Opinion ID: 165579
Heading Depth: 2
Heading Rank: 2

Heading: The Order on Remand

Text: The FCC responded to our opinion in its Order on Remand, FCC 03-249, CC Docket No. 96-45 (October 27, 2003) (“Order on Remand”). The Commission first sought to address our concerns with respect to the definitions of statutory terms. The FCC defined “sufficient” as “enough federal support to enable states to achieve reasonable comparability of rural and urban rates in high-cost areas served by non-rural carriers.” Order on Remand ¶ 4. The Commission then defined “reasonably comparable” 9 in terms of a national urban rate benchmark, i.e., rural rates are deemed reasonably comparable if they fall within two standard deviations2, or roughly 138%, of the national urban average. Id. ¶ 38 n.130. The Order on Remand contains the FCC’s revised federal support mechanism for non-rural carriers in high-cost areas. To gauge whether current support mechanisms result in reasonably comparable rates, the Order on Remand requires states to regularly compare individual rural rates with the national average urban rate benchmark referenced above. Id. ¶ 70. The states must annually certify to the FCC whether their rural rates are reasonably comparable. Id. The benchmark represents a safe harbor, i.e., rates falling within the benchmark are presumed reasonably comparable. Id. However, states have the option to present additional information that other factors impact the comparability of their rates in high cost areas. Id. ¶ 70, 73. Importantly, non-rural carriers’ eligibility for federal support is dependant on effective state certification. Id. ¶ 92. To determine the level of support, the FCC then compares the statewide average cost per line against a national average cost per line. Id. ¶¶ 49-50. Support is only available if the state’s average exceeds the national average plus two standard deviations. Id. ¶ 64. Thus, the 2 A standard deviation is a statistical term representing the difference between input values in a range and the mean or average. One standard deviation encompasses 68.27% of the values in a given range. Two standard deviations encompasses 95.45% of the same values. In a hypothetical survey of 100 varying rates charged by telecommunications carriers, two standard deviations from the mean will encompass nearly 96 of the rates in the range, leaving roughly 4 rates outside the grouping. 10 Order on Remand actually contains two separate benchmarks: a national average urban rate benchmark is used to determine whether rates are reasonably comparable and a national cost benchmark is used to determine the availability and amount of federal support. In drafting the Order on Remand, the FCC rejected complaints from states and telecommunications carriers asserting that the previous level and allocation of funding were inadequate for the purposes of insuring universal service. However, as conceded by Petitioners, the Order on Remand increases the level of federal support from $254 million to $278 million, and the number of qualifying states from eight to ten.