Federal Register / Vol. 73, No. 199 / Tuesday, October 14, 2008 / Notices 60689 

system is temporarily out of service for 

repair or replacement, the station may 

be operated, pending completion of 

repairs or replacement, for a period not 

exceeding 120 days without further 

authority from the FCC if all other 

operating parameters and the field 

monitoring point values are within the 

limits specified on the station 

authorization. 

47 CFR 73.68(e)(1) Special Temporary 

Authority (see Sec. 73.1635) shall be 

requested and obtained from the 

Commission’s Audio Division, Media 

Bureau in Washington to operate with 

parameters at variance with licensed 

values pending issuance of a modified 

license specifying parameters 

subsequent to modification or 

replacement of components. 

47 CFR 73.68(e)(4) states request for 

modification of license shall be 

submitted to the FCC in Washington, 

DC, within 30 days of the date of 

sampling system modification or 

replacement. Such request shall specify 

the transmitter plate voltage and plate 

current, common point current, base 

currents and their ratios, antenna 

monitor phase and current indications, 

and all other data obtained pursuant to 

this paragraph. 

47 CFR 73.68(f) states if an existing 

sampling system is found to be patently 

of marginal construction, or where the 

performance of a directional antenna is 

found to be unsatisfactory, and this 

deficiency reasonably may be attributed, 

in whole or in part, to inadequacies in 

the antenna monitoring system, the FCC 

may require the reconstruction of the 

sampling system in accordance with 

requirements specified above. 

47 CFR 73.151(c)(1)(ix) states the 

orientation and distances among the 

individual antenna towers in the array 

shall be confirmed by a postconstruction certification by a land 

surveyor (or, where permitted by local 

regulation, by an engineer) licensed or 

registered in the state or territory where 

the antenna system is located. 

47 CFR 73.151(c)(2)(i) describes 

techniques for moment method 

modeling, sampling system 

construction, and measurements that 

must be taken as part of a moment 

method proof. A description of the 

sampling system and the specified 

measurements must be filed with the 

license application. 

47 CFR 73.151(c)(3) states reference 

field strength measurement locations 

shall be established in directions of 

pattern minima and maxima. On each 

radial corresponding to a pattern 

minimum or maximum, there shall be at 

least three measurement locations. The 

field strength shall be measured at each 

reference location at the time of the 

proof of performance. The license 

application shall include the measured 

field strength values at each reference 

point, along with a description of each 

measurement location, including GPS 

coordinates and datum reference. 

47 CFR 73.155 states a station 

licensed with a directional antenna 

pattern pursuant to a proof of 

performance using moment method 

modeling and internal array parameters 

as described in § 73.151(c) shall 

recertify the performance of that 

directional antenna pattern at least once 

within every 24 month period. 

47 CFR 73.155(c) states the results of 

the periodic directional antenna 

performance recertification 

measurements shall be retained in the 

station’s public inspection file. The 

existing information collection 

requirements for this information 

collection are as follows: 

47 CFR Section 73.54(c) requires that 

AM licensees file a letter notification 

with the FCC when determining power 

by the direct method. In addition, 

Section 73.54(c) requires that 

background information regarding 

antenna resistance measurement data 

for AM stations must be kept on file at 

the station. 

47 CFR Section 73.54(d) requires AM 

stations using direct reading power 

meters to either submit the information 

required by (c) or submit a statement 

indicating that such a meter is being 

used. 

47 CFR Section 73.61(c) requires a 

station may be directed to make a partial 

proof of performance by the FCC 

whenever there is an indication that the 

antenna is not operating as authorized. 

47 CFR Section 73.62(b) requires an 

AM station with a directional antenna 

system to measure and log every 

monitoring point at least once for each 

mode of directional operation within 24 

hours of detection of variance of 

operating parameters from allowed 

tolerances. 

47 CFR Section 73.69(c) requires AM 

station licensees with directional 

antennas to file an informal request to 

operate without required monitors with 

the Media Bureau in Washington, D.C., 

when conditions beyond the control of 

the licensee prevent the restoration of 

an antenna monitor to service within a 

120 day period. This request is filed in 

conjunction with Section 73.3549. 

47 CFR Section 73.69(d)(1) requires 

that AM licensees with directional 

antennas request to obtain temporary 

authority to operate with parameters at 

variance with licensed values when an 

authorized antenna monitor is replaced 

pending issuance of a modified license 

specifying new parameters. 

47 CFR Section 73.69(d)(5) requires 

AM licensees with directional antennas 

to submit an informal request for 

modification of license to the FCC 

within 30 days of the date of antenna 

monitor replacement. 

47 CFR Section 73.154 requires the 

result of the most recent partial proof of 

performance measurements and analysis 

to be retained in the station records and 

made available to the FCC upon request. 

Maps showing new measurement points 

shall be associated with the partial proof 

in the station’s records and shall be 

made available to the FCC upon request. 

47 CFR Section 73.158(b) requires a 

licensee of an AM station using a 

directional antenna system to file a 

request for a corrected station license 

when the description of monitoring 

point in relation to nearby landmarks as 

shown on the station license is no 

longer correct due to road or building 

construction or other changes. A copy of 

the monitoring point description must 

be posted with the existing station 

license. 

47 CFR Section 73.3538(b) requires a 

broadcast station to file an informal 

application to modify or discontinue the 

obstruction marking or lighting of an 

antenna supporting structure. 

47 CFR Section 73.3549 requires 

licensees to file with the FCC requests 

for extensions of authority to operate 

without required monitors, transmission 

system indicating instruments, or 

encoders and decoders for monitoring 

and generating the Emergency Alert 

System codes. Such requests must 

contain information as to when and 

what steps were taken to repair or 

replace the defective equipment and a 

brief description of the alternative 

procedures being used while the 

equipment is out of service. 

Federal Communications Commission. 

Marlene H. Dortch, 

Secretary. 

[FR Doc. E8–24316 Filed 10–10–08; 8:45 am] 

BILLING CODE 6712–01–P 

FEDERAL COMMUNICATIONS 

COMMISSION 

[WC Docket No. 05–195; FCC 08–189] 

Comprehensive Review of the 

Universal Service Fund Management, 

Administration, and Oversight 

AGENCY: Federal Communication 

Commission. 

ACTION: Notice of Inquiry. 

SUMMARY: In this document, we seek 

comment on ways to further strengthen 


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management, administration, and 

oversight of the Universal Service Fund 

(‘‘USF’’ or ‘‘Fund’’), how to define more 

clearly the goals of the USF, and to 

identify any additional quantifiable 

performance measures that may be 

necessary or desirable. We also seek 

comment on whether and, if so, to what 

extent the Commission’s oversight of the 

USF can be improved. In conducting 

this inquiry, we plan to build upon the 

comprehensive audit oversight 

conducted by the Commission’s 

Inspector General in 2007. 

DATES: Submit comments on or before 

November 13, 2008; reply comments on 

or before December 15, 2008. 

ADDRESSES: You may submit comments, 

identified by WC Docket No. 05–195, by 

any of the following methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow 

instructions for submitting comments. 

• Federal Communications 

Commission’s Web Site: http:// 

www.fcc.gov/cgb/ecfs/. Follow 

instructions for submitting comments. 

• U.S. Postal Service first class, 

Express, and priority mail should be 

addressed to 445 12th Street, SW., 

Washington, DC 20554. 

• People with Disabilities: Contact the 

FCC to request reasonable 

accommodations (accessible format 

documents, sign language interpreters, 

CART, etc.) by e-mail: FCC504@fcc.gov 

or phone: 202–418–0530 or TTY: 202– 

418–0432. 

For detailed instructions for 

submitting comments, see the 

SUPPLEMENTARY INFORMATION section of 

this document. 

SUPPLEMENTARY INFORMATION: This is a 

summary of the Commission’s Notice of 

Inquiry, WC Docket No. 05–195, 

adopted August 15, 2008 and released 

September 12, 2008. The complete text 

of this document is available for public 

inspection and copying during regular 

business hours at the FCC Reference 

Information Center, Portals II, 445 12th 

Street, SW., Room CY–A257, 

Washington, DC 20554. In addition, the 

complete text of this document is 

available at http://www.fcc.gov/ 

headlines.html. The text may also be 

purchased from the Commission’s 

duplicating inspection and copying 

during regular business hours at the 

contractor, Best Copy and Printing, Inc., 

Portals II, 445 12th Street, SW., Room 

CY–B402, Washington, DC 20554, 

telephone (202) 488–5300 or (800) 378– 

3160, facsimile (202) 488–5563, or via email http://www.bcpiweb.com. 

I. Introduction 

1. In this Notice of Inquiry (‘‘NOI’’), 

we seek comment on ways to further 

strengthen management, administration, 

and oversight of the Universal Service 

Fund (‘‘USF’’ or ‘‘Fund’’), how to define 

more clearly the goals of the USF, and 

to identify any additional quantifiable 

performance measures that may be 

necessary or desirable. We also seek 

comment on whether and, if so, to what 

extent the Commission’s oversight of the 

USF can be improved. In conducting 

this inquiry, we plan to build upon the 

comprehensive audit oversight 

conducted by the Commission’s 

Inspector General in 2007. 

2. Our primary goal in initiating this 

NOI is to ensure sufficient safeguards 

are in place for the USF to operate as 

Congress intended. In recent years, the 

Commission has undertaken a series of 

steps to improve and strengthen 

oversight, including support of the 

Inspector General’s audit program. Still, 

we are concerned about the error rates 

the Inspector General identified. The 

Commission has already taken a number 

of steps to address the problems 

identified by the Inspector General and 

others, for example, implementing 

program-wide debarment measures in 

2007, initiating recovery of any 

improperly disbursed funds, and 

executing a Memorandum of 

Understanding (‘‘MOU’’) with the USF 

Administrator. These recent steps have 

provided tangible benefits. For example, 

an independent auditor audited the 

Commission’s finance and accounting 

activities and issued a positive opinion 

that identified no material weaknesses 

in these activities in fiscal years 2006 or 

2007. The independent auditor’s 

opinion expressly covers the 

Commission’s financial controls over 

the USF and represents a marked 

improvement over the period covering 

fiscal years 1999 through 2005. The 

importance and size of the USF 

demands constant scrutiny and 

assessment of the Commission’s 

oversight efforts. We are initiating this 

NOI to continue our assessment, solicit 

input from the public, and develop 

additional rules and safeguards to 

protect the Fund. 

II. Background 

3. As set forth in section 254 of the 

Communications Act of 1934, as 

amended (the ‘‘Act’’), universal service 

policy is intended to ensure the 

availability of affordable 

telecommunications services to 

consumers living in high-cost areas, 

low-income consumers, eligible schools 

and libraries, and rural health care 

providers. Section 254 also required 

explicit federal universal service 

mechanisms and enlarged the scope of 

the universal service program. The 

universal service programs are funded 

by contributions remitted by 

telecommunications carriers providing 

interstate and international 

telecommunications services and from 

certain other providers of interstate 

telecommunications. The Universal 

Service Administrative Company 

(‘‘USAC’’ or ‘‘USF Administrator’’), a 

subsidiary of the National Exchange 

Carrier Association (‘‘NECA’’) and a 

private not-for-profit corporation, was 

created to serve as the Administrator of 

the USF. The USF consists of four 

programs: (1) High-cost, providing 

financial support to eligible 

telecommunications carriers (‘‘ETCs’’) 

serving high-cost areas; (2) schools and 

libraries (‘‘E-Rate’’), providing 

discounted telecommunications 

services, Internet access, and internal 

connections to eligible schools and 

libraries; (3) low-income, assisting lowincome customers with discounted 

installation and monthly telephone 

services; and (4) rural health care, 

providing discounted 

telecommunications and information 

services to rural health care providers. 

4. Many observers, including the 

Government Accountability Office 

(‘‘GAO’’), have recommended that the 

Commission take steps to improve 

oversight of the USF. In response, the 

Commission has taken action in 

previous proceedings to detect and deter 

waste, fraud, and abuse of the Fund. In 

addition, schools and libraries 

participating in the E-rate program have 

been subject to audits to determine 

compliance with program rules and 

requirements. Audits and investigations 

have uncovered issues ranging from 

poor program design to improper use of 

funds, including intentional efforts to 

defraud the program by unscrupulous 

actors. In many instances these audits 

and investigations have resulted in the 

referral of fraud cases to the Department 

of Justice (‘‘DOJ’’), and in settlements 

favorable to the Government and/or 

criminal convictions or civil judgments 

against the wrongdoers. In addition, 

where wrongdoers have been convicted 

or subject to civil judgments, the 

Commission has debarred or proposed 

debarment of the wrongdoers consistent 

with our rules. 

5. More recently, the Commission has 

taken a series of steps to further bolster 

oversight of the USF. First, the Inspector 

General initiated 459 audits of 

beneficiaries and contributors. Based on 

the results of those audits, the Inspector 

General is now overseeing a second 

round of 650 audits (beneficiaries of 

Schools and Libraries and High Cost 

Fund programs only) that build upon 

experience from the first round. The 


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results of the Inspector General’s audits 

have resulted in both recoveries of USF 

monies and enforcement action against 

entities that apparently violated 

Commission rules. 

6. Second, the Commission has 

strengthened its oversight and 

management of the USF Administrator. 

In June 2007, the Commission 

established an MOU with the USF 

Administrator to ensure greater clarity 

in administrative and management 

functions. The MOU established 

reporting requirements of key 

performance measurement data to the 

Commission, instructed the 

Administrator to take corrective action 

on all audit findings including recovery 

of all funds identified as improperly 

disbursed, and directed the 

Administrator to maintain effective 

internal controls over its operations. 

Specifically, the MOU directs the 

Administrator to implement an internal 

controls structure consistent with the 

requirements of Office of Management 

and Budget (‘‘OMB’’) Circular A–123. 

The Administrator is in the process of 

re-assessing its internal controls 

framework. The results of this effort 

should enable the Administrator to 

develop and implement corrective 

action plans for any identified internal 

control weaknesses, which will help to 

prevent and reduce improper payments 

across all USF programs. As noted 

above, the improved internal control 

structure over the USF has helped the 

Commission receive unprecedented 

high marks from the outside 

independent auditor over the 

Commission’s finance and accounting 

activities, including those governing the 

USF. More recently, the Commission 

directed the USF Administrator to 

establish an incentive-based system for 

its executives to reduce and prevent 

improper payments. Specifically, any 

bonuses the USF Administrator pays to 

its executives must be based at least in 

part on the USF Administrators’ success 

at reducing and preventing improper 

payments. 

7. Third, the Commission established 

performance measures and goals for the 

USF and the USF Administrator. These 

performance measures and goals will be 

reported at least annually by the USF 

Administrator and will be summarized 

in the Commission’s budget and 

financial submissions to Congress. In 

addition, the Commission required the 

USF Administrator to develop customer 

service standards and to prepare, 

review, and report data concerning the 

quality of service the USF Administrator 

provides to USF stakeholders. Like the 

USF Administrator’s efforts to reduce 

and prevent improper payments, the 

quality of service it provides its 

stakeholders will also help form the 

basis for executive compensation. 

8. Fourth, in August 2007, the 

Commission adopted rules that address 

many of the problems previously 

identified with the USF program. The 

Commission’s new rules establish 

rigorous document retention 

requirements for program participants 

and establish performance 

measurements to better manage the 

Administrator and the USF. These 

measurements, among other things, 

require the Administrator to provide 

specific performance metrics such as the 

number of program beneficiaries, rates 

of telephone subscribership in urban 

versus rural areas, and the average 

dollar amount of support. The 

Commission’s new rules also create 

additional penalties for bad actors— 

specifically, the Commission can now 

debar from continued participation in 

the program, any party that defrauds 

any of the four disbursement programs. 

9. Fifth, the Commission has followed 

up on investigations by taking strong 

enforcement action against bad actors. 

Since January 2007, the Commission has 

suspended or debarred 14 individuals or 

companies and proposed or issued 19 

forfeitures or consent decrees against 

violators and other targets of our 

investigations. We expect that strong 

enforcement action and the deterrent 

effect of the Inspector General’s 

comprehensive audit program will 

encourage compliance among program 

participants. 

10. Finally, although not the subject 

of this Notice of Inquiry, the 

Commission has taken steps toward 

more fundamental reform of the USF. 

For example, the Commission recently 

took action to rein in the explosive 

growth in high-cost universal service 

support disbursements by adopting an 

interim, emergency cap on the amount 

of high-cost support that competitive 

ETCs may receive. Further, on January 

29, 2008, the Commission released three 

notices of proposed rulemaking 

addressing proposals for comprehensive 

reform of the high-cost program. In the 

Identical Support Rule NPRM, the 

Commission tentatively concludes that 

it should eliminate the Commission’s 

current ‘‘identical support’’ rule, which 

provides competitive ETCs with the 

same per-line high-cost support 

amounts that incumbent LECs receive. 

In the Reverse Auctions NPRM, the 

Commission tentatively concludes that 

reverse auctions offer several potential 

advantages over the current high-cost 

support distribution mechanisms. In the 

Joint Board Comprehensive Reform 

NPRM, the Commission is considering 

the recommendations of the Joint Board 

to establish three separate funds with 

distinct budgets and purposes: A 

broadband fund; a mobility fund; and a 

provider of last resort fund, and to adopt 

an overall cap on high-cost funding. The 

Commission is also considering all the 

principles in section 254(b) of the Act, 

including reasonable comparability, in 

the Tenth Circuit Remand proceeding. 

Further, building on the progress made 

by the Commission in the 

Comprehensive Review Order, the 

Commission is continuing to consider 

comprehensive USF reform proposals 

raised in, or in response to, the 

Comprehensive Review NPRM, 

including ways to simplify the E-Rate 

program. 

11. These oversight improvements 

have built upon the earlier measures 

taken by the Commission. In 1999, in 

the Commitment Adjustment Order, the 

Commission directed the USF 

Administrator to recover E-Rate funds 

committed in violation of the Act. In 

2003, the Commission adopted a 

debarment rule and other measures for 

the E-Rate program to safeguard the 

Fund. In addition, as mentioned above, 

the Commission has taken other actions 

to detect and deter waste, fraud, and 

abuse of the Fund. 

Summary of Audit Findings 

12. In the Comprehensive Review 

NPRM, we asked whether we should 

require audits of program participants. 

In the Comprehensive Review Order, we 

concluded that the Inspector General’s 

compliance audits of contributions to 

the USF and distributions from the USF 

would provide appropriate audit 

oversight of the USF programs and that 

an additional annual audit requirement 

was unnecessary. Working under the 

Inspector General’s supervision, 

independent auditors audited 

distributions from and contributions to 

the USF that occurred during the 2005 

funding year. The auditors tested 

compliance with the Commission’s 

rules and provided the basis for the 

Inspector General’s statistical estimates 

of erroneous payments as defined in the 

Improper Payments Information Act of 

2002 (‘‘IPIA’’). Under the IPIA, a 

program is at risk if the erroneous 

payment rate exceeds 2.5 percent and 

the total amount of erroneous payment 

is greater than $10 million. Under those 

criteria, the low-income, schools and 

libraries, and high-cost fund 

distributions were determined to be at 

risk. These audits represent the most 

rigorous review of USF beneficiaries 

and contributors since the Fund’s 

inception. The auditors performed a 

random sample of 459 audits of 


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beneficiaries from all USF programs, as 

well as contributors, from 2005. The 

Inspector General released a preliminary 

analysis on October 3, 2007. The Office 

of Managing Director (‘‘OMD’’) 

subsequently directed the USF 

Administrator to propose steps it could 

take to reduce future improper 

payments based on the information 

gained from the Inspector General’s 

audits. The USF Administrator 

submitted a report on December 31, 

2007, and a follow-up report on 

February 28, 2008. In its reports, the 

USF Administrator proposes additional 

steps that it could take to enhance 

oversight. 

13. Contributors. Section 254 of the 

Act and the Commission’s rules require 

all telecommunications carriers 

providing interstate and international 

telecommunications services and 

certain other providers of interstate 

telecommunications to contribute to the 

USF. Ninety contributors were 

randomly selected for the audits. The 

contribution improper payment rate was 

5.50 percent. The independent auditors 

found noncompliance with the 

following rules: Rules associated with 

contributor ID; regulatory contact 

information; agent for service of process; 

Commission registration number; 

company’s reported interstate revenues; 

company’s reported interstate estimate; 

certification, and records maintained to 

support data. 

14. Low-income program. The lowincome program provides discounts to 

qualified consumers by reducing 

installation fees and monthly charges 

for basic telephone service. Additional 

discounts are available to qualified 

consumers living on tribal lands. The 

estimated improper payment rate was 

9.5 percent. Areas of noncompliance 

included violations of the following: 

Advertising supported services; rates; 

link up discount; support of toll 

election; no deposit for lifeline; 

determination of consumer 

qualification; eligibility verification; 

officer certification; procedures for 

qualification; accurate submission of 

Form 497; record keeping; and 

certification from resellers. 

15. Schools and libraries program. 

The E-Rate program provides discounts 

to schools and libraries for 

telecommunications services, Internet 

access, and internal connections. The 

auditors estimated the improper 

payment rate at 12.9 percent. The 

auditors found non-compliance in 

several areas, such as recordkeeping; 

eligible services; using the correct 

discount; and entering into a contract 

too early in the application process. 

16. High-cost program. The high-cost 

program provides support for ETCs to 

ensure that consumers in all rural, 

insular, and high-cost areas have access 

to telecommunications services at rates 

that are reasonably comparable to those 

paid in urban areas. The estimated 

improper payment rate was 16.6 

percent. The auditors found 

noncompliance with various rules, e.g., 

failure to accurately report historical 

revenue; failure to report the number of 

working loops; failure to submit forms; 

and failure to submit data. 

17. Rural health care program. The 

rural health care program provides 

discounts to rural health care providers 

to ensure they pay no more than their 

urban counterparts for their 

telecommunications needs in the 

provision of health care services. In 

addition, the program provides support 

to rural health care providers for access 

to the Internet. The estimated improper 

payment rate was 20.64 percent which 

was mainly due to record keeping and 

record production problems. 

18. In the Comprehensive Review 

Order, the Commission adopted rules 

that addressed many of the audit 

findings. For example, the audits 

disclosed widespread failure of 

beneficiaries to retain appropriate 

documentation to justify USF support. 

The document retention requirements 

adopted in the Comprehensive Review 

Order should remedy these problems. 

Other concerns raised by the audits, 

such as rule violations, may be 

prevented by better outreach by the USF 

Administrator, or other methods of 

educating program beneficiaries. 

III. Discussion 

19. At the outset, we seek comment 

broadly on ways to further strengthen 

the administration, management, and 

oversight of the Fund. For example, we 

seek comment on what additional 

measures the Commission can 

implement to prevent improper USF 

payments, to safeguard the USF from 

waste, fraud, and abuse, to ensure that 

all providers are properly contributing 

the amounts they have collected from 

their subscribers to the USF, and to help 

operate the program in a more efficient, 

effective manner. Commenters should 

propose measures that the USF 

Administrator could take to prevent 

improper payments and collect all sums 

that should be paid to the fund and 

address the error rates identified in the 

Inspector General’s audit results. 

Commenters should also propose 

measures that the Commission could 

take to prevent improper payments and 

address error rates, as well as measures 

that program participants can take to 

prevent improper payments and address 

error rates. We seek comment on 

whether the Commission should adopt 

an independent audit requirement for 

program beneficiaries and contributors. 

Commenters should address whether 

safeguards should be adopted uniquely 

for certain USF programs and 

contributions or if the safeguards should 

remain more or less uniform, and if so, 

why. Commenters should discuss the 

costs versus benefits of their proposals 

in specific, rather than general, terms. 

We recognize that the four USF 

disbursement programs and the 

contribution mechanism have many 

differences and perhaps need different, 

more closely tailored requirements to 

prevent waste, fraud, and abuse 

efficiently and effectively. In summary, 

we seek comment on whether different 

safeguards are necessary for the 

different aspects of the universal service 

program. We also use this as an 

opportunity to request that parties 

refresh the record on these issues in 

response to the Commission’s 2005 

Comprehensive Review NPRM. 

20. We expect to continue to rely on 

the expert oversight of the 

Commission’s Inspector General to 

conduct and maintain a sufficient audit 

program. As noted above, the 

Commission’s Inspector General 

completed the most comprehensive 

round of audits of the USF ever 

conducted. Based on these initial 

results, the Inspector General has 

initiated plans to significantly expand 

the audit program going-forward in 

order to provide more precise estimates 

of the error rates and more detailed 

information on the underlying causes of 

any high error rates. In Fiscal Year 2008, 

the Commission requested and received 

from Congress $21.48 million for the 

Inspector General’s USF oversight 

efforts. The Commission has requested 

an additional $25.48 million in USF 

oversight funding for the Inspector 

General in Fiscal Year 2009. As the 

Inspector General completes audits of 

the program, we will continue to 

recover any improperly disbursed 

monies and work to implement 

appropriate corrective action in light of 

the audit results. 

21. We seek comment on whether the 

Commission should establish additional 

rules pertaining to document retention 

and enforcement. We note that most 

problems identified in the audit results 

were related to lack of documentation 

by program participants. In August 

2007, the Commission adopted specific 

document retention rules for each USF 

mechanism. We seek comment on 

whether the audit results suggest that 

the Commission should take additional 


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steps related to document retention in 

order to help verify that USF monies are 

used for their intended purposes. If so, 

what steps should be taken? Should 

recipients of universal service funding 

be required to retain documents that 

they are currently not required to retain? 

Currently, the rules require that records 

be retained for five years for all aspects 

of the USF, except for the low-income 

program for which documents must be 

retained for as long as the recipient 

continues to receive supported service 

plus three additional years. Should 

applicants and service providers be 

required to retain records for a longer 

period? Should the Commission 

embrace additional enforcement 

methods, or adopt additional 

enforcement rules, to address these 

issues and, if so, what should they be? 

22. As part of our examination into 

enhancing our oversight and 

management of the USF, we seek 

comment on whether the Commission 

should take steps to more clearly define 

the goals of the federal universal service 

programs. We seek comment on whether 

we should adopt specific qualitative or 

quantitative goals beyond those policy 

objectives enumerated in section 254 of 

the Act. We ask parties that advocate 

additional goals to identify with 

specificity the goals they recommend 

we apply. 

23. In 2005 we sought comment on 

the utility of a permanent administrator 

of the USF. We specifically solicited 

comment from stakeholders on the 

option of eliminating USAC as the 

permanent administrator of the USF and 

thereby using a contractor (obtained 

using the FAR) to perform the 

administration of the USF. As a general 

matter, commenters either did not 

address this proposal or filed comments 

in support of retaining the status quo. 

We use this opportunity to refresh the 

record in this regard. Should the 

Commission continue to use a 

permanent administrator of the USF? 

Alternatively, the Commission could 

obtain the services of a contractor or 

contractors to perform the USF 

Administrator’s functions. We seek 

comment on this option. 

24. Earlier this year, the Commission 

required the USF Administrator to 

establish customer service standards 

and to report regularly on the quality of 

service provided to USF stakeholders. 

At this time, the USF Administrator 

collects and reports the number and 

type of complaints received, the number 

of inquiries, the average number of 

business days to resolve complaints, 

and the percentage of complaints 

resolved within 20 business days. These 

specific data elements are currently 

under review and may change. We note 

that the USF Administrator is now 

required to base its executive 

compensation in part on the quality of 

service it provides stakeholders. In the 

meantime, we seek comment from USF 

stakeholders on additional metrics the 

USF Administrator should collect and 

report to illustrate the quality of service 

it provides stakeholders. 

25. We seek comment on what 

additional performance management 

techniques the Commission could adopt 

to improve the administration and 

operation of the USF. In August 2007, 

the Commission took initial steps to 

improve the performance management 

of the USF by adopting performance 

measures to help ensure the program 

operates in an efficient, effective 

manner. Most of these performance 

measures were ‘‘output measures.’’ 

OMB and GAO have written extensively 

on the use of performance management 

techniques and the use of performance 

goals and measures in Federal programs. 

OMB and GAO have recommended 

greater reliance on other types of 

performance goals and measures, 

including ‘‘outcome’’ and ‘‘efficiency’’ 

measures. Because we are committed to 

ensuring the USF operates in the 

manner intended by Congress, we seek 

comment on whether the Commission 

should establish additional performance 

goals and measures, or delete or revise 

any previously established performance 

goals and measures, and, more 

fundamentally, if the Commission has 

the authority to set long-term goals for 

the USF programs. If so, what additional 

performance goals and measures should 

be established, deleted, or modified, 

and, if so, why? Should performance 

measures be oriented toward the 

implicit social welfare objectives of the 

USF programs or tied only to 

accomplishment of the explicit 

requirements of the Act? If and when 

long-term program goals are met, does 

the Commission have the authority to 

terminate or significantly modify a USF 

program, without explicit Congressional 

direction? 

26. The GAO recently concluded that 

the internal control mechanisms over 

the High Cost program, including the 

use of audits, have ‘‘weaknesses.’’ 

However, the GAO declined to make 

any specific recommendations for 

strengthening or improving the internal 

control structure over the program 

beyond recommending that the 

Commission ‘‘should identify areas of 

risk in its internal control environment 

and implement mechanisms that will 

help ensure compliance with program 

rules and produce cost-effective use of 

program funds.’’ Nor did the GAO 

identify any specific internal control 

weaknesses beyond concluding that the 

existing internal controls ‘‘may not fully 

address’’ the concerns the GAO 

identified about cost-effectiveness, 

accuracy of cost and line count data, 

and the appropriateness of high cost 

support. We invite program 

stakeholders to identify areas of risk in 

the program’s internal control 

environment and to propose 

mechanisms that will help ensure 

compliance with program rules and 

produce cost-effective use of program 

funds. We seek comment on additional 

measures we can take to enhance the 

internal control structure of the entire 

USF, including all four beneficiary 

support mechanisms and the 

contributions program. We seek 

comment on whether we should 

establish an independent audit 

requirement such as the one discussed 

in the 2005 NPRM. We note that the 

Commission’s OIG may exercise its 

discretion to evaluate the accuracy of 

cost and line count data, which the 

GAO identified as a concern. We seek 

comment on whether the Commission 

should establish any additional 

measures to provide better guarantees in 

this area. 

27. Commenters should describe the 

costs and benefits of any such 

proposals, including the costs 

associated with any information 

collection effort. Commenters should 

address how the Commission should 

gather, process, and report on 

performance measures. Should the 

funds for such data collection and 

processing come from the USF? If so, 

how much USF money should be spent 

on an information collection effort for 

performance measurements? 

28. Commenters should also discuss 

whether short-term goals should flow 

from explicitly stated long-term goals 

and if the Commission has the 

responsibility to set short-term 

operational goals based upon the 

requirements in the Act. Should 

performance measurements of 

accomplishment of the long and shortterm goals be at least in part the 

responsibility of the USF 

Administrator? 

29. We seek comment on any specific 

long-term and short-term goals of the 

USF programs. With respect to the highcost program, we seek comment on any 

quantifiable measures that can be used 

in determining the program’s success in 

meeting its goals. Commenters should 

discuss whether the Commission has 

the authority to adopt goals that are not 

specifically part of section 254 of the 

Act. Commenters should address 

whether high-cost program goals should 


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focus exclusively on broadband 

connections or develop a defined mix of 

support for broadband and traditional 

voice telecom. Commenters should 

discuss appropriate long-term goals for 

the schools and libraries program and 

what the Commission should do with 

respect to the schools and libraries 

program after such goals have been met. 

For example, if an appropriate long-term 

goal is a certain level of connectivity in 

the Nation’s schools and libraries, what 

should the Commission do, and what 

authority does the Commission have, 

with respect to the program after that 

level of connectivity is met? With 

respect to the high-cost program, should 

the Commission create a low, mid, and 

high range set of options regarding 

services that could be provided by the 

program under current rules with less, 

the same, or more funding? 

30. We recognize that a specific rule 

may never be specific enough to 

adequately address all situations. In 

addition, a specific rule may not remain 

perfectly up-to-date, especially in such 

a dynamic industry as 

telecommunications, e.g., changes in 

technology, corporate structures, etc. 

We recognize the need of an 

administrator to be able to effectively 

implement our rules in such a fastchanging environment. Under Part 54 of 

our rules, USAC, as the administrator, is 

not permitted to make policy decisions 

without bureau guidance. Any party, 

including USAC and NECA, can file for 

such guidance at any time. Timely 

guidance would be important to the 

efficient and effective administration of 

the USF programs. We seek comment on 

the efficiency and effectiveness of this 

process for obtaining timely guidance 

with interpretation of our rules, 

especially with regard to the 

administration of the USF programs. 

Commenters are encouraged to provide 

specifics to the extent possible. For 

example, comments on actual 

experience(s) in receiving timely 

guidance on the interpretation of our 

rules would be most helpful. 

Commenters are also asked to state how 

any identified problem area can be 

improved. 

31. We seek comment on whether the 

Commission should establish additional 

rules pertaining to internal control 

requirements for program participants. 

For example, OMB Circular A–123 

describes the internal control 

requirements applicable to Federal 

agencies. In this circular, OMB 

describes internal control, consisting of 

organization, policies, and procedures, 

as a method to help program and 

financial managers achieve results and 

safeguard the integrity of their 

programs. We seek comment on what 

steps, if any, the Commission should 

take with respect to the establishment of 

internal control measures for program 

participants. We also seek comment on 

whether the Commission’s internal 

control measures should be improved 

with respect to the Universal Service 

Fund. Commenters should describe any 

internal control recommendations in 

detail, as well as the estimated costs and 

benefits of any such requirements. 

Commenters should discuss whether the 

Commission needs to have more direct 

oversight of the USF Administrator, 

with respect to the internal controls of 

the USF. 

32. We note that, under the 

Commission’s rules, NECA performs 

certain activities and functions related 

to the USF. For example, NECA is the 

sole shareholder of the current USF 

Administrator, USAC. In addition, 

NECA collects certain data used to 

administer the high cost program. On a 

related note, NECA performs 

comparable administrative functions 

over the TRS fund. We seek comment 

on whether we should take additional 

measures concerning NECA’s 

relationship to the current USF 

Administrator and its activities in the 

program. For example, should the 

Commission adopt any specific conflict 

of interest or other requirements 

pertaining to NECA (or its successors or 

assigns) and its relations with the USF 

Administrator? Should the Commission 

establish any requirements specifically 

designed to create greater transparency 

in the relationship between NECA and 

the USF Administrator? We seek 

comment on whether we should 

establish any rules governing the NECA 

board with respect to its relations with 

the USF Administrator, such as the 

sharing of information or the possibility 

of shared board members. USAC has 

proposed that the Commission consider 

whether USAC should be divested from 

NECA ownership. We seek comment on 

USAC’s proposal. 

33. Since 2005, the Commission has 

required USAC to conduct its 

procurements consistent with the 

Federal Acquisition Regulation 

(‘‘FAR’’). We seek comment on ways 

that we can improve our oversight of the 

Administrator’s procurement function. 

For example, should the Commission 

adopt rules that apply fully the socioeconomic goals incorporated into the 

FAR, such as veteran’s preferences and 

small business set-asides? We note that 

the USF Administrator is currently 

subject to an annual audit as specified 

in Part 54 of the Commission’s rules and 

that, while this audit may cover the USF 

Administrator’s procurement activities, 

such reviews and evaluations are not 

guaranteed. We therefore seek comment 

on the extent to which we should 

establish additional oversight of the 

USF Administrator’s compliance with 

the FAR. We note that the MOU requires 

the USF Administrator to take greater 

steps to use performance-based 

contracting in its procurements. We 

seek comment on whether we should 

mandate a percentage of the USF 

Administrator’s procurements to be 

performance-based. We also seek 

comment on other ways to ensure 

fairness and transparency in the USF 

Administrator beyond those provided 

for the in FAR. Alternatively, the 

Commission could handle certain or all 

procurements on behalf of the USF 

Administrator. We seek comment on 

whether the Commission should take a 

more active role in the USF 

Administrator’s procurements, such as 

by handling all aspects of the 

procurement process for contracts 

exceeding $250,000. Commenters 

should discuss whether the Commission 

should impose additional substantive or 

reporting requirements on the 

Administrator. 

34. We seek comment on what 

additional measures, if any, the 

Commission should undertake with 

respect to the application process for 

each of the USF programs. For example, 

should the Commission revise any of 

the existing procedures or forms to help 

safeguard the process for obtaining 

program benefits? In particular, should 

additional information be required of 

program participants in the application 

process that would improve the 

detection of waste, fraud, or abuse, or 

that would enable the Commission to 

evaluate whether or how universal 

service goals are being met? We seek 

comment on these issues for each of the 

universal service mechanisms. 

35. We seek comment on ways in 

which we could ensure better accuracy 

in the certification and verification 

requirements in the low-income 

program. In 2004, the Commission 

adopted federal verification and 

certification procedures and required 

states, under certain circumstances, to 

establish verification and certification 

procedures to minimize potential abuse 

in the low-income program. Each year, 

ETCs are required to verify the 

continued eligibility of a statistically 

valid sample of their Lifeline 

subscribers. ETCs in states that do not 

have state-based low-income programs 

must follow the certification and 

verification procedures set out in the 

Lifeline Order. ETCs in states with their 

own state-based low-income programs 

must follow the state-established 


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Federal Register / Vol. 73, No. 199 / Tuesday, October 14, 2008 / Notices 60695 

verification procedures. We are 

concerned about the possibility of 

waste, fraud, and abuse in this program 

by consumers and telecommunications 

carriers, in federal default states as well 

as in other states. We therefore seek 

comment on how to improve the 

certification and verification 

requirements. Commenters should 

suggest ways in which the USF 

Administrator can better ensure that 

Lifeline and Link-Up low-income 

consumers are eligible for such 

programs after their initial enrollment. 

Commenters should also discuss 

whether different methods should be 

used to prevent waste, fraud, and abuse 

in federal default states and in states 

that are not federal default states. 

IV. Procedural Matters 

A. Initial Paperwork Reduction Act 

Analysis 

36. This NOI does not contain 

proposed or modified information 

collections subject to the Paperwork 

Reduction Act of 1995 (‘‘PRA’’), Public 

Law 104–13. This NOI does not contain 

any new or modified ‘‘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. 

B. Ex Parte Rules 

37. This is as a ‘‘permit-but-disclose’’ 

proceeding subject to the requirements 

under section 1.1206(b) of the 

Commission’s rules. Ex parte 

presentations are permissible if 

disclosed in accordance with 

Commission rules, except during the 

Sunshine Agenda period when 

presentations, ex parte or otherwise, are 

generally prohibited. Persons making 

oral ex parte presentations are reminded 

that a memorandum summarizing a 

presentation must contain a summary of 

the substance of the presentation and 

not merely a listing of the subjects 

discussed. More than a one- or twosentence description of the views and 

arguments presented is generally 

required. Additional rules pertaining to 

oral and written presentations are set 

forth in section 1.1206(b). 

C. Filing Requirements 

38. Comments and Replies. Pursuant 

to sections 1.415 and 1.419 of the 

Commission’s rules, interested parties 

may file comments on or before the 

dates indicated on the first page of this 

document. Comments may be filed 

using: (1) The Commission’s Electronic 

Comment Filing System (‘‘ECFS’’), (2) 

the Federal Government’s eRulemaking 

Portal, or (3) procedures for filing paper 

copies. 

39. Electronic Filers: Comments may 

be filed electronically using the Internet 

by accessing the ECFS: http:// 

www.fcc.gov/cgb/ecfs or the Federal 

eRulemaking Portal: http:// 

www.regulations.gov. Filers should 

follow the instructions provided on the 

Web site for submitting comments. For 

ECFS filers, if multiple docket or 

rulemaking numbers appear in the 

caption of this proceeding, filers must 

transmit one electronic copy of the 

comments for each docket or 

rulemaking number referenced in the 

caption. In completing the transmittal 

screen, filers should include their full 

name, U.S. Postal Service mailing 

address, and the applicable docket or 

rulemaking number. Parties may also 

submit an electronic comment by 

Internet e-mail. To get filing 

instructions, filers should send an 

e-mail to ecfs@fcc.gov, and include the 

following words in the body of the 

message, ‘‘get form.’’ A sample form and 

directions will be sent in response. 

40. Paper Filers: Parties who choose 

to file by paper must file an original and 

four copies 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 (although we 

continue to experience delays in 

receiving U.S. Postal Service mail). All 

filings must be addressed to the 

Commission’s Secretary, Office of the 

Secretary, Federal Communications 

Commission. 

• The Commission’s contractor will 

receive hand-delivered or messengerdelivered paper filings for the 

Commission’s Secretary at 236 

Massachusetts Avenue, NE., Suite 110, 

Washington, DC 20002. The filing hours 

at this location are 8 a.m. to 7 p.m. All 

hand deliveries must be held together 

with rubber bands or fasteners. Any 

envelopes must be disposed of before 

entering the building. 

• 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. 

• U.S. Postal Service first-class, 

Express, and Priority mail should be 

addressed to 445 12th Street, SW., 

Washington, DC 20554. 

41. Availability of Documents. 

Comments, reply comments, and ex 

parte submissions will be available for 

public inspection during regular 

business hours in the Commission 

Reference Center, Federal 

Communications Commission, 445 12th 

Street, SW., CY–A257, Washington, DC 

20554. These documents will also be 

available free online, via ECFS. 

Documents will be available 

electronically in ASCII, Word, and/or 

Adobe Acrobat. 

42. Accessibility Information. To 

request information in accessible 

formats (computer diskettes, large print, 

audio recording, and Braille), send an 

e-mail to fcc504@fcc.gov or call the 

Commission’s Consumer and 

Governmental Affairs Bureau at (202) 

418–0530 (voice), (202) 418–0432 

(TTY). This document can also be 

downloaded in Word and Portable 

Document Format (‘‘PDF’’) at: http:// 

www.fcc.gov. 

V. Ordering Clauses 

43. Accordingly, it is ordered that, 

pursuant to sections 1, 4(i) and (j), 9, 

205, and 303(r) of the Communications 

Act of 1934, as amended, 47 U.S.C. 151, 

154(i), 154(j), 159, 205, and 303(r), this 

Notice of Inquiry is hereby adopted. 

Federal Communications Commission. 

Marlene H. Dortch, 

Secretary. 

[FR Doc. E8–24300 Filed 10–10–08; 8:45 am] 

BILLING CODE 6712–01–P 

FEDERAL COMMUNICATIONS 

COMMISSION 

Sunshine Act Meeting; FCC To Hold 

Open Commission Meeting 

Wednesday, October 15, 2008 in 

Nashville, TN 

October 8, 2008. 

The Federal Communications 

Commission will hold an Open Meeting 

on the subjects listed below on 

Wednesday, October 15, 2008, which is 

scheduled to commence at 9:30 a.m. in 

Nashville, Tennessee. 


jlentini on PROD1PC65 with NOTICES