[Federal Register Volume 75, Number 179 (Thursday, September 16, 2010)]
[Proposed Rules]
[Pages 56494-56500]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-23162]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[WC Docket No. 05-337, CC Docket No. 96-45; FCC 10-155]


High-Cost Universal Service Support and Federal-State Joint Board 
on Universal Service

AGENCY: Federal Communications Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: In this document, the Federal Communications Commission 
(Commission) undertakes important steps for fiscally responsible 
universal service fund reform. The Commission seeks comment on 
permanently amending our rules to facilitate efficient use of reclaimed 
excess high-cost support. In addition, the Commission seeks comment on 
a proposal to modify our rules to reclaim legacy support surrendered by 
a competitive ETC when it relinquishes ETC status in a particular 
state.

DATES: Comments on the proposed rules are due on or before October 7, 
2010 and reply comments are due on or before October 21, 2010. If you 
anticipate that you will be submitting comments, but find it difficult 
to do so within the period of time allowed by this notice, you should 
advise the contact listed below as soon as possible.

ADDRESSES: You may submit comments, identified by WC Docket No. 05-337 
and CC Docket No. 96-45, by any of the following methods:
    <bullet> Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
    <bullet> Federal Communications Commission's Web Site: http://fjallfoss.fcc.gov/ecfs2/. Follow the instructions for submitting 
comments.
    <bullet> People with Disabilities: Contact the FCC to request 
reasonable accommodations (accessible format documents, sign language 
interpreters, CART, etc.) by e-mail: <a href="/cdn-cgi/l/email-protection#9bddd8d8aeabafdbfdf8f8b5fcf4ed"><span class="__cf_email__" data-cfemail="1b5d58582e2b2f5b7d7878357c746d">[email protected]</span></a> or phone: (202) 
418-0530 or TTY: (202) 418-0432.

For detailed instructions for submitting comments and additional 
information on the rulemaking process, see the SUPPLEMENTARY 
INFORMATION section of this document.

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 
Notice of Proposed Rulemaking in WC Docket No. 05-337, CC Docket No. 
96-45, FCC 10-155, adopted August 31, 2010, and released September 3, 
2010. This NPRM was also released with a companion Final 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 http://www.bcpiweb.com. It is also available on the Commission's Web site at 
http://www.fcc.gov.
    Pursuant to Sec. Sec.  1.415 and 1.419 of the Commission's rules, 
47 CFR 1.415, 1.419, interested parties may file comments and reply 
comments on or before the dates indicated on the first page of this 
document. Comments may be filed using: (1) The Commission's Electronic 
Comment Filing System (ECFS), (2) the Federal Government's eRulemaking 
Portal, or (3) by filing paper copies. See Electronic Filing of 
Documents in Rulemaking Proceedings, 63 FR 24121, May 1, 1998.
    <bullet> 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 website for submitting 
comments.
    <bullet> 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.

[[Page 56495]]

    <bullet> All hand-delivered or messenger-delivered paper filings 
for the Commission's Secretary must be delivered to FCC Headquarters at 
445 12th St., SW., Room TW-A325, Washington, DC 20554. The filing hours 
are 8 a.m. to 7 p.m. All hand deliveries must be held together with 
rubber bands or fasteners. Any envelopes must be disposed of before 
entering the building.
    <bullet> 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.
    <bullet> U.S. Postal Service first-class, Express, and Priority 
mail should be addressed to 445 12th Street, SW., Washington, DC 20554.
    In addition, one copy of each pleading must be sent to each of the 
following:
    <bullet> The Commission's duplicating contractor, Best Copy and 
Printing, Inc, 445 12th Street, SW., Room CY-B402, Washington, DC 
20554; Web site: http://www.bcpiweb.com; phone: 1-800-378-3160;
    <bullet> Theordore Burmeister, Telecommunications, 
Telecommunications Access Policy Division, Wireline Competition Bureau, 
445 12th Street, SW., Room 5-A5360, Washington, DC 20554; e-mail: 
<a href="/cdn-cgi/l/email-protection#74201c111b101b06115a36010619111d07001106341217175a131b02"><span class="__cf_email__" data-cfemail="e0b488858f848f9285cea295928d858993948592a0868383ce878f96">[email protected]</span></a>; and
    <bullet> Charles Tyler, Telecommunications Access Policy Division, 
Wireline Competition Bureau, 445 12th Street, SW., Room 5-A452, 
Washington, DC 20554; e-mail: <a href="/cdn-cgi/l/email-protection#35765d54475950461b614c595047755356561b525a43"><span class="__cf_email__" data-cfemail="a3e0cbc2d1cfc6d08df7dacfc6d1e3c5c0c08dc4ccd5">[email protected]</span></a>.
    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 <a href="/cdn-cgi/l/email-protection" class="__cf_email__" data-cfemail="d5b3b6b6e0e5e195b3b6b6fbb2baa3">[email protected]</a> or call the 
Consumer & Governmental Affairs Bureau at (202) 418-0530 (voice) or 
(202) 418-0432 (TTY). Contact the FCC to request reasonable 
accommodations for filing comments (accessible format documents, sign 
language interpreters, CART, etc.) by e-mail: <a href="/cdn-cgi/l/email-protection" class="__cf_email__" data-cfemail="3c5a5f5f090c087c5a5f5f125b534a">[email protected]</a>; phone: 
(202) 418-0530 or (202) 418-0432 (TTY).
    Filings and comments are also 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. Copies may also be purchased from the Commission's duplicating 
contractor, BCPI, 445 12th Street, SW., Room CY-B402, Washington, DC. 
20554. Customers may contact BCPI through its Web site: http://www.bcpiweb.com, by e-mail at <a href="/cdn-cgi/l/email-protection#32545151725051425b4557501c515d5f"><span class="__cf_email__" data-cfemail="a4c2c7c7e4c6c7d4cdd3c1c68ac7cbc9">[email protected]</span></a>, by telephone at (202) 
488-5300 or (800) 378-3160 (voice), (202) 488-5562 (TTY), or by 
facsimile at (202) 488-5563.
    1. In the Order and Notice of Proposed Rulemaking (NPRM), we 
undertake important steps for fiscally responsible universal service 
fund reform. Verizon Wireless and Sprint Nextel, in separate 
transactions in 2008, each committed to surrender their high-cost 
universal service support over five years, but those commitments have 
yet to be implemented. Corr Wireless Communications, LLC (Corr 
Wireless) has asked that any support reclaimed from Verizon Wireless 
and Sprint Nextel be redistributed to other competitive eligible 
telecommunications carriers (ETCs).
    2. In the NPRM, we seek comment on permanently amending our rules 
to facilitate efficient use of reclaimed excess high-cost support. In 
addition, we seek comment on a proposal to modify our rules to reclaim 
legacy support surrendered by a competitive ETC when it relinquishes 
ETC status in a particular state.

Synopsis of Notice of Proposed Rulemaking

    3. In the NPRM, we seek comment on modifying our rules to better 
enable the Commission to reclaim certain high-cost support, and to use 
that support to help fund broadband universal service programs, 
consistent with the recommendations of the National Broadband Plan. 
First, we seek comment on amending the interim cap rule so that a 
state's interim cap amount would be adjusted if a competitive ETC 
serving the state relinquishes its ETC status. In the Interim Cap 
Order, the Commission capped high-cost support for voice service 
provided to competitive ETCs serving each state at the level of support 
such carriers were eligible to receive in March 2008, on an annualized 
basis. This cap amount does not change even if the number of 
competitive ETCs serving the state changes. We propose amending the 
interim cap rule so that, if a competitive ETC relinquishes its ETC 
status in a state, the cap amount for that state is reduced by the 
amount of support that the competitive ETC was eligible to receive in 
its final month of eligibility, annualized.
    4. The goal of the Interim Cap Order was to rein in high-cost 
universal service disbursements, and additional support would not 
necessarily result in future deployment of expanded service. Reducing 
the total amount of support available to competitive ETCs in a state 
when a competitive ETC relinquishes its ETC status in that state will 
not reduce support flowing to any individual competitive ETC. Reducing 
the pool of support in a state also would enable excess funds from the 
legacy high-cost program to be used more effectively to advance 
universal service broadband programs, as recommended by the National 
Broadband Plan. We invite comment on this proposal.
    5. Second, we seek comment on amending Sec.  54.709(b) to permit 
the Commission to provide the Universal Service Administrative Company 
(USAC) alternate instructions for implementing prior period 
adjustments. In the accompanying order, we adopt an interim waiver of 
Sec.  54.709(b) to enable us to direct USAC to reserve reclaimed funds 
as we consider broadband universal service reform. Amending the rule as 
proposed would serve this same purpose, on a permanent basis. In 
addition, it would enable the Commission to provide USAC with alternate 
instructions regarding future excess funds in other situations without 
having to adopt a rule waiver.
    6. We seek comment on how to develop a streamlined, 
administratively workable process for providing such instruction to 
USAC, if we amended Sec.  54.709(b). We seek comment regarding the form 
that the instructions must take, including whether the instructions 
must be provided in an order, public notice, or other form. We also 
seek comment on a process by which the Wireline Competition Bureau or 
Office of the Managing Director would issue a public notice providing 
instruction to USAC that would become effective absent action by the 
Commission within fourteen days. We note that, for the purpose of 
calculating the contribution factor, the Commission already has the 
authority to set demand and administrative expenses at levels other 
than those shown in USAC's quarterly demand projections. The 
modification we propose here would permit the Commission, or the 
Wireline Competition Bureau or Office of the Managing Director on 
delegated authority, to instruct USAC to modify the prior period 
adjustments in the quarterly demand projections. We request comment on 
this proposal.

Procedural Matters

Paperwork Reduction Act

    7. This notice of proposed rulemaking does not contain new, 
modified, or proposed information collections subject to the Paperwork 
Reduction Act of 1995. 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

[[Page 56496]]

the Small Business Paperwork Relief Act of 2002.

Initial Regulatory Flexibility Analysis

    8. As required by the Regulatory Flexibility Act of 1980, as 
amended, see 5 U.S.C. 603, the Commission has prepared an Initial 
Regulatory Flexibility Analysis (IRFA) for this NPRM, of the possible 
significant economic impact on a substantial number of small entities 
by the policies and rules proposed in this NPRM. Written public 
comments are requested on this IRFA. Comments must be identified as 
responses to the IRFA and must be filed by the deadlines for comments 
on the NPRM. The Commission will send a copy of the NPRM, including 
this IRFA, to the Chief Counsel for Advocacy of the SBA. In addition, 
the NPRM and IRFA (or summaries thereof) will be published in the 
Federal Register.

Need for, and Objectives of, the Notice

    9. In the NPRM, the Commission seeks comment on a proposal to 
modify its interim cap on support for competitive eligible 
telecommunications carriers (ETCs) so that if a competitive ETC 
relinquishes its ETC status, the amount of support it receives would be 
removed from the cap amount. The Commission is considering this action 
so that support removed from the cap may be reserved as a potential 
down payment on proposed broadband universal service reforms as 
recommended by the National Broadband Plan, including to index the E-
rate funding cap to inflation to enhance broadband opportunities for 
children, teachers, schools, and libraries; support a Mobility Fund to 
provide wireless broadband service in areas that lack coverage; improve 
utilization of the Rural Health Care program to advance telemedicine in 
rural areas across the country, including Tribal lands; and, in the 
long term, directly support broadband Internet services for all 
Americans.
    10. The Commission also seeks comment on a proposal to modify its 
rules governing the calculation of the universal service fund 
contribution factor. Specifically, we seek comment on amending Sec.  
54.709(b) to enable the Commission to provide USAC with alternate 
direction regarding the application of excess contributions from prior 
quarters. The current rule requires that excess contributions be 
applied in the next quarter, effectively reducing the contribution 
factor in that quarter. In the associated Order, the Commission waives 
the rule on an interim basis and directs USAC to reserve reclaimed 
funds as a potential down payment on proposed broadband universal 
service reforms. In the NPRM, the Commission seeks comment on amending 
the rule to permit it to do so permanently. In addition, amending the 
rule as proposed would enable the Commission to provide USAC with 
alternate instructions regarding future excess funds in other 
situations without having to adopt a rule waiver.

Legal Basis

    11. This legal basis for any action that may be taken pursuant to 
the NPRM is contained in sections 1, 2, 4(i), 4(j), 201-205, 214, 220, 
and 254 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 
152, 154(i), 154(j), 201-205, 214, 220, and 254 and 1.411 of the 
Commission's rules, 47 CFR 1.411.

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

    12. The RFA directs agencies to provide a description of, and where 
feasible, an estimate of the number of small entities that may be 
affected by the proposed rules and policies, if adopted. The RFA 
generally defines the term ``small entity'' as having the same meaning 
as the terms ``small business,'' ``small organization,'' and ``small 
governmental jurisdiction.'' In addition, the term ``small business'' 
has the same meaning as the term ``small business concern'' under the 
Small Business Act. A ``small business concern'' is one which: (1) Is 
independently owned and operated; (2) is not dominant in its field of 
operation; and (3) satisfies any additional criteria established by the 
SBA.
    13. Small Businesses. Nationwide, there are a total of 
approximately 29.6 million small businesses, according to the SBA.
    14. Small Organizations. Nationwide, as of 2002, there are 
approximately 1.6 million small organizations. A ``small organization'' 
is generally ``any not-for-profit enterprise which is independently 
owned and operated and is not dominant in its field.''
    15. Small Governmental Jurisdictions. The term ``small governmental 
jurisdiction'' is defined generally as ``governments of cities, towns, 
townships, villages, school districts, or special districts, with a 
population of less than fifty thousand.'' Census Bureau data for 2002 
indicate that there were 87,525 local governmental jurisdictions in the 
United States. We estimate that, of this total, 84,377 entities were 
``small governmental jurisdictions.'' Thus, we estimate that most 
governmental jurisdictions are small.
    16. We have included small incumbent local exchange carriers in 
this present RFA analysis. As noted above, a ``small business'' under 
the RFA is one that, inter alia, meets the pertinent small business 
size standard (e.g., a telephone communications business having 1,500 
or fewer employees), and ``is not dominant in its field of operation.'' 
The SBA's Office of Advocacy contends that, for RFA purposes, small 
incumbent local exchange carriers are not dominant in their field of 
operation because any such dominance is not ``national'' in scope. We 
have therefore included small incumbent local exchange carriers in this 
RFA analysis, although we emphasize that this RFA action has no effect 
on Commission analyses and determinations in other, non-RFA contexts.
    17. Competitive Local Exchange Carriers (``CLECs''), Competitive 
Access Providers (``CAPs''), ``Shared-Tenant Service Providers,'' and 
``Other Local Service Providers.'' Neither the Commission nor the SBA 
has developed a small business size standard specifically for these 
service providers. The appropriate size standard under SBA rules is for 
the category Wired Telecommunications Carriers. Under that size 
standard, such a business is small if it has 1,500 or fewer employees. 
According to Commission data, 1005 carriers have reported that they are 
engaged in the provision of either competitive access provider services 
or competitive local exchange carrier services. Of these 1005 carriers, 
an estimated 918 have 1,500 or fewer employees and 87 have more than 
1,500 employees. In addition, 16 carriers have reported that they are 
``Shared-Tenant Service Providers,'' and all 16 are estimated to have 
1,500 or fewer employees. In addition, 89 carriers have reported that 
they are ``Other Local Service Providers.'' Of the 89, all have 1,500 
or fewer employees. Consequently, the Commission estimates that most 
providers of competitive local exchange service, competitive access 
providers, ``Shared-Tenant Service Providers,'' and ``Other Local 
Service Providers'' are small entities that may be affected by our 
action.
    18. Wireless Telecommunications Carriers (except Satellite). Since 
2007, the Census Bureau has placed wireless firms within this new, 
broad, economic census category. Prior to that time, such firms were 
within the now-superseded categories of ``Paging'' and ``Cellular and 
Other Wireless Telecommunications.''

[[Page 56497]]

Under the present and prior categories, the SBA has deemed a wireless 
business to be small if it has 1,500 or fewer employees. Because Census 
Bureau data are not yet available for the new category, we will 
estimate small business prevalence using the prior categories and 
associated data. For the category of Paging, data for 2002 show that 
there were 807 firms that operated for the entire year. Of this total, 
804 firms had employment of 999 or fewer employees, and three firms had 
employment of 1,000 employees or more. For the category of Cellular and 
Other Wireless Telecommunications, data for 2002 show that there were 
1,397 firms that operated for the entire year. Of this total, 1,378 
firms had employment of 999 or fewer employees, and 19 firms had 
employment of 1,000 employees or more. Thus, we estimate that the 
majority of wireless firms are small.
    19. 2.3 GHz Wireless Communications Services. This service can be 
used for fixed, mobile, radiolocation, and digital audio broadcasting 
satellite uses. The Commission defined ``small business'' for the 
wireless communications services (``WCS'') auction as an entity with 
average gross revenues of $40 million for each of the three preceding 
years, and a ``very small business'' as an entity with average gross 
revenues of $15 million for each of the three preceding years. The SBA 
has approved these definitions. The Commission auctioned geographic 
area licenses in the WCS service. In the auction, which was conducted 
in 1997, there were seven bidders that won 31 licenses that qualified 
as very small business entities, and one bidder that won one license 
that qualified as a small business entity.
    20. 1670-1675 MHz Services. An auction for one license in the 1670-
1675 MHz band was conducted in 2003. One license was awarded. The 
winning bidder was not a small entity.
    21. Wireless Telephony. Wireless telephony includes cellular, 
personal communications services, and specialized mobile radio 
telephony carriers. As noted, the SBA has developed a small business 
size standard for Wireless Telecommunications Carriers (except 
Satellite). Under the SBA small business size standard, a business is 
small if it has 1,500 or fewer employees. According to Trends in 
Telephone Service data, 434 carriers reported that they were engaged in 
wireless telephony. Of these, an estimated 222 have 1,500 or fewer 
employees and 212 have more than 1,500 employees. We have estimated 
that 222 of these are small under the SBA small business size standard.
    22. Broadband Personal Communications Service. The broadband 
personal communications services (``PCS'') spectrum is divided into six 
frequency blocks designated A through F, and the Commission has held 
auctions for each block. The Commission has created a small business 
size standard for Blocks C and F as an entity that has average gross 
revenues of less than $40 million in the three previous calendar years. 
For Block F, an additional small business size standard for ``very 
small business'' was added and is defined as an entity that, together 
with its affiliates, has average gross revenues of not more than $15 
million for the preceding three calendar years. These small business 
size standards, in the context of broadband PCS auctions, have been 
approved by the SBA. No small businesses within the SBA-approved small 
business size standards bid successfully for licenses in Blocks A and 
B. There were 90 winning bidders that qualified as small entities in 
the Block C auctions. A total of 93 ``small'' and ``very small'' 
business bidders won approximately 40 percent of the 1,479 licenses for 
Blocks D, E, and F. In 1999, the Commission reauctioned 155 C, D, E, 
and F Block licenses; there were 113 small business winning bidders.
    23. In 2001, the Commission completed the auction of 422 C and F 
Broadband PCS licenses in Auction 35. Of the 35 winning bidders in this 
auction, 29 qualified as ``small'' or ``very small'' businesses. 
Subsequent events, concerning Auction 35, including judicial and agency 
determinations, resulted in a total of 163 C and F Block licenses being 
available for grant. In 2005, the Commission completed an auction of 
188 C block licenses and 21 F block licenses in Auction 58. There were 
24 winning bidders for 217 licenses. Of the 24 winning bidders, 16 
claimed small business status and won 156 licenses. In 2007, the 
Commission completed an auction of 33 licenses in the A, C, and F 
Blocks in Auction 71. Of the 14 winning bidders, six were designated 
entities. In 2008, the Commission completed an auction of 20 Broadband 
PCS licenses in the C, D, E and F block licenses in Auction 78.
    24. Advanced Wireless Services. In 2008, the Commission conducted 
the auction of Advanced Wireless Services (``AWS'') licenses. This 
auction, which as designated as Auction 78, offered 35 licenses in the 
AWS 1710-1755 MHz and 2110-2155 MHz bands (``AWS-1''). The AWS-1 
licenses were licenses for which there were no winning bids in Auction 
66. That same year, the Commission completed Auction 78. A bidder with 
attributed average annual gross revenues that exceeded $15 million and 
did not exceed $40 million for the preceding three years (``small 
business'') received a 15 percent discount on its winning bid. A bidder 
with attributed average annual gross revenues that did not exceed $15 
million for the preceding three years (``very small business'') 
received a 25 percent discount on its winning bid. A bidder that had 
combined total assets of less than $500 million and combined gross 
revenues of less than $125 million in each of the last two years 
qualified for entrepreneur status. Four winning bidders that identified 
themselves as very small businesses won 17 licenses. Three of the 
winning bidders that identified themselves as a small business won five 
licenses. Additionally, one other winning bidder that qualified for 
entrepreneur status won 2 licenses.
    25. 700 MHz Band Licenses. The Commission previously adopted 
criteria for defining three groups of small businesses for purposes of 
determining their eligibility for special provisions such as bidding 
credits. The Commission defined a ``small business'' as an entity that, 
together with its affiliates and controlling principals, has average 
gross revenues not exceeding $40 million for the preceding three years. 
A ``very small business'' is defined as an entity that, together with 
its affiliates and controlling principals, has average gross revenues 
that are not more than $15 million for the preceding three years. 
Additionally, the lower 700 MHz Service had a third category of small 
business status for Metropolitan/Rural Service Area (``MSA/RSA'') 
licenses. The third category is ``entrepreneur,'' which is defined as 
an entity that, together with its affiliates and controlling 
principals, has average gross revenues that are not more than $3 
million for the preceding three years. The SBA approved these small 
size standards. The Commission conducted an auction in 2002 of 740 
licenses (one license in each of the 734 MSAs/RSAs and one license in 
each of the six Economic Area Groupings (EAGs)). Of the 740 licenses 
available for auction, 484 licenses were sold to 102 winning bidders. 
Seventy-two of the winning bidders claimed small business, very small 
business or entrepreneur status and won a total of 329 licenses. The 
Commission conducted a second auction in 2003 that included 256 
licenses: 5 EAG licenses and 476 Cellular Market Area licenses. 
Seventeen winning bidders claimed

[[Page 56498]]

small or very small business status and won 60 licenses, and nine 
winning bidders claimed entrepreneur status and won 154 licenses. In 
2005, the Commission completed an auction of 5 licenses in the lower 
700 MHz band (Auction 60). There were three winning bidders for five 
licenses. All three winning bidders claimed small business status.
    26. In 2007, the Commission adopted the 700 MHz Second Report and 
Order. The Order revised the band plan for the commercial (including 
Guard Band) and public safety spectrum, adopted services rules, 
including stringent build-out requirements, an open platform 
requirement on the C Block, and a requirement on the D Block licensee 
to construct and operate a nationwide, interoperable wireless broadband 
network for public safety users. In 2008, the Commission commenced 
Auction 73 which offered all available, commercial 700 MHz Band 
licenses (1,099 licenses) for bidding using the Commission's standard 
simultaneous multiple-round (``SMR'') auction format for the A, B, D, 
and E block licenses and an SMR auction design with hierarchical 
package bidding (``HPB'') for the C Block licenses. Later in 2008, the 
Commission concluded Auction 73. A bidder with attributed average 
annual gross revenues that did not exceed $15 million for the preceding 
three years (very small business) qualified for a 25 percent discount 
on its winning bids. A bidder with attributed average annual gross 
revenues that exceeded $15 million, but did not exceed $40 million for 
the preceding three years, qualified for a 15 percent discount on its 
winning bids. There were 36 winning bidders (who won 330 of the 1,090 
licenses won) that identified themselves as very small businesses. 
There were 20 winning bidders that identified themselves as a small 
business that won 49 of the 1,090 licenses won. The provisionally 
winning bids for the A, B, C, and E Block licenses exceeded the 
aggregate reserve prices for those blocks. However, the provisionally 
winning bid for the D Block license did not meet the applicable reserve 
price and thus did not become a winning bid.
    27. 700 MHz Guard Band Licenses. In the 700 MHz Guard Band Order, 
the Commission adopted size standards for ``small businesses'' and 
``very small businesses'' for purposes of determining their eligibility 
for special provisions such as bidding credits and installment 
payments. A small business in this service is an entity that, together 
with its affiliates and controlling principals, has average gross 
revenues not exceeding $40 million for the preceding three years. 
Additionally, a very small business is an entity that, together with 
its affiliates and controlling principals, has average gross revenues 
that are not more than $15 million for the preceding three years. SBA 
approval of these definitions is not required. In 2000, the Commission 
conducted an auction of 52 Major Economic Area (``MEA'') licenses. Of 
the 104 licenses auctioned, 96 licenses were sold to nine bidders. Five 
of these bidders were small businesses that won a total of 26 licenses. 
A second auction of 700 MHz Guard Band licenses commenced and closed in 
2001. All eight of the licenses auctioned were sold to three bidders. 
One of these bidders was a small business that won a total of two 
licenses.
    28. Specialized Mobile Radio. The Commission awards ``small 
entity'' bidding credits in auctions for Specialized Mobile Radio (SMR) 
geographic area licenses in the 800 MHz and 900 MHz bands to firms that 
had revenues of no more than $15 million in each of the three previous 
calendar years. The Commission awards ``very small entity'' bidding 
credits to firms that had revenues of no more than $3 million in each 
of the three previous calendar years. The SBA has approved these small 
business size standards for the 900 MHz Service. The Commission has 
held auctions for geographic area licenses in the 800 MHz and 900 MHz 
bands. The 900 MHz SMR auction was completed in 1996. Sixty bidders 
claiming that they qualified as small businesses under the $15 million 
size standard won 263 geographic area licenses in the 900 MHz SMR band. 
The 800 MHz SMR auction for the upper 200 channels was conducted in 
1997. Ten bidders claiming that they qualified as small businesses 
under the $15 million size standard won 38 geographic area licenses for 
the upper 200 channels in the 800 MHz SMR band. A second auction for 
the 800 MHz band was conducted in 2002 and included 23 BEA licenses. 
One bidder claiming small business status won five licenses. The 
auction of the 1,053 800 MHz SMR geographic area licenses for the 
General Category channels was conducted in 2000. Eleven bidders won 108 
geographic area licenses for the General Category channels in the 800 
MHz SMR band qualified as small businesses under the $15 million size 
standard. In an auction completed in 2000, a total of 2,800 Economic 
Area licenses in the lower 80 channels of the 800 MHz SMR service were 
awarded. Of the 22 winning bidders, 19 claimed small business status 
and won 129 licenses. Thus, combining all three auctions, 40 winning 
bidders for geographic licenses in the 800 MHz SMR band claimed status 
as small business.
    29. In addition, there are numerous incumbent site-by-site SMR 
licensees and licensees with extended implementation authorizations in 
the 800 and 900 MHz bands. We do not know how many firms provide 800 
MHz or 900 MHz geographic area SMR pursuant to extended implementation 
authorizations, nor how many of these providers have annual revenues of 
no more than $15 million. One firm has over $15 million in revenues. In 
addition, we do not know how many of these firms have 1500 or fewer 
employees. We assume, for purposes of this analysis, that all of the 
remaining existing extended implementation authorizations are held by 
small entities, as that small business size standard is approved by the 
SBA.
    30. Cellular Radiotelephone Service. Auction 77 was held to resolve 
one group of mutually exclusive applications for Cellular 
Radiotelephone Service licenses for unserved areas in New Mexico. 
Bidding credits for designated entities were not available in Auction 
77. In 2008, the Commission completed the closed auction of one 
unserved service area in the Cellular Radiotelephone Service, 
designated as Auction 77. Auction 77 concluded with one provisionally 
winning bid for the unserved area totaling $25,002.
    31. Private Land Mobile Radio (``PLMR''). PLMR systems serve an 
essential role in a range of industrial, business, land transportation, 
and public safety activities. These radios are used by companies of all 
sizes operating in all U.S. business categories, and are often used in 
support of the licensee's primary (non-telecommunications) business 
operations. For the purpose of determining whether a licensee of a PLMR 
system is a small business as defined by the SBA, we use the broad 
census category, Wireless Telecommunications Carriers (except 
Satellite). This definition provides that a small entity is any such 
entity employing no more than 1,500 persons. The Commission does not 
require PLMR licensees to disclose information about number of 
employees, so the Commission does not have information that could be 
used to determine how many PLMR licensees constitute small entities 
under this definition. We note that PLMR licensees generally use the 
licensed facilities in support of other business activities, and 
therefore, it would also be helpful to assess PLMR licensees under the 
standards applied to the particular industry subsector to which the 
licensee belongs.

[[Page 56499]]

    32. As of March 2010, there were 424,162 PLMR licensees operating 
921,909 transmitters in the PLMR bands below 512 MHz. We note that any 
entity engaged in a commercial activity is eligible to hold a PLMR 
license, and that any revised rules in this context could therefore 
potentially impact small entities covering a great variety of 
industries.
    33. Rural Radiotelephone Service. The Commission has not adopted a 
size standard for small businesses specific to the Rural Radiotelephone 
Service. A significant subset of the Rural Radiotelephone Service is 
the Basic Exchange Telephone Radio System (``BETRS''). In the present 
context, we will use the SBA's small business size standard applicable 
to Wireless Telecommunications Carriers (except Satellite), i.e., an 
entity employing no more than 1,500 persons. There are approximately 
1,000 licensees in the Rural Radiotelephone Service, and the Commission 
estimates that there are 1,000 or fewer small entity licensees in the 
Rural Radiotelephone Service that may be affected by the rules and 
policies proposed herein.
    34. 1.4 GHz Band Licensees. The Commission conducted an auction of 
64 1.4 GHz band licenses in 2007. In that auction, the Commission 
defined ``small business'' as an entity that, together with its 
affiliates and controlling interests, had average gross revenues that 
exceed $15 million but do not exceed $40 million for the preceding 
three years, and a ``very small business'' as an entity that, together 
with its affiliates and controlling interests, has had average annual 
gross revenues not exceeding $15 million for the preceding three years. 
Neither of the two winning bidders sought such designated entity 
status.

Description of Projected Reporting, Recordkeeping and Other Compliance 
Requirements

    35. The NPRM does not propose any reporting, recordkeeping, or 
other compliance requirements.

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

    36. The RFA requires an agency to describe any significant 
alternatives that it has considered in reaching its approach, which may 
include the following four alternatives, among others: (1) The 
establishment of differing compliance or reporting requirements or 
timetables that take into account the resources available to small 
entities; (2) the clarification, consolidation, or simplification of 
compliance or reporting requirements under the rule for small entities; 
(3) the use of performance, rather than design, standards; and (4) an 
exemption from coverage of the rule, or any part thereof, for small 
entities.
    37. The NPRM proposes reducing the size of the interim cap on 
competitive ETC support when any competitive ETC relinquishes its ETC 
designation. Under certain circumstances, this may have a significant 
economic impact on other competitive ETCs that are small entities. For 
example, as described in footnote 31 of the Order, the reduction in 
size of a state interim cap amount could negatively affect a 
competitive ETC that is a small entity if another competitive ETC is 
later designated and receives a share of the smaller interim cap 
amount. While the designation of another competitive ETC would have an 
impact on the support received by the small entity even without the 
adoption of the proposed rule, the proposed rule could magnify that 
impact. The Commission is seeking comment on this rule, in part to 
consider its necessity and any alternatives. Because, however, the 
purpose of the proposed rule is to reduce the amount of high-cost 
universal service support received by competitive ETCs, it is not 
likely that a significant alternative could be chosen that would 
minimize the effect of the proposed rule if it is, in fact, adopted.
    38. The NPRM also seeks comment on a proposed rule that would give 
the Commission the ability to provide the universal service 
administrator alternate instructions with regard to the use of extra or 
unused funds. The current rules require that the administrator use such 
funds to reduce the need for universal service contributions in the 
next quarter. The proposed rule would permit the Commission to instruct 
the administrator to reserve the funds for later use. Because the later 
use of the funds would also require universal service contributions, 
the overall effect of this proposed rule would be to shift the time of 
the contributions' collection, not to change the long-term amount 
contributed. Accordingly, we do not believe there is a significant 
economic impact, on small entities or otherwise, associated with this 
proposed rule.

Federal Rules That May Duplicate, Overlap, or Conflict With the 
Proposed Rules

    39. None.

Ex Parte Presentations

    40. 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 Sec.  
1.1206(b) of the Commission's rules.

Comment Filing Procedures

    41. Pursuant to Sec. Sec.  1.415 and 1.419 of the Commission's 
rules, interested parties may file comments and reply comments on or 
before the dates indicated on the first page of this document. Comments 
may be filed using: (1) The Commission's Electronic Comment Filing 
System (ECFS); (2) the Federal Government's eRulemaking Portal; or (3) 
by filing paper copies.
    <bullet> 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.
    <bullet> 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 <a href="/cdn-cgi/l/email-protection#ee8b8d889dae888d8dc0898198"><span class="__cf_email__" data-cfemail="f590969386b5939696db929a83">[email protected]</span></a>, and include the following 
words in the body of the message, ``get form.'' A sample form and 
directions will be sent in response.
    <bullet> 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.
    <bullet> 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.

[[Page 56500]]

    <bullet> All hand-delivered or messenger-delivered paper filings 
for the Commission's Secretary must be delivered to FCC Headquarters at 
445 12th St., SW., Room TW-A325, Washington, DC 20554. The filing hours 
are 8 a.m. to 7 p.m. All hand deliveries must be held together with 
rubber bands or fasteners. Any envelopes must be disposed of before 
entering the building.
    <bullet> 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.
    <bullet> U.S. Postal Service first-class, Express, and Priority 
mail should be addressed to 445 12th Street, SW., Washington, DC 20554.
    42. In addition, one copy of each pleading must be sent to the 
Commission's duplicating contractor, Best Copy and Printing, Inc, 445 
12th Street, SW., Room CY-B402, Washington, DC 20554; website: 
www.bcpiweb.com; phone: 1-800-378-3160. Furthermore, three copies of 
each pleading must be sent to Charles Tyler, Telecommunications Access 
Policy Division, Wireline Competition Bureau, 445 12th Street, SW., 
Room 5-A452, Washington, DC 20554; e-mail: <a href="/cdn-cgi/l/email-protection#3f7c575e4d535a4c116b46535a4d7f595c5c11585049"><span class="__cf_email__" data-cfemail="387b50594a545d4b166c41545d4a785e5b5b165f574e">[email protected]</span></a>.
    43. Filings and comments are also 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. Copies may also be purchased from the 
Commission's duplicating contractor, BCPI, 445 12th Street, SW., Room 
CY-B402, Washington, DC 20554. Customers may contact BCPI through its 
website: www.bcpiweb.com, by e-mail at <a href="/cdn-cgi/l/email-protection#583e3b3b183a3b28312f3d3a763b3735"><span class="__cf_email__" data-cfemail="e7818484a78584978e908285c984888a">[email protected]</span></a>, by telephone at 
(202) 488-5300 or (800) 378-3160 (voice), (202) 488-5562 (tty), or by 
facsimile at (202) 488-5563.
    44. To request materials in accessible formats for people with 
disabilities (Braille, large print, electronic files, audio format), 
send an e-mail to <a href="/cdn-cgi/l/email-protection" class="__cf_email__" data-cfemail="690f0a0a5c595d290f0a0a470e061f">[email protected]</a> or call the Consumer & Governmental 
Affairs Bureau at (202) 418-0530 (voice) or (202) 418-0432 (TTY). 
Contact the FCC to request reasonable accommodations for filing 
comments (accessible format documents, sign language interpreters, 
CART, etc.) by e-mail: <a href="/cdn-cgi/l/email-protection#02444141373236426461612c656d74"><span class="__cf_email__" data-cfemail="f7b1b4b4c2c7c3b7919494d9909881">[email protected]</span></a>; phone: (202) 418-0530 or TTY: 
(202) 418-0432.
    45. For further information regarding this proceeding, contact Ted 
Burmeister, Attorney Advisor, Telecommunications Access Policy 
Division, Wireline Competition Bureau at (202) 418-7389, or 
<a href="/cdn-cgi/l/email-protection#c99da1aca6ada6bbace78bbcbba4aca0babdacbb89afaaaae7aea6bf"><span class="__cf_email__" data-cfemail="c793afa2a8a3a8b5a2e985b2b5aaa2aeb4b3a2b587a1a4a4e9a0a8b1">[email protected]</span></a>.

List of Subjects in 47 CFR Part 54

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

Federal Communications Commission.
Marlene H. Dortch,
Secretary.

Proposed Rules

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

PART 54--UNIVERSAL SERVICE

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

    Authority: 47 U.S.C. 151, 154(i), 201, 205, 214, and 254 unless 
otherwise noted.

    2. Section 54.709 is amended by revising paragraph (b) to read as 
follows:


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

* * * * *
    (b) If the contributions received by the Administrator in a quarter 
exceed the amount of universal service support program contributions 
and administrative costs for that quarter, the excess payments will be 
carried forward to the following quarter, unless otherwise instructed 
by the Commission. The contribution factors for the following quarter 
will take into consideration the projected costs of the support 
mechanisms for that quarter and the excess contributions carried over 
from the previous quarter.
* * * * *
[FR Doc. 2010-23162 Filed 9-15-10; 8:45 am]
BILLING CODE 6712-01-P


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