[Federal Register Volume 77, Number 238 (Tuesday, December 11, 2012)]
[Proposed Rules]
[Pages 73586-73589]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-29879]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 1

[WC Docket No. 10-90; WT Docket No. 10-208; DA 12-1853]


Further Inquiry Into Issues Related to Mobility Fund Phase II

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: The Wireless Telecommunications Bureau and Wireline 
Competition Bureau (collectively, the Bureaus) seek further comment on 
specific issues relating to the implementation of Phase II of the 
Mobility Fund. The Bureaus also seek to develop a more comprehensive 
record on certain issues relating to the award of ongoing support for 
advanced mobile services.

DATES: Comments are due on or before December 21, 2012, and reply 
comments are due on or before January 7, 2013.

ADDRESSES: All filings in response to this public notice must refer to 
Docket Numbers 10-90 and 10-208. The Bureaus strongly encourage 
interested parties to file comments electronically. Comments may be 
submitted by any of the following methods:
    [ssquf] Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
    [ssquf] Federal Communications Commission's Web Site: http://fjallfoss.fcc.gov/ecfs2/. Follow the instructions for submitting 
comments.
    [ssquf] Paper Filers: Parties who choose to file by paper must file 
an original and four copies of each filing. 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, Attn: WTB/ASAD, 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 Street SW., Room TW-A325, Washington, DC 20554. All hand 
deliveries must be held together with rubber bands or fasteners. Any 
envelopes 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] People with Disabilities: Contact the FCC to request 
reasonable accommodations (accessible format documents, sign language 
interpreters, CART, etc.) by email: FCC504@fcc.gov or phone: 202-418-
0530 or TTY: 202-418-0432.

FOR FURTHER INFORMATION CONTACT: Sue McNeil, Auctions and Spectrum 
Access Division, Wireless Telecommunications Bureau at (202) 418-0660.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's 
Further Inquiry Into Issues Related to Mobility Fund Phase II (Mobility 
Fund Phase II Public Notice) released on November 27, 2012. The 
complete text of the Mobility Fund Phase II Public Notice, as well as 
related Commission documents, is available for public inspection and 
copying from 8:00 a.m. to 4:30 p.m. Eastern Time (ET) Monday through 
Thursday or from 8:00 a.m. to 11:30 a.m. ET on Fridays in the FCC 
Reference Information Center, 445 12th Street SW., Room CY-A257, 
Washington, DC 20554. The Mobility Fund Phase II Public Notice and 
related Commission documents also may be purchased from the 
Commission's duplicating contractor, Best Copy and Printing, Inc. 
(BCPI), 445 12th Street SW., Room CY-B402, Washington, DC 20554, 
telephone 202-488-5300, fax 202-488-5563, or you may contact BCPI at 
its Web site: http://www.BCPIWEB.com. When ordering documents from 
BCPI, please provide the appropriate FCC document number, for example, 
DA 12-1853.

I. Introduction

    1. The Bureaus seek further comment on a limited number of specific 
issues relating to the implementation of Phase II of the Mobility Fund. 
As established in the USF/ICC Transformation Order and FNPRM, 76 FC 
78383, December 16, 2011, in Mobility Fund Phase II the Commission will 
award $500 million annually to ensure the availability of mobile 
broadband and high quality voice services in certain areas. Building on 
the comments previously filed in response to the USF/ICC Transformation 
Order and FNPRM and the Bureaus' experience in implementing a reverse 
auction to award one-time Phase I support, the Bureaus seek to develop 
a more comprehensive record on certain issues related to the award of 
ongoing support for advanced mobile services. In considering the issues 
related to Mobility Fund Phase II, the Bureaus ask commenters keep in 
mind that Phase II support is not one-time support, but is ongoing 
support aimed at expanding and sustaining mobile services.

II. Background

    2. In the USF/ICC Transformation Order and FNPRM, the Commission 
comprehensively reformed and modernized the universal service high-cost 
program. Among other things, for the first time, the Commission 
explicitly recognized the important benefits of and demand for mobile 
services through the creation of a two-phase Mobility Fund within the 
high-cost program.
    3. For Phase I, the Commission allocated $300 million in one-time

[[Page 73587]]

support to expand the availability of advanced mobile services, plus an 
additional $50 million dedicated to Tribal lands. For Phase II of the 
Mobility Fund, the Commission dedicated $500 million annually 
(including up to $100 million dedicated to Tribal lands) and proposed 
to make awards through a reverse auction to support providers of voice 
and mobile broadband service in areas where such services cannot be 
sustained or extended without ongoing support. The Commission further 
proposed to award support on the same terms and conditions as it 
adopted for Phase I, but sought comment on whether any modifications 
were needed to reflect the ongoing nature of support in Phase II.
    4. Under the Commission's proposal, a Mobility Fund Phase II 
reverse auction would assign support to maximize coverage of unserved 
road miles (or other units) within the budget. To implement an auction, 
the Commission proposed a basic framework of auction rules that would 
give the Bureaus flexibility under delegated authority to establish 
specific procedures for a Mobility Fund Phase II auction.

III. Overall Design

A. Identifying Areas Eligible for Support

    5. In the USF/ICC Transformation Order and FNPRM, the Commission 
sought comment on various issues associated with identifying the 
geographic areas that would be eligible for Phase II support. In light 
of experience with Mobility Fund Phase I and Auction 901, the Bureaus 
seek further comment on certain of these issues.
    6. Identifying Areas Eligible for Support. To target Phase II 
support to only those areas where it is needed, the Commission proposed 
to use Mosaik Solutions (Mosaik) data to exclude all census blocks 
where an unsubsidized carrier is providing 3G or better service. For 
purposes of determining areas with unsubsidized service, the Commission 
proposed in the USF/ICC Transformation Order and FNPRM that areas 
receiving one-time Mobility Fund Phase I support would still be 
eligible to receive Mobility Fund Phase II support.
    7. Some commenters express concern about the accuracy of the Mosaik 
database. The Bureaus now seek further comment based on the use of 
Mosaik data as a factor in determining eligible areas for Phase I 
support. To the extent that parties assert that Mosaik data 
inaccurately reflects the availability of service, the Bureaus seek 
comment on whether there are any other data sources that the Commission 
could use to better identify eligible areas. The Bureaus request that 
commenters provide specific information on what makes these alternate 
sources superior and how they could be used instead of, or in 
combination with, the Mosaik database. The Bureaus also seek comment on 
whether there are other factors the Commission should consider in 
addition to the availability of unsubsidized service. For instance, how 
should providers' planned expansion of unsubsidized service affect the 
identification of areas eligible for support? For example, in Mobility 
Fund Phase I, the Commission excluded areas from auction where a 
provider has made a regulatory commitment to provide 3G or better 
wireless service, or has received a funding commitment from a federal 
executive department or agency in response to the carrier's commitment 
to provide 3G or better service. In addition, the Commission required 
applicants for Mobility Fund Phase I support to certify that they were 
not seeking support for any areas in which they had made a public 
commitment to deploy 3G or better wireless service by December 31, 
2012.
    8. Use of the Centroid Method. In the USF/ICC Transformation Order 
and FNPRM, the Commission proposed to determine the eligibility of a 
particular census block for Phase II support based on the absence of 
unsubsidized 3G or better service at the centroid, which refers to the 
internal point latitude/longitude of a census block polygon. Some 
commenters expressed concern that the centroid method is an ineffective 
measure to determine whether large areas are unserved. The Bureaus ask 
commenters for feedback on the centroid method in light of their 
experience in Phase I. Should the Commission consider alternatives, 
such as the proportional method? For instance, should it consider 
unserved any census block if the data indicates more than 50 percent of 
the area is unserved?

B. Prioritizing Areas Eligible for Support

    9. In the USF/ICC Transformation Order and FNPRM, the Commission 
sought comment on whether to target Phase II support to particular 
areas, such as those that lack any mobile service or ones that lack 
current generation (3G) service. Some commenters suggest prioritizing 
support to rural carriers or carriers with 2G or less capacity; another 
opposed prioritization of funding to areas with no service at all. 
Others suggested that the Commission should take into account 
additional factors, such as poverty level or whether an area is served 
by the National Highway System, instead of, or in addition to, coverage 
level. Despite this discussion in the record, the Commission received 
little input on implementation and specific measures for prioritizing 
eligible areas.
    10. The Bureaus seek additional comment on whether and how the 
Commission might implement priorities for support among eligible areas. 
The Bureaus ask commenters to address whether the Commission should 
prioritize ongoing support to areas that lack coverage, a designated 
level of coverage, or whether there are other measurable factors that 
should be taken into account. The Bureaus observe that, in the USF/ICC 
Transformation Order and FNPRM, the Commission suggested that targeted 
areas could be prioritized by making a bidding credit available. The 
Bureaus seek additional specific comment on how the Commission might 
set an appropriate level(s) of bidding credit(s) to prioritize areas 
based on the existing level of coverage in a particular area. The 
Bureaus seek comment on whether and how the Commission might assure 
that support goes to areas that would lose service absent the receipt 
of ongoing support. In this regard, commenters are invited to discuss 
how, if at all, the availability of Remote Areas Fund support for the 
highest cost areas should affect the areas targeted for Mobility Fund 
Phase II.

C. Establishing Bidding and Coverage Units

    11. In the USF/ICC Transformation Order and FNPRM, under its 
auction proposal, the Commission proposed to establish bidding units in 
each eligible census block for purposes of comparing bids and assessing 
performance, and to base the number of bidding units on the number of 
road miles in each eligible area. Road miles directly reflect the 
Mobility Fund's goals of supporting mobile services, and indirectly 
reflect many other important factors, such as business locations, 
recreation areas and work sites, since roads are used to access those 
areas. Several commenters recommend that the Commission consider other 
alternatives, including population, terrain, workplaces, annual 
revenues, and straight-line miles or traditional river miles, instead 
of, or in combination with, road miles. Some commenters also suggest 
that the Commission revisit the issue of bidding and coverage units 
after the Phase I auction before deciding on whether to use road miles 
as the sole bidding unit.
    12. Given the results of the Mobility Fund Phase I auction, the 
Bureaus seek further comment on the use of road

[[Page 73588]]

miles to determine bidding units and corresponding coverage 
requirements. The Bureaus note that the Commission concluded that, for 
Phase I of the Tribal Mobility Funds, it would base bidding units on 
population rather than road miles. The Bureaus also invite additional 
comment on how specifically the Commission might measure or factor 
various suggested alternatives, such as terrain or topography, into its 
determination of bidding units and ask for input on the benefits or 
drawbacks of any particular approach.

D. Public Interest Obligations

    13. In the USF/ICC Transformation Order and FNPRM, the Commission 
proposed that recipients of Mobility Fund Phase II support would be 
required to provide mobile voice and data services that meet or exceed 
a minimum bandwidth or data rate of 768 kbps downstream and 200 kbps 
upstream, consistent with the capabilities offered by representative 4G 
technologies. The Commission proposed that these data rates should be 
achievable in both fixed and mobile conditions throughout the cell 
area, including at the cell edge, at a high probability, and with 
substantial sector loading. The Commission further noted that the 
proposed measurement conditions may enable users to receive much better 
service when accessing the network from a fixed location or close to a 
base station. The Commission sought comment on whether, and in what 
ways, these metrics should be modified during the proposed 10-year term 
of support to reflect anticipated advances in technology. The 
Commission also proposed that the performance characteristics expected 
of Mobility Fund Phase II recipients be required to evolve over time, 
to keep pace with mobile broadband service in urban areas. Commenters 
generally recommend periodic review and modification of these 
requirements through a rulemaking proceeding. The Bureaus now seek to 
further develop the record on how often, and through what process, the 
Commission should modify the performance metrics applicable to Phase II 
support recipients. Commenters should address the threshold question of 
whether an evolving standard is appropriate given the proposed term of 
support and anticipated advances in technology. For example, should the 
Commission require that broadband networks built with support be 
capable of meeting increasing consumer demand for capacity and over a 
specified time period? If so, should the Commission mandate any 
specific network attributes?

E. Term of Support

    14. In the USF/ICC Transformation Order and FNPRM, the Commission 
proposed a fixed term of support of 10 years and sought comment on a 
shorter term. In seeking comment on an optimal term for ongoing 
support, the Commission noted that it sought to balance the need to 
provide certainty to carriers to attract private investment and deploy 
services, while taking into account changing circumstances. Commenters 
generally agreed that a 10-year term was appropriate, noting that the 
term reflects the economic realities of network building, and need for 
financial assurance to upgrade or extend networks. The Bureaus seek 
additional comment on establishing an appropriate term of support, in 
light of the timeframes for deployment and private investment and the 
pace of new technology and marketplace developments. Further, the 
Bureaus request comment on the tradeoffs between using a 10-year term 
versus one or more shorter terms and which approach would provide the 
best structure for dealing with dynamic changes in the industry.

IV. Provider Eligibility

    15. In the USF/ICC Transformation Order and FNPRM, the Commission 
proposed to require that parties seeking Mobility Fund Phase II support 
satisfy the same eligibility requirements that were adopted with 
respect to Phase I. Commenters generally support the Commission's 
proposal, though some advocate size-based and other restrictions. The 
Bureaus seek further comment on certain of these issues.
    16. Interplay with other universal service mechanisms. The Bureaus 
seek comment on the inter-relationship between eligibility for Mobility 
Fund Phase II support and other universal service support mechanisms. 
The Commission noted that a party may be eligible to participate in 
both Connect America Phase II and Mobility Fund Phase II, but noted 
that carriers would not be allowed to receive redundant support for the 
same service in the same areas. The Bureaus seek additional comment on 
how to implement this principle so as to provide advance information to 
potential participants in a Mobility Fund Phase II auction. In 
particular, the Bureaus ask commenters to provide input on how the 
deployment of mobile service under Mobility Fund Phase II could be 
supplemented or modified for purposes of meeting the public interest 
obligations of Connect America Phase II. The Bureaus also seek comment 
on any interrelationship between eligibility for Mobility Fund Phase II 
support and the Remote Areas Fund that is to provide support in the 
highest cost areas.
    17. Small business participation. In the USF/ICC Transformation 
Order and FNPRM, the Commission sought comment on whether small 
businesses should be eligible for a bidding preference in a Mobility 
Fund Phase II auction. The Commission noted that in a spectrum auction 
context, the Commission typically awards small business bidding credits 
ranging from 15 to 35 percent, depending on varying small business size 
standards. Commenters were asked to address the effectiveness of a 
preference to help smaller carriers compete at auction and whether the 
Commission should adopt a preference even if the bidding credit would 
result in less coverage than would occur without the bidding credit. 
The Commission also sought comment on how to define small businesses 
and what size bidding credit may be appropriate. Specifically, the 
Commission sought comment on whether a small business should be defined 
as an entity with average gross revenues not exceeding $40 million for 
the preceding three years, or whether it should use a larger size 
definition, such as average gross revenues not exceeding $125 million 
for the preceding three years. Several commenters supported the use of 
bidding credits to increase the competitiveness of small and rural 
carriers. The Bureaus now seek to develop the record in light of 
commenters' experience in Phase I, where bidding preferences were not 
available, except for Tribally-owned or controlled providers. Would the 
entities that were successful bidders in Auction 901 qualify as small 
businesses under the definitions the Commission asked about? To what 
extent do commenters continue to believe that a bidding credit is 
important to smaller carriers' ability to effectively compete at 
auction for support and how does that weigh against other Commission 
objectives?

V. Accountability and Oversight

    18. In the USF/ICC Transformation Order and FNPRM, the Commission 
proposed to generally apply to Mobility Fund Phase II the same rules 
for accountability and oversight that will apply to all recipients of 
Connect America Fund (CAF) support. Among other things, the CAF 
accountability and oversight proposals are intended to create a process 
for the reasonable and prudent disbursement of universal service 
support. In Mobility Fund Phase I, the Commission authorized 
disbursement of funds in three equal

[[Page 73589]]

installments, linked to completion of certain milestones. The Bureaus 
seek comment on how to structure ongoing support payments over the term 
of support in a way that achieves the Commission's goals of providing 
sufficient and predictable support throughout the term of the Mobility 
Fund Phase II, while ensuring compliance with the Anti-Deficiency Act. 
Should support be tied to completion of certain milestones, disbursed 
on a regular recurring basis, or some combination of both?

VI. Tribal Priority Units

    19. In the USF/ICC Transformation Order and FNPRM, the Commission 
proposed and sought comment on a number of provisions targeted at the 
specific connectivity challenges on Tribal lands. Among other things, 
the Commission sought comment on a possible mechanism that would 
allocate a specified number of ``priority units'' to Tribal governments 
to afford Tribes an opportunity to identify their own priorities. As 
discussed in the USF/ICC Transformation Order and FNPRM, priority units 
for each Tribe could be based upon a percentage, in the range of 20 to 
30 percent, of the total population in unserved blocks located within 
Tribal boundaries. Tribal governments would have the flexibility to 
allocate these units in whatever manner they choose. Tribal governments 
could elect to allocate all of their priority units to one geographic 
area that is particularly important to them, or to divide the total 
number of priority units among multiple geographic units according to 
their relative priority. The Commission requested comment on whether 
this approach should apply to both the general and Tribal Mobility Fund 
Phase II, and how such priority units should be awarded in Alaska and 
Hawaii given the unique conditions in those states. The Commission also 
sought comment on how this mechanism, if adopted, would interact with 
the proposed 25 percent Tribal bidding credit.
    20. Few parties offered comments addressing the priority units 
mechanism for Tribal governments, and those that did generally focused 
on issues unique to Alaska. In light of the relatively light record the 
Commission received on this issue and the results of Mobility Fund 
Phase I, the Bureaus seek additional comment on the Tribal priority 
units proposal. In particular, the Bureaus seek further comment on 
whether this approach should apply to Tribal governments participating 
in both the general and Tribal Mobility Fund Phase II, and, if so, how 
such priority units should be awarded in Alaska and Hawaii. Would the 
25 percent Tribal bidding credit and the Tribal engagement obligation 
proposed in the USF/ICC Transformation Order and FNPRM be sufficient to 
ensure that Tribal priorities are met with respect to ongoing support 
under Phase II?

VII. Regulatory Flexibility Analysis

    21. The USF/ICC Transformation Order and FNPRM included an Initial 
Regulatory Flexibility Analysis (IRFA) pursuant to 5 U.S.C. 603, 
exploring the potential impact on small entities of the Commission's 
proposal. The Bureaus invite parties to file comments on the IRFA in 
light of this additional notice.

VIII. Procedural Matters

    22. This matter shall be treated as a permit-but-disclose 
proceeding in accordance with the 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 generally is required. Other requirements pertaining to oral 
and written presentations are set forth in 47 CFR 1.1206(b).

Federal Communications Commission.
Gary D. Michaels,
Deputy Chief, Auctions and Spectrum Access Division, WTB.
[FR Doc. 2012-29879 Filed 12-10-12; 8:45 am]
BILLING CODE 6712-01-P