[Federal Register Volume 77, Number 7 (Wednesday, January 11, 2012)]
[Rules and Regulations]
[Pages 1637-1640]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-349]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 20 and 54

[WC Docket Nos. 10-90, 07-135, 05-337, 03-109; GN Docket No. 09-51; CC 
Docket Nos. 01-92, 96-45; WT Docket No. 10-208; FCC 11-189]


Connect America Fund; Developing an Unified Intercarrier 
Compensation Regime; Lifeline and Link Up

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: In this document, the Commission amends rules regarding the 
attributes of ``voice telephony service'' to be supported by the 
Federal universal service support mechanisms. This action is necessary 
to reflect the evolution of the marketplace and to limit supported 
services. The Commission also waives certain effective dates so that 
intercarrier compensation for non-access traffic exchanged between 
Local Exchange Carriers (LEC) and Commercial Mobile Radio Service 
(CMRS) providers pursuant to an interconnection agreement in effect as 
of December 23, 2011, will be subject to a default bill-and-keep 
methodology on July 1, 2012, rather than on December 29, 2011. This 
action is necessary to limit marketplace disruption by delaying bill-
and-keep until carriers are eligible to receive recovery as part of the 
transitional revenue recovery mechanism for this type of traffic.

DATES: Effective January 11, 2012.

FOR FURTHER INFORMATION CONTACT: Amy Bender, Wireline Competition 
Bureau, (202) 418-1469, or Victoria Goldberg, Wireline Competition 
Bureau, (202) 418-7353, or TTY: (202) 418-0484.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Order 
on Reconsideration (Order) in WC Docket Nos. 10-90, 07-135, 05-337, 03-
109, GN Docket No. 09-51, CC Docket Nos. 01-92, 96-45, WT Docket No. 
10-208, FCC 11-189, released on December 23, 2011. The full text of 
this document is available for public inspection during regular 
business hours in the FCC Reference Center, Room CY-A257, 445 12th 
Street SW., Washington, DC 20554.
    1. In this Order, the Commission modifies on its own motion two 
aspects of the USF/ICC Transformation Order, 76 FR 73830, November 18, 
2011.
    2. In the USF/ICC Transformation Order, the Commission eliminated 
its former list of nine supported services and amended Sec.  54.101 of 
the Commission's rules to specify that ``voice telephony service'' is 
supported by federal universal service support mechanisms. The 
Commission found this to be a more technologically neutral approach 
that focuses on the functionality offered instead of the technologies 
used, while allowing services to be provided over any platform. This 
approach also recognizes that many of the services enumerated in the 
previous rule are universal today and that the importance of operator 
services and directory assistance, in particular, has declined with 
changes in the marketplace. A number of parties have raised questions 
about how the amended rule should be understood to affect Lifeline-only 
ETCs and their compliance with section 214(e)(1)(A) of the Act, which 
requires a carrier to provide supported services using its own 
facilities, in whole or in part, in order to be eligible to receive 
support. Several parties have urged the Commission to take action to 
ensure that there is no disruption to the services currently being 
provided to

[[Page 1638]]

millions of eligible Lifeline consumers by ETCs that have already been 
designated based on their provision of supported services as previously 
defined by the Commission.
    3. The Commission notes that, in adopting the new definition of 
``voice telephony'' in Sec.  54.101, it eliminated certain services and 
functionalities from the list of supported services, consistent with 
its findings regarding the evolution of the marketplace. To more 
clearly reflect its intent to specify the attributes of ``voice 
telephony'' in the new definition, the Commission amends Sec.  54.101 
to read: ``Services designated for support. Voice telephony services 
shall be supported by federal universal service support mechanisms. 
Eligible voice telephony services must provide voice grade access to 
the public switched network or its functional equivalent; minutes of 
use for local service provided at no additional charge to end users; 
access to the emergency services provided by local government or other 
public safety organizations, such as 911 and enhanced 911, to the 
extent the local government in an eligible carrier's service area has 
implemented 911 or enhanced 911 systems; and toll limitation for 
qualifying low-income consumers (as described in subpart E of this 
part).''
    4. Additionally, the Commission affirms that only carriers that 
provide ``voice telephony'' as defined under Sec.  54.101(a) as amended 
using their own facilities will be deemed to meet the requirements of 
section 214(e)(1). Thus, a Lifeline-only ETC does not meet the ``own 
facilities'' requirement of section 214(e)(1) if its only facilities 
are those used to provide functions that are no longer supported 
``voice telephony service'' under 47 CFR 54.101, such as access to 
operator service or directory assistance. Therefore, to be in 
compliance with the Commission's rules, Lifeline-only carriers that 
seek ETC designation after the December 29, 2011 effective date of the 
USF/ICC Transformation Order, as well as such carriers that had 
previously obtained ETC designation prior to December 29, 2011 on the 
basis of facilities associated solely with, for example, access to 
operator service or directory assistance, must either use their own 
facilities, in whole or in part, to provide the supported ``voice 
telephony service,'' or obtain forbearance from the ``own facilities'' 
requirement from the Commission. As discussed more fully below, the 
effective date of this minor modification to the language in amended 
Sec.  54.101 is the date of Federal Register publication of the Order. 
To avoid disruption to consumers of previously designated ETCs, 
however, the Commission set July 1, 2012 as the effective date of 47 
CFR 54.101 for Lifeline-only ETCs in the service areas for which they 
were designated prior to December 29, 2011. The Commission anticipates 
that it may address the ``own facilities'' requirement for Lifeline 
providers in the near future in a subsequent order addressing the 
Commission's Lifeline program. In the event that this Order is not 
published in the Federal Register before December 29, the Commission 
will consider the amended rule as adopted in the USF/ICC Transformation 
Order suspended with respect to this limited class of ETCs, so that the 
Commission's actions in the USF/ICC Transformation Order do not impact 
existing state designations.
    5. In the USF/ICC Transformation Order, the Commission adopted 
bill-and-keep as the default intercarrier compensation methodology for 
non-access traffic exchanged between local exchange carriers (LECs) and 
Commercial Mobile Radio Service (CMRS) providers. Rather than 
implementing a more gradual transition, the USF/ICC Transformation 
Order made the default bill-and-keep methodology applicable as of the 
effective date of the rules (December 29, 2011). This timing reflected 
the Commission's balancing of the benefits of providing clarity and 
addressing arbitrage and, in particular, traffic pumping, against the 
apparently small risk of marketplace disruption from doing so. There 
was little, if any, evidence in the record that there would be 
significant harmful effects on any LECs as a result of this timing. One 
factor supporting the Commission's conclusion with regard to incumbent 
LECs was the understanding that such carriers would be eligible to 
receive recovery as part of the transitional recovery mechanism for 
reductions in net reciprocal compensation payments. Another factor was 
adoption of an interim rule that limited the responsibility for 
transport costs applicable to non-access traffic exchanged between CMRS 
providers and rural, rate-of-return incumbent LECs.
    6. In the Order the Commission reconsiders the balancing of 
benefits and burdens in this context. The Commission finds it more 
appropriate to make the default bill-and-keep compensation methodology 
for LEC-CMRS non-access traffic consistent with the start of the 
transitional intercarrier compensation recovery mechanism for carriers 
that were exchanging LEC-CMRS traffic under existing interconnection 
agreements prior to the adoption date of the USF/ICC Transformation 
Order. Under the recovery rules as adopted in the USF/ICC 
Transformation Order, the transitional recovery mechanism does not 
begin until July 1, 2012, and it is unclear whether incumbent LECs will 
be eligible to receive recovery for reductions in revenues from 
December 29, 2011 through July 1, 2012. The Commission had anticipated 
carriers would continue to receive payment at the rates in place under 
existing interconnection agreements while they were being renegotiated. 
However, the Commission believes that this assumption is over-inclusive 
and not entirely accurate since interconnection agreements are 
negotiated between two parties and contain different terms and 
conditions for implementing change of law provisions--indeed, some may 
relate back to the effective date of the new rule, rather than when the 
renegotiated agreement is in place. Moreover, the Commission believed 
that, as a general matter, LEC-CMRS agreements contained rates at 
$0.0007 or less as their reciprocal compensation rate. Parties 
indicate, however, that many existing LEC-CMRS agreements reflect 
reciprocal compensation rates ``much higher than $0.0007.'' Thus, the 
supplemental record suggests that the Commission did not accurately 
assess the impact of its decision to immediately move to bill-and-keep 
for all LECs for this category of traffic.
    7. Enabling carriers that have effective interconnection agreements 
governing the exchange of LEC-CMRS non-access traffic as of the 
adoption date of the USF/ICC Transformation Order to continue to 
exchange traffic and receive compensation pursuant to those existing 
agreements until July 1, 2012 will minimize market disruption, while 
enabling carriers to begin the process of revising such agreements 
immediately. In contrast, carriers exchanging LEC-CMRS non-access 
traffic without an interconnection agreement do not receive such 
compensation today, so the Commission finds no likelihood of 
marketplace disruption that would support reconsideration of its 
decision in that context. Accordingly, intercarrier compensation for 
non-access traffic exchanged between LECs and CMRS providers pursuant 
to an interconnection agreement in effect as of the adoption date of 
this Order, will be subject to a default bill-and-keep methodology on 
July 1, 2012 rather than on December 29, 2011. In the event that the 
Order is not published in the Federal Register before December 29,

[[Page 1639]]

2011, the Commission also finds good cause to waive these requirements 
to the extent necessary to preserve the status quo until such time that 
the Order goes into effect. The Commission may waive its rules for good 
cause shown. The Commission finds that waiver, if needed to preserve 
the status quo for a limited period consistent with the Order, will 
serve the public interest by protecting against the potential 
marketplace disruption, described above, that the Commission sought to 
avoid through the intercarrier compensation rule changes adopted in 
this Order. The Commission expects that, unless parties mutually agree 
otherwise, traffic will continue to be exchanged pursuant to existing 
interconnection agreements between the adoption date of the Order and 
June 30, 2012. The Commission cautions that parties should not use the 
Order as an opportunity to abuse the distinction between traffic 
subject to an interconnection agreement as of the adoption date of the 
USF/ICC Transformation Order and traffic not subject to an 
interconnection agreement in order to engage in arbitrage to avoid 
payment of intercarrier compensation charges. Indeed, the Commission 
will be monitoring the situation and will not hesitate to take action 
if it appears any such arbitrage is occurring.
    8. The Commission strongly urges all parties with such agreements 
to immediately begin preparations for the July 1 effective date of the 
transitional recovery mechanism, including by commencing discussions 
regarding change-of-law provisions, if applicable. LECs should not view 
the Order as an excuse for delaying negotiations or deferring 
preparations. To ensure that the change the Commission adopts does not 
create incentives to engage in such delay, and consistent with the 
balance of interests discussed above, the Commission provides that, 
unless parties mutually agree otherwise, starting on July 1, 2012, 
compensation for traffic exchanged during the re-negotiation of 
interconnection agreements with change-of-law provisions will be 
subject to true-up at the level of reciprocal compensation for non-
access LEC-CMRS traffic established in the resulting interconnection 
agreement, whether the default of bill-and-keep or other pricing 
negotiated by the carriers. The Commission finds that this limited 
departure from the Commission's prior determination not to override 
compensation arrangements in existing contracts is justified to ensure 
that the onset of bill-and-keep is not unilaterally delayed beyond the 
intended transition period due to delayed or extended re-negotiations 
under contractual change-of-law provisions. When the Commission set an 
immediate effective date for a default bill-and-keep methodology for 
this traffic in the USF/ICC Transformation Order, it found that re-
negotiation under such provisions would help provide a reasonable 
transition for LECs with such agreements. Now, the change in the 
effective date for bill-and-keep provides a transition for non-access 
LEC-CMRS traffic to mitigate marketplace disruption for carriers for 
which these revenues may be significant today. Given that change, the 
Commission finds that this measure is necessary to maintain the balance 
of benefits to consumers and carriers from a default bill-and-keep 
methodology that the Commission intended in the USF/ICC Transformation 
Order. Further, because of the limited nature of this modification, the 
Commission finds that it will not have the harmful effects that 
concerned the Commission in adopting its general policy on existing 
agreements. The Commission also finds that adoption of this limited 
measure will have minimal adverse impact on carriers.
    9. Regulatory Flexibility Certification. The Regulatory Flexibility 
Act (RFA) requires that agencies prepare a regulatory flexibility 
analysis for notice-and-comment rulemaking proceedings, unless the 
agency certifies that ``the rule will not have a significant economic 
impact on a substantial number of small entities.'' The Commission 
certifies that the rule revisions will not have a significant economic 
impact on a substantial number of small entities, because the action 
merely maintains the status quo for the entities affected. The 
Commission will send a copy of the Order, including such certification, 
to the Chief Counsel for Advocacy of the Small Business Administration.
    10. Paperwork Reduction Act Analysis. This document does not 
contain proposed information collection(s) subject to the Paperwork 
Reduction Act of 1995 (PRA), Public Law 104-13. In addition, therefore, 
it 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, 
see 44 U.S.C. 3506(c)(4).
    11. Congressional Review Act. The Commission will send a copy of 
the Order on Reconsideration in a report to be sent to Congress and the 
Government Accountability Office pursuant to the Congressional Review 
Act (``CRA'').
    12. Effective Date. The Commission concludes that good cause exists 
to make the effective date of the amendments to rule 47 CFR 54.101 
effective immediately upon publication in the Federal Register, 
pursuant to Sec.  553(d)(3) of the Administrative Procedure Act. 
Agencies determining whether there is good cause to make a rule 
revision take effect less than 30 days after Federal Register 
publication must balance the necessity for immediate implementation 
against principles of fundamental fairness that require that all 
affected persons be afforded a reasonable time to prepare for the 
effective date of a new rule. In this instance, no ETC will be 
prejudiced by the Order being effective immediately upon publication in 
the Federal Register because this action merely clarifies the intent of 
the USF/ICC Transformation Order and, by delaying the implementation 
date of the modified rule, restores the status quo for Lifeline-only 
ETCs in those states where they have already been designated that 
existed prior to the USF/ICC Transformation Order for a defined period 
of time. This will allow the Commission the opportunity to take further 
action with respect to the ``own facilities'' requirement for such 
providers in the context of the low-income program.
    13. The Commission also concludes that good cause exists to make 
the revisions to Sec. Sec.  20.11(e), 51.705(a), and 51.709(c) 
effective immediately upon publication in the Federal Register. As 
discussed above, allowing the rules subject to the Order to go into 
effect on December 29, 2011 may potentially result in a significant 
financial impact on LECs exchanging non-access LEC-CMRS traffic 
pursuant to interconnection agreements, contrary to the Commission's 
initial assumptions. Thus, the Commission finds good cause to make 
these rule revisions take effect upon publication in the Federal 
Register. Again, no parties will be prejudiced by this Order being 
effective immediately upon publication in the Federal Register because 
this action merely permits LECs and CMRS providers exchanging non-
access traffic pursuant to an interconnection agreement to maintain the 
status quo for a defined period of time.

List of Subjects

47 CFR Part 20

    Communications common carriers, Commercial mobile radio services, 
Interconnection, Intercarrier compensation.

[[Page 1640]]

47 CFR Part 54

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

Federal Communications Commission.
Marlene H. Dortch,
Secretary.

    For the reasons discussed in the preamble, the Federal 
Communications Commission amends 47 CFR parts 20 and 54 as follows:

PART 20--COMMERCIAL MOBILE RADIO SERVICES

0
1. The authority citation for part 20 continues to read as follows:

    Authority: 47 U.S.C. 154, 160, 201, 251-254, 301, 303, 316, and 
332 unless otherwise noted. Section 20.12 is also issued under 47 
U.S.C. 1302.


0
2. Section 20.11 is amended by revising paragraph (e) to read as 
follows:


Sec.  20.11  Interconnection to facilities of local exchange carriers.

* * * * *
    (e) An incumbent local exchange carrier may request interconnection 
from a commercial mobile radio service provider and invoke the 
negotiation and arbitration procedures contained in section 252 of the 
Act. A commercial mobile radio service provider receiving a request for 
interconnection must negotiate in good faith and must, if requested, 
submit to arbitration by the state commission.
* * * * *

PART 54--UNIVERSAL SERVICE

0
3. The authority citation for part 54 continues to read as follows:

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

Subpart B--Services Designated for Support

0
4. Section 54.101 is amended by revising paragraph (a) to read as 
follows:


Sec.  54.101  Supported services for rural, insular and high cost 
areas.

    (a) Services designated for support. Voice telephony services shall 
be supported by federal universal service support mechanisms. Eligible 
voice telephony services must provide voice grade access to the public 
switched network or its functional equivalent; minutes of use for local 
service provided at no additional charge to end users; access to the 
emergency services provided by local government or other public safety 
organizations, such as 911 and enhanced 911, to the extent the local 
government in an eligible carrier's service area has implemented 911 or 
enhanced 911 systems; and toll limitation for qualifying low-income 
consumers (as described in subpart E of this part).
* * * * *

[FR Doc. 2012-349 Filed 1-10-12; 8:45 am]
BILLING CODE 6712-01-P