[Federal Register Volume 79, Number 227 (Tuesday, November 25, 2014)]
[Rules and Regulations]
[Pages 70113-70115]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-27883]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Chapter I
[WC Docket No. 10-90; DA 14-1569]
Connect America Fund
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: In this document, the Wireline Competition Bureau adopts a
specific methodology for calculating reasonable comparability
benchmarks for fixed broadband services. The methodology the Commission
adopts today establishes reasonable comparability broadband benchmarks
that vary, depending on the supported service's download and upload
bandwidths and usage allowance.
DATES: Effective December 26, 2014.
FOR FURTHER INFORMATION CONTACT: Suzanne Yelen, Telecommunications
Access Policy Division, Wireline Competition Bureau at (202) 418-0626
or TTY (202) 418-0484.
SUPPLEMENTARY INFORMATION: This is a synopsis of the Wireline
Competition Bureau's Report and Order in WC Docket No. 10-90; DA 14-
1569, released October 29, 2014. 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. (BCPI), 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 https://apps.fcc.gov/edocs_public/attachmatch/DA-14-1569A1.pdf.
I. Introduction
1. In this Report and Order (Order), the Wireline Competition
Bureau (Bureau) adopts a specific methodology for calculating
reasonable comparability benchmarks for fixed broadband services. In
the USF/ICC Transformation Order, 76 FR 73830, November 29, 2011, the
Commission required that as a condition of receiving high-cost support,
eligible telecommunications carriers (ETCs) must offer voice and
broadband services in supported areas at rates that are reasonably
comparable to rates for similar services in urban areas. The
methodology we adopt today establishes reasonable comparability
broadband benchmarks that vary, depending on the supported service's
download and upload bandwidths and usage allowance. This approach
recognizes that ETCs may choose to meet their broadband performance
obligation with a service offering that exceeds the minimum
requirements in one or more respects. The approach also is sufficiently
flexible to account for any changes that the Commission may adopt
regarding the required minimum performance characteristics.
2. The Bureau notes that because they are announcing the
methodology late in the calendar year, the results for 2014 are
illustrative and to inform parties that are potentially interested in
bidding on Connect America funding for rural broadband experiments in
the weeks ahead. The Bureau also will take into account the benchmarks
published below when adjudicating Connect America Phase II challenges.
The Bureau plans to announce the 2015 reasonable comparability
benchmarks for fixed broadband services when the Bureau completes our
analysis of the
[[Page 70114]]
data collected in the annual urban rate survey. The Bureau also waives
on our own motion implementation of the reasonable comparability
benchmarks for Alaska carriers for 2015 to allow further time to
determine whether an alternative methodology should be adopted for
Alaska.
II. Discussion
3. The Bureau now adopts a methodology that will be used annually
to develop reasonable comparability benchmarks for fixed broadband
services offered to residential and small business customers, using the
data from the annual urban rate survey. The Bureau adopts its proposal
to use a weighted linear regression to estimate the mean rate for a
specific set of service characteristics and then to add two standard
deviations to this mean to determine the benchmark for services meeting
those defined service characteristics. Because broadband service has
multiple characteristics (i.e., download and upload bandwidth, usage
allowance) that may affect its price, a regression is the most
straightforward approach to developing an average urban rate that
appropriately takes into account those varying service characteristics.
The Bureau will annually develop an average urban rate through a
regression approach, using data collected from the annual survey, and
then determine reasonable comparability benchmarks that are two
standard deviations above the average.
4. The Bureau adopts the Rural Associations' proposal to develop a
single regression using a broader sample of observations, ranging in
download speeds from 2 to 40 Mbps. Given that these benchmarks will be
applicable to winning bidders in the rural broadband experiments, and
those ETCs will be offering fixed broadband service to residential and
small business locations significantly faster than the current 4/1 Mbps
minimum, the Bureau concludes that it makes sense to include higher
speed observations in the calculation. In addition, the Bureau
calculates separate standard deviations for service offerings in the
vicinity of 4/1 Mbps using observations where the download speed ranged
from 2 up to 8 Mbps, and for services that exceed 8 Mbps downstream
using observations with download speeds from 8 to 25 Mbps. The Bureau
did so because they found that the standard deviation of rate
differences from the average of services in the 8 to 25 Mbps range was
higher than the standard deviation for services in the lower speed
tier. The Bureau concludes that calculating two different standard
deviations for the lower speed service and the higher speed service
effectively addresses the Rural Associations' concern that these
services are differentiated products. The Bureau incorporates this
approach into the benchmark equations provided below.
5. In any given year, providers will need to determine the
appropriate reasonable comparability benchmark based on the
characteristics of the specific service offered to residential and
small business customers that they are relying upon to meet their
broadband performance obligations. To determine the applicable
benchmark for a given service using the 2014 data, where a service is
defined by its download, upload, and usage allowance, a provider would
use equations developed based on the weighted regression methodology.
For 2014, the equations are as follows:
For services with download speeds greater than or equal to 4 Mbps
and less than or equal to 8 Mbps, the equation is
Benchmark = 69.5015 + 0.839703*DOWNLOAD + 1.44127*UPLOAD - 1710.68*K
For services with download speeds greater than 8 Mbps but less than
or equal to 25 Mbps, the equation is
Benchmark = 75.6095 + 0.839703*DOWNLOAD + 1.44127*UPLOAD - 1710.68*K
6. In each equation, the variables DOWNLOAD and UPLOAD must be
entered in units of Mbps. The variable K equals zero (0) if the service
has an ``Unlimited'' monthly usage allowance, and the variable K equals
(1/USAGE ALLOWANCE) if the usage allowance is not unlimited. The
variable USAGE ALLOWANCE must be entered in the units of GB per month.
Calculated benchmarks should be rounded up to the nearest cent.
Examples of benchmark calculations for 2014 are provided below.
------------------------------------------------------------------------
Reasonable
Upload speed/ download speed Usage allowance comparability
benchmark
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4/1 Mbps.......................... 100 GB............. $57.20
4/1 Mbps.......................... Unlimited.......... 74.31
10/1 Mbps......................... 100 GB............. 68.35
10/1 Mbps......................... 250 GB............. 78.61
10/1 Mbps......................... Unlimited.......... 85.45
25/5 Mbps......................... 250 GB............. 96.97
25/5 Mbps......................... Unlimited.......... 103.81
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7. To facilitate these calculations, the Bureau will post an Excel
file and online tool in which providers can plug in the relevant
variables to determine the benchmark for specific service
characteristics at http://www.fcc.gov/encyclopedia/urban-rate-survey-data.
8. Temporary Waiver of Benchmarks for Alaska. On our own motion,
the Bureau waives implementation of the reasonable comparability
benchmarks for Alaska carriers for 2015 to allow further time to study
this issue and determine whether an alternative methodology should be
adopted for Alaska. The Bureau notes that the Commission has already
relaxed the broadband public interest standards for carriers providing
fixed broadband that rely upon satellite backhaul and has held that
capacity requirements that generally apply will not apply to this
subset of providers. The Bureau will consider in a future Public Notice
whether and how to tailor our methodology to the unique circumstances
of Alaska.
9. Effect on the Connect America Phase II Challenge Process. In the
Phase II Service Obligations Order, 78 FR 70881, November 27, 2013, the
Bureau adopted an interim presumption for rates to use in the Phase II
challenge process, pending the publication of these reasonable
comparability benchmarks. For situations where the potential competitor
does not offer fixed wireline service in urban areas or does not serve
an area where the incumbent itself offers broadband, the Bureau adopted
interim benchmarks of $37 for voice service and $60 for broadband
service to determine whether that competitor was offering reasonably
comparable rates. The Bureau recognizes that challengers may have
relied on the $60 interim figure in preparing their challenges, but
note that parties replying to those challenges are free to present
evidence that takes into account these announced benchmarks. For
example, a price cap carrier may have been able to make a prima facie
challenge that a potential competitor's price is over $60, but that
competitor may now respond that its particular speed/usage combination
is in fact reasonably comparable because it meets a benchmark the
Bureau adopts. The Bureau will consider the totality of the evidence in
adjudicating these Phase II challenges.
III. Procedural Matters
1. Paperwork Reduction Analysis
10. The Report and Order does not contain information collection
requirements required by the Paperwork Reduction Act of 1995, Public
Law 104-13.
[[Page 70115]]
2. Congressional Review Act
11. The Commission will not submit this Report and Order pursuant
to the Congressional Review Act, 5 U.S.C. 801(a)(1)(A) because the
Commission has not yet defined the specific requirements associated
with the standard adopted in this Report and Order. The Commission
anticipates that when it does adopt the specific requirements applying
the standard in this Report and Order, it will make all submissions
required by the Congressional Review Act, 5 U.S.C. 801(a)(1)(A).
IV. Ordering Clause
12. Accordingly, it is ordered that, pursuant to sections 1, 4(i),
5(c), 201(b), 214, and 254 of the Communications Act of 1934, as
amended, and section 706 of the Telecommunications Act of 1996, 47
U.S.C. 151, 154(i), 155(c), 201(b), 214, 254, 1302, sections 0.91 and
0.291 of the Commission's rules, 47 CFR 0.91, 0.291, and the
delegations of authority in paragraph 113 of the USF/ICC Transformation
Order, FCC 11-161, this Report and Order is adopted, effective thirty
(30) days after publication of the text or summary thereof in the
Federal Register.
Federal Communications Commission.
Alexander A. Minard,
Deputy Chief, Telecommunications Access Policy Division Wireline
Competition Bureau.
[FR Doc. 2014-27883 Filed 11-24-14; 8:45 am]
BILLING CODE 6712-01-P