[Federal Register Volume 77, Number 42 (Friday, March 2, 2012)]
[Proposed Rules]
[Pages 12784-12791]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-5142]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 54
[WC Docket Nos. 11-42, 03-109, 12-23, and CC Docket No. 96-45; FCC 12-
11]
Lifeline and Link Up Reform and Modernization, Advancing
Broadband Availability Through Digital Literacy Training
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
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SUMMARY: In this document, the Federal Communications Commission
(Commission) seeks further focused comment on a number of issues
related to the Lifeline program, including establishing an eligibility
database, advancing broadband availability through digital literacy
training, limiting section 251 resale of Lifeline-supported services,
establishing a permanent support amount for voice service support,
reforming Lifeline and Link Up support on Tribal lands, adding Women,
Infants and Children (WIC) to the list of qualifying programs for
Lifeline, establishing eligibility for homeless veterans, determining
whether ETCs should be required to apply the Lifeline discount on all
of their voice and data packages, examining whether the Commission
should further clarify the own facilities requirement, determining
whether ILECs should have the ability to opt out of the Lifeline
program as well as whether the record retention requirement should be
lengthened from three years to ten years.
DATES: Comments are due April 2, 2012 reply comments are due May 1,
2012.
ADDRESSES: You may submit comments, identified by WC Docket Nos. 11-42,
03-109, 12-23, and CC Docket No. 96-45; FCC 12-11, by any of the
following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Federal Communications Commission's Web Site: http://fjallfoss.fcc.gov/ecfs2/. Follow the instructions for submitting
comments.
People with Disabilities: Contact the FCC to request
reasonable accommodations (accessible format documents, sign language
interpreters, CART, etc.) by email: [email protected] 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.
[[Page 12785]]
FOR FURTHER INFORMATION CONTACT: Kimberly Scardino, Wireline
Competition Bureau, (202) 418-7400 or TTY: (202) 418-0484.
SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's
Further Notice of Proposed Rulemaking (FNPRM) in WC Docket Nos. 11-42,
03-109, 12-23, and CC Docket No. 96-45; FCC 12-11, adopted January 31,
2012 and released February 6, 2012. There was also a companion document
released with this item. 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 the Commission's Electronic
Comment Filing System (ECFS). See Electronic Filing of Documents in
Rulemaking Proceedings, 63 FR 24121, May 1, 1998.
[ssquf] Electronic Filers: Comments may be filed electronically
using the Internet by accessing the ECFS: http://fjallfoss.fcc.gov/ecfs2/.
[ssquf] Paper Filers: Parties who choose to file by paper must file
an original and one copy 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. All filings must be addressed to the Commission's Secretary,
Office of the Secretary, Federal Communications Commission.
[ssquf] 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 and boxes must be disposed of before
entering the building.
[ssquf] 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.
[ssquf] U.S. Postal Service first-class, Express, and Priority mail
must be addressed to 445 12th Street SW., Washington DC 20554.
People with Disabilities: To request materials in accessible
formats for people with disabilities (braille, large print, electronic
files, audio format), send an email to [email protected] or call the
Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-
418-0432 (tty).
I. Introduction
1. In this Order, we comprehensively reform and begin to modernize
the Universal Service Fund's Lifeline program (Lifeline or the
program). Building on recommendations from the Federal-State Joint
Board on Universal Service (Joint Board), proposals in the National
Broadband Plan, input from the Government Accountability Office (GAO),
and comments received in response to the Commission's March Notice of
Proposed Rulemaking, the reforms adopted in this Order substantially
strengthen protections against waste, fraud, and abuse; improve program
administration and accountability; improve enrollment and consumer
disclosures; initiate modernization of the program for broadband; and
constrain the growth of the program in order to reduce the burden on
all who contribute to the Universal Service Fund (USF or the Fund). We
take these significant actions, while ensuring that eligible low-income
consumers who do not have the means to pay for telephone service can
maintain their current voice service through the Lifeline program and
those who are not currently connected to the network will have the
opportunity to benefit from the numerous opportunities and security
that telephone service affords.
2. This Order is another step in the Commission's ongoing efforts
to overhaul all USF programs to promote the availability of modern
networks and the capability of all American consumers to access and use
those networks. Consistent with previous efforts, we act here to
eliminate waste and inefficiency, increase accountability, and
transition the Fund from supporting standalone telephone service to
broadband. In June 2011, the Commission adopted the Duplicative Program
Payments Order, 76 FR 38040, June 29, 2011, which made clear that an
eligible consumer may only receive one Lifeline-supported service,
established procedures to detect and de-enroll subscribers receiving
duplicative Lifeline-supported services, and directed the Universal
Service Administrative Company (USAC) to implement a process to detect
and eliminate duplicative Lifeline support--a process now completed in
12 states and expanding to other states in the near future. Building on
those efforts, the unprecedented reforms adopted in today's Order could
save the Fund up to an estimated $2 billion over the next three years,
keeping money in the pockets of American consumers that otherwise would
have been wasted on duplicative benefits, subsidies for ineligible
consumers, or fraudulent misuse of Lifeline funds.
3. These savings will reduce growth in the Fund, while providing
telephone service to consumers who remain disconnected from the voice
networks of the twentieth century. Moreover, by using a fraction of the
savings from eliminating waste and abuse in the program to create a
broadband pilot program, we explore how Lifeline can best be used to
help low-income consumers access the networks of the twenty-first
century by closing the broadband adoption gap. This Order complements
the recent USF/ICC Transformation Order, 76 FR 76623, December 8, 2011,
which reoriented intercarrier compensation and the high-cost fund
toward increasing the availability of broadband networks, as well as
the recently launched ``Connect to Compete'' private-sector initiative
to increase access to affordable broadband service for low-income
consumers.
4. To make the program more accountable, the Order establishes
clear goals and measures and establishes national eligibility criteria
to allow low-income consumers to qualify for Lifeline based on either
income or participation in certain government benefit programs. The
Order adopts rules for Lifeline enrollment, including enhanced initial
and annual certification requirements, and confirms the program's one-
per-household requirement. The Order simplifies Lifeline reimbursement
and makes it more transparent. The Commission adopts a number of
reforms to eliminate waste, fraud and abuse in the program, including
creating a National Lifeline Accountability Database to prevent
multiple carriers from receiving support for the same subscribers;
phasing out toll limitation service support; eliminating Link Up
support except for recipients on Tribal
[[Page 12786]]
lands that are served by eligible telecommunications carriers (ETCs)
that participate in the high-cost program; reducing the number of
ineligible subscribers in the program; and imposing independent audit
requirements on carriers receiving more than $5 million in annual
support. These reforms are estimated to save the Fund up to $2 billion
over the next three years. As part of these reforms, we establish a
savings target of $200 million in 2012 versus the program's status quo
path in the absence of reform, create a mechanism for ensuring that
target is met, and put the Commission in a position to determine the
appropriate budget for Lifeline in early 2013 after monitoring the
impact of today's fundamental overhaul of the program and addressing
key issues in the FNPRM, including the appropriate monthly per-line
support for the program. Using savings from the reforms, the Order
establishes a Broadband Adoption Pilot Program to test and determine
how Lifeline can best be used to increase broadband adoption among
Lifeline-eligible consumers. We also establish an interim base of
uniform support amount of $9.25 per month for non-Tribal subscribers to
simplify program administration.
II. Further Notice
A. Eligibility Database
5. We conclude that establishing a fully automated means for
verifying consumers' initial and ongoing Lifeline eligibility from
governmental data sources would both improve the accuracy of
eligibility determinations and ensure that only eligible consumers
receive Lifeline benefits, and reduce burdens on consumers as well as
ETCs. We conclude that it is important to speed-up adoption of a
widespread, automated means of verifying program eligibility. We
therefore direct the Bureau and USAC to take all necessary actions so
that, as soon as possible and no later than the end of 2013, there will
be an automated menas to determine Lifeline eligibility for, at a
minimum, the three most common programs through which consumers qualify
for Lifeline. To ensure that the Commission has sufficient information
to implement such a solution, we seek focused comment on issues in a
FNPRM. The Commission directs the Bureau to reach out to the relevant
federal agencies (e.g., HHS and Agriculture) and their state
counterparts to determine whether and to what extent program
eligibility information can be shared among agencies.
B. Digital Literacy
6. To support broadband adoption, the FNPRM seeks comment on
dedicating a certain amount of USF funding for four years to support
formal digital literacy training for consumers at libraries and schools
across the United States. The Commission also seeks comment on its
statutory authority to use USF funds for this purpose.
C. Resale
7. The FNPRM proposes that only ETCs who provide Lifeline directly
to subscribers will be eligible to receive reimbursement from the Fund.
Moreover, the FNPRM proposes that the entity with the relationship with
the end-user be required to populate the duplicates database with the
necessary subscriber information. As an alternative to the foregoing
proposals, the FNPRM proposes forbearing from the incumbent LECs'
resale obligation under section 251(c)(4).
D. Lifeline Support Amounts for Voice Service
8. The FNPRM seeks comment on number of issues, including whether
to continue with a flat-rate of reimbursement, and if, so, whether the
current interim $9.25 per line support amount should be made permanent.
The FNRPM also seeks comment on and information for a demand estimation
study to determine the effect of different support amounts on demand
for the program.
E. Tribal Lands Support
9. The FNPRM seeks comment on whether to adopt a rule permitting
eligible residents of Tribal lands to apply their allotted Tribal Lands
discount amount to more than one supported service per household (e.g.,
a household would be permitted to ``split'' their Lifeline discount
between a wireline and a mobile phone service or between two mobile
services and receive a discount off of the cost of each service). The
FNPRM seeks comment on how such a rule could be administered, including
ways to prevent waste, fraud, and abuse if this rule is adopted. In
addition, the FNPRM seeks comment on whether the Link Up program for
residents of Tribal lands is currently implemented effectively, or
whether the program should be altered or eliminated given the recent
reforms in high-cost support, including establishment of the Tribal
Mobility Fund.
F. WIC
10. The FNPRM seeks comment on whether to include the Supplemental
Nutrition Assistance Program for Women, Infants and Children,
administered by the Department of Agriculture, as a program conferring
Lifeline eligibility upon participants.
G. Homeless Veterans Programs Inclusion for Purposes of Eligibility
11. The FNPRM seeks comment on measures that would enable veterans
who lack any income (and therefore cannot document whether their income
is below the income-based program threshold) but are not otherwise
enrolled in a qualifying program, to demonstrate eligibility for
Lifeline. The FNPRM asks whether additional measures should be
implemented to ensure program access while limiting waste, fraud and
abuse in situations where an eligible veteran has no documentation of
income.
H. Mandatory Application of Lifeline Discount to Bundled Service
Offerings
12. The FNPRM seeks comment on whether to require ETCs to permit
subscribers to apply their Lifeline discount to any bundle that
includes a voice component. The FNPRM also seeks comment on whether
there should be any limitations on this requirement (e.g., should ETCs
be obligated to offer a Lifeline discount on all of their service
plans, including premium plans and packages that contain services other
than voice and broadband, such as video).
I. ``Own Facilities'' Requirements
13. The FNPRM seeks further comment on whether the Commission
should consider any additional requirements for a carrer to receive
support if that carrier does not own network assets or meet the
requirements of section 214(e)(1)(A). Specifically, the FNPRM seeks
comment on whether the Commission should amend its rules to clarify the
term ``combination of its own facilities'' with respect to the
facilities a carrier must own and use to provide USF supported
services. The FNPRM also asks for comment on whether there should be a
minimum combination of facilities that the carrier should own and use
in order to qualify as a facilities-based ETC under section
254(e)(1)(A).
J. Eligible Telecommunications Carrier Requirements
14. The FNPRM seeks comment on whether incumbent LECs can choose
whether to participate in the Lifeline program. In addition, the FNPRM
seeks comment on whether the program should move to a voucher-based
system.
[[Page 12787]]
K. Record Retention Requirements
15. The FNRPM proposes to amend the current three year record
retention requirement to a ten year requirement.
III. Procedural Matters
A. Filing Requirements
16. 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 the Commission's Electronic
Comment Filing System (ECFS). See Electronic Filing of Documents in
Rulemaking Proceedings, 63 FR 24121, May 1, 1998.
[ssquf] Electronic Filers: Comments may be filed electronically
using the Internet by accessing the ECFS: http://fjallfoss.fcc.gov/ecfs2/.
[ssquf] Paper Filers: Parties who choose to file by paper must file
an original and one copy 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. All filings must be addressed to the Commission's
Secretary, Office of the Secretary, Federal Communications Commission.
[ssquf] 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 and boxes must be disposed of before
entering the building.
[ssquf] 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.
[ssquf] U.S. Postal Service first-class, Express, and Priority mail
must be addressed to 445 12th Street SW., Washington, DC 20554.
People with Disabilities: To request materials in accessible
formats for people with disabilities (braille, large print, electronic
files, audio format), send an email to [email protected] or call the
Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-
418-0432 (tty).
B. Paperwork Reduction Act Analysis
17. The Further Notice of Proposed Rulemaking (FNPRM) contains
proposed new information collection requirements subject to the
Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. The proposed
requirements will be submitted to the Office of Management and Budget
(OMB). The Commission, as part of its continuing effort to reduce
paperwork burdens, invites the OMB, general public, and other Federal
agencies to comment on the information collection requirements
contained in this document, as required by PRA. In addition, pursuant
to the Small Business Paperwork Relief Act of 2002, we seek specific
comment on how we might ``further reduce the information collection
burden for small business concerns with fewer than 25 employees.
C. Initial Regulatory Flexibility Analysis
18. As Required by the Regulatory Flexibility Act if 1980, as
amended (RFA), the Commission has prepared this Initial Regulatory
Flexibility analysis (IRFA) of the possible significant economic impact
on a substantial number of small entities by the policies and rules
proposed in this Further Notice of Proposed Rulemaking (FNPRM). Written
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 FNPRM. The Commission will send a copy of the FNPRM, including
this IRFA, to the Chief Counsel for Advocacy of the Small Business
Administration (SBA). In addition, the FNPRM and IRFA (or summaries
thereof) will be published in the Federal Register.
A. Need for, and Objectives of, the Proposed Rulemaking
19. The FNPRM seeks comment on a variety of issues relating to the
comprehensive reform and modernization of the Universal Service Fund's
Lifeline program. As discussed in the Order accompanying the FNPRM, the
Commission believes that such reform will strengthen protections
against waste, fraud, and abuse; improve program administration and
accountability; improve enrollment and consumer disclosures; modernize
the program for broadband; and constrain the growth of the program. In
proposing these reforms, the Commission seeks comment on various
reporting, recordkeeping, and other compliance requirements that may
apply to all carriers, including small entities. We seek comment on any
costs and burdens on small entities associated with the proposed rules,
including data quantifying the extent of those costs or burdens.
20. This FNPRM is one of a series of rulemaking proceedings
designed to implement the National Broadband Plan's (NBP) vision of
improving and modernizing the universal service programs. In this
FNPRM, we propose and seek comment on comprehensive reforms to the
universal service low-income support mechanism.
21. Specifically, we propose and seek comment on the following
eight reforms and modernizations that may be implemented in funding
year 2012 (July 1, 2012-June 30, 2013).
22. In the FNPRM, we recommend the creation of a centralized
database for online certification and verification on Lifeline
consumers' eligibility to participate in the low-income program. In the
FNPRM, we seek comment on the methods of creating the database
including whether, how, and with what information ETCs should populate
the eligibility database.
23. Additionally, we seek comment on establishing a digital
literacy training program, and specifically, we seek comment on what
entities are best suited to provide such training (i.e., schools and
libraries), including ETCs.
24. As part of the effort to reduce waste, fraud, and abuse in the
program, the Commission proposes to allow only ETCs with a direct
relationship with the end-user Lifeline subscriber to seek
reimbursement from the Fund. In addition we propose that the ETC with
the direct relationship with the end-user be responsible for populating
the duplicates database. How would this proposal affect entities
economically? We seek comment on the matter. We seek comment on
procedures that should be implemented to ensure that Lifeline
wholesalers are not seeking Fund reimbursement for resold Lifeline
offerings including self-certification, record keeping, and audit
requirements. We also seek comment on which ETC, the wholesaler or the
reseller, should be responsible for complying with the other
certification and verification requirements in the Order. Compliance
with the proposed rule would require current Lifeline resellers who are
not designated ETCs to either (1) obtain ETC designation or (2)
purchase Lifeline for resale at wholesale rates and be prevented from
seeking Fund reimbursement. As an alternative, we seek comment on
whether the Commission should forbear, on its own motion, on incumbent
LECs' obligation to resell Lifeline services. In addition, we seek
comment on how, if at all,
[[Page 12788]]
incumbent LECs would be required to amend tariffs to separate the
amount of the Lifeline subsidy from the wholesale price of the
underlying Lifeline service being resold. We seek further comment on
how the proposed rule would impact existing contractual relationships
between incumbent LECs and Lifeline resellers.
25. In the Order, we establish an interim amount of $9.25 per month
for Lifeline reimbursement. In the FNPRM, we seek comment on whether
the interim reimbursement amount of $9.25 is appropriate and should be
made permanent. We also seek comment on how to best determine a flat
rate of reimbursement. In furtherance of that, we seek comment on the
best method of obtaining the necessary information to perform a demand
estimation study. Finally, we seek comment on whether the discount
should be reduced over time as voice becomes a secondary application
compared to broadband service.
26. In the FNPRM, we seek comment on whether to adopt a rule
permitting eligible residents of Tribal lands to apply their allotted
Tribal Lands discount amount to more than one supported service per
household (e.g., a household would be permitted to ``split'' their
Lifeline discount between a wireline and a mobile phone service and
receive a discount off of the cost of each service). The Commission
seeks comment on how such a rule could be administered and how to
prevent waste, fraud, and abuse if this rule is adopted.
27. The Commission seeks comment in the FNPRM on whether to include
three additional programs in its eligibility criteria: the Supplemental
Nutrition Assistance Program for Women, Infants and Children,
administered by the Department of Agriculture; the Veterans Benefits
Administration-Veterans Health Administration Special Outreach and
Benefits Assistance program; and the Healthcare for Homeless Veterans
program.
28. The Commission seeks comment regarding mandatory application of
the Lifeline discount to bundled service offerings. Specifically, we
seek comment on whether to require ETCs to permit subscribers to apply
their Lifeline discount to any bundle that includes a voice component
and whether there should be any limitations on this requirement. We ask
whether there should be limitations on this potential requirement,
should such a rule be adopted. Should ETCs be obligated to offer a
Lifeline discount on all of their service plans, including premium
plans and packages that contain services other than voice and
broadband? We also seek comment on various implementation issues
regarding any such rule (i.e., would Lifeline subscribers face loss of
voice service based on their inability to pay the entirety of a bundled
service bill; can carriers limit Lifeline consumers' use of premium
services).
29. Finally, we propose to update our rules to extend the retention
period for Lifeline documentation, including subscriber-specific
eligibility documentation, from three years to at least ten years,
because the current requirements are inadequate for purposes of
litigation under the False Claims Act.
B. Legal Basis
30. The Further Notice of Proposed Rulemaking, including
publication of proposed rules, is authorized under sections 1, 2, 4(i)-
(j), 201(b), 254, 257, 303(r), and 503 of the Communications Act of
1934, as amended, and section 706 of the Telecommunications Act of
1996, as amended, 47 U.S.C. 151, 152, 154(i)-(j), 201(b), 254, 257,
303(r), 503, and 1302.
C. Description and Estimate of the Number of Small Entities to Which
the Proposed Rules Will Apply
31. 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, 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 that: (1) Is independently owned
and operated; (2) is not dominant in its field of operation; and (3)
satisfies any additional criteria established by the Small Business
Administration (SBA). Nationwide, there are a total of approximately
29.6 million small businesses, according to the SBA. A ``small
organization'' is generally ``any not-for-profit enterprise which is
independently owned and operated and is not dominant in its field.''
Nationwide, as of 2002, there were approximately 1.6 million small
organizations. 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.
1. Wireline Providers
32. Incumbent Local Exchange Carriers (Incumbent LECs). Neither the
Commission nor the SBA has developed a small business size standard
specifically for incumbent local exchange services. 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. Census Bureau data for
2007, which now supersede data from the 2002 Census, show that there
were 3,188 firms in this category that operated for the entire year. Of
this total, 3,144 had employment of 999 or fewer and 44 firms had had
employment of 1,000 or more. According to Commission data, 1,307
carriers reported that they were incumbent local exchange service
providers. Of these 1,307 carriers, an estimated 1,006 have 1,500 or
fewer employees and 301 have more than 1,500 employees. Consequently,
the Commission estimates that most providers of local exchange service
are small entities that may be affected by the rules and policies
proposed in the Notice. Thus under this category and the associated
small business size standard, the majority of these incumbent local
exchange service providers can be considered small providers.
33. Competitive Local Exchange Carriers (Competitive LECs),
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.
Census Bureau data for 2007, which now supersede data from the 2002
Census, show that there were 3,188 firms in this category that operated
for the entire year. Of this total, 3,144 had employment of 999 or
fewer and 44 firms had had employment of 1,000 employees or more. Thus
under this category and the associated small business size standard,
the majority of these Competitive LECs, CAPs, Shared-Tenant Service
Providers, and Other Local Service Providers can be considered small
entities. According to
[[Page 12789]]
Commission data, 1,442 carriers reported that they were engaged in the
provision of either competitive local exchange services or competitive
access provider services. Of these 1,442 carriers, an estimated 1,256
have 1,500 or fewer employees and 186 have more than 1,500 employees.
In addition, 17 carriers have reported that they are Shared-Tenant
Service Providers, and all 17 are estimated to have 1,500 or fewer
employees. In addition, 72 carriers have reported that they are Other
Local Service Providers. Seventy of which have 1,500 or fewer employees
and two have more than 1,500 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 rules adopted pursuant to the Notice.
34. Interexchange Carriers. Neither the Commission nor the SBA has
developed a small business size standard specifically for providers of
interexchange services. 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.
Census Bureau data for 2007, which now supersede data from the 2002
Census, show that there were 3,188 firms in this category that operated
for the entire year. Of this total, 3,144 had employment of 999 or
fewer, and 44 firms had had employment of 1,000 employees or more. Thus
under this category and the associated small business size standard,
the majority of these Interexchange carriers can be considered small
entities. According to Commission data, 359 companies reported that
their primary telecommunications service activity was the provision of
interexchange services. Of these 359 companies, an estimated 317 have
1,500 or fewer employees and 42 have more than 1,500 employees.
Consequently, the Commission estimates that the majority of
interexchange service providers are small entities that may be affected
by rules adopted pursuant to the Notice.
35. Operator Service Providers (OSPs). Neither the Commission nor
the SBA has developed a small business size standard specifically for
operator service providers. The appropriate size standard under SBA
rules is the category Wired Telecommunications Carriers. Under that
size standard, such a business is small if it has 1,500 or fewer
employees. Under that size standard, such a business is small if it has
1,500 or fewer employees. Census Bureau data for 2007, which now
supersede 2002 Census data, show that there were 3,188 firms in this
category that operated for the entire year. Of the total, 3,144 had
employment of 999 or fewer, and 44 firms had had employment of 1,000
employees or more. Thus under this category and the associated small
business size standard, the majority of these interexchange carriers
can be considered small entities. According to Commission data, 33
carriers have reported that they are engaged in the provision of
operator services. Of these, an estimated 31 have 1,500 or fewer
employees and 2 have more than 1,500 employees. Consequently, the
Commission estimates that the majority of OSPs are small entities that
may be affected by our proposed action.
36. Local Resellers. The SBA has developed a small business size
standard for the category of Telecommunications Resellers. Under that
size standard, such a business is small if it has 1,500 or fewer
employees. Census data for 2007 show that 1,523 firms provided resale
services during that year. Of that number, 1,522 operated with fewer
than 1,000 employees and one operated with more than 1,000. Thus under
this category and the associated small business size standard, the
majority of these local resellers can be considered small entities.
According to Commission data, 213 carriers have reported that they are
engaged in the provision of local resale services. Of these, an
estimated 211 have 1,500 or fewer employees and two have more than
1,500 employees. Consequently, the Commission estimates that the
majority of local resellers are small entities that may be affected by
rules adopted pursuant to the Notice.
37. Toll Resellers. The SBA has developed a small business size
standard for the category of Telecommunications Resellers. Under that
size standard, such a business is small if it has 1,500 or fewer
employees. Census data for 2007 show that 1,523 firms provided resale
services during that year. Of that number, 1,522 operated with fewer
than 1,000 employees and one operated with more than 1,000. Thus under
this category and the associated small business size standard, the
majority of these resellers can be considered small entities. According
to Commission data, 881 carriers have reported that they are engaged in
the provision of toll resale services. Of these, an estimated 857 have
1,500 or fewer employees and 24 have more than 1,500 employees.
Consequently, the Commission estimates that the majority of toll
resellers are small entities that may be affected by our action.
38. Pre-paid Calling Card Providers. Neither the Commission nor the
SBA has developed a small business size standard specifically for pre-
paid calling card providers. The appropriate size standard under SBA
rules is for the category Telecommunications Resellers. Under that size
standard, such a business is small if it has 1,500 or fewer employees.
Census data for 2007 show that 1,523 firms provided resale services
during that year. Of that number, 1,522 operated with fewer than 1,000
employees and one operated with more than 1,000. Thus under this
category and the associated small business size standard, the majority
of these pre-paid calling card providers can be considered small
entities. According to Commission data, 193 carriers have reported that
they are engaged in the provision of pre-paid calling cards. Of these,
an estimated all 193 have 1,500 or fewer employees and none have more
than 1,500 employees. Consequently, the Commission estimates that the
majority of pre-paid calling card providers are small entities that may
be affected by rules adopted pursuant to the Notice.
2. Wireless Carriers and Service Providers
39. Below, for those services subject to auctions, the Commission
notes that, as a general matter, the number of winning bidders that
qualify as small businesses at the close of an auction does not
necessarily represent the number of small businesses currently in
service. Also, the Commission does not generally track subsequent
business size unless, in the context of assignments or transfers,
unjust enrichment issues are implicated.
40. 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.'' Under the present and prior
categories, the SBA has deemed a wireless business to be small if it
has 1,500 or fewer employees. For the category of Wireless
Telecommunications Carriers (except Satellite), Census data for 2007,
which supersede data contained in the 2002 Census, show that there were
1,383 firms that operated that year. Of those 1,383, 1,368 had fewer
than 100 employees, and 15 firms had more than 100 employees. Thus
under this category and the associated small
[[Page 12790]]
business size standard, the majority of firms can be considered small.
Similarly, according to Commission data, 413 carriers reported that
they were engaged in the provision of wireless telephony, including
cellular service, Personal Communications Service (PCS), and
Specialized Mobile Radio (SMR) Telephony services. Of these, an
estimated 261 have 1,500 or fewer employees and 152 have more than
1,500 employees. Consequently, the Commission estimates that
approximately half or more of these firms can be considered small.
Thus, using available data, we estimate that the majority of wireless
firms can be considered small.
41. 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 commenced on April 15, 1997 and
closed on April 25, 1997, seven bidders won 31 licenses that qualified
as very small business entities, and one bidder won one license that
qualified as a small business entity.
42. Satellite Telecommunications Providers. Two economic census
categories address the satellite industry. The first category has a
small business size standard of $15 million or less in average annual
receipts, under SBA rules. The second has a size standard of $25
million or less in annual receipts.
43. The category of Satellite Telecommunications ``comprises
establishments primarily engaged in providing telecommunications
services to other establishments in the telecommunications and
broadcasting industries by forwarding and receiving communications
signals via a system of satellites or reselling satellite
telecommunications.'' Census Bureau data for 2007 show that 512
Satellite Telecommunications firms that operated for that entire year.
Of this total, 464 firms had annual receipts of under $10 million, and
18 firms had receipts of $10 million to $24,999,999. Consequently, the
Commission estimates that the majority of Satellite Telecommunications
firms are small entities that might be affected by our action.
44. The second category, i.e. ``All Other Telecommunications''
comprises ``establishments primarily engaged in providing specialized
telecommunications services, such as satellite tracking, communications
telemetry, and radar station operation. This industry also includes
establishments primarily engaged in providing satellite terminal
stations and associated facilities connected with one or more
terrestrial systems and capable of transmitting telecommunications to,
and receiving telecommunications from, satellite systems.
Establishments providing Internet services or voice over Internet
protocol (VoIP) services via client-supplied telecommunications
connections are also included in this industry.'' For this category,
Census Bureau data for 2007 show that there were a total of 2,383 firms
that operated for the entire year. Of this total, 2,347 firms had
annual receipts of under $25 million and 12 firms had annual receipts
of $25 million to $49,999,999. Consequently, the Commission estimates
that the majority of All Other Telecommunications firms are small
entities that might be affected by our action.
45. Common Carrier Paging. The SBA considers paging to be a
wireless telecommunications service and classifies it under the
industry classification Wireless Telecommunications Carriers (except
satellite). Under that classification, the applicable size standard is
that a business is small if it has 1,500 or fewer employees. For the
general category of Wireless Telecommunications Carriers (except
Satellite), Census data for 2007, which supersede data contained in the
2002 Census, show that there were 1,383 firms that operated that year.
Of those 1,383, 1,368 had fewer than 100 employees, and 15 firms had
more than 100 employees. Thus under this category and the associated
small business size standard, the majority of firms can be considered
small. The 2007 census also contains data for the specific category of
``Paging'' ``that is classified under the seven-number North American
Industry Classification System (NAICS) code 5172101. According to
Commission data, 291 carriers have reported that they are engaged in
Paging or Messaging Service. Of these, an estimated 289 have 1,500 or
fewer employees, and 2 have more than 1,500 employees. Consequently,
the Commission estimates that the majority of paging providers are
small entities that may be affected by our action. In addition, in the
Paging Third Report and Order, the Commission developed a small
business size standard 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'' is an entity that, together with its affiliates and
controlling principals, has average gross revenues not exceeding $15
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 $3 million for the preceding three years. The SBA has approved
these small business size standards. An auction of Metropolitan
Economic Area licenses commenced on February 24, 2000, and closed on
March 2, 2000. Of the 985 licenses auctioned, 440 were sold. Fifty-
seven companies claiming small business status won.
46. 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 the 2008 Trends
Report, 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.
3. Internet Service Providers
47. The 2007 Economic Census places these firms, whose services
might include voice over Internet protocol (VoIP), in either of two
categories, depending on whether the service is provided over the
provider's own telecommunications facilities (e.g., cable and DSL
ISPs), or over client-supplied telecommunications connections (e.g.,
dial-up ISPs). The former are within the category of Wired
Telecommunications Carriers, which has an SBA small business size
standard of 1,500 or fewer employees. The latter are within the
category of All Other Telecommunications, which has a size standard of
annual receipts of $25 million or less. The most current Census Bureau
data for all such firms, however, are the 2002 data for the previous
census category called Internet Service Providers. That category had a
small business size standard of $21 million or less in annual receipts,
which was revised in late 2005 to $23 million. The
[[Page 12791]]
2002 data show that there were 2,529 such firms that operated for the
entire year. Of those, 2,437 firms had annual receipts of under $10
million, and an additional 47 firms had receipts of between $10 million
and $24,999,999. Consequently, we estimate that the majority of ISP
firms are small entities.
D. Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements
48. Tribal Lands Lifeline Support. If we permit eligible residents
of Tribal lands to apply their allotted Tribal Lands discount amount to
more than one supported service per household, postpaid carriers may
need to update their billing systems to reflect that more than one
supported service may be received per Tribal household. Additionally,
several carriers currently allow consumers to apply their Lifeline
discount to the purchase of family shared calling plans, and, if such a
rule were adopted, a similar billing functionality could be used by
postpaid carriers serving eligible residents of Tribal lands. The
Commission is continuing to evaluate the potential costs and benefits
of this proposal and will take the steps necessary to mitigate the
costs to small businesses.
49. Mandatory Application of Lifeline Discount to Bundled Service
Offerings. The FNPRM seeks comment on whether to require ETCs to permit
subscribers to apply their Lifeline discount to any bundle that
includes a voice component. The FNPRM also seeks comment on whether
there should be any limitations on this requirement (e.g., should ETCs
be obligated to offer a Lifeline discount on all of their service
plans, including premium plans and packages that contain services other
than voice and broadband, such as video). While we do not anticipate
that these proposals will have an impact on small businesses at this
time, we recognize that small entities may incur costs due to a need to
update their internal systems to comply with the rule.
50. Record Retention Requirements. The Commission proposes to amend
Sec. 54.417 of the Commission's rules to extend the retention period
for Lifeline documentation, including subscriber-specific eligibility
documentation, from three years to at least ten years. ETCs will
continue to maintain documentation of consumer eligibility for at least
ten years and for as long as the consumer receives Lifeline service
from that ETC, even if that period extends beyond ten years. The
amended recordkeeping requirement will continue to apply equally to all
ETCs, all of whom are currently required to maintain Lifeline
documentation, including subscriber-specific eligibility documentation,
for at least three years.
E. Steps Taken To Minimize Significant Economic Impact on Small
Entities, and Significant Alternatives Considered
51. Eligibility database. For the period prior to the
implementation of a national eligibility database, in the FNPRM we
consider the alternative of having third-party administrators, as
opposed to the ETCs, be responsible for verifying Lifeline consumers'
eligibility in the program. Accordingly, we seek comment on how to
minimize or mitigate extra costs to the Fund caused by the selection of
third-party administrators.
52. Limitations on the Resale of Lifeline-Supported Services. As
part of the effort to reduce waste, fraud, and abuse in the program,
the Commission proposes to allow only ETCs with a direct relationship
with the end-user Lifeline subscriber to seek reimbursement from the
Fund. To the extent that a reseller who is not an ETC is receiving
support from the Fund, there could be an economic impact should this
change be adopted, but the Commission believes that the need to protect
the Fund from abuse outweighs any concerns with existing carriers
raising concerns with the economic impact of the proposed rule.
Furthermore, if there is an economic impact from this proposal, we seek
comment on how to minimize the burdens of such a requirement on small
entities. Accordingly, we seek comment on the potential economic impact
of these requirements.
F. Federal Rules That May Duplicate or Conflict With Proposed Rules
53. None.
IV. Ordering Clauses
54. It is further ordered that, pursuant to the authority contained
in sections 1, 2, 4(i), 10, 201-206, 214, 218-220, 251, 252, 254, 256,
303(r), 332, and 403 of the Communications Act of 1934, as amended, and
section 706 of the Telecommunications Act of 1996, 47 U.S.C. 151, 152,
154(i), 160, 201-206, 214, 218-220, 251, 252, 254, 256, 303(r), 332,
403, 1302, and Sec. Sec. 1.1 and 1.421 of the Commission's rules, 47
CFR 1.1, 1.421, this Further Notice of Proposed Rulemaking is adopted.
55. It is further ordered that, pursuant to applicable procedures
set forth in Sec. Sec. 1.415 and 1.419 of the Commission's Rules, 47
CFR 1.415, 1.419, interested parties may file comments on the Further
Notice of Proposed Rulemaking April 2, 2012, and reply comments on or
before May 1, 2012.
56. It is further ordered that the Commission shall send a copy of
this Further Notice of Proposed Rulemaking to Congress and to the
Government Accountability Office pursuant to the Congressional Review
Act, see 5 U.S.C. 801(a)(1)(A).
57. It is further ordered that the Commission's Consumer and
Governmental Affairs Bureau, Reference Information Center, shall send a
copy of this Further Notice of Proposed Rulemaking, including the
Initial Regulatory Flexibility Analysis, to the Chief Counsel for
Advocacy of the Small Business Administration.
List of Subjects in 47 CFR Part 54
Communications common carriers, Reporting and recordkeeping
requirements, Telecommunications, Telephone.
Federal Communications Commission.
Bulah P. Wheeler,
Deputy Manager.
Proposed Rules
For the reasons discussed in the preamble, the Federal
Communications Commission proposes to amend 47 CFR part 54 to read 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, 219, 220, 254,
303(r), 403, and 1302 unless otherwise noted.
2. Revise Sec. 54.417 to read as follows:
Sec. 54.417 Recordkeeping requirements
Eligible telecommunications carriers must maintain records to
document compliance with all Commission and state requirements
governing the Lifeline/Link Up programs for the ten full preceding
calendar years and provide that documentation to the Commission or
Administrator upon request. Notwithstanding the preceding sentence,
eligible telecommunications carriers must maintain the documentation
required in Sec. Sec. 54.409(d) and 54.410(b)(3) for as long as the
consumer receives Lifeline service from that eligible
telecommunications carrier.
[FR Doc. 2012-5142 Filed 3-1-12; 8:45 am]
BILLING CODE 6712-01-P