the effectiveness 

of the low-income support mechanism 

by expanding the federal default 

eligibility criteria for Lifeline/Link-Up 

to include an income-based criterion 

and additional means-tested programs. 

And to target low-income consumers 

more effectively, the Commission 

adopted outreach guidelines for 

Lifeline/Link-Up and issued a voluntary 

survey to gather data and information 

from states regarding the administration 

of the programs. Further, low-income 

consumers in Puerto Rico receive the 

maximum amount of Lifeline assistance 

available ($13.50 per month) due to the 

substantial contribution ($3.50 per 

month) provided by the 

Commonwealth. Importantly, the 

Commission has found a positive 

correlation between the amount of state 

Lifeline support and telephone 

subscribership penetration rates. We 

also found that the transfer of PRTC to 

Ame ́rica Mo ́vil in 2007 was in the 

public interest based, in part, on 

Ame ́rica Mo ́vil’s extensive experience 

in designing products specifically for 

rural and low-income populations. 

Finally, we note again that through the 

operation of market forces, the wireless 

subscription rate in Puerto Rico has 

grown substantially, with low-income 

customers subscribing to wireless 

service in ever-increasing numbers, so 

that the customers of wireless 

competitive ETCs received more than 

one-third of total low-income support in 

2008. 

16. These combined public and 

private efforts have contributed to the 

dramatic growth in low-income support 

provided to the Commonwealth. 

Combined annual Lifeline and Link-Up 

support in Puerto Rico has grown from 

just over $1.16 million in 2001 to more 

than $23.4 million in 2008, ranking 

Puerto Rico as the seventh largest 

recipient of low-income support among 

the states and territories. This increase 

was driven by a dramatic expansion in 

the number of low-income support 

recipients, which grew from zero in 

1997 to 188,000 in 2008. The 

Commission has previously attributed 

Puerto Rico’s historically lagging 

telephone subscribership penetration 

rate to low per-capita income, not a high 

cost of service. PRTC acknowledges this 

fact. We therefore find the expansion of 

subsidies associated with the lowincome support program significant 

given our prior finding that low-income 

support—not high-cost support—is the 

federal program best suited to address 

issues of affordability and 

subscribership in Puerto Rico. On the 

basis of the record before us, we are 

unpersuaded that providing additional 

high-cost support through a non-rural 

insular mechanism is needed to address 

the underlying concern that PRTC 

identifies regarding low telephone 

subscribership in Puerto Rico. While we 

emphasize that there is still work to be 

done, this dramatic narrowing of the gap 

in telephone subscribership between 

Puerto Rico and non-insular areas 

reinforces our long-held view that lowincome support, in combination with 

our other universal service programs, is 

an effective means to address 

affordability and subscribership in 

Puerto Rico. As indicated in the 

companion NPRM, we seek comment on 

whether, due to the extraordinarily low 

income levels in Puerto Rico, it is 

appropriate to amend our rules to allow 

eligible low-income consumers in 

Puerto Rico additional support through 

the Link Up Program to offset special 

construction charges incurred if 

additional facilities are required to 

provide them with access to voice 

telephone service. 

17. In summary, we agree with PRTC 

that ‘‘the Commission has created a set 

of complementary universal service 

programs that work in conjunction to 

ensure that all consumers have access to 

affordable and reasonably comparable 

telecommunications services.’’ Indeed, 

in responding to the Tenth Circuit’s 

Qwest II decision, we concluded 

generally that the non-rural high-cost 

support mechanism, acting in 

combination with the Commission’s 

other universal service programs, 

provides sufficient support to achieve 

the universal service objectives set forth 

in section 254 of the Act. These 

programs have produced almost 

ubiquitous access to 

telecommunications services and very 

high telephone subscribership rates 

throughout the United States, including 

Puerto Rico. We therefore do not agree 

with PRTC that its loss of high-cost loop 

support from the legacy program that 

preceded the creation of the non-rural 

support mechanism rendered universal 

service support to Puerto Rico 

insufficient. As we recently explained, 

the Commission cannot reasonably 

evaluate the non-rural high-cost support 

mechanism in isolation. Sufficient 

support that satisfies the universal 

service objectives of Act—including 

reasonable comparability and 

affordability—can only be achieved 

through the totality of the Commission’s 

universal service programs. Moreover, 

we reject PRTC’s contention that the 

Commission views high-cost support 

and low-income support to be ‘‘mutually 

exclusive.’’ To the contrary, we simply 

find that PRTC is not entitled to federal 

high-cost model support under the nonrural mechanism because its costs do 

not meet the eligibility threshold and, 

on the basis of this record, that total 

support provided to Puerto Rico through 

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Federal Register / Vol. 75, No. 88 / Friday, May 7, 2010 / Rules and Regulations 25117 

the various universal service programs 

is sufficient to satisfy the objectives in 

section 254 of the Act. 

18. We acknowledge that in the 2005 

NPRM, the Commission tentatively 

concluded that ‘‘adopting a non-rural 

mechanism would have a limited 

impact on the universal service fund.’’ 

PRTC estimates that a non-rural insular 

mechanism would provide PRTC with 

approximately $33 million in additional 

annual support based on 2004 data, 

which amounts to less than one percent 

of the total high-cost program. We are 

not persuaded, however, that the 

relatively limited financial impact of 

PRTC’s proposal compels us to adopt it. 

Because universal service is funded by 

contributions from telecommunications 

carriers, which typically pass their 

contributions on to consumers, we must 

take care to avoid ‘‘excess subsidization 

of the universal service fund,’’ which 

may actually ‘‘detract from universal 

service by causing rates to unnecessarily 

rise, thereby pricing some consumers 

out of the market.’’ Moreover, as the D.C. 

Circuit recently held, we ‘‘must consider 

not only the possibility of pricing some 

customers out of the market altogether, 

but the need to limit the burden on 

customers who continue to maintain 

telephone service.’’ In administering the 

universal service program, we take 

seriously our obligation to ‘‘strike an 

appropriate balance between the 

interests of widely dispersed customers 

with small stakes and a concentrated 

interest group seeking to increase its 

already large stake.’’ Given our 

conclusion on this record that universal 

service support for Puerto Rico is 

sufficient under the Commission’s 

existing universal service programs, we 

find that any additional high-cost 

support provided to PRTC cannot be 

justified under those existing programs. 

3. The Application of the Commission’s 

Forward-Looking Cost-Based Model for 

Determining Non-Rural High-Cost 

Support Adequately Addresses PRTC’s 

Circumstances 

19. The Commission determined in 

the Universal Service First Report and 

Order, 62 FR 32862, June 17, 1997, that 

non-rural carriers would receive support 

based on forward-looking economic 

costs (i.e., costs estimated by the 

Commission’s cost model), that the 

definition of rural carriers would 

exclude carriers of PRTC’s size, and that 

a separate support mechanism for 

carriers serving insular areas was not 

warranted. As a result, although PRTC 

receives significant levels of Interstate 

Common Line Support, it does not 

receive high-cost model support or any 

specially targeted insular support today. 

In the NPRM, the Commission sought 

comment on a PRTC proposal that the 

Commission adopt a non-rural insular 

high-cost support mechanism based on 

the existing rural high-cost loop support 

mechanism, but with a cost threshold 

far below that currently used for rural 

telephone companies. 

20. PRTC’s proposal is predicated, in 

part, on its long-standing contention 

that the extreme weather and terrain 

conditions and high shipping costs in 

insular areas make the cost 

characteristics of even large insular 

carriers more like those of rural carriers. 

In the Universal Service First Report 

and Order, the Commission rejected this 

argument as grounds for providing 

PRTC high-cost support on the basis of 

embedded costs, finding that, ‘‘as a large 

telephone compan[y],’’ PRTC ‘‘should 

possess the economies of scale and 

scope to deal efficiently with the cost of 

providing service in their areas.’’ We 

believe this reasoning still applies to 

PRTC. In approving license transfers 

associated with Ame ́rica Mo ́vil’s 2007 

acquisition of PRTC, for example, we 

found that Ame ́rica Mo ́vil ‘‘brings 

significant advantages of scale and 

scope to bear’’ in providing 

telecommunications services to 

consumers. 

21. Even more significantly, record 

evidence in this proceeding reinforces 

our earlier decision. While PRTC claims 

that its costs are similar to those of rural 

carriers, PRTC’s embedded costs are 

actually too low to make it eligible for 

support under the high-cost support 

mechanism that currently funds much 

smaller, rural telephone companies that 

do not enjoy the same economies of 

scale and scope. Only by lowering the 

rural mechanism’s cost threshold 

significantly—from slightly more than 

$400 per loop to about $240 per loop (as 

proposed by PRTC)—would PRTC 

become eligible for the significant 

increase in high-cost loop support 

(about $33 million annually) that it has 

requested. Thus, based on PRTC’s own 

embedded cost data in the record before 

us, we find that PRTC has not justified 

a departure from our prior 

determinations that, for purposes of 

high-cost support, PRTC should be 

treated as a non-rural carrier due to its 

size and resulting economies of scale 

and scope. 

22. We also reject PRTC’s claim that 

the non-rural forward-looking cost 

model fails accurately to represent 

insular costs. In particular, we do not 

find persuasive PRTC’s arguments that 

it should receive high-cost support 

based on its embedded costs because the 

forward-looking economic costs 

produced by the high-cost model are 

less than PRTC’s actual costs. First, 

PRTC’s arguments do not address the 

central purpose of using forwardlooking economic costs in the non-rural 

support model, which is to estimate the 

costs that would be incurred by an 

efficient provider of service. The 

Commission previously found that 

‘‘variability in historic costs among 

companies is due to a variety of factors 

and does not simply reflect how 

efficient or inefficient a firm is in 

providing the supported services.’’ 

Indeed, in this proceeding, PRTC has 

merely asserted that its costs are higher 

because it serves an insular area and has 

not addressed whether inefficiencies 

may have contributed to the difference. 

Second, PRTC argues that the national 

average costs used in the model are 

inappropriate for estimating the costs of 

serving insular areas and states that ‘‘it 

remains unclear the extent to which 

[PRTC’s] costs were included in those 

national averages.’’ In the Tenth Report 

and Order, 64 FR 67372, December 1, 

1999, the Commission considered the 

use of a variety of data sources to 

determine input values in the high-cost 

model, including surveys of non-rural 

carriers. To the extent that PRTC 

declined to respond to a voluntary 

survey seeking cost data from carriers, 

the Commission could not include 

PRTC’s cost data. Finally, PRTC’s 

argument relies on inaccurate premises. 

For example, PRTC argues that the 

model’s use of customer addresses from 

Puerto Rico results in erroneous 

customer locations that generate 

inaccurate results. In fact, the road 

surrogate method used by the model 

assumes an even distribution of 

customers along roads and does not 

attempt to precisely assign customer 

location based on addresses. PRTC also 

complains that ‘‘[a] comparison of the 

actual operating costs of other non-rural 

jurisdictions further calls attention to 

the disparate treatment of Puerto Rico.’’ 

But it does not follow that the forwardlooking cost model produces inaccurate 

results simply because Puerto Rico 

receives less high-cost model support 

than other jurisdictions. In any event, 

we find PRTC’s ‘‘analysis’’ unpersuasive 

due to the manner in which it mixes 

statewide average embedded costs with 

support amounts from two different 

support mechanisms (i.e., the rural and 

non-rural support mechanisms) that are 

based on two different methodologies 

(i.e., embedded versus forward-looking 

costs). 

23. PRTC’s attacks on the accuracy of 

the forward-looking cost model are 

similar to arguments that the 

Commission rejected when it adopted 

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25118 Federal Register / Vol. 75, No. 88 / Friday, May 7, 2010 / Rules and Regulations 

that model in the Tenth Report and 

Order. For example, in ‘‘explain[ing] 

why the model estimates higher costs in 

some states relative to others in a 

distribution that differs from carriers’ 

book costs and from some observers’ 

expectations,’’ the Commission found 

that ‘‘[i]n general, * * * the states where 

the model estimated the highest costs 

were those states in which the territory 

served by the non-rural carriers, which 

are typically larger carriers, included 

more rural areas than in other states.’’ 

This analysis is entirely consistent with 

the data in the record, which show that 

PRTC’s embedded costs fall below the 

threshold for support under the rural 

high-cost support mechanism. Simply 

stated, PRTC has not persuaded us that 

the model fails to accurately measure its 

costs because PRTC has not 

demonstrated that its actual costs share 

the cost characteristics of rural carriers, 

as opposed to non-rural carriers. We 

further note that the Tenth Circuit in 

Qwest I upheld that Order (and our use 

of the cost model) against a similar 

challenge from Qwest, explaining that 

‘‘while Qwest notes analytic problems 

with * * * the model it has not 

presented any evidence that the model 

overall produces such inaccurate results 

that it cannot form the basis of rational 

decision-making.’’ Indeed, as the Tenth 

Circuit explained, ‘‘[t]he model is meant 

to estimate the costs of providing 

service,’’ so ‘‘[i]t need not reflect 

physical reality in all aspects if it 

produces ‘reasonably accurate 

estimates,’ as the FCC has found it 

does.’’ PRTC has provided no new 

evidence on this record that compels 

reconsideration of our previous 

conclusion that the cost model provides 

a reasonable means of determining 

appropriate levels of high-cost support. 

To the contrary, as noted, the record 

demonstrates a significant increase in 

telephone subscribership in Puerto Rico 

in the years since the NPRM was issued. 

24. Nor do we believe that it would 

be in the public interest to transition 

PRTC from the non-rural mechanism to 

an entirely new high-cost support 

mechanism based on embedded costs, 

even on an interim basis. As a general 

matter, we have determined that the 

appropriate basis for high-cost support 

is forward-looking economic cost and 

have moved away from the use of 

embedded costs for determining 

universal service support wherever 

possible. We intend to continue that 

process, and agree with GCI that 

adoption of PRTC’s proposal would be 

a step in the wrong direction. 

4. Comprehensive Reform and the 

National Broadband Plan 

25. The Commission has long 

recognized the need for comprehensive 

review and possible reform of universal 

service reform, and has sought comment 

on various proposals for comprehensive 

reform of the high-cost support 

mechanisms, rural as well as non-rural. 

Since the Commission originally 

adopted the non-rural high-cost 

mechanism in 1999, the 

telecommunications marketplace has 

undergone significant changes. While in 

1996 the majority of consumers 

subscribed to separate local and long 

distance providers, today the majority of 

consumers subscribe to local/long 

distance bundles offered by a single 

provider. In addition, the vast majority 

of subscribers have wireless phones as 

well as wireline phones, and an 

increasing percentage of consumers are 

dropping their wireline phones in favor 

of wireless or broadband-based (voice 

over Internet protocol) phone services. 

Finally, an increasing percentage of 

carriers are converting their networks 

from circuit-switched to Internet 

protocol (IP) technology. 

26. On March 16, 2010, the 

Commission adopted a Joint Statement 

on Broadband, which sets forth the 

overarching vision and goals for U.S. 

broadband policy and recommends 

comprehensive reform of universal 

service. The Commission also delivered 

to Congress the National Broadband 

Plan, which contains specific 

recommendations for reform. The 

National Broadband Plan recommends 

that all Americans should have access to 

affordable broadband service and 

proposes a comprehensive reform 

program to shift the high-cost universal 

service program from primarily 

supporting voice communications to 

supporting broadband platforms that 

enable many applications, including 

voice. As set forth in the National 

Broadband plan, a new Connect 

America Fund would provide universal 

service support in areas where there is 

no private sector business case to offer 

broadband platforms that are capable of 

delivering high-quality voice services 

because providers cannot earn enough 

revenue to cover the costs of deploying 

and operating broadband infrastructure 

and services. 

27. The recommendations to 

transition the existing high-cost 

universal service mechanisms to a new 

broadband program further cause us to 

conclude that PRTC’s requested reform, 

limited only to non-rural insular areas, 

should not be undertaken at this time. 

While we believe that we have fully 

addressed the insular support questions 

raised in the NPRM, we anticipate that 

our efforts to reform universal service 

support will be advanced further 

through future proceedings that follow 

from the National Broadband Plan. The 

Commission will release a notice of 

proposed rulemaking later this year that 

will address the high-cost universal 

service recommendations of the 

National Broadband Plan. We encourage 

parties with information about any 

unique cost characteristics of providing 

broadband service in insular areas, such 

as Puerto Rico, to participate in these 

forthcoming proceedings and submit 

any relevant data. Doing so will ensure 

that the Commission has the 

information necessary to determine the 

cost of deploying and operating a 

broadband infrastructure in insular 

areas. 

28. In the interim, we find that it will 

further the public interest if PRTC 

remains subject to the non-rural support 

mechanism until comprehensive 

universal service reform is adopted, 

consistent with the recommendations 

contained in the National Broadband 

Plan. If PRTC were to receive additional 

support for voice service pursuant to its 

proposed non-rural insular mechanism, 

it likely would be more difficult to 

transition that support to focus on areas 

unserved or underserved by broadband. 

III. Procedural Matters 

A. Procedural Matters Related to the 

Order 

1. Paperwork Reduction Analysis 

29. This order does not contain new, 

modified, or proposed information 

collections subject to the Paperwork 

Reduction Act of 1995, Public Law 104– 

13. In addition, therefore, it does not 

contain any new, modified, or proposed 

‘‘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). 

2. Final Regulatory Flexibility Act 

Certification 

30. As we are adopting no rules in 

this order, no regulatory flexibility 

analysis is required. 

3. Congressional Review Act 

31. The Commission will not send a 

copy of this order in a report to 

Congress and the Government 

Accountability Office pursuant to the 

Congressional Review Act because no 

rules are being adopted at this time. 

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Federal Register / Vol. 75, No. 88 / Friday, May 7, 2010 / Rules and Regulations 25119 

B. Ex Parte Presentations 

32. This proceeding shall be treated as 

a ‘‘permit-but-disclose’’ proceeding in 

accordance with the Commission’s ex 

parte rules. Persons making oral ex 

parte presentations are reminded that 

memoranda summarizing the 

presentations must contain summaries 

of the substance of the presentations 

and not merely a listing of the subjects 

discussed. More than a one or two 

sentence description of the views and 

arguments presented is generally 

required. Other requirements pertaining 

to oral and written presentations are set 

forth in § 1.1206(b) of the Commission’s 

rules. 

List of Subjects in 47 CFR Part 54 

Communications common carriers, 

High-Cost universal support, Reporting 

and recordkeeping requirements, 

Schools, Telecommunications, 

Telephone. 

Federal Communications Commission. 

Marlene H. Dortch, 

Secretary. 

[FR Doc. 2010–10852 Filed 5–6–10; 8:45 am] 

BILLING CODE 6712–01–P 

FEDERAL COMMUNICATIONS 

COMMISSION 

47 CFR Part 73 

[DA 10–698; MB Docket No. 09–230; RM– 

11586] 

Television Broadcasting Services; 

Seaford, DE 

AGENCY: Federal Communications 

Commission. 

ACTION: Final rule. 

SUMMARY: The Commission grants the 

allotment of channel 5 to Seaford, 

Delaware. The Commission waived the 

freeze on the filing of new DTV 

allotments to initiate this proceeding 

and to advance the policy, as set forth 

in Section 331(a) of the 

Communications Act of 1934, as 

amended, to allocate not less than one 

very high frequency commercial 

television channel to each State, if 

technically feasible. 

DATES: This rule is effective June 7, 

2010. 

FOR FURTHER INFORMATION CONTACT: 

Adrienne Y. Denysyk, Media Bureau, 

(202) 418–1600. 

SUPPLEMENTARY INFORMATION: This is a 

synopsis of the Commission’s Report 

and Order, MB Docket No. 09–230, 

adopted April 23, 2010, and released 

April 28, 2010. The full text of this 

document is available for public 

inspection and copying during normal 

business hours in the FCC’s Reference 

Information Center at Portals II, CY– 

A257, 445 12th Street, SW., 

Washington, DC 20554. This document 

will also be available via ECFS (http:// 

fjallfoss.fcc.gov/ecfs/). This document 

may be purchased from the 

Commission’s duplicating contractor, 

Best Copy and Printing, Inc., 445 12th 

Street, SW., Room CY–B402, 

Washington, DC 20554, telephone 1– 

800–478–3160 or via the company’s 

Web site, http://www.bcipweb.com. To 

request materials in accessible formats 

for people with disabilities (braille, 

large print, electronic files, audio 

format), send an e-mail to 

fcc504@fcc.gov or call the Consumer & 

Governmental Affairs Bureau at 202– 

418–0530 (voice), 202–418–0432 (tty). 

This document does not contain 

information collection requirements 

subject to the Paperwork Reduction Act 

of 1995, Public Law 104–13. In addition, 

therefore, it does not contain any 

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). Provisions of the Regulatory 

Flexibility Act of 1980 do not apply to 

this proceeding. 

The Commission will send a copy of 

this Report and Order in a report to be 

sent to Congress and the Government 

Accountability Office pursuant to the 

Congressional Review Act, see 5 U.S.C. 

801(a)(1)(A). 

List of Subjects in 47 CFR Part 73 

Television, Television broadcasting. 

■ For the reasons discussed in the 

preamble, the Federal Communications 

Commission amends 47 CFR part 73 as 

follows: 

PART 73—RADIO BROADCAST 

SERVICES 

■ 1. The authority citation for part 73 

continues to read as follows: 

Authority: 47 U.S.C. 154, 303, 334, 336. 

§ 73.622 [Amended] 

■ 2. Section 73.622(i), the PostTransition Table of DTV Allotments 

under Delaware, is amended by adding 

channel 5 at Seaford. 

Federal Communications Commission. 

Clay C. Pendarvis, 

Associate Chief, Video Division, Media 

Bureau. 

[FR Doc. 2010–10865 Filed 5–6–10; 8:45 am] 

BILLING CODE 6712–01–P 

DEPARTMENT OF DEFENSE 

Defense Acquisition Regulations 

System 

48 CFR Part 252 

Defense Federal Acquisition 

Regulation Supplement; Technical 

Amendment 

AGENCY: Defense Acquisition 

Regulations System, Department of 

Defense (DoD). 

ACTION: Final rule. 

SUMMARY: DoD is issuing a technical 

amendment to the Defense Federal 

Acquisition Regulation Supplement 

(DFARS) to correct a reference to a 

paragraph in a FAR clause. 

DATES: Effective Date: May 7, 2010. 

FOR FURTHER INFORMATION CONTACT: Ms. 

Ynette R. Shelkin, Defense Acquisition 

Regulations System, OUSD (AT&L) 

DPAP (DARS), Room 3B855, 3060 

Defense Pentagon, Washington, DC 

20301–3060. Telephone 703–602–8384; 

facsimile 703–602–0350. 

SUPPLEMENTARY INFORMATION: This final 

rule amends DFARS text at 252.204– 

7007, Alternate A, Annual 

Representations and Certifications, by 

correcting the paragraph reference to 

FAR 52.204–8 from paragraph (c) to 

paragraph (d). 

List of Subjects in 48 CFR Part 252 

Government procurement. 

Ynette R. Shelkin, 

Editor, Defense Acquisition Regulations 

System. 

■ Therefore DoD is amending 48 CFR 

part 252 as follows: 

■ 1. The authority citation for 48 CFR 

part 252 continues to read as follows: 

Authority: 41 U.S.C. 421 and 48 CFR 

chapter 1. 

PART 252—SOLICITATION 

PROVISIONS AND CONTRACT 

CLAUSES 

252.204–7007 [Amended] 

■ 2. Amend section 252.204–7007 by 

revising the clause date to read ‘‘(MAY 

2010)’’ and the paragraph designation in 

the FAR provision to read ‘‘(d)’’. 

[FR Doc. 2010–10757 Filed 5–6–10; 8:45 am] 

BILLING CODE 5001–08–P 

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