[Title 47 CFR ]
[Code of Federal Regulations (annual edition) - October 1, 2017 Edition]
[From the U.S. Government Publishing Office]



[[Page i]]

          

          Title 47

Telecommunication


________________________

Parts 40 to 69

                         Revised as of October 1, 2017

          Containing a codification of documents of general 
          applicability and future effect

          As of October 1, 2017
                    Published by the Office of the Federal Register 
                    National Archives and Records Administration as a 
                    Special Edition of the Federal Register

[[Page ii]]

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                            Table of Contents



                                                                    Page
  Explanation.................................................       v

  Title 47:
          Chapter I--Federal Communications Commission 
          (Continued)                                                3
  Finding Aids:
      Table of CFR Titles and Chapters........................     601
      Alphabetical List of Agencies Appearing in the CFR......     621
      Table of OMB Control Numbers............................     631
      List of CFR Sections Affected...........................     639

[[Page iv]]


      


                     ----------------------------

                     Cite this Code:  CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus, 47 CFR 42.01 refers 
                       to title 47, part 42, 
                       section 01.

                     ----------------------------

[[Page v]]



                               EXPLANATION

    The Code of Federal Regulations is a codification of the general and 
permanent rules published in the Federal Register by the Executive 
departments and agencies of the Federal Government. The Code is divided 
into 50 titles which represent broad areas subject to Federal 
regulation. Each title is divided into chapters which usually bear the 
name of the issuing agency. Each chapter is further subdivided into 
parts covering specific regulatory areas.
    Each volume of the Code is revised at least once each calendar year 
and issued on a quarterly basis approximately as follows:

Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1

    The appropriate revision date is printed on the cover of each 
volume.

LEGAL STATUS

    The contents of the Federal Register are required to be judicially 
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie 
evidence of the text of the original documents (44 U.S.C. 1510).

HOW TO USE THE CODE OF FEDERAL REGULATIONS

    The Code of Federal Regulations is kept up to date by the individual 
issues of the Federal Register. These two publications must be used 
together to determine the latest version of any given rule.
    To determine whether a Code volume has been amended since its 
revision date (in this case, October 1, 2017), consult the ``List of CFR 
Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative 
List of Parts Affected,'' which appears in the Reader Aids section of 
the daily Federal Register. These two lists will identify the Federal 
Register page number of the latest amendment of any given rule.

EFFECTIVE AND EXPIRATION DATES

    Each volume of the Code contains amendments published in the Federal 
Register since the last revision of that volume of the Code. Source 
citations for the regulations are referred to by volume number and page 
number of the Federal Register and date of publication. Publication 
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instances where the effective date is beyond the cut-off date for the 
Code a note has been inserted to reflect the future effective date. In 
those instances where a regulation published in the Federal Register 
states a date certain for expiration, an appropriate note will be 
inserted following the text.

OMB CONTROL NUMBERS

    The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires 
Federal agencies to display an OMB control number with their information 
collection request.

[[Page vi]]

Many agencies have begun publishing numerous OMB control numbers as 
amendments to existing regulations in the CFR. These OMB numbers are 
placed as close as possible to the applicable recordkeeping or reporting 
requirements.

PAST PROVISIONS OF THE CODE

    Provisions of the Code that are no longer in force and effect as of 
the revision date stated on the cover of each volume are not carried. 
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for 1949-1963, 1964-1972, 1973-1985, and 1986-2000.

``[RESERVED]'' TERMINOLOGY

    The term ``[Reserved]'' is used as a place holder within the Code of 
Federal Regulations. An agency may add regulatory information at a 
``[Reserved]'' location at any time. Occasionally ``[Reserved]'' is used 
editorially to indicate that a portion of the CFR was left vacant and 
not accidentally dropped due to a printing or computer error.

INCORPORATION BY REFERENCE

    What is incorporation by reference? Incorporation by reference was 
established by statute and allows Federal agencies to meet the 
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This material, like any other properly issued regulation, has the force 
of law.
    What is a proper incorporation by reference? The Director of the 
Federal Register will approve an incorporation by reference only when 
the requirements of 1 CFR part 51 are met. Some of the elements on which 
approval is based are:
    (a) The incorporation will substantially reduce the volume of 
material published in the Federal Register.
    (b) The matter incorporated is in fact available to the extent 
necessary to afford fairness and uniformity in the administrative 
process.
    (c) The incorporating document is drafted and submitted for 
publication in accordance with 1 CFR part 51.
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alphabetical list of agencies publishing in the CFR are also included in 
this volume.

[[Page vii]]

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the revision dates of the 50 CFR titles.

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in the Code of Federal Regulations.

INQUIRIES

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    For inquiries concerning CFR reference assistance, call 202-741-6000 
or write to the Director, Office of the Federal Register, National 
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register.
    The e-CFR is a regularly updated, unofficial editorial compilation 
of CFR material and Federal Register amendments, produced by the Office 
of the Federal Register and the Government Publishing Office. It is 
available at www.ecfr.gov.

    Oliver A. Potts,
    Director,
    Office of the Federal Register.
    October 1, 2017.

                                
                                      
                            

  

[[Page ix]]



                               THIS TITLE

    Title 47--Telecommunication is composed of five volumes. The parts 
in these volumes are arranged in the following order: Parts 0-19, parts 
20-39, parts 40-69, parts 70-79, and part 80 to end. All five volumes 
contain chapter I--Federal Communications Commission. The last volume, 
part 80 to end, also includes chapter II--Office of Science and 
Technology Policy and National Security Council, chapter III--National 
Telecommunications and Information Administration, Department of 
Commerce, chapter IV--National Telecommunications and Information 
Administration, Department of Commerce, and National Highway Traffic 
Safety Administration, Department of Transportation, and chapter V--
First Responder Network Authority (FIRSTNET). The contents of these 
volumes represent all current regulations codified under this title of 
the CFR as of October 1, 2017.

    Part 73 contains a numerical designation of FM broadcast channels 
(Sec. 73.201) and a table of FM allotments designated for use in 
communities in the United States, its territories, and possessions 
(Sec. 73.202). Part 73 also contains a numerical designation of 
television channels (Sec. 73.603) and a table of allotments which 
contain channels designated for the listed communities in the United 
States, its territories, and possessions (Sec. 73.606).

    The OMB control numbers for the Federal Communications Commission 
appear in Sec. 0.408 of chapter I. For the convenience of the user 
Sec. 0.408 is reprinted in the Finding Aids section of the second 
through fifth volumes.

    For this volume, Michele Bugenhagen was Chief Editor. The Code of 
Federal Regulations publication program is under the direction of John 
Hyrum Martinez, assisted by Stephen J. Frattini.

[[Page 1]]



                       TITLE 47--TELECOMMUNICATION




                   (This book contains parts 40 to 69)

  --------------------------------------------------------------------
                                                                    Part

chapter i--Federal Communications Commission (Continued)....          42

[[Page 3]]



        CHAPTER I--FEDERAL COMMUNICATIONS COMMISSION (CONTINUED)




  --------------------------------------------------------------------

            SUBCHAPTER B--COMMON CARRIER SERVICES (CONTINUED)
Part                                                                Page
40-41

[Reserved]

42              Preservation of records of communication 
                    common carriers.........................           5
43              Reports of communication common carriers and 
                    certain affiliates......................           7
51              Interconnection.............................          13
52              Numbering...................................          90
53              Special provisions concerning Bell operating 
                    companies...............................         118
54              Universal service...........................         123
59              Infrastructure sharing......................         277
61              Tariffs.....................................         278
63              Extension of lines, new lines, and 
                    discontinuance, reduction, outage and 
                    impairment of service by common 
                    carriers; and grants of recognized 
                    private operating agency status.........         317
64              Miscellaneous rules relating to common 
                    carriers................................         350
65              Interstate rate of return prescription, 
                    procedures, and methodologies...........         504
67              Real-time text..............................         514
68              Connection of terminal equipment to the 
                    telephone network.......................         515
69              Access charges..............................         550

Supplementary Publications: Annual Reports of the Federal Communications 
  Commission to Congress.
  Federal Communications Commission Reports of Orders and Decisions.
  Communications Act of 1934 (with amendments and index thereto), Recap. 
Version, May 1989.
  Study Guide and Reference Material for Commercial Radio Operator 
Examinations, May 1979 edition.

[[Page 5]]



            SUBCHAPTER B_COMMON CARRIER SERVICES (CONTINUED)



                         PARTS 40	41 [RESERVED]



PART 42_PRESERVATION OF RECORDS OF COMMUNICATION COMMON CARRIERS
--Table of Contents



                              Applicability

Sec.
42.01  Applicability.

                          General Instructions

42.1  Scope of the regulations in this part.
42.2  Designation of a supervisory official.
42.3  Protection and storage of records.
42.4  Index of records.
42.5  Preparation and preservation of reproductions of original records.
42.6  Retention of telephone toll records.
42.7  Retention of other records.

   Specific Instructions for Carriers Offering Interexchange Services

42.10  Public availability of information concerning interexchange 
          services.
42.11  Retention of information concerning detariffed interexchange 
          services.

    Authority: Sec. 4(i), 48 Stat. 1066, as amended, 47 U.S.C. 154(i). 
Interprets or applies secs. 219 and 220, 48 Stat. 1077-78, 47 U.S.C. 
219, 220.

    Source: 51 FR 32653, Sept. 15, 1986, unless otherwise noted.

                              Applicability



Sec. 42.01  Applicability.

    This part prescribes the regulations governing the preservation of 
records of communication common carriers that are fully subject to the 
jurisdiction of the Commission.

                          General Instructions



Sec. 42.1  Scope of the regulations in this part.

    (a) The regulations in this part apply to all accounts, records, 
memoranda, documents, papers, and correspondence prepared by or on 
behalf of the carrier as well as those which come into its possession in 
connection with the acquisition of property, such as by purchase, 
consolidation, merger, etc.
    (b) The regulations in this part shall not be construed as requiring 
the preparation of accounts, records, or memoranda not required to be 
prepared by other regulations, such as the Uniform System of Accounts, 
except as provided hereinafter.
    (c) The regulations in this part shall not be construed as excusing 
compliance with any other lawful requirement for the preservation of 
records.



Sec. 42.2  Designation of a supervisory official.

    Each carrier subject to the regulations in this part shall designate 
one or more officials to supervise the preservation of its records.



Sec. 42.3  Protection and storage of records.

    The carrier shall protect records subject to the regulations in this 
part from damage from fires, and other hazards and, in the selection of 
storage spaces, safeguard the records from unnecessary exposure to 
deterioration.



Sec. 42.4  Index of records.

    Each carrier shall maintain at its operating company headquarters a 
master index of records. The master index shall identify the records 
retained, the related retention period, and the locations where the 
records are maintained. The master index shall be subject to review by 
Commission staff and the Commission shall reserve the right to add 
records, or lengthen retention periods upon finding that retention 
periods may be insufficient for its regulatory purposes. When any 
records are lost or destroyed before expiration of the retention period 
set forth in the master index, a certified statement shall be added to 
the master index, as soon as practicable, listing, as far as may be 
determined, the records lost or destroyed and describing the 
circumstances of the premature loss or destruction. At each office of 
the carrier where records are kept or stored, the carrier shall arrange, 
file, and currently index the records on site so that

[[Page 6]]

they may be readily identified and made available to representatives of 
the Commission.



Sec. 42.5  Preparation and preservation of reproductions of original
records.

    (a) Each carrier may use a retention medium of its choice to 
preserve records in lieu of original records, provided that they observe 
the requirements of paragraphs (b) and (c) of this section.
    (b) A paper or microfilm record need not be created to satisfy the 
requirements of this part if the record is initially prepared in 
machine-readable medium such as punched cards, magnetic tapes, and 
disks. Each record kept in a machine-readable medium shall be 
accompanied by a statement clearly indicating the type of data included 
in the record and certifying that the information contained in it has 
been accurately duplicated. This statement shall be executed by a person 
duplicating the records. The records shall be indexed and retained in 
such a manner that they are easily accessible, and the carrier shall 
have the facilities available to locate, identify and reproduce the 
records in readable form without loss of clarity.
    (c) Records may be retained on microfilm provided they meet the 
requirements of the Federal Business Records Act (28 U.S.C. 1732).



Sec. 42.6  Retention of telephone toll records.

    Each carrier that offers or bills toll telephone service shall 
retain for a period of 18 months such records as are necessary to 
provide the following billing information about telephone toll calls: 
the name, address, and telephone number of the caller, telephone number 
called, date, time and length of the call. Each carrier shall retain 
this information for toll calls that it bills whether it is billing its 
own toll service customers for toll calls or billing customers for 
another carrier.

[51 FR 39536, Oct. 29, 1986]



Sec. 42.7  Retention of other records.

    Except as specified in Sec. 42.6, each carrier shall retain records 
identified in its master index of records for the period established 
therein. Records relevant to complaint proceedings not already contained 
in the index of records should be added to the index as soon as a 
complaint is filed and retained until final disposition of the 
complaint. Records a carrier is directed to retain as the result of a 
proceeding or inquiry by the Commission to the extent not already 
contained in the index will also be added to the index and retained 
until final disposition of the proceeding or inquiry.

   Specific Instructions for Carriers Offering Interexchange Services



Sec. 42.10  Public availability of information concerning interexchange
services.

    (a) A nondominant interexchange carrier (IXC) shall make available 
to any member of the public, in at least one location, during regular 
business hours, information concerning its current rates, terms and 
conditions for all of its international and interstate, domestic, 
interexchange services. Such information shall be made available in an 
easy to understand format and in a timely manner. Following an inquiry 
or complaint from the public concerning rates, terms and conditions for 
such services, a carrier shall specify that such information is 
available and the manner in which the public may obtain the information.
    (b) In addition, a nondominant IXC that maintains an Internet 
website shall make such rate and service information specified in 
paragraph (a) of this section available on-line at its Internet website 
in a timely and easily accessible manner, and shall update this 
information regularly.

[64 FR 19725, Apr. 22, 1999, as amended at 66 FR 16879, Mar. 28, 2001]



Sec. 42.11  Retention of information concerning detariffed interexchange
services.

    (a) A nondominant IXC shall maintain, for submission to the 
Commission and to state regulatory commissions upon request, price and 
service information regarding all of the carrier's international and 
interstate, domestic, interexchange service offerings. A commercial 
mobile radio service (CMRS) provider shall maintain such price and

[[Page 7]]

service information only about its international common carrier service 
offerings and only for those routes on which the CMRS provider is 
classified as dominant under Sec. 63.10 of this Chapter due to an 
affiliation with a foreign carrier that collects settlement payments 
from U.S. carriers for terminating U.S. international switched traffic 
at the foreign end of the route. Such a CMRS provider is not required to 
maintain its price and service information, however, on any such 
affiliated route if it provides service on that route solely through the 
resale of an unaffiliated facilities-based provider's international 
switched services. The price and service information maintained for 
purposes of this paragraph shall include documents supporting the rates, 
terms, and conditions of the carrier's international and interstate, 
domestic, interexchange offerings. The information maintained pursuant 
to this section shall be maintained in a manner that allows the carrier 
to produce such records within ten business days. For purposes of this 
paragraph, affiliated and foreign carrier are defined in Sec. 63.09 of 
this chapter.
    (b) The price and service information maintained pursuant to this 
section shall be retained for a period of at least two years and six 
months following the date the carrier ceases to provide services 
pursuant to such rates, terms and conditions.

[61 FR 59366, Nov. 22, 1996, as amended at 62 FR 59604, Nov. 4, 1997; 64 
FR 19725, Apr. 22, 1999; 66 FR 16879, Mar. 28, 2001]



PART 43_REPORTS OF COMMUNICATION COMMON CARRIERS AND CERTAIN AFFILIATES
--Table of Contents



Sec.
43.01  Applicability.
43.11  Reports of local exchange competition data.
43.21  Transactions with affiliates.
43.41  [Reserved]
43.43  Reports of proposed changes in depreciation rates.
43.51  Contracts and concessions.
43.62  Reporting requirements for holders of international Section 214 
          authorizations and providers of international services.
43.72  [Reserved]

    Authority: 47 U.S.C. 154; Telecommunications Act of 1996; Pub. L. 
104-104, sec. 402(b)(2)(B), (c), 110 Stat. 56 (1996) as amended unless 
otherwise noted. 47 U.S.C. 211, 219, 220, as amended; Cable Landing 
License Act of 1921, 47 U.S.C. 35-39.

    Source: 28 FR 13214, Dec. 5, 1963, unless otherwise noted.



Sec. 43.01  Applicability.

    (a) The sections in this part include requirements which have been 
promulgated under authority of sections 211 and 219 of the 
Communications Act of 1934, as amended, with respect to the filing by 
communication common carriers and certain of their affiliates of 
periodic reports and certain other data, but do not include certain 
requirements relating to the filing of information with respect to 
specific services, accounting systems and other matters incorporated in 
other parts of this chapter.
    (b) Except as provided in paragraphs (c) and (d) of this section, 
carriers becoming subject to the provisions of the several sections of 
this part for the first time, shall, within thirty (30) days of becoming 
subject, file the required data as set forth in the various sections of 
this part.
    (c) Carriers becoming subject to the provisions of Secs. 43.21 and 
43.43 for the first time, because their annual operating revenues equal 
or exceed the indexed revenue threshold for a given year, shall begin 
collecting data pursuant to such provisions in the calendar year 
following the publication of that indexed revenue threshold in the 
Federal Register. With respect to such initial filing of reports by any 
carrier, pursuant to the provisions of Sec. 43.21 (d), (e), (f), (g), 
(h), (i), (j), and (k), the carrier is to begin filing data for the 
calendar year following the publication of that indexed revenue 
threshold in the Federal Register by April 1 of the second calendar year 
following publication of that indexed revenue threshold in the Federal 
Register.
    (d) Common carriers subject to the provisions of Sec. 43.11 shall 
file data semi-annually. Reports shall be filed each year on or before 
March 1st (reporting data about their deployment of local exchange 
services as of December 31 of the prior year) and September 1st 
(reporting data about their deployment of local exchange services as of 
June 31 of

[[Page 8]]

the current year). Common carriers becoming subject to the provisions of 
Sec. 43.11 for the first time within a calendar year shall file data for 
the reporting period in which they become eligible and semi-annually 
thereafter. Common carriers subject to the provisions of Sec. 43.11 
shall make an initial filing of the FCC Form 477 on May 15, 2000 
(reporting data about their deployment of local exchange services as of 
December 31, 1999).

[28 FR 13214, Dec. 5, 1963, as amended at 62 FR 39778, July 24, 1997; 65 
FR 19685, Apr. 12, 2000; 78 FR 49149, Aug. 13, 2013]



Sec. 43.11  Reports of local exchange competition data.

    (a) All common carriers and their affiliates (as defined in 47 
U.S.C. 153(1)) providing telephone exchange or exchange access service 
(as defined in 47 U.S.C. 153(16) and (47)), commercial mobile radio 
service (CMRS) providers offering mobile telephony (as defined in 
Sec. 20.15(b)(1) of this chapter), and Interconnected Voice over IP 
service providers (as defined in Sec. 9.3 of this chapter), shall file 
with the Commission a completed FCC Form 477, in accordance with the 
Commission's rules and the instructions to the FCC Form 477.
    (b) Respondents identified in paragraph (a) of this section shall 
include in each report a certification signed by an appropriate official 
of the respondent (as specified in the instructions to FCC Form 477) and 
shall report the title of their certifying official.
    (c) Disclosure of data contained in FCC Form 477 will be addressed 
as follows:
    (1) Emergency operations contact information contained in FCC Form 
477 are information that should not be routinely available for public 
inspection pursuant to Sec. 0.457 of this chapter.
    (2) Respondents may make requests for Commission non-disclosure of 
the following data contained in FCC Form 477 under Sec. 0.459 of this 
chapter by so indicating on Form 477 at the time that the subject data 
are submitted:
    (i) Provider-specific subscription data and
    (ii) Provider-specific mobile deployment data that includes specific 
spectrum and speed parameters that may be used by providers for internal 
network planning purposes.
    (3) Respondents seeking confidential treatment of any other data 
contained in FCC Form 477 must submit a request that the data be treated 
as confidential with the submission of their Form 477 filing, along with 
their reasons for withholding the information from the public, pursuant 
to Sec. 0.459 of this chapter.
    (4) The Commission shall make all decisions regarding non-disclosure 
of provider-specific information, except that the Chief of the Wireline 
Competition Bureau may release provider-specific information to:
    (i) A state commission provided that the state commission has 
protections in place that would preclude disclosure of any confidential 
information, and
    (ii) ``Eligible entities,'' as those entities are defined in the 
Broadband Data Improvement Act, in an aggregated format and pursuant to 
confidentiality conditions prescribed by the Commission, and
    (iii) Others, to the extent that access to such data can be 
accomplished in a manner that addresses concerns about the competitive 
sensitivity of the data and precludes public disclosure of any 
confidential information.
    (d) Respondents identified in paragraph (b) of this section shall 
file a revised version of FCC Form 477 if and when they discover a 
significant error in their filed FCC Form 477. For counts, a difference 
amounting to 5 percent of the filed number is considered significant. 
For percentages, a difference of 5 percentage points is considered 
significant.
    (e) Failure to file FCC Form 477 in accordance with the Commission's 
rules and the instructions to Form 477 may lead to enforcement action 
pursuant to the Act and any other applicable law.

[65 FR 19685, Apr. 12, 2000, as amended at 69 FR 77938, Dec. 29, 2004; 
73 FR 37881, July 2, 2008; 78 FR 49149, Aug. 13, 2013]



Sec. 43.21  Transactions with affiliates.

    (a) Communication common carriers having annual operating revenues 
in excess of the indexed revenue threshold, as defined in Sec. 32.9000, 
and certain companies (as indicated in paragraph

[[Page 9]]

(b) of this section) directly or indirectly controlling such carriers 
shall file with the Commission annual reports or an annual letter as 
provided in this section. Except as provided in paragraph (b) of this 
section, each annual report required by this section shall be filed no 
later than April 1 of each year, covering the preceding calendar year. 
It shall be filed on the appropriate report form prescribed by the 
Commission (see Sec. 1.785 of this chapter) and shall contain full and 
specific answers to all questions propounded and information requested 
in the currently effective report forms. The number of copies to be 
filed shall be specified in the applicable report form. At least one 
copy of this report shall be signed on the signature page by the 
responsible accounting officer. A copy of each annual report shall be as 
retained in the principal office of the respondent and shall be filed in 
such manner to be readily available for reference and inspection.
    (b) Each company, not itself a communication common carrier, that 
directly or indirectly controls any communication common carrier that 
has annual operating revenues equal to or above the indexed revenue 
threshold, as defined in Sec. 32.9000, shall file annually with the 
Commission, not later than the date prescribed by the Securities and 
Exchange Commission for its purposes, two complete copies of any annual 
report Forms 10-K (or any superseding form) filed with that Commission.
    (c) Each miscellaneous common carrier (as defined by Sec. 21.2 of 
this chapter) with operating revenues for a calendar year in excess of 
the indexed revenue threshold, as defined in Sec. 32.9000, shall file 
with the Common Carrier Bureau Chief a letter showing its operating 
revenues for that year and the value of its total communications plant 
at the end of that year. This letter must be filed no later than April 1 
of the following year. Those miscellaneous common carriers with annual 
operating revenues that equal or surpass the indexed revenue threshold 
for the first time may file the letter up to one month after publication 
of the adjusted revenue threshold in the Federal Register, but in no 
event shall such carriers be required to file the letter prior to April 
1.
    (d) Each communications common carrier required by order to file a 
manual allocating its costs between regulated and nonregulated 
operations shall file, on or before April 1:
    (1) A three-year forecast of regulated and nonregulated use of 
network plant for the current calendar year and the two calendar years 
following, and investment pool projections and allocations for the 
current calendar year; and
    (2) A report of the actual use of network plant investment for the 
prior calendar year.
    (e) Each incumbent local exchange carrier, except mid-sized 
incumbent local exchange carriers, as defined by Sec. 32.9000 with 
annual operating revenues equal to or above the indexed revenue 
threshold shall file, no later than April 1 of each year:
    (1) Its revenues, expenses and investment for all accounts 
established in part 32 of this chapter, on an operating company basis,
    (2) The same part 32 of this chapter, on a study area basis, with 
data for regulated and nonregulated operations for those accounts which 
are related to the carrier's revenue requirement, and
    (3) The separations categories on a study area basis, with each 
category further divided into access elements and a nonaccess interstate 
category.
    (f) Each incumbent local exchange carrier with operating revenues 
for the preceding year that equal or exceed the indexed revenue 
threshold shall file, no later than April 1 of each year, a report 
showing for the previous calendar year its revenues, expenses, taxes, 
plant in service, other investment and depreciation reserves, and other 
such data as are required by the Commission, on computer media 
prescribed by the Commission. The total operating results shall be 
allocated between regulated and nonregulated operations, and the 
regulated data shall be further divided into the following categories: 
State and interstate, and the interstate will be further divided into 
common line, traffic sensitive access, special access, and nonaccess.
    (g) Each incumbent local exchange carrier for whom price cap 
regulation is mandatory and every incumbent

[[Page 10]]

local exchange carrier that elects to be covered by the price cap rules 
shall file, by April 1 of each year, a report designed to capture trends 
in service quality under price cap regulation. The report shall contain 
data relative to network measures of service quality, as defined by the 
Wireline Competition Bureau, from the previous calendar year on a study 
area basis.
    (h) Each incumbent local exchange carrier for whom price cap 
regulation is mandatory shall file, by April 1 of each year, a report 
designed to capture trends in service quality under price cap 
regulation. The report shall contain data relative to customer measures 
of service quality, as defined by the Wireline Competition Bureau, from 
the previous calendar year a study area basis.
    (i) Each incumbent local exchange carrier for whom price regulation 
is mandatory shall file, by April 1 of each year, a report containing 
data from the previous calendar year on a study area basis that are 
designed to capture trends in telephone industry infrastructure 
development under price cap regulation.
    (j) Each incumbent local exchange carrier with annual operating 
revenues that equal or exceed the indexed revenue threshold shall file, 
no later than April 1 of each year, a report containing data from the 
previous calendar year on an operating company basis. Such report shall 
combine statistical data designed to monitor network growth, usage, and 
reliability.
    (k) Each designated interstate carrier with operating revenues for 
the preceding year that equal or exceed the indexed revenue threshold 
shall file, no later than April 1 of each year, a report showing for the 
previous calendar year its revenues, expenses, taxes, plant in service, 
other investments and depreciation reserves, and such other data as are 
required by the Commission, on computer media prescribed by the 
Commission. The total operating results shall be allocated between 
regulated and nonregulated operations, and the regulated data shall be 
further divided into the following categories: State and interstate, and 
the interstate will be further divided into common line, traffic 
sensitive access, special access, and nonaccess.

[28 FR 13214, Dec. 5, 1963, as amended at 49 FR 10122, Mar. 19, 1984; 50 
FR 41153, Oct. 9, 1985; 51 FR 37024, Oct. 17, 1986; 52 FR 35918, Sept. 
24, 1987; 58 FR 36143, July 6, 1993; 61 FR 50245, Sept. 25, 1996; 62 FR 
39778, July 24, 1997; 67 FR 5700, Feb. 6, 2002; 67 FR 13225, Mar. 21, 
2002]



Sec. 43.41  [Reserved]



Sec. 43.43  Reports of proposed changes in depreciation rates.

    (a) Each communication common carrier with annual operating expenses 
that equal or exceed the indexed revenue threshold, as defined in 
Sec. 32.9000, and that has been found by this Commission to be a 
dominant carrier with respect to any communications service shall, 
before making any changes in the depreciation rates applicable to its 
operated plant, file with the Commission a report furnishing the data 
described in the subsequent paragraphs of this section, and also comply 
with the other requirements thereof.
    (b) Each such report shall contain the following:
    (1) A schedule showing for each class and subclass of plant (whether 
or not the depreciation rate is proposed to be changed) an appropriate 
designation therefor, the depreciation rate currently in effect, the 
proposed rate, and the service-life and net-salvage estimates underlying 
both the current and proposed depreciation rates;
    (2) An additional schedule showing for each class and subclass, as 
well as the totals for all depreciable plant, (i) the book cost of plant 
at the most recent date available, (ii) the estimated amount of 
depreciation accruals determined by applying the currently effective 
rate to the amount of such book cost, (iii) the estimated amount of 
depreciation accruals determined by applying the rate proposed to be 
used to the amount of such book cost, and (iv) the difference between 
the amounts determined in paragraphs (b)(2) (ii) and (iii) of this 
section;
    (3) A statement giving the reasons for the proposed change in each 
rate;
    (4) A statement describing the method or methods employed in the 
development of the service-life and salvage

[[Page 11]]

estimates underlying each proposed change in a depreciation rate; and
    (5) The date as of which the revised rates are proposed to be made 
effective in the accounts.
    (c) Except as specified in paragraphs (c)(1) and (c)(3) of this 
section, when the change in the depreciation rate proposed for any class 
or subclass of plant (other than one occasioned solely by a shift in the 
relative investment in the several subclasses of the class of plant) 
amounts to twenty percent (20%) or more of the rate currently applied 
thereto, or when the proposed change will produce an increase or 
decrease of one percent (1%) or more of the aggregate depreciation 
charges for all depreciable plant (based on the amounts determined in 
compliance with paragraph (b)(2) of this section) the carrier shall 
supplement the data required by paragraph (b) of this section) with 
copies of the underlying studies, including calculations and charts, 
developed by the carrier to support service-life and net-salvage 
estimates. If a carrier must submit data of a repetitive nature to 
comply with this requirement, the carrier need only submit a fully 
illustrative portion thereof.
    (1) A Local Exchange Carrier regulated under price caps, pursuant to 
Secs. 61.41 through 61.49 of this chapter, is not required to submit the 
supplemental information described in paragraph (c) introductory text of 
this section for a specific account if: The carrier's currently 
prescribed depreciation rate for the specific accounts derived from 
basic factors that fall within the basic factor ranges established for 
that same account; and the carrier's proposed depreciation rate for the 
specific account would also be derived from basic factors that fall 
within the basic factor ranges for the same account.
    (2) Local Exchange Carriers that are regulated under price caps, 
pursuant to Secs. 61.41 through 61.49 of this chapter, and have selected 
basic factors that fall within the basic factor ranges for all accounts 
are exempt from paragraphs (b)(3), (b)(4), and (c) introductory text of 
this section. They shall instead comply with paragraphs (b)(1), (b)(2) 
and (b)(5) of this section and provide a book and theoretical reserve 
summary and a summary of basic factors underlying proposed rates by 
account.
    (3) Interexchange carriers regulated under price caps, pursuant to 
Secs. 61.41 through 61.49 of this chapter, are exempted from submitting 
the supplemental information as described in paragraph (c) introductory 
text of this section. They shall instead submit: Generation data, a 
summary of basic factors underlying proposed depreciation rates by 
account and a short narrative supporting those basic factors, including 
company plans of forecasted retirements and additions, recent annual 
retirements, salvage and cost of removal.
    (d) Each report shall be filed in duplicate and the original shall 
be signed by the responsible official to whom correspondence related 
thereto should be addressed.
    (e) Unless otherwise directed or approved by the Commission, the 
following shall be observed: Proposed changes in depreciation rates 
shall be filed at least ninety (90) days prior to the last day of the 
month with respect to which the revised rates are first to be applied in 
the accounts (e.g., if the new rates are to be first applied in the 
depreciation accounts for September, they must be filed on or before 
July 1). Such rates may be made retroactive to a date not prior to the 
beginning of the year in which the filing is made: Provided however, 
that in no event shall a carrier for which the Commission has prescribed 
depreciation rates make any changes in such rates unless the changes are 
prescribed by the Commission. Carriers who select basic factors that 
fall within the basic factor ranges for all accounts are exempt from 
depreciation rate prescription by the Commission.
    (f) Any changes in depreciation rates that are made under the 
provisions of paragraph (e) of this section shall not be construed as 
having been approved by the Commission unless the carrier has been 
specifically so informed.

[28 FR 13214, Dec. 5, 1963, as amended at 30 FR 3223, Mar. 9, 1965; 53 
FR 49987, Dec. 13, 1988; 58 FR 58790, Nov. 4, 1993; 61 FR 50246, Sept. 
25, 1996; 62 FR 39779, July 24, 1997; 65 FR 18931, Apr. 10, 2000]

[[Page 12]]



Sec. 43.51  Contracts and concessions.

    (a)(1) Any communication common carrier described in paragraph (b) 
of this section must file with the Commission, within thirty (30) days 
of execution, a copy of each contract, agreement, concession, license, 
authorization, operating agreement or other arrangement to which it is a 
party and amendments thereto (collectively hereinafter referred to as 
``agreement'' for purposes of this rule) with respect to the following:
    (i) The exchange of services; and,
    (ii) The interchange or routing of traffic and matters concerning 
rates, accounting rates, division of tolls, or the basis of settlement 
of traffic balances, except as provided in paragraph (c) of this 
section.
    (2) If the contract, agreement, concession, license, authorization, 
operating agreement or other arrangement and amendments thereto is made 
other than in writing, a certified statement covering all details 
thereof must be filed by at least one of the parties to the agreement. 
Each other party to the agreement which is also subject to these 
provisions may, in lieu of also filing a copy of the agreement, file a 
certified statement referencing the filed document. The Commission may, 
at any time and upon reasonable request, require any communication 
common carrier not subject to the provisions of this section to submit 
the documents referenced in this section.
    (b) The following communication common carriers must comply with the 
requirements of paragraph (a) of this section:
    (1) A carrier that is engaged in domestic communications and has not 
been classified as non-dominant pursuant to Sec. 61.3 of this Chapter; 
or
    (2) A carrier that is engaged in foreign communications and that has 
been classified as dominant for any service on any of the U.S.-
international routes included in the contract, except for a carrier 
classified as dominant on a particular route due only to a foreign 
carrier affiliation under Sec. 63.10 of this chapter.
    (c) With respect to contracts coming within the scope of paragraph 
(a)(1)(ii) of this section between subject telephone carriers and 
connecting carriers, except those contracts related to communications 
with foreign or overseas points, such documents shall not be filed with 
the Commission; but each subject telephone carrier shall maintain a copy 
of such contracts to which it is a party in appropriate files at a 
central location upon its premises, copies of which shall be readily 
accessible to Commission staff and members of the public upon reasonable 
request therefor; and upon request by the Commission, a subject 
telephone carrier shall promptly forward individual contracts to the 
Commission.
    (d) Any U.S. carrier, other than a provider of commercial mobile 
radio services, that is engaged in foreign communications, and enters 
into an agreement with a foreign carrier, is subject to the Commission's 
authority to require the U.S. carrier providing service on any U.S.-
international routes to file, on an as-needed basis, a copy of each 
agreement to which it is a party.

    Note 1 to Sec. 43.51: For purposes of this section, affiliated and 
foreign carrier are defined in Sec. 63.09 of this chapter.
    Note 2 to Sec. 43.51: To the extent that a foreign government 
provides telecommunications services directly through a governmental 
organization, body or agency, it shall be treated as a foreign carrier 
for the purposes of this section.

[66 FR 16879, Mar. 28, 2001, as amended at 69 FR 23153, Apr. 28, 2004; 
78 FR 11112, Feb. 15, 2013]



Sec. 43.62  Reporting requirements for holders of international
Section 214 authorizations and providers of international services.

    (a) Circuit Capacity Reports. Not later than March 31 of each year:
    (1) Satellite and Terrestrial Circuits. Each facilities-based common 
carrier shall file a report showing its active common carrier circuits 
between the United States and any foreign point as of December 31 of the 
preceding calendar year in any terrestrial or satellite facility for the 
provision of service to an end user or resale carrier, which includes 
active circuits used by themselves or their affiliates. Each non-common 
carrier satellite licensee shall file a report showing its active 
circuits between the United States and any foreign point as of December 
31 of

[[Page 13]]

the preceding calendar sold or leased to any customer, including 
themselves or their affiliates, other than a carrier authorized by the 
Commission to provide U.S. international common carrier services.
    (2) International Submarine Cable Capacity--(i) The licensee(s) of a 
submarine cable between the United States and any foreign point shall 
file a report showing the capacity of the submarine cable as of December 
31 of the preceding calendar year. The licensee(s) shall also file a 
report showing the planned capacity of the submarine cable (the intended 
capacity of the submarine cable two years from December 31 of the 
preceding calendar year). Only one cable landing licensee shall file the 
capacity data for each submarine cable. For cables with more than one 
licensee, the licensees shall determine which licensee will file the 
reports.
    (ii) Each cable landing licensee and common carrier shall file a 
report showing its capacity on submarine cables between the United 
States and any foreign point as of December 31 of the preceding calendar 
year.
    (b) Traffic and revenue reports. (1) Not later than July 31 of each 
year, each person or entity that holds an authorization pursuant to 
section 214 to provide international telecommunications service shall 
report whether it provided international telecommunications services 
during the preceding calendar year.
    (2) Not later than July 31 of each year, each common carrier engaged 
in providing international telecommunications service, and each person 
or entity engaged in providing Voice over Internet Protocol service 
connected to the public switched telephone network, between the United 
States and any foreign point shall file a report with the Commission 
showing revenues, payouts, and traffic for such international 
telecommunications service and Voice over Internet Protocol service 
connected to the public switched telephone network provided during the 
preceding calendar year.
    (3) Entities filing such reports shall submit a revised report by 
October 31 identifying and correcting any inaccuracies included in the 
annual report exceeding one percent of the reported figure.

    Note to paragraphs (a) and (b): United States is defined in section 
3 of the Communications Act of 1934, as amended, 47 U.S.C. 153.

    (c)(1) A Registration Form, containing information about the filer, 
such as address, phone number, email address, etc., shall be filed with 
each report filed pursuant to paragraphs (a) and (b).
    (2) The Registration Form shall include a certification enabling the 
filer to check a box to indicate that the filer requests that its 
circuit capacity data or traffic and revenue data be treated as 
confidential. If a filer checks that box, the Commission shall treat the 
data contained in the accompanying report as confidential. Upon receipt 
of a request for inspection of such information, the Commission shall 
notify the filer; at that point, the filer must justify continued 
confidentiality of the information consistent with section 0.459(b) of 
the Commission's rules.
    (d) Filing Manual. Authority is delegated to the Chief, 
International Bureau to prepare instructions and reporting requirements 
for the filing of these reports prepared and published as a Filing 
Manual. The information required under this section shall be furnished 
in conformance with the instructions and reporting requirements in the 
Filing Manual.

    Note to paragraph (d): The instructions and reporting requirements 
prepared by the Chief, International Bureau, shall be consistent with 
the terms of Reporting Requirements for U.S. Providers of International 
Telecommunications Services; Amendment of Part 43 of the Commission's 
Rules, IB Docket No. 04-112, Second Report and Order, FCC 13-6 (rel. 
January 15, 2013).

[78 FR 15623, Mar. 12, 2013]



Sec. 43.72  [Reserved]



PART 51_INTERCONNECTION--Table of Contents



                      Subpart A_General Information

Sec.
51.1  Basis and purpose.
51.3  Applicability to negotiated agreements.
51.5  Terms and definitions.

[[Page 14]]

                  Subpart B_Telecommunications Carriers

51.100  General duty.

          Subpart C_Obligations of All Local Exchange Carriers

51.201  Resale.
51.203  Number portability.
51.205  Dialing parity: General.
51.207  Local dialing parity.
51.209  Toll dialing parity.
51.213  Toll dialing parity implementation plans.
51.215  Dialing parity: Cost recovery.
51.217  Nondiscriminatory access: Telephone numbers, operator services, 
          directory assistance services, and directory listings.
51.219  Access to rights of way.
51.221  Reciprocal compensation.
51.223  Application of additional requirements.
51.230  Presumption of acceptability for deployment of an advanced 
          services loop technology.
51.231  Provision of information on advanced services deployment.
51.232  Binder group management.
51.233  Significant degradation of services caused by deployment of 
          advanced services.

  Subpart D_Additional Obligations of Incumbent Local Exchange Carriers

51.301  Duty to negotiate.
51.303  Preexisting agreements.
51.305  Interconnection.
51.307  Duty to provide access on an unbundled basis to network 
          elements.
51.309  Use of unbundled network elements.
51.311  Nondiscriminatory access to unbundled network elements.
51.313  Just, reasonable and nondiscriminatory terms and conditions for 
          the provision of unbundled network elements.
51.315  Combination of unbundled network elements.
51.316  Conversion of unbundled network elements and services.
51.317  Standards for requiring the unbundling of network elements.
51.318  Eligibility criteria for access to certain unbundled network 
          elements.
51.319  Specific unbundling requirements.
51.320  Assumption of responsibility by the Commission.
51.321  Methods of obtaining interconnection and access to unbundled 
          elements under section 251 of the Act.
51.323  Standards for physical collocation and virtual collocation.
51.325  Notice of network changes: Public notice requirement.
51.327  Notice of network changes: Content of notice.
51.329  Notice of network changes: Methods for providing notice.
51.331  Notice of network changes: Timing of notice.
51.332  Notice of network changes: Copper retirement.
51.333  Notice of network changes: Short term notice, objections 
          thereto.
51.335  Notice of network changes: Confidential or proprietary 
          information.

Subpart E_Exemptions, Suspensions, and Modifications of Requirements of 
                         Section 251 of the Act

51.401  State authority.
51.403  Carriers eligible for suspension or modification under section 
          251(f)(2) of the Act.
51.405  Burden of proof.

                      Subpart F_Pricing of Elements

51.501  Scope.
51.503  General pricing standard.
51.505  Forward-looking economic cost.
51.507  General rate structure standard.
51.509  Rate structure standards for specific elements.
51.511  Forward-looking economic cost per unit.
51.513  Proxies for forward-looking economic cost.
51.515  Application of access charges.

                            Subpart G_Resale

51.601  Scope of resale rules.
51.603  Resale obligation of all local exchange carriers.
51.605  Additional obligations of incumbent local exchange carriers.
51.607  Wholesale pricing standard.
51.609  Determination of avoided retail costs.
51.611  Interim wholesale rates.
51.613  Restrictions on resale.
51.615  Withdrawal of services.
51.617  Assessment of end user common line charge on resellers.

   Subpart H_Reciprocal Compensation for Transport and Termination of 
                       Telecommunications Traffic

51.700  Purpose of this subpart.
51.701  Scope of transport and termination pricing rules.
51.703  Non-Access reciprocal compensation obligation of LECs.
51.705  LECs' rates for transport and termination.
51.707  [Reserved]
51.709  Rate structure for transport and termination.
51.711  Symmetrical reciprocal compensation.
51.713  Bill-and-keep arrangements.

[[Page 15]]

51.715  Interim transport and termination pricing.
51.717  [Reserved]

    Subpart I_Procedures for Implementation of Section 252 of the Act

51.801  Commission action upon a state commission's failure to act to 
          carry out its responsibility under section 252 of the Act.
51.803  Procedures for Commission notification of a state commission's 
          failure to act.
51.805  The Commission's authority over proceedings and matters.
51.807  Arbitration and mediation of agreements by the Commission 
          pursuant to section 252(e)(5) of the Act.
51.809  Availability of provisions of agreements to other 
          telecommunications carriers under section 252(i) of the Act.

              Subpart J_Transitional Access Service Pricing

51.901  Purpose and scope of transitional access service pricing rules.
51.903  Definitions.
51.905  Implementation.
51.907  Transition of price cap carrier access charges.
51.909  Transition of rate-of-return carrier access charges.
51.911  Access reciprocal compensation rates for competitive LECs.
51.913  Transition for VoIP-PSTN traffic.
51.915  Recovery mechanism for price cap carriers.
51.917  Revenue recovery for Rate of Return carriers.
51.919  Reporting and monitoring.

    Authority: 47 U.S.C. 151-55, 201-05, 207-09, 218, 220, 225-27, 251-
54, 256, 271, 303(r), 332, 1302.

    Source: 61 FR 45619, Aug. 29, 1996, unless otherwise noted.



                      Subpart A_General Information



Sec. 51.1  Basis and purpose.

    (a) Basis. These rules are issued pursuant to the Communications Act 
of 1934, as amended.
    (b) Purpose. The purpose of these rules is to implement sections 251 
and 252 of the Communications Act of 1934, as amended, 47 U.S.C. 251 and 
252.



Sec. 51.3  Applicability to negotiated agreements.

    To the extent provided in section 252(e)(2)(A) of the Act, a state 
commission shall have authority to approve an interconnection agreement 
adopted by negotiation even if the terms of the agreement do not comply 
with the requirements of this part.



Sec. 51.5  Terms and definitions.

    Terms used in this part have the following meanings:
    Act. The Communications Act of 1934, as amended.
    Advanced intelligent network. Advanced intelligent network is a 
telecommunications network architecture in which call processing, call 
routing, and network management are provided by means of centralized 
databases located at points in an incumbent local exchange carrier's 
network.
    Advanced services. The term ``advanced services'' is defined as high 
speed, switched, broadband, wireline telecommunications capability that 
enables users to originate and receive high-quality voice, data, 
graphics or video telecommunications using any technology.
    Arbitration, final offer. Final offer arbitration is a procedure 
under which each party submits a final offer concerning the issues 
subject to arbitration, and the arbitrator selects, without 
modification, one of the final offers by the parties to the arbitration 
or portions of both such offers. ``Entire package final offer 
arbitration,'' is a procedure under which the arbitrator must select, 
without modification, the entire proposal submitted by one of the 
parties to the arbitration. ``Issue-by-issue final offer arbitration,'' 
is a procedure under which the arbitrator must select, without 
modification, on an issue-by-issue basis, one of the proposals submitted 
by the parties to the arbitration.
    Billing. Billing involves the provision of appropriate usage data by 
one telecommunications carrier to another to facilitate customer billing 
with attendant acknowledgements and status reports. It also involves the 
exchange of information between telecommunications carriers to process 
claims and adjustments.
    Binder or binder group. Copper pairs bundled together, generally in 
groups of 25, 50 or 100.
    Business line. A business line is an incumbent LEC-owned switched 
access line used to serve a business customer, whether by the incumbent 
LEC itself

[[Page 16]]

or by a competitive LEC that leases the line from the incumbent LEC. The 
number of business lines in a wire center shall equal the sum of all 
incumbent LEC business switched access lines, plus the sum of all UNE 
loops connected to that wire center, including UNE loops provisioned in 
combination with other unbundled elements. Among these requirements, 
business line tallies:
    (1) Shall include only those access lines connecting end-user 
customers with incumbent LEC end-offices for switched services,
    (2) Shall not include non-switched special access lines,
    (3) Shall account for ISDN and other digital access lines by 
counting each 64 kbps-equivalent as one line. For example, a DS1 line 
corresponds to 24 64 kbps-equivalents, and therefore to 24 ``business 
lines.''
    Commercial Mobile Radio Service (CMRS). CMRS has the same meaning as 
that term is defined in Sec. 20.3 of this chapter.
    Commingling. Commingling means the connecting, attaching, or 
otherwise linking of an unbundled network element, or a combination of 
unbundled network elements, to one or more facilities or services that a 
requesting telecommunications carrier has obtained at wholesale from an 
incumbent LEC, or the combining of an unbundled network element, or a 
combination of unbundled network elements, with one or more such 
facilities or services. Commingle means the act of commingling.
    Commission. Commission refers to the Federal Communications 
Commission.
    Day. Day means calendar day.
    Dialing parity. The term dialing parity means that a person that is 
not an affiliate of a local exchange carrier is able to provide 
telecommunications services in such a manner that customers have the 
ability to route automatically, without the use of any access code, 
their telecommunications to the telecommunications service provider of 
the customer's designation from among 2 or more telecommunications 
service providers (including such local exchange carrier).
    Directory assistance service. Directory assistance service includes, 
but is not limited to, making available to customers, upon request, 
information contained in directory listings.
    Directory listings. Directory listings are any information:
    (1) Identifying the listed names of subscribers of a 
telecommunications carrier and such subscriber's telephone numbers, 
addresses, or primary advertising classifications (as such 
classifications are assigned at the time of the establishment of such 
service), or any combination of such listed names, numbers, addresses or 
classifications; and
    (2) That the telecommunications carrier or an affiliate has 
published, caused to be published, or accepted for publication in any 
directory format.
    Downstream database. A downstream database is a database owned and 
operated by an individual carrier for the purpose of providing number 
portability in conjunction with other functions and services.
    Enhanced extended link. An enhanced extended link or EEL consists of 
a combination of an unbundled loop and unbundled dedicated transport, 
together with any facilities, equipment, or functions necessary to 
combine those network elements.
    Equipment necessary for interconnection or access to unbundled 
network elements. For purposes of section 251(c)(2) of the Act, the 
equipment used to interconnect with an incumbent local exchange 
carrier's network for the transmission and routing of telephone exchange 
service, exchange access service, or both. For the purposes of section 
251(c)(3) of the Act, the equipment used to gain access to an incumbent 
local exchange carrier's unbundled network elements for the provision of 
a telecommunications service.
    Fiber-based collocator. A fiber-based collocator is any carrier, 
unaffiliated with the incumbent LEC, that maintains a collocation 
arrangement in an incumbent LEC wire center, with active electrical 
power supply, and operates a fiber-optic cable or comparable 
transmission facility that
    (1) Terminates at a collocation arrangement within the wire center;
    (2) Leaves the incumbent LEC wire center premises; and

[[Page 17]]

    (3) Is owned by a party other than the incumbent LEC or any 
affiliate of the incumbent LEC, except as set forth in this paragraph. 
Dark fiber obtained from an incumbent LEC on an indefeasible right of 
use basis shall be treated as non-incumbent LEC fiber-optic cable. Two 
or more affiliated fiber-based collocators in a single wire center shall 
collectively be counted as a single fiber-based collocator. For purposes 
of this paragraph, the term affiliate is defined by 47 U.S.C. 153(1) and 
any relevant interpretation in this Title.
    Incumbent Local Exchange Carrier (Incumbent LEC). With respect to an 
area, the local exchange carrier that:
    (1) On February 8, 1996, provided telephone exchange service in such 
area; and
    (2)(i) On February 8, 1996, was deemed to be a member of the 
exchange carrier association pursuant to Sec. 69.601(b) of this chapter; 
or
    (ii) Is a person or entity that, on or after February 8, 1996, 
became a successor or assign of a member described in paragraph (2)(i) 
of this section.
    Information services. The term information services means the 
offering of a capability for generating, acquiring, storing, 
transforming, processing, retrieving, utilizing, or making available 
information via telecommunications, and includes electronic publishing, 
but does not include any use of any such capability for the management, 
control, or operation of a telecommunications system or the management 
of a telecommunications service.
    Interconnection. Interconnection is the linking of two networks for 
the mutual exchange of traffic. This term does not include the transport 
and termination of traffic.
    Known disturber. An advanced services technology that is prone to 
cause significant interference with other services deployed in the 
network.
    Intermodal. The term intermodal refers to facilities or technologies 
other than those found in traditional telephone networks, but that are 
utilized to provide competing services. Intermodal facilities or 
technologies include, but are not limited to, traditional or new cable 
plant, wireless technologies, and power line technologies.
    Local Access and Transport Area (LATA). A Local Access and Transport 
Area is a contiguous geographic area--
    (1) Established before February 8, 1996 by a Bell operating company 
such that no exchange area includes points within more than 1 
metropolitan statistical area, consolidated metropolitan statistical 
area, or State, except as expressly permitted under the AT&T Consent 
Decree; or
    (2) Established or modified by a Bell operating company after 
February 8, 1996 and approved by the Commission.
    Local Exchange Carrier (LEC). A LEC is any person that is engaged in 
the provision of telephone exchange service or exchange access. Such 
term does not include a person insofar as such person is engaged in the 
provision of a commercial mobile service under section 332(c) of the 
Act, except to the extent that the Commission finds that such service 
should be included in the definition of the such term.
    Maintenance and repair. Maintenance and repair involves the exchange 
of information between telecommunications carriers where one initiates a 
request for maintenance or repair of existing products and services or 
unbundled network elements or combination thereof from the other with 
attendant acknowledgements and status reports.
    Meet point. A meet point is a point of interconnection between two 
networks, designated by two telecommunications carriers, at which one 
carrier's responsibility for service begins and the other carrier's 
responsibility ends.
    Meet point interconnection arrangement. A meet point interconnection 
arrangement is an arrangement by which each telecommunications carrier 
builds and maintains its network to a meet point.
    Mobile wireless service. A mobile wireless service is any mobile 
wireless telecommunications service, including any commercial mobile 
radio service.
    Multi-functional equipment. Multi-functional equipment is equipment 
that combines one or more functions that are necessary for 
interconnection or access to unbundled network elements with one or more 
functions that

[[Page 18]]

would not meet that standard as stand-alone functions.
    Network element. A network element is a facility or equipment used 
in the provision of a telecommunications service. Such term also 
includes, but is not limited to, features, functions, and capabilities 
that are provided by means of such facility or equipment, including but 
not limited to, subscriber numbers, databases, signaling systems, and 
information sufficient for billing and collection or used in the 
transmission, routing, or other provision of a telecommunications 
service.
    Operator services. Operator services are any automatic or live 
assistance to a consumer to arrange for billing or completion of a 
telephone call. Such services include, but are not limited to, busy line 
verification, emergency interrupt, and operator-assisted directory 
assistance services.
    Physical collocation. Physical collocation is an offering by an 
incumbent LEC that enables a requesting telecommunications carrier to:
    (1) Place its own equipment to be used for interconnection or access 
to unbundled network elements within or upon an incumbent LEC's 
premises;
    (2) Use such equipment to interconnect with an incumbent LEC's 
network facilities for the transmission and routing of telephone 
exchange service, exchange access service, or both, or to gain access to 
an incumbent LEC's unbundled network elements for the provision of a 
telecommunications service;
    (3) Enter those premises, subject to reasonable terms and 
conditions, to install, maintain, and repair equipment necessary for 
interconnection or access to unbundled elements; and
    (4) Obtain reasonable amounts of space in an incumbent LEC's 
premises, as provided in this part, for the equipment necessary for 
interconnection or access to unbundled elements, allocated on a first-
come, first-served basis.
    Premises. Premises refers to an incumbent LEC's central offices and 
serving wire centers; all buildings or similar structures owned, leased, 
or otherwise controlled by an incumbent LEC that house its network 
facilities; all structures that house incumbent LEC facilities on public 
rights-of-way, including but not limited to vaults containing loop 
concentrators or similar structures; and all land owned, leased, or 
otherwise controlled by an incumbent LEC that is adjacent to these 
central offices, wire centers, buildings, and structures.
    Pre-ordering and ordering. Pre-ordering and ordering includes the 
exchange of information between telecommunications carriers about: 
current or proposed customer products and services; or unbundled network 
elements, or some combination thereof. This information includes loop 
qualification information, such as the composition of the loop material, 
including but not limited to: fiber optics or copper; the existence, 
location and type of any electronic or other equipment on the loop, 
including but not limited to, digital loop carrier or other remote 
concentration devices, feeder/distribution interfaces, bridge taps, load 
coils, pair-gain devices, disturbers in the same or adjacent binder 
groups; the loop length, including the length and location of each type 
of transmission media; the wire gauge(s) of the loop; and the electrical 
parameters of the loop, which may determine the suitability of the loop 
for various technologies.
    Provisioning. Provisioning involves the exchange of information 
between telecommunications carriers where one executes a request for a 
set of products and services or unbundled network elements or 
combination thereof from the other with attendant acknowledgements and 
status reports.
    Rural telephone company. A rural telephone company is a LEC 
operating entity to the extent that such entity:
    (1) Provides common carrier service to any local exchange carrier 
study area that does not include either:
    (i) Any incorporated place of 10,000 inhabitants or more, or any 
part thereof, based on the most recently available population statistics 
of the Bureau of the Census; or
    (ii) Any territory, incorporated or unincorporated, included in an 
urbanized area, as defined by the Bureau of the Census as of August 10, 
1993;

[[Page 19]]

    (2) Provides telephone exchange service, including exchange access, 
to fewer than 50,000 access lines;
    (3) Provides telephone exchange service to any local exchange 
carrier study area with fewer than 100,000 access lines; or
    (4) Has less than 15 percent of its access lines in communities of 
more than 50,000 on February 8, 1996.
    Service control point. A service control point is a computer 
database in the public switched network which contains information and 
call processing instructions needed to process and complete a telephone 
call.
    Service creation environment. A service creation environment is a 
computer containing generic call processing software that can be 
programmed to create new advanced intelligent network call processing 
services.
    Service provider. A service provider is a provider of 
telecommunications services or a provider of information services.
    Signal transfer point. A signal transfer point is a packet switch 
that acts as a routing hub for a signaling network and transfers 
messages between various points in and among signaling networks.
    State. The term state includes the District of Columbia and the 
Territories and possessions.
    State commission. A state commission means the commission, board, or 
official (by whatever name designated) which under the laws of any state 
has regulatory jurisdiction with respect to intrastate operations of 
carriers. As referenced in this part, this term may include the 
Commission if it assumes responsibility for a proceeding or matter, 
pursuant to section 252(e)(5) of the Act or Sec. 51.320. This term shall 
also include any person or persons to whom the state commission has 
delegated its authority under sections 251 and 252 of the Act and this 
part.
    State proceeding. A state proceeding is any administrative 
proceeding in which a state commission may approve or prescribe rates, 
terms, and conditions including, but not limited to, compulsory 
arbitration pursuant to section 252(b) of the Act, review of a Bell 
operating company statement of generally available terms pursuant to 
section 252(f) of the Act, and a proceeding to determine whether to 
approve or reject an agreement adopted by arbitration pursuant to 
section 252(e) of the Act.
    Technically feasible. Interconnection, access to unbundled network 
elements, collocation, and other methods of achieving interconnection or 
access to unbundled network elements at a point in the network shall be 
deemed technically feasible absent technical or operational concerns 
that prevent the fulfillment of a request by a telecommunications 
carrier for such interconnection, access, or methods. A determination of 
technical feasibility does not include consideration of economic, 
accounting, billing, space, or site concerns, except that space and site 
concerns may be considered in circumstances where there is no 
possibility of expanding the space available. The fact that an incumbent 
LEC must modify its facilities or equipment to respond to such request 
does not determine whether satisfying such request is technically 
feasible. An incumbent LEC that claims that it cannot satisfy such 
request because of adverse network reliability impacts must prove to the 
state commission by clear and convincing evidence that such 
interconnection, access, or methods would result in specific and 
significant adverse network reliability impacts.
    Telecommunications carrier. A telecommunications carrier is any 
provider of telecommunications services, except that such term does not 
include aggregators of telecommunications services (as defined in 
section 226 of the Act). A telecommunications carrier shall be treated 
as a common carrier under the Act only to the extent that it is engaged 
in providing telecommunications services, except that the Commission 
shall determine whether the provision of fixed and mobile satellite 
service shall be treated as common carriage. This definition includes 
CMRS providers, interexchange carriers (IXCs) and, to the extent they 
are acting as telecommunications carriers, companies that provide both 
telecommunications and information services. Private Mobile Radio 
Service providers are telecommunications carriers to the extent they 
provide domestic or

[[Page 20]]

international telecommunications for a fee directly to the public.
    Telecommunications service. The term telecommunications service 
refers to the offering of telecommunications for a fee directly to the 
public, or to such classes of users as to be effectively available 
directly to the public, regardless of the facilities used.
    Telephone exchange service. A telephone exchange service is:
    (1) A service within a telephone exchange, or within a connected 
system of telephone exchanges within the same exchange area operated to 
furnish to subscribers intercommunicating service of the character 
ordinarily furnished by a single exchange, and which is covered by the 
exchange service charge, or
    (2) A comparable service provided through a system of switches, 
transmission equipment, or other facilities (or combination thereof) by 
which a subscriber can originate and terminate a telecommunications 
service.
    Telephone toll service. The term telephone toll service refers to 
telephone service between stations in different exchange areas for which 
there is made a separate charge not included in contracts with 
subscribers for exchange service.
    Unreasonable dialing delay. For the same type of calls, dialing 
delay is ``unreasonable'' when the dialing delay experienced by the 
customer of a competing provider is greater than that experienced by a 
customer of the LEC providing dialing parity, or nondiscriminatory 
access to operator services or directory assistance.
    Triennial Review Order. The Triennial Review Order means the 
Commission's Report and Order and Order on Remand and Further Notice of 
Proposed Rulemaking in CC Docket Nos. 01-338, 96-98, and 98-147.
    Triennial Review Remand Order. The Triennial Review Remand Order is 
the Commission's Order on Remand in CC Docket Nos. 01-338 and 04-313 
(released February 4, 2005).
    Virtual collocation. Virtual collocation is an offering by an 
incumbent LEC that enables a requesting telecommunications carrier to:
    (1) Designate or specify equipment to be used for interconnection or 
access to unbundled network elements to be located within or upon an 
incumbent LEC's premises, and dedicated to such telecommunications 
carrier's use;
    (2) Use such equipment to interconnect with an incumbent LEC's 
network facilities for the transmission and routing of telephone 
exchange service, exchange access service, or both, or for access to an 
incumbent LEC's unbundled network elements for the provision of a 
telecommunications service; and
    (3) Electronically monitor and control its communications channels 
terminating in such equipment.
    Wire center. A wire center is the location of an incumbent LEC local 
switching facility containing one or more central offices, as defined in 
the Appendix to part 36 of this chapter. The wire center boundaries 
define the area in which all customers served by a given wire center are 
located.

[61 FR 45619, Aug. 29, 1996, as amended at 61 FR 47348, Sept. 6, 1996; 
64 FR 23241, Apr. 30, 1999; 65 FR 1344, Jan. 10, 2000; 65 FR 2550, Jan. 
18, 2000; 65 FR 54438, Sept. 8, 2000; 66 FR 43521, Aug. 20, 2001; 68 FR 
52293, Sept. 2, 2003; 70 FR 8952, Feb. 24, 2005]



                  Subpart B_Telecommunications Carriers



Sec. 51.100  General duty.

    (a) Each telecommunications carrier has the duty:
    (1) To interconnect directly or indirectly with the facilities and 
equipment of other telecommunications carriers; and
    (2) To not install network features, functions, or capabilities that 
do not comply with the guidelines and standards as provided in the 
Commission's rules or section 255 or 256 of the Act.
    (b) A telecommunication carrier that has interconnected or gained 
access under sections 251(a)(1), 251(c)(2), or 251(c)(3) of the Act, may 
offer information services through the same arrangement, so long as it 
is offering telecommunications services through the same arrangement as 
well.

[[Page 21]]



          Subpart C_Obligations of All Local Exchange Carriers



Sec. 51.201  Resale.

    The rules governing resale of services by an incumbent LEC are set 
forth in subpart G of this part.



Sec. 51.203  Number portability.

    The rules governing number portability are set forth in part 52, 
subpart C of this chapter.



Sec. 51.205  Dialing parity: General.

    A local exchange carrier (LEC) shall provide local and toll dialing 
parity to competing providers of telephone exchange service or telephone 
toll service, with no unreasonable dialing delays. Dialing parity shall 
be provided for all originating telecommunications services that require 
dialing to route a call.

[61 FR 47349, Sept. 6, 1996]



Sec. 51.207  Local dialing parity.

    A LEC shall permit telephone exchange service customers within a 
local calling area to dial the same number of digits to make a local 
telephone call notwithstanding the identity of the customer's or the 
called party's telecommunications service provider.

[61 FR 47349, Sept. 6, 1996]



Sec. 51.209  Toll dialing parity.

    (a) A LEC shall implement throughout each state in which it offers 
telephone exchange service intraLATA and interLATA toll dialing parity 
based on LATA boundaries. When a single LATA covers more than one state, 
the LEC shall use the implementation procedures that each state has 
approved for the LEC within that state's borders.
    (b) A LEC shall implement toll dialing parity through a 
presubscription process that permits a customer to select a carrier to 
which all designated calls on a customer's line will be routed 
automatically. LECs shall allow a customer to presubscribe, at a 
minimum, to one telecommunications carrier for all interLATA toll calls 
and to presubscribe to the same or to another telecommunications carrier 
for all intraLATA toll calls.
    (c) A LEC may not assign automatically a customer's intraLATA toll 
traffic to itself, to its subsidiaries or affiliates, to the customer's 
presubscribed interLATA or interstate toll carrier, or to any other 
carrier, except when, in a state that already has implemented 
intrastate, intraLATA toll dialing parity, the subscriber has selected 
the same presubscribed carrier for both intraLATA and interLATA toll 
calls.
    (d) Notwithstanding the requirements of paragraphs (a) and (b) of 
this section, states may require that toll dialing parity be based on 
state boundaries if it deems that the provision of intrastate and 
interstate toll dialing parity is procompetitive and otherwise in the 
public interest.

[61 FR 47349, Sept. 6, 1996]



Sec. 51.213  Toll dialing parity implementation plans.

    (a) A LEC must file a plan for providing intraLATA toll dialing 
parity throughout each state in which it offers telephone exchange 
service. A LEC cannot offer intraLATA toll dialing parity within a state 
until the implementation plan has been approved by the appropriate state 
commission or the Commission.
    (b) A LEC's implementation plan must include:
    (1) A proposal that explains how the LEC will offer intraLATA toll 
dialing parity for each exchange that the LEC operates in the state, in 
accordance with the provisions of this section, and a proposed time 
schedule for implementation; and
    (2) A proposal for timely notification of its subscribers and the 
methods it proposes to use to enable subscribers to affirmatively select 
an intraLATA toll service provider.
    (3) A LEC that is not a BOC also shall identify the LATA with which 
it will associate for the purposes of providing intraLATA and interLATA 
toll dialing parity under this subpart.

[61 FR 47349, Sept. 6, 1996, as amended at 71 FR 65750, Nov. 9, 2006]

[[Page 22]]



Sec. 51.215  Dialing parity: Cost recovery.

    (a) A LEC may recover the incremental costs necessary for the 
implementation of toll dialing parity. The LEC must recover such costs 
from all providers of telephone exchange service and telephone toll 
service in the area served by the LEC, including that LEC. The LEC shall 
use a cost recovery mechanism established by the state.
    (b) Any cost recovery mechanism for the provision of toll dialing 
parity pursuant to this section that a state adopts must not:
    (1) Give one service provider an appreciable cost advantage over 
another service provider, when competing for a specific subscriber 
(i.e., the recovery mechanism may not have a disparate effect on the 
incremental costs of competing service providers seeking to serve the 
same customer); or
    (2) Have a disparate effect on the ability of competing service 
providers to earn a normal return on their investment.

[61 FR 47350, Sept. 6, 1996]



Sec. 51.217  Nondiscriminatory access: Telephone numbers, operator
services, directory assistance services, and directory listings.

    (a) Definitions. As used in this section, the following definitions 
apply:
    (1) Competing provider. A ``competing provider'' is a provider of 
telephone exchange or telephone toll services that seeks 
nondiscriminatory access from a local exchange carrier (LEC) in that 
LEC's service area.
    (2) Nondiscriminatory access. ``Nondiscriminatory access'' refers to 
access to telephone numbers, operator services, directory assistance and 
directory listings that is at least equal to the access that the 
providing local exchange carrier (LEC) itself receives. 
Nondiscriminatory access includes, but is not limited to:
    (i) Nondiscrimination between and among carriers in the rates, 
terms, and conditions of the access provided; and
    (ii) The ability of the competing provider to obtain access that is 
at least equal in quality to that of the providing LEC.
    (3) Providing local exchange carrier (LEC). A ``providing local 
exchange carrier'' is a local exchange carrier (LEC) that is required to 
permit nondiscriminatory access to a competing provider.
    (b) General rule. A local exchange carrier (LEC) that provides 
operator services, directory assistance services or directory listings 
to its customers, or provides telephone numbers, shall permit competing 
providers of telephone exchange service or telephone toll service to 
have nondiscriminatory access to that service or feature, with no 
unreasonable dialing delays.
    (c) Specific requirements. A LEC subject to paragraph (b) of this 
section must also comply with the following requirements:
    (1) Telephone numbers. A LEC shall permit competing providers to 
have access to telephone numbers that is identical to the access that 
the LEC provides to itself.
    (2) Operator services. A LEC must permit telephone service customers 
to connect to the operator services offered by that customer's chosen 
local service provider by dialing ``0,'' or ``0'' plus the desired 
telephone number, regardless of the identity of the customer's local 
telephone service provider.
    (3) Directory assistance services and directory listings--(i) Access 
to directory assistance. A LEC shall permit competing providers to have 
access to its directory assistance services, including directory 
assistance databases, so that any customer of a competing provider can 
obtain directory listings, except as provided in paragraph (c)(3)(iv) of 
this section, on a nondiscriminatory basis, notwithstanding the identity 
of the customer's local service provider, or the identity of the 
provider for the customer whose listing is requested. A LEC must supply 
access to directory assistance in the manner specified by the competing 
provider, including transfer of the LECs' directory assistance databases 
in readily accessible magnetic tape, electronic or other convenient 
format, as provided in paragraph (c)(3)(iii) of this section. Updates to 
the directory assistance database shall be made in the same format as 
the initial transfer (unless the requesting LEC requests otherwise), and 
shall be performed in a timely manner, taking no longer than those made 
to the

[[Page 23]]

providing LEC's own database. A LEC shall accept the listings of those 
customers served by competing providers for inclusion in its directory 
assistance/operator services databases.
    (ii) Access to directory listings. A LEC that compiles directory 
listings shall share directory listings with competing providers in the 
manner specified by the competing provider, including readily accessible 
tape or electronic formats, as provided in paragraph (c)(3)(iii) of this 
section. Such data shall be provided in a timely fashion.
    (iii) Format. A LEC shall provide access to its directory assistance 
services, including directory assistance databases, and to its directory 
listings in any format the competing provider specifies, if the LEC's 
internal systems can accommodate that format.
    (A) If a LEC's internal systems do not permit it provide directory 
assistance or directory listings in the format the specified by the 
competing provider, the LEC shall:
    (1) Within thirty days of receiving the request, inform the 
competing provider that the requested format cannot be accommodated and 
tell the requesting provider which formats can be accommodated; and
    (2) Provide the requested directory assistance or directory listings 
in the format the competing provider chooses from among the available 
formats.
    (B) [Reserved]
    (iv) Unlisted numbers. A LEC shall not provide access to unlisted 
telephone numbers, or other information that its customer has asked the 
LEC not to make available, with the exception of customer name and 
address. The LEC shall ensure that access is permitted to the same 
directory information, including customer name and address, that is 
available to its own directory assistance customers.
    (v) Adjuncts to services. Operator services and directory assistance 
services must be made available to competing providers in their 
entirety, including access to any adjunct features (e.g., rating tables 
or customer information databases) necessary to allow competing 
providers full use of these services.
    (d) Branding of operator services and directory assistance services. 
The refusal of a providing local exchange carrier (LEC) to comply with 
the reasonable request of a competing provider that the providing LEC 
rebrand its operator services and directory assistance, or remove its 
brand from such services, creates a presumption that the providing LEC 
is unlawfully restricting access to its operator services and directory 
assistance. The providing LEC can rebut this presumption by 
demonstrating that it lacks the capability to comply with the competing 
provider's request.
    (e) Disputes--(1) Disputes involving nondiscriminatory access. In 
disputes involving nondiscriminatory access to operator services, 
directory assistance services, or directory listings, a providing LEC 
shall bear the burden of demonstrating with specificity:
    (i) That it is permitting nondiscriminatory access, and
    (ii) That any disparity in access is not caused by factors within 
its control. ``Factors within its control'' include, but are not limited 
to, physical facilities, staffing, the ordering of supplies or 
equipment, and maintenance.
    (2) Disputes involving unreasonable dialing delay. In disputes 
between providing local exchange carriers (LECs) and competing providers 
involving unreasonable dialing delay in the provision of access to 
operator services and directory assistance, the burden of proof is on 
the providing LEC to demonstrate with specificity that it is processing 
the calls of the competing provider's customers on terms equal to that 
of similar calls from the providing LEC's own customers.

[61 FR 47350, Sept. 6, 1996, as amended at 64 FR 51911, Sept. 27, 1999]



Sec. 51.219  Access to rights of way.

    The rules governing access to rights of way are set forth in part 1, 
subpart J of this chapter.



Sec. 51.221  Reciprocal compensation.

    The rules governing reciprocal compensation are set forth in subpart 
H of this part.



Sec. 51.223  Application of additional requirements.

    (a) A state may not impose the obligations set forth in section 
251(c) of the Act on a LEC that is not classified as

[[Page 24]]

an incumbent LEC as defined in section 251(h)(1) of the Act, unless the 
Commission issues an order declaring that such LECs or classes or 
categories of LECs should be treated as incumbent LECs.
    (b) A state commission, or any other interested party, may request 
that the Commission issue an order declaring that a particular LEC be 
treated as an incumbent LEC, or that a class or category of LECs be 
treated as incumbent LECs, pursuant to section 251(h)(2) of the Act.



Sec. 51.230  Presumption of acceptability for deployment of an advanced
services loop technology.

    (a) An advanced services loop technology is presumed acceptable for 
deployment under any one of the following circumstances, where the 
technology:
    (1) Complies with existing industry standards; or
    (2) Is approved by an industry standards body, the Commission, or 
any state commission; or
    (3) Has been successfully deployed by any carrier without 
significantly degrading the performance of other services.
    (b) An incumbent LEC may not deny a carrier's request to deploy a 
technology that is presumed acceptable for deployment unless the 
incumbent LEC demonstrates to the relevant state commission that 
deployment of the particular technology will significantly degrade the 
performance of other advanced services or traditional voiceband 
services.
    (c) Where a carrier seeks to establish that deployment of a 
technology falls within the presumption of acceptability under paragraph 
(a)(3) of this section, the burden is on the requesting carrier to 
demonstrate to the state commission that its proposed deployment meets 
the threshold for a presumption of acceptability and will not, in fact, 
significantly degrade the performance of other advanced services or 
traditional voice band services. Upon a successful demonstration by the 
requesting carrier before a particular state commission, the deployed 
technology shall be presumed acceptable for deployment in other areas.

[65 FR 1345, Jan. 10, 2000]



Sec. 51.231  Provision of information on advanced services deployment.

    (a) An incumbent LEC must provide to requesting carriers that seek 
access to a loop or high frequency portion of the loop to provide 
advanced services:
    (1) Uses in determining which services can be deployed; and 
information with respect to the spectrum management procedures and 
policies that the incumbent LEC.
    (2) Information with respect to the rejection of the requesting 
carrier's provision of advanced services, together with the specific 
reason for the rejection; and
    (3) Information with respect to the number of loops using advanced 
services technology within the binder and type of technology deployed on 
those loops.
    (b) A requesting carrier that seeks access to a loop or a high 
frequency portion of a loop to provide advanced services must provide to 
the incumbent LEC information on the type of technology that the 
requesting carrier seeks to deploy.
    (1) Where the requesting carrier asserts that the technology it 
seeks to deploy fits within a generic power spectral density (PSD) mask, 
it also must provide Spectrum Class information for the technology.
    (2) Where a requesting carrier relies on a calculation-based 
approach to support deployment of a particular technology, it must 
provide the incumbent LEC with information on the speed and power at 
which the signal will be transmitted.
    (c) The requesting carrier also must provide the information 
required under paragraph (b) of this section when notifying the 
incumbent LEC of any proposed change in advanced services technology 
that the carrier uses on the loop.

[65 FR 1345, Jan. 10, 2000]



Sec. 51.232  Binder group management.

    (a) With the exception of loops on which a known disturber is 
deployed, the incumbent LEC shall be prohibited from designating, 
segregating or reserving particular loops or binder groups for use 
solely by any particular advanced services loop technology.

[[Page 25]]

    (b) Any party seeking designation of a technology as a known 
disturber should file a petition for declaratory ruling with the 
Commission seeking such designation, pursuant to Sec. 1.2 of this 
chapter.

[65 FR 1346, Jan. 10, 2000]



Sec. 51.233  Significant degradation of services caused by deployment
of advanced services.

    (a) Where a carrier claims that a deployed advanced service is 
significantly degrading the performance of other advanced services or 
traditional voiceband services, that carrier must notify the deploying 
carrier and allow the deploying carrier a reasonable opportunity to 
correct the problem. Where the carrier whose services are being degraded 
does not know the precise cause of the degradation, it must notify each 
carrier that may have caused or contributed to the degradation.
    (b) Where the degradation asserted under paragraph (a) of this 
section remains unresolved by the deploying carrier(s) after a 
reasonable opportunity to correct the problem, the carrier whose 
services are being degraded must establish before the relevant state 
commission that a particular technology deployment is causing the 
significant degradation.
    (c) Any claims of network harm presented to the deploying carrier(s) 
or, if subsequently necessary, the relevant state commission, must be 
supported with specific and verifiable information.
    (d) Where a carrier demonstrates that a deployed technology is 
significantly degrading the performance of other advanced services or 
traditional voice band services, the carrier deploying the technology 
shall discontinue deployment of that technology and migrate its 
customers to technologies that will not significantly degrade the 
performance of other such services.
    (e) Where the only degraded service itself is a known disturber, and 
the newly deployed technology satisfies at least one of the criteria for 
a presumption that it is acceptable for deployment under Sec. 51.230, 
the degraded service shall not prevail against the newly-deployed 
technology.

[65 FR 1346, Jan. 10, 2000]



  Subpart D_Additional Obligations of Incumbent Local Exchange Carriers



Sec. 51.301  Duty to negotiate.

    (a) An incumbent LEC shall negotiate in good faith the terms and 
conditions of agreements to fulfill the duties established by sections 
251 (b) and (c) of the Act.
    (b) A requesting telecommunications carrier shall negotiate in good 
faith the terms and conditions of agreements described in paragraph (a) 
of this section.
    (c) If proven to the Commission, an appropriate state commission, or 
a court of competent jurisdiction, the following actions or practices, 
among others, violate the duty to negotiate in good faith:
    (1) Demanding that another party sign a nondisclosure agreement that 
precludes such party from providing information requested by the 
Commission, or a state commission, or in support of a request for 
arbitration under section 252(b)(2)(B) of the Act;
    (2) Demanding that a requesting telecommunications carrier attest 
that an agreement complies with all provisions of the Act, federal 
regulations, or state law;
    (3) Refusing to include in an arbitrated or negotiated agreement a 
provision that permits the agreement to be amended in the future to take 
into account changes in Commission or state rules;
    (4) Conditioning negotiation on a requesting telecommunications 
carrier first obtaining state certifications;
    (5) Intentionally misleading or coercing another party into reaching 
an agreement that it would not otherwise have made;
    (6) Intentionally obstructing or delaying negotiations or 
resolutions of disputes;
    (7) Refusing throughout the negotiation process to designate a 
representative with authority to make binding representations, if such 
refusal significantly delays resolution of issues; and

[[Page 26]]

    (8) Refusing to provide information necessary to reach agreement. 
Such refusal includes, but is not limited to:
    (i) Refusal by an incumbent LEC to furnish information about its 
network that a requesting telecommunications carrier reasonably requires 
to identify the network elements that it needs in order to serve a 
particular customer; and
    (ii) Refusal by an incumbent LEC to furnish cost data that would be 
relevant to setting rates if the parties were in arbitration.

[61 FR 45619, Aug. 29, 1996, as amended at 68 FR 52294, Sept. 2, 2003]



Sec. 51.303  Preexisting agreements.

    (a) All interconnection agreements between an incumbent LEC and a 
telecommunications carrier, including those negotiated before February 
8, 1996, shall be submitted by the parties to the appropriate state 
commission for approval pursuant to section 252(e) of the Act.
    (b) Interconnection agreements negotiated before February 8, 1996, 
between Class A carriers, as defined by Sec. 32.11(a)(1) of this 
chapter, shall be filed by the parties with the appropriate state 
commission no later than June 30, 1997, or such earlier date as the 
state commission may require.
    (c) If a state commission approves a preexisting agreement, it shall 
be made available to other parties in accordance with section 252(i) of 
the Act and Sec. 51.809 of this part. A state commission may reject a 
preexisting agreement on the grounds that it is inconsistent with the 
public interest, or for other reasons set forth in section 252(e)(2)(A) 
of the Act.



Sec. 51.305  Interconnection.

    (a) An incumbent LEC shall provide, for the facilities and equipment 
of any requesting telecommunications carrier, interconnection with the 
incumbent LEC's network:
    (1) For the transmission and routing of telephone exchange traffic, 
exchange access traffic, or both;
    (2) At any technically feasible point within the incumbent LEC's 
network including, at a minimum:
    (i) The line-side of a local switch;
    (ii) The trunk-side of a local switch;
    (iii) The trunk interconnection points for a tandem switch;
    (iv) Central office cross-connect points;
    (v) Out-of-band signaling transfer points necessary to exchange 
traffic at these points and access call-related databases; and
    (vi) The points of access to unbundled network elements as described 
in Sec. 51.319;
    (3) That is at a level of quality that is equal to that which the 
incumbent LEC provides itself, a subsidiary, an affiliate, or any other 
party. At a minimum, this requires an incumbent LEC to design 
interconnection facilities to meet the same technical criteria and 
service standards that are used within the incumbent LEC's network. This 
obligation is not limited to a consideration of service quality as 
perceived by end users, and includes, but is not limited to, service 
quality as perceived by the requesting telecommunications carrier; and
    (4) On terms and conditions that are just, reasonable, and 
nondiscriminatory in accordance with the terms and conditions of any 
agreement, the requirements of sections 251 and 252 of the Act, and the 
Commission's rules including, but not limited to, offering such terms 
and conditions equally to all requesting telecommunications carriers, 
and offering such terms and conditions that are no less favorable than 
the terms and conditions upon which the incumbent LEC provides such 
interconnection to itself. This includes, but is not limited to, the 
time within which the incumbent LEC provides such interconnection.
    (b) A carrier that requests interconnection solely for the purpose 
of originating or terminating its interexchange traffic on an incumbent 
LEC's network and not for the purpose of providing to others telephone 
exchange service, exchange access service, or both, is not entitled to 
receive interconnection pursuant to section 251(c)(2) of the Act.
    (c) Previous successful interconnection at a particular point in a 
network, using particular facilities, constitutes substantial evidence 
that interconnection is technically feasible at that point, or at 
substantially similar

[[Page 27]]

points, in networks employing substantially similar facilities. 
Adherence to the same interface or protocol standards shall constitute 
evidence of the substantial similarity of network facilities.
    (d) Previous successful interconnection at a particular point in a 
network at a particular level of quality constitutes substantial 
evidence that interconnection is technically feasible at that point, or 
at substantially similar points, at that level of quality.
    (e) An incumbent LEC that denies a request for interconnection at a 
particular point must prove to the state commission that interconnection 
at that point is not technically feasible.
    (f) If technically feasible, an incumbent LEC shall provide two-way 
trunking upon request.
    (g) An incumbent LEC shall provide to a requesting 
telecommunications carrier technical information about the incumbent 
LEC's network facilities sufficient to allow the requesting carrier to 
achieve interconnection consistent with the requirements of this 
section.

[61 FR 45619, Aug. 29, 1996, as amended at 61 FR 47351, Sept. 6, 1996; 
68 FR 52294, Sept. 2, 2003]



Sec. 51.307  Duty to provide access on an unbundled basis to network
elements.

    (a) An incumbent LEC shall provide, to a requesting 
telecommunications carrier for the provision of a telecommunications 
service, nondiscriminatory access to network elements on an unbundled 
basis at any technically feasible point on terms and conditions that are 
just, reasonable, and nondiscriminatory in accordance with the terms and 
conditions of any agreement, the requirements of sections 251 and 252 of 
the Act, and the Commission's rules.
    (b) The duty to provide access to unbundled network elements 
pursuant to section 251(c)(3) of the Act includes a duty to provide a 
connection to an unbundled network element independent of any duty to 
provide interconnection pursuant to this part and section 251(c)(2) of 
the Act.
    (c) An incumbent LEC shall provide a requesting telecommunications 
carrier access to an unbundled network element, along with all of the 
unbundled network element's features, functions, and capabilities, in a 
manner that allows the requesting telecommunications carrier to provide 
any telecommunications service that can be offered by means of that 
network element.
    (d) An incumbent LEC shall provide a requesting telecommunications 
carrier access to the facility or functionality of a requested network 
element separate from access to the facility or functionality of other 
network elements, for a separate charge.
    (e) An incumbent LEC shall provide to a requesting 
telecommunications carrier technical information about the incumbent 
LEC's network facilities sufficient to allow the requesting carrier to 
achieve access to unbundled network elements consistent with the 
requirements of this section.

[61 FR 45619, Aug. 29, 1996, as amended at 61 FR 47351, Sept. 6, 1996]



Sec. 51.309  Use of unbundled network elements.

    (a) Except as provided in Sec. 51.318, an incumbent LEC shall not 
impose limitations, restrictions, or requirements on requests for, or 
the use of, unbundled network elements for the service a requesting 
telecommunications carrier seeks to offer.
    (b) A requesting telecommunications carrier may not access an 
unbundled network element for the exclusive provision of mobile wireless 
services or interexchange services.
    (c) A telecommunications carrier purchasing access to an unbundled 
network facility is entitled to exclusive use of that facility for a 
period of time, or when purchasing access to a feature, function, or 
capability of a facility, a telecommunications carrier is entitled to 
use of that feature, function, or capability for a period of time. A 
telecommunications carrier's purchase of access to an unbundled network 
element does not relieve the incumbent LEC of the duty to maintain, 
repair, or replace the unbundled network element.
    (d) A requesting telecommunications carrier that accesses and uses 
an unbundled network element consistent

[[Page 28]]

with paragraph (b) of this section may provide any telecommunications 
services over the same unbundled network element.
    (e) Except as provided in Sec. 51.318, an incumbent LEC shall permit 
a requesting telecommunications carrier to commingle an unbundled 
network element or a combination of unbundled network elements with 
wholesale services obtained from an incumbent LEC.
    (f) Upon request, an incumbent LEC shall perform the functions 
necessary to commingle an unbundled network element or a combination of 
unbundled network elements with one or more facilities or services that 
a requesting telecommunications carrier has obtained at wholesale from 
an incumbent LEC.
    (g) An incumbent LEC shall not deny access to an unbundled network 
element or a combination of unbundled network elements on the grounds 
that one or more of the elements:
    (1) Is connected to, attached to, linked to, or combined with, a 
facility or service obtained from an incumbent LEC; or
    (2) Shares part of the incumbent LEC's network with access services 
or inputs for mobile wireless services and/or interexchange services.

[61 FR 45619, Aug. 29, 1996, as amended at 68 FR 52294, Sept. 2, 2003; 
70 FR 8952, Feb. 24, 2005]



Sec. 51.311  Nondiscriminatory access to unbundled network elements.

    (a) The quality of an unbundled network element, as well as the 
quality of the access to the unbundled network element, that an 
incumbent LEC provides to a requesting telecommunications carrier shall 
be the same for all telecommunications carriers requesting access to 
that network element.
    (b) To the extent technically feasible, the quality of an unbundled 
network element, as well as the quality of the access to such unbundled 
network element, that an incumbent LEC provides to a requesting 
telecommunications carrier shall be at least equal in quality to that 
which the incumbent LEC provides to itself. If an incumbent LEC fails to 
meet this requirement, the incumbent LEC must prove to the state 
commission that it is not technically feasible to provide the requested 
unbundled network element, or to provide access to the requested 
unbundled network element, at a level of quality that is equal to that 
which the incumbent LEC provides to itself.
    (c) Previous successful access to an unbundled element at a 
particular point in a network, using particular facilities, is 
substantial evidence that access is technically feasible at that point, 
or at substantially similar points, in networks employing substantially 
similar facilities. Adherence to the same interface or protocol 
standards shall constitute evidence of the substantial similarity of 
network facilities.
    (d) Previous successful provision of access to an unbundled element 
at a particular point in a network at a particular level of quality is 
substantial evidence that access is technically feasible at that point, 
or at substantially similar points, at that level of quality.

[61 FR 45619, Aug. 29, 1996, as amended at 68 FR 52294, Sept. 2, 2003]



Sec. 51.313  Just, reasonable and nondiscriminatory terms and conditions
for the provision of unbundled network elements.

    (a) The terms and conditions pursuant to which an incumbent LEC 
provides access to unbundled network elements shall be offered equally 
to all requesting telecommunications carriers.
    (b) Where applicable, the terms and conditions pursuant to which an 
incumbent LEC offers to provide access to unbundled network elements, 
including but not limited to, the time within which the incumbent LEC 
provisions such access to unbundled network elements, shall, at a 
minimum, be no less favorable to the requesting carrier than the terms 
and conditions under which the incumbent LEC provides such elements to 
itself.
    (c) An incumbent LEC must provide a carrier purchasing access to 
unbundled network elements with the pre-ordering, ordering, 
provisioning, maintenance and repair, and billing functions of the 
incumbent LEC's operations support systems.

[[Page 29]]



Sec. 51.315  Combination of unbundled network elements.

    (a) An incumbent LEC shall provide unbundled network elements in a 
manner that allows requesting telecommunications carriers to combine 
such network elements in order to provide a telecommunications service.
    (b) Except upon request, an incumbent LEC shall not separate 
requested network elements that the incumbent LEC currently combines.
    (c) Upon request, an incumbent LEC shall perform the functions 
necessary to combine unbundled network elements in any manner, even if 
those elements are not ordinarily combined in the incumbent LEC's 
network, provided that such combination:
    (1) Is technically feasible; and
    (2) Would not undermine the ability of other carriers to obtain 
access to unbundled network elements or to interconnect with the 
incumbent LEC's network.
    (d) Upon request, an incumbent LEC shall perform the functions 
necessary to combine unbundled network elements with elements possessed 
by the requesting telecommunications carrier in any technically feasible 
manner.
    (e) An incumbent LEC that denies a request to combine elements 
pursuant to paragraph (c)(1) or paragraph (d) of this section must prove 
to the state commission that the requested combination is not 
technically feasible.
    (f) An incumbent LEC that denies a request to combine unbundled 
network elements pursuant to paragraph (c)(2) of this section must 
demonstrate to the state commission that the requested combination would 
undermine the ability of other carriers to obtain access to unbundled 
network elements or to interconnect with the incumbent LEC's network.

[61 FR 45619, Aug. 29, 1996, as amended at 68 FR 52294, Sept. 2, 2003]



Sec. 51.316  Conversion of unbundled network elements and services.

    (a) Upon request, an incumbent LEC shall convert a wholesale 
service, or group of wholesale services, to the equivalent unbundled 
network element, or combination of unbundled network elements, that is 
available to the requesting telecommunications carrier under section 
251(c)(3) of the Act and this part.
    (b) An incumbent LEC shall perform any conversion from a wholesale 
service or group of wholesale services to an unbundled network element 
or combination of unbundled network elements without adversely affecting 
the service quality perceived by the requesting telecommunications 
carrier's end-user customer.
    (c) Except as agreed to by the parties, an incumbent LEC shall not 
impose any untariffed termination charges, or any disconnect fees, re-
connect fees, or charges associated with establishing a service for the 
first time, in connection with any conversion between a wholesale 
service or group of wholesale services and an unbundled network element 
or combination of unbundled network elements.

[68 FR 52294, Sept. 2, 2003]



Sec. 51.317  Standards for requiring the unbundling of network elements.

    (a) Proprietary network elements. A network element shall be 
considered to be proprietary if an incumbent LEC can demonstrate that it 
has invested resources to develop proprietary information or 
functionalities that are protected by patent, copyright or trade secret 
law. The Commission shall undertake the following analysis to determine 
whether a proprietary network element should be made available for 
purposes of section 251(c)(3) of the Act:
    (1) Determine whether access to the proprietary network element is 
``necessary.'' A network element is ``necessary'' if, taking into 
consideration the availability of alternative elements outside the 
incumbent LEC's network, including self-provisioning by a requesting 
telecommunications carrier or acquiring an alternative from a third-
party supplier, lack of access to the network element precludes a 
requesting telecommunications carrier from providing the services that 
it seeks to offer. If access is ``necessary,'' the Commission may 
require the unbundling of such proprietary network element.
    (2) In the event that such access is not ``necessary,'' the 
Commission may

[[Page 30]]

require unbundling if it is determined that:
    (i) The incumbent LEC has implemented only a minor modification to 
the network element in order to qualify for proprietary treatment;
    (ii) The information or functionality that is proprietary in nature 
does not differentiate the incumbent LEC's services from the requesting 
telecommunications carrier's services; or
    (iii) Lack of access to such element would jeopardize the goals of 
the Act.
    (b) Non-proprietary network elements. The Commission shall determine 
whether a non-proprietary network element should be made available for 
purposes of section 251(c)(3) of the Act by analyzing, at a minimum, 
whether lack of access to a non-proprietary network element ``impairs'' 
a requesting carrier's ability to provide the service it seeks to offer. 
A requesting carrier's ability to provide service is ``impaired'' if, 
taking into consideration the availability of alternative elements 
outside the incumbent LEC's network, including elements self-provisioned 
by the requesting carrier or acquired as an alternative from a third-
party supplier, lack of access to that element poses a barrier or 
barriers to entry, including operational and economic barriers, that are 
likely to make entry into a market by a reasonably efficient competitor 
uneconomic.

[70 FR 8952, Feb. 24, 2005]



Sec. 51.318  Eligibility criteria for access to certain unbundled network
elements.

    (a) Except as provided in paragraph (b) of this section, an 
incumbent LEC shall provide access to unbundled network elements and 
combinations of unbundled network elements without regard to whether the 
requesting telecommunications carrier seeks access to the elements to 
establish a new circuit or to convert an existing circuit from a service 
to unbundled network elements.
    (b) An incumbent LEC need not provide access to an unbundled DS1 
loop in combination, or commingled, with a dedicated DS1 transport or 
dedicated DS3 transport facility or service, or to an unbundled DS3 loop 
in combination, or commingled, with a dedicated DS3 transport facility 
or service, or an unbundled dedicated DS1 transport facility in 
combination, or commingled, with an unbundled DS1 loop or a DS1 channel 
termination service, or to an unbundled dedicated DS3 transport facility 
in combination, or commingled, with an unbundled DS1 loop or a DS1 
channel termination service, or to an unbundled DS3 loop or a DS3 
channel termination service, unless the requesting telecommunications 
carrier certifies that all of the following conditions are met:
    (1) The requesting telecommunications carrier has received state 
certification to provide local voice service in the area being served 
or, in the absence of a state certification requirement, has complied 
with registration, tariffing, filing fee, or other regulatory 
requirements applicable to the provision of local voice service in that 
area.
    (2) The following criteria are satisfied for each combined circuit, 
including each DS1 circuit, each DS1 enhanced extended link, and each 
DS1-equivalent circuit on a DS3 enhanced extended link:
    (i) Each circuit to be provided to each customer will be assigned a 
local number prior to the provision of service over that circuit;
    (ii) Each DS1-equivalent circuit on a DS3 enhanced extended link 
must have its own local number assignment, so that each DS3 must have at 
least 28 local voice numbers assigned to it;
    (iii) Each circuit to be provided to each customer will have 911 or 
E911 capability prior to the provision of service over that circuit;
    (iv) Each circuit to be provided to each customer will terminate in 
a collocation arrangement that meets the requirements of paragraph (c) 
of this section;
    (v) Each circuit to be provided to each customer will be served by 
an interconnection trunk that meets the requirements of paragraph (d) of 
this section;
    (vi) For each 24 DS1 enhanced extended links or other facilities 
having equivalent capacity, the requesting telecommunications carrier 
will have at least one active DS1 local service interconnection trunk 
that meets the

[[Page 31]]

requirements of paragraph (d) of this section; and
    (vii) Each circuit to be provided to each customer will be served by 
a switch capable of switching local voice traffic.
    (c) A collocation arrangement meets the requirements of this 
paragraph if it is:
    (1) Established pursuant to section 251(c)(6) of the Act and located 
at an incumbent LEC premises within the same LATA as the customer's 
premises, when the incumbent LEC is not the collocator; and
    (2) Located at a third party's premises within the same LATA as the 
customer's premises, when the incumbent LEC is the collocator.
    (d) An interconnection trunk meets the requirements of this 
paragraph if the requesting telecommunications carrier will transmit the 
calling party's number in connection with calls exchanged over the 
trunk.

[68 FR 52295, Sept. 2, 2003, as amended at 68 FR 64000, Nov. 12, 2003]



Sec. 51.319  Specific unbundling requirements.

    (a) Local loops. An incumbent LEC shall provide a requesting 
telecommunications carrier with nondiscriminatory access to the local 
loop on an unbundled basis, in accordance with section 251(c)(3) of the 
Act and this part and as set forth in paragraphs (a)(1) through (8) of 
this section. The local loop network element is defined as a 
transmission facility between a distribution frame (or its equivalent) 
in an incumbent LEC central office and the loop demarcation point at an 
end-user customer premises. This element includes all features, 
functions, and capabilities of such transmission facility, including the 
network interface device. It also includes all electronics, optronics, 
and intermediate devices (including repeaters and load coils) used to 
establish the transmission path to the end-user customer premises as 
well as any inside wire owned or controlled by the incumbent LEC that is 
part of that transmission path.
    (1) Copper loops. An incumbent LEC shall provide a requesting 
telecommunications carrier with nondiscriminatory access to the copper 
loop on an unbundled basis. A copper loop is a stand-alone local loop 
comprised entirely of copper wire or cable. Copper loops include two-
wire and four-wire analog voice-grade copper loops, digital copper loops 
(e.g., DS0s and integrated services digital network lines), as well as 
two-wire and four-wire copper loops conditioned to transmit the digital 
signals needed to provide digital subscriber line services, regardless 
of whether the copper loops are in service or held as spares. The copper 
loop includes attached electronics using time division multiplexing 
technology, but does not include packet switching capabilities as 
defined in paragraph (a)(2)(i) of this section. The availability of DS1 
and DS3 copper loops is subject to the requirements of paragraphs (a)(4) 
and (5) of this section.
    (i) Line splitting. An incumbent LEC shall provide a requesting 
telecommunications carrier that obtains an unbundled copper loop from 
the incumbent LEC with the ability to engage in line splitting 
arrangements with another competitive LEC using a splitter collocated at 
the central office where the loop terminates into a distribution frame 
or its equivalent. Line splitting is the process in which one 
competitive LEC provides narrowband voice service over the low frequency 
portion of a copper loop and a second competitive LEC provides digital 
subscriber line service over the high frequency portion of that same 
loop. The high frequency portion of the loop consists of the frequency 
range on the copper loop above the range that carries analog circuit-
switched voice transmissions. This portion of the loop includes the 
features, functions, and capabilities of the loop that are used to 
establish a complete transmission path on the high frequency range 
between the incumbent LEC's distribution frame (or its equivalent) in 
its central office and the demarcation point at the end-user customer 
premises, and includes the high frequency portion of any inside wire 
owned or controlled by the incumbent LEC.

[[Page 32]]

    (A) An incumbent LEC's obligation, under paragraph (a)(1)(i) of this 
section, to provide a requesting telecommunications carrier with the 
ability to engage in line splitting applies regardless of whether the 
carrier providing voice service provides its own switching or obtains 
local circuit switching from the incumbent LEC.
    (B) An incumbent LEC must make all necessary network modifications, 
including providing nondiscriminatory access to operations support 
systems necessary for pre-ordering, ordering, provisioning, maintenance 
and repair, and billing for loops used in line splitting arrangements.
    (ii) Line conditioning. The incumbent LEC shall condition a copper 
loop at the request of the carrier seeking access to a copper loop under 
paragraph (a)(1) of this section or a copper subloop under paragraph (b) 
of this section to ensure that the copper loop or copper subloop is 
suitable for providing digital subscriber line services, whether or not 
the incumbent LEC offers advanced services to the end-user customer on 
that copper loop or copper subloop. If the incumbent LEC seeks 
compensation from the requesting telecommunications carrier for line 
conditioning, the requesting telecommunications carrier has the option 
of refusing, in whole or in part, to have the line conditioned; and a 
requesting telecommunications carrier's refusal of some or all aspects 
of line conditioning will not diminish any right it may have, under 
paragraphs (a) and (b) of this section, to access the copper loop or the 
copper subloop.
    (A) Line conditioning is defined as the removal from a copper loop 
or copper subloop of any device that could diminish the capability of 
the loop or subloop to deliver high-speed switched wireline 
telecommunications capability, including digital subscriber line 
service. Such devices include, but are not limited to, bridge taps, load 
coils, low pass filters, and range extenders.
    (B) Incumbent LECs shall recover the costs of line conditioning from 
the requesting telecommunications carrier in accordance with the 
Commission's forward-looking pricing principles promulgated pursuant to 
section 252(d)(1) of the Act and in compliance with rules governing 
nonrecurring costs in Sec. 51.507(e).
    (C) Insofar as it is technically feasible, the incumbent LEC shall 
test and report troubles for all the features, functions, and 
capabilities of conditioned copper lines, and may not restrict its 
testing to voice transmission only.
    (iii) Maintenance, repair, and testing. (A) An incumbent LEC shall 
provide, on a nondiscriminatory basis, physical loop test access points 
to a requesting telecommunications carrier at the splitter, through a 
cross-connection to the requesting telecommunications carrier's 
collocation space, or through a standardized interface, such as an 
intermediate distribution frame or a test access server, for the purpose 
of testing, maintaining, and repairing copper loops and copper subloops.
    (B) An incumbent LEC seeking to utilize an alternative physical 
access methodology may request approval to do so from the state 
commission, but must show that the proposed alternative method is 
reasonable and nondiscriminatory, and will not disadvantage a requesting 
telecommunications carrier's ability to perform loop or service testing, 
maintenance, or repair.
    (iv) Control of the loop and splitter functionality. In situations 
where a requesting telecommunications carrier is obtaining access to the 
high frequency portion of a copper loop through a line splitting 
arrangement, the incumbent LEC may maintain control over the loop and 
splitter equipment and functions, and shall provide to the requesting 
telecommunications carrier loop and splitter functionality that is 
compatible with any transmission technology that the requesting 
telecommunications carrier seeks to deploy using the high frequency 
portion of the loop, as defined in paragraph (a)(1)(i) of this section, 
provided that such transmission technology is presumed to be deployable 
pursuant to Sec. 51.230.
    (2) Hybrid loops. A hybrid loop is a local loop composed of both 
fiber optic cable, usually in the feeder plant, and copper wire or 
cable, usually in the distribution plant.

[[Page 33]]

    (i) Packet switching facilities, features, functions, and 
capabilities. An incumbent LEC is not required to provide unbundled 
access to the packet switched features, functions and capabilities of 
its hybrid loops. Packet switching capability is the routing or 
forwarding of packets, frames, cells, or other data units based on 
address or other routing information contained in the packets, frames, 
cells or other data units, and the functions that are performed by the 
digital subscriber line access multiplexers, including but not limited 
to the ability to terminate an end-user customer's copper loop (which 
includes both a low-band voice channel and a high-band data channel, or 
solely a data channel); the ability to forward the voice channels, if 
present, to a circuit switch or multiple circuit switches; the ability 
to extract data units from the data channels on the loops; and the 
ability to combine data units from multiple loops onto one or more 
trunks connecting to a packet switch or packet switches.
    (ii) Broadband services. When a requesting telecommunications 
carrier seeks access to a hybrid loop for the provision of broadband 
services, an incumbent LEC shall provide the requesting 
telecommunications carrier with nondiscriminatory access to the time 
division multiplexing features, functions, and capabilities of that 
hybrid loop, including DS1 or DS3 capacity (where impairment has been 
found to exist), on an unbundled basis to establish a complete 
transmission path between the incumbent LEC's central office and an end 
user's customer premises. This access shall include access to all 
features, functions, and capabilities of the hybrid loop that are not 
used to transmit packetized information.
    (iii) Narrowband services. When a requesting telecommunications 
carrier seeks access to a hybrid loop for the provision of narrowband 
services, the incumbent LEC may either:
    (A) Provide nondiscriminatory access, on an unbundled basis, to an 
entire hybrid loop capable of voice-grade service (i.e., equivalent to 
DS0 capacity), using time division multiplexing technology; or
    (B) Provide nondiscriminatory access to a spare home-run copper loop 
serving that customer on an unbundled basis.
    (3) Fiber loops--(i) Definitions--(A) Fiber-to-the-home loops. A 
fiber-to-the-home loop is a local loop consisting entirely of fiber 
optic cable, whether dark or lit, serving an end user's customer 
premises or, in the case of predominantly residential multiple dwelling 
units (MDUs), a fiber optic cable, whether dark or lit, that extends to 
the multiunit premises' minimum point of entry (MPOE).
    (B) Fiber-to-the-curb loops. A fiber-to-the-curb loop is a local 
loop consisting of fiber optic cable connecting to a copper distribution 
plant that is not more than 500 feet from the customer's premises or, in 
the case of predominantly residential MDUs, not more than 500 feet from 
the MDU's MPOE. The fiber optic cable in a fiber-to-the-curb loop must 
connect to a copper distribution plant at a serving area interface from 
which every other copper distribution subloop also is not more than 500 
feet from the respective customer's premises.
    (ii) New builds. An incumbent LEC is not required to provide 
nondiscriminatory access to a fiber-to-the-home loop or a fiber-to-the-
curb loop on an unbundled basis when the incumbent LEC deploys such a 
loop to an end user's customer premises that previously has not been 
served by any loop facility.
    (iii) Overbuilds. An incumbent LEC is not required to provide 
nondiscriminatory access to a fiber-to-the-home loop or a fiber-to-the-
curb loop on an unbundled basis when the incumbent LEC has deployed such 
a loop parallel to, or in replacement of, an existing copper loop 
facility, except that:
    (A) The incumbent LEC must maintain the existing copper loop 
connected to the particular customer premises after deploying the fiber-
to-the-home loop or the fiber-to-the-curb loop and provide 
nondiscriminatory access to that copper loop on an unbundled basis 
unless the incumbent LEC retires the copper loops pursuant to paragraph 
(a)(3)(iv) of this section.
    (B) An incumbent LEC that maintains the existing copper loops 
pursuant to paragraph (a)(3)(iii)(A) of this section need not incur any 
expenses to

[[Page 34]]

ensure that the existing copper loop remains capable of transmitting 
signals prior to receiving a request for access pursuant to that 
paragraph, in which case the incumbent LEC shall restore the copper loop 
to serviceable condition upon request.
    (C) An incumbent LEC that retires the copper loop pursuant to 
paragraph (a)(3)(iv) of this section shall provide nondiscriminatory 
access to a 64 kilobits per second transmission path capable of voice 
grade service over the fiber-to-the-home loop or fiber-to-the-curb loop 
on an unbundled basis.
    (iv) Retirement of copper loops or copper subloops. Prior to 
retiring any copper loop or copper subloop that has been replaced with a 
fiber-to-the-home loop or a fiber-to-the-curb loop, an incumbent LEC 
must comply with:
    (A) The network disclosure requirements set forth in section 
251(c)(5) of the Act and in Sec. 51.325 through Sec. 51.335; and
    (B) Any applicable state requirements.
    (4) DS1 loops. (i) Subject to the cap described in paragraph 
(a)(4)(ii) of this section, an incumbent LEC shall provide a requesting 
telecommunications carrier with nondiscriminatory access to a DS1 loop 
on an unbundled basis to any building not served by a wire center with 
at least 60,000 business lines and at least four fiber-based 
collocators. Once a wire center exceeds both of these thresholds, no 
future DS1 loop unbundling will be required in that wire center. A DS1 
loop is a digital local loop having a total digital signal speed of 
1.544 megabytes per second. DS1 loops include, but are not limited to, 
two-wire and four-wire copper loops capable of providing high-bit rate 
digital subscriber line services, including T1 services.
    (ii) Cap on unbundled DS1 loop circuits. A requesting 
telecommunications carrier may obtain a maximum of ten unbundled DS1 
loops to any single building in which DS1 loops are available as 
unbundled loops.
    (5) DS3 loops. (i) Subject to the cap described in paragraph 
(a)(5)(ii) of this section, an incumbent LEC shall provide a requesting 
telecommunications carrier with nondiscriminatory access to a DS3 loop 
on an unbundled basis to any building not served by a wire center with 
at least 38,000 business lines and at least four fiber-based 
collocators. Once a wire center exceeds both of these thresholds, no 
future DS3 loop unbundling will be required in that wire center. A DS3 
loop is a digital local loop having a total digital signal speed of 
44.736 megabytes per second.
    (ii) Cap on unbundled DS3 loop circuits. A requesting 
telecommunications carrier may obtain a maximum of a single unbundled 
DS3 loop to any single building in which DS3 loops are available as 
unbundled loops.
    (6) Dark fiber loops. An incumbent LEC is not required to provide 
requesting telecommunications carriers with access to a dark fiber loop 
on an unbundled basis. Dark fiber is fiber within an existing fiber 
optic cable that has not yet been activated through optronics to render 
it capable of carrying communications services.
    (7) Routine network modifications. (i) An incumbent LEC shall make 
all routine network modifications to unbundled loop facilities used by 
requesting telecommunications carriers where the requested loop facility 
has already been constructed. An incumbent LEC shall perform these 
routine network modifications to unbundled loop facilities in a 
nondiscriminatory fashion, without regard to whether the loop facility 
being accessed was constructed on behalf, or in accordance with the 
specifications, of any carrier.
    (ii) A routine network modification is an activity that the 
incumbent LEC regularly undertakes for its own customers. Routine 
network modifications include, but are not limited to, rearranging or 
splicing of cable; adding an equipment case; adding a doubler or 
repeater; adding a smart jack; installing a repeater shelf; adding a 
line card; deploying a new multiplexer or reconfiguring an existing 
multiplexer; and attaching electronic and other equipment that the 
incumbent LEC ordinarily attaches to a DS1 loop to activate such loop 
for its own customer. Routine network modifications may entail 
activities such as accessing manholes, deploying bucket trucks to reach 
aerial cable, and installing equipment casings. Routine network

[[Page 35]]

modifications do not include the construction of a new loop, or the 
installation of new aerial or buried cable for a requesting 
telecommunications carrier.
    (8) Engineering policies, practices, and procedures. An incumbent 
LEC shall not engineer the transmission capabilities of its network in a 
manner, or engage in any policy, practice, or procedure, that disrupts 
or degrades access to a local loop or subloop, including the time 
division multiplexing-based features, functions, and capabilities of a 
hybrid loop, for which a requesting telecommunications carrier may 
obtain or has obtained access pursuant to paragraph (a) of this section.
    (b) Subloops. An incumbent LEC shall provide a requesting 
telecommunications carrier with nondiscriminatory access to subloops on 
an unbundled basis in accordance with section 251(c)(3) of the Act and 
this part and as set forth in paragraph (b) of this section.
    (1) Copper subloops. An incumbent LEC shall provide a requesting 
telecommunications carrier with nondiscriminatory access to a copper 
subloop on an unbundled basis. A copper subloop is a portion of a copper 
loop, or hybrid loop, comprised entirely of copper wire or copper cable 
that acts as a transmission facility between any point of technically 
feasible access in an incumbent LEC's outside plant, including inside 
wire owned or controlled by the incumbent LEC, and the end-user customer 
premises. A copper subloop includes all intermediate devices (including 
repeaters and load coils) used to establish a transmission path between 
a point of technically feasible access and the demarcation point at the 
end-user customer premises, and includes the features, functions, and 
capabilities of the copper loop. Copper subloops include two-wire and 
four-wire analog voice-grade subloops as well as two-wire and four-wire 
subloops conditioned to transmit the digital signals needed to provide 
digital subscriber line services, regardless of whether the subloops are 
in service or held as spares.
    (i) Point of technically feasible access. A point of technically 
feasible access is any point in the incumbent LEC's outside plant where 
a technician can access the copper wire within a cable without removing 
a splice case. Such points include, but are not limited to, a pole or 
pedestal, the serving area interface, the network interface device, the 
minimum point of entry, any remote terminal, and the feeder/distribution 
interface. An incumbent LEC shall, upon a site-specific request, provide 
access to a copper subloop at a splice near a remote terminal. The 
incumbent LEC shall be compensated for providing this access in 
accordance with Secs. 51.501 through 51.515.
    (ii) Rules for collocation. Access to the copper subloop is subject 
to the Commission's collocation rules at Secs. 51.321 and 51.323.
    (2) Subloops for access to multiunit premises wiring. An incumbent 
LEC shall provide a requesting telecommunications carrier with 
nondiscriminatory access to the subloop for access to multiunit premises 
wiring on an unbundled basis regardless of the capacity level or type of 
loop that the requesting telecommunications carrier seeks to provision 
for its customer. The subloop for access to multiunit premises wiring is 
defined as any portion of the loop that it is technically feasible to 
access at a terminal in the incumbent LEC's outside plant at or near a 
multiunit premises. One category of this subloop is inside wire, which 
is defined for purposes of this section as all loop plant owned or 
controlled by the incumbent LEC at a multiunit customer premises between 
the minimum point of entry as defined in Sec. 68.105 of this chapter and 
the point of demarcation of the incumbent LEC's network as defined in 
Sec. 68.3 of this chapter.
    (i) Point of technically feasible access. A point of technically 
feasible access is any point in the incumbent LEC's outside plant at or 
near a multiunit premises where a technician can access the wire or 
fiber within the cable without removing a splice case to reach the wire 
or fiber within to access the wiring in the multiunit premises. Such 
points include, but are not limited to, a pole or pedestal, the network 
interface device, the minimum point of

[[Page 36]]

entry, the single point of interconnection, and the feeder/distribution 
interface.
    (ii) Single point of interconnection. Upon notification by a 
requesting telecommunications carrier that it requests interconnection 
at a multiunit premises where the incumbent LEC owns, controls, or 
leases wiring, the incumbent LEC shall provide a single point of 
interconnection that is suitable for use by multiple carriers. This 
obligation is in addition to the incumbent LEC's obligations, under 
paragraph (b)(2) of this section, to provide nondiscriminatory access to 
a subloop for access to multiunit premises wiring, including any inside 
wire, at any technically feasible point. If the parties are unable to 
negotiate rates, terms, and conditions under which the incumbent LEC 
will provide this single point of interconnection, then any issues in 
dispute regarding this obligation shall be resolved in state proceedings 
under section 252 of the Act.
    (3) Other subloop provisions--(i) Technical feasibility. If parties 
are unable to reach agreement through voluntary negotiations as to 
whether it is technically feasible, or whether sufficient space is 
available, to unbundle a copper subloop or subloop for access to 
multiunit premises wiring at the point where a telecommunications 
carrier requests, the incumbent LEC shall have the burden of 
demonstrating to the state commission, in state proceedings under 
section 252 of the Act, that there is not sufficient space available, or 
that it is not technically feasible to unbundle the subloop at the point 
requested.
    (ii) Best practices. Once one state commission has determined that 
it is technically feasible to unbundle subloops at a designated point, 
an incumbent LEC in any state shall have the burden of demonstrating to 
the state commission, in state proceedings under section 252 of the Act, 
that it is not technically feasible, or that sufficient space is not 
available, to unbundle its own loops at such a point.
    (c) Network interface device. Apart from its obligation to provide 
the network interface device functionality as part of an unbundled loop 
or subloop, an incumbent LEC also shall provide nondiscriminatory access 
to the network interface device on an unbundled basis, in accordance 
with section 251(c)(3) of the Act and this part. The network interface 
device element is a stand-alone network element and is defined as any 
means of interconnection of customer premises wiring to the incumbent 
LEC's distribution plant, such as a cross-connect device used for that 
purpose. An incumbent LEC shall permit a requesting telecommunications 
carrier to connect its own loop facilities to on-premises wiring through 
the incumbent LEC's network interface device, or at any other 
technically feasible point.
    (d) Dedicated transport. An incumbent LEC shall provide a requesting 
telecommunications carrier with nondiscriminatory access to dedicated 
transport on an unbundled basis, in accordance with section 251(c)(3) of 
the Act and this part, as set forth in paragraphs (d) through (d)(4) of 
this section. A ``route'' is a transmission path between one of an 
incumbent LEC's wire centers or switches and another of the incumbent 
LEC's wire centers or switches. A route between two points (e.g., wire 
center or switch ``A'' and wire center or switch ``Z'') may pass through 
one or more intermediate wire centers or switches (e.g., wire center or 
switch ``X''). Transmission paths between identical end points (e.g., 
wire center or switch ``A'' and wire center or switch ``Z'') are the 
same ``route,'' irrespective of whether they pass through the same 
intermediate wire centers or switches, if any.
    (1) Definition. For purposes of this section, dedicated transport 
includes incumbent LEC transmission facilities between wire centers or 
switches owned by incumbent LECs, or between wire centers or switches 
owned by incumbent LECs and switches owned by requesting 
telecommunications carriers, including, but not limited to, DS1-, DS3-, 
and OCn-capacity level services, as well as dark fiber, dedicated to a 
particular customer or carrier.
    (2) Availability.
    (i) Entrance facilities. An incumbent LEC is not obligated to 
provide a requesting carrier with unbundled access to dedicated 
transport that does not

[[Page 37]]

connect a pair of incumbent LEC wire centers.
    (ii) Dedicated DS1 transport. Dedicated DS1 transport shall be made 
available to requesting carriers on an unbundled basis as set forth in 
paragraphs (d)(2)(ii)(A) and (B) of this section. Dedicated DS1 
transport consists of incumbent LEC interoffice transmission facilities 
that have a total digital signal speed of 1.544 megabytes per second and 
are dedicated to a particular customer or carrier.
    (A) General availability of DS1 transport. Incumbent LECs shall 
unbundle DS1 transport between any pair of incumbent LEC wire centers 
except where, through application of tier classifications described in 
paragraph (d)(3) of this section, both wire centers defining the route 
are Tier 1 wire centers. As such, an incumbent LEC must unbundle DS1 
transport if a wire center at either end of a requested route is not a 
Tier 1 wire center, or if neither is a Tier 1 wire center.
    (B) Cap on unbundled DS1 transport circuits. A requesting 
telecommunications carrier may obtain a maximum of ten unbundled DS1 
dedicated transport circuits on each route where DS1 dedicated transport 
is available on an unbundled basis.
    (iii) Dedicated DS3 transport. Dedicated DS3 transport shall be made 
available to requesting carriers on an unbundled basis as set forth in 
paragraphs (d)(2)(iii)(A) and(B) of this section. Dedicated DS3 
transport consists of incumbent LEC interoffice transmission facilities 
that have a total digital signal speed of 44.736 megabytes per second 
and are dedicated to a particular customer or carrier.
    (A) General availability of DS3 transport. Incumbent LECs shall 
unbundle DS3 transport between any pair of incumbent LEC wire centers 
except where, through application of tier classifications described in 
paragraph (d)(3) of this section, both wire centers defining the route 
are either Tier 1 or Tier 2 wire centers. As such, an incumbent LEC must 
unbundle DS3 transport if a wire center on either end of a requested 
route is a Tier 3 wire center.
    (B) Cap on unbundled DS3 transport circuits. A requesting 
telecommunications carrier may obtain a maximum of 12 unbundled DS3 
dedicated transport circuits on each route where DS3 dedicated transport 
is available on an unbundled basis.
    (iv) Dark fiber transport. Dark fiber transport consists of 
unactivated optical interoffice transmission facilities. Incumbent LECs 
shall unbundle dark fiber transport between any pair of incumbent LEC 
wire centers except where, through application of tier classifications 
described in paragraph (d)(3) of this section, both wire centers 
defining the route are either Tier 1 or Tier 2 wire centers. An 
incumbent LEC must unbundle dark fiber transport if a wire center on 
either end of a requested route is a Tier 3 wire center.
    (3) Wire center tier structure. For purposes of this section, 
incumbent LEC wire centers shall be classified into three tiers, defined 
as follows:
    (i) Tier 1 wire centers are those incumbent LEC wire centers that 
contain at least four fiber-based collocators, at least 38,000 business 
lines, or both. Tier 1 wire centers also are those incumbent LEC tandem 
switching locations that have no line-side switching facilities, but 
nevertheless serve as a point of traffic aggregation accessible by 
competitive LECs. Once a wire center is determined to be a Tier 1 wire 
center, that wire center is not subject to later reclassification as a 
Tier 2 or Tier 3 wire center.
    (ii) Tier 2 wire centers are those incumbent LEC wire centers that 
are not Tier 1 wire centers, but contain at least 3 fiber-based 
collocators, at least 24,000 business lines, or both. Once a wire center 
is determined to be a Tier 2 wire center, that wire center is not 
subject to later reclassification as a Tier 3 wire center.
    (iii) Tier 3 wire centers are those incumbent LEC wire centers that 
do not meet the criteria for Tier 1 or Tier 2 wire centers.
    (4) Routine network modifications. (i) An incumbent LEC shall make 
all routine network modifications to unbundled dedicated transport 
facilities used by requesting telecommunications carriers where the 
requested dedicated transport facilities have already been constructed. 
An incumbent LEC shall perform all routine network modifications to 
unbundled dedicated

[[Page 38]]

transport facilities in a nondiscriminatory fashion, without regard to 
whether the facility being accessed was constructed on behalf, or in 
accordance with the specifications, of any carrier.
    (ii) A routine network modification is an activity that the 
incumbent LEC regularly undertakes for its own customers. Routine 
network modifications include, but are not limited to, rearranging or 
splicing of cable; adding an equipment case; adding a doubler or 
repeater; installing a repeater shelf; and deploying a new multiplexer 
or reconfiguring an existing multiplexer. They also include activities 
needed to enable a requesting telecommunications carrier to light a dark 
fiber transport facility. Routine network modifications may entail 
activities such as accessing manholes, deploying bucket trucks to reach 
aerial cable, and installing equipment casings. Routine network 
modifications do not include the installation of new aerial or buried 
cable for a requesting telecommunications carrier.
    (e) 911 and E911 databases. An incumbent LEC shall provide a 
requesting telecommunications carrier with nondiscriminatory access to 
911 and E911 databases on an unbundled basis, in accordance with section 
251(c)(3) of the Act and this part.
    (f) Operations support systems. An incumbent LEC shall provide a 
requesting telecommunications carrier with nondiscriminatory access to 
operations support systems on an unbundled basis, in accordance with 
section 251(c)(3) of the Act and this part. Operations support system 
functions consist of pre-ordering, ordering, provisioning, maintenance 
and repair, and billing functions supported by an incumbent LEC's 
databases and information. An incumbent LEC, as part of its duty to 
provide access to the pre-ordering function, shall provide the 
requesting telecommunications carrier with nondiscriminatory access to 
the same detailed information about the loop that is available to the 
incumbent LEC.

[68 FR 52295, Sept. 4, 2003, as amended at 68 FR 64000, Nov. 12, 2003; 
69 FR 54591, Sept. 9, 2004; 69 FR 77953, Dec. 29, 2004; 70 FR 8953, Feb. 
24, 2005:78 FR 5746, Jan. 28, 2013]



Sec. 51.320  Assumption of responsibility by the Commission.

    If a state commission fails to exercise its authority under 
Sec. 51.319, any party seeking that the Commission step into the role of 
the state commission shall file with the Commission and serve on the 
state commission a petition that explains with specificity the bases for 
the petition and information that supports the claim that the state 
commission has failed to act. Subsequent to the Commission's issuing a 
public notice and soliciting comments on the petition from interested 
parties, the Commission will rule on the petition within 90 days of the 
date of the public notice. If it agrees that the state commission has 
failed to act, the Commission will assume responsibility for the 
proceeding, and within nine months from the date it assumed 
responsibility for the proceeding, make any findings in accordance with 
the Commission's rules.

[68 FR 52305, Sept. 2, 2003]



Sec. 51.321  Methods of obtaining interconnection and access to unbundled
elements under section 251 of the Act.

    (a) Except as provided in paragraph (e) of this section, an 
incumbent LEC shall provide, on terms and conditions that are just, 
reasonable, and nondiscriminatory in accordance with the requirements of 
this part, any technically feasible method of obtaining interconnection 
or access to unbundled network elements at a particular point upon a 
request by a telecommunications carrier.
    (b) Technically feasible methods of obtaining interconnection or 
access to unbundled network elements include, but are not limited to:
    (1) Physical collocation and virtual collocation at the premises of 
an incumbent LEC; and
    (2) Meet point interconnection arrangements.
    (c) A previously successful method of obtaining interconnection or 
access to unbundled network elements at a particular premises or point 
on any incumbent LEC's network is substantial evidence that such method 
is technically feasible in the case of substantially similar network 
premises or

[[Page 39]]

points. A requesting telecommunications carrier seeking a particular 
collocation arrangement, either physical or virtual, is entitled to a 
presumption that such arrangement is technically feasible if any LEC has 
deployed such collocation arrangement in any incumbent LEC premises.
    (d) An incumbent LEC that denies a request for a particular method 
of obtaining interconnection or access to unbundled network elements on 
the incumbent LEC's network must prove to the state commission that the 
requested method of obtaining interconnection or access to unbundled 
network elements at that point is not technically feasible.
    (e) An incumbent LEC shall not be required to provide for physical 
collocation of equipment necessary for interconnection or access to 
unbundled network elements at the incumbent LEC's premises if it 
demonstrates to the state commission that physical collocation is not 
practical for technical reasons or because of space limitations. In such 
cases, the incumbent LEC shall be required to provide virtual 
collocation, except at points where the incumbent LEC proves to the 
state commission that virtual collocation is not technically feasible. 
If virtual collocation is not technically feasible, the incumbent LEC 
shall provide other methods of interconnection and access to unbundled 
network elements to the extent technically feasible.
    (f) An incumbent LEC shall submit to the state commission, subject 
to any protective order as the state commission may deem necessary, 
detailed floor plans or diagrams of any premises where the incumbent LEC 
claims that physical collocation is not practical because of space 
limitations. These floor plans or diagrams must show what space, if any, 
the incumbent LEC or any of its affiliates has reserved for future use, 
and must describe in detail the specific future uses for which the space 
has been reserved and the length of time for each reservation. An 
incumbent LEC that contends space for physical collocation is not 
available in an incumbent LEC premises must also allow the requesting 
carrier to tour the entire premises in question, not only the area in 
which space was denied, without charge, within ten days of the receipt 
of the incumbent's denial of space. An incumbent LEC must allow a 
requesting telecommunications carrier reasonable access to its selected 
collocation space during construction.
    (g) An incumbent LEC that is classified as a Class A company under 
Sec. 32.11 of this chapter and that is not a National Exchange Carrier 
Association interstate tariff participant as provided in part 69, 
subpart G, shall continue to provide expanded interconnection service 
pursuant to interstate tariff in accordance with Secs. 64.1401, 64.1402, 
69.121 of this chapter, and the Commission's other requirements.
    (h) Upon request, an incumbent LEC must submit to the requesting 
carrier within ten days of the submission of the request a report 
describing in detail the space that is available for collocation in a 
particular incumbent LEC premises. This report must specify the amount 
of collocation space available at each requested premises, the number of 
collocators, and any modifications in the use of the space since the 
last report. This report must also include measures that the incumbent 
LEC is taking to make additional space available for collocation. The 
incumbent LEC must maintain a publicly available document, posted for 
viewing on the incumbent LEC's publicly available Internet site, 
indicating all premises that are full, and must update such a document 
within ten days of the date at which a premises runs out of physical 
collocation space.
    (i) An incumbent LEC must, upon request, remove obsolete unused 
equipment from their premises to increase the amount of space available 
for collocation.

[61 FR 45619, Aug. 28, 1996, as amended at 64 FR 23241, Apr. 30, 1999; 
65 FR 54438, Sept. 8, 2000; 66 FR 43521, Aug. 20, 2001]



Sec. 51.323  Standards for physical collocation and virtual collocation.

    (a) An incumbent LEC shall provide physical collocation and virtual 
collocation to requesting telecommunications carriers.
    (b) An incumbent LEC shall permit the collocation and use of any 
equipment necessary for interconnection or access to unbundled network 
elements.

[[Page 40]]

    (1) Equipment is necessary for interconnection if an inability to 
deploy that equipment would, as a practical, economic, or operational 
matter, preclude the requesting carrier from obtaining interconnection 
with the incumbent LEC at a level equal in quality to that which the 
incumbent obtains within its own network or the incumbent provides to 
any affiliate, subsidiary, or other party.
    (2) Equipment is necessary for access to an unbundled network 
element if an inability to deploy that equipment would, as a practical, 
economic, or operational matter, preclude the requesting carrier from 
obtaining nondiscriminatory access to that unbundled network element, 
including any of its features, functions, or capabilities.
    (3) Multi-functional equipment shall be deemed necessary for 
interconnection or access to an unbundled network element if and only if 
the primary purpose and function of the equipment, as the requesting 
carrier seeks to deploy it, meets either or both of the standards set 
forth in paragraphs (b)(1) and (b)(2) of this section. For a piece of 
equipment to be utilized primarily to obtain equal in quality 
interconnection or nondiscriminatory access to one or more unbundled 
network elements, there also must be a logical nexus between the 
additional functions the equipment would perform and the 
telecommunication services the requesting carrier seeks to provide to 
its customers by means of the interconnection or unbundled network 
element. The collocation of those functions of the equipment that, as 
stand-alone functions, do not meet either of the standards set forth in 
paragraphs (b)(1) and (b)(2) of this section must not cause the 
equipment to significantly increase the burden on the incumbent's 
property.
    (c) Whenever an incumbent LEC objects to collocation of equipment by 
a requesting telecommunications carrier for purposes within the scope of 
section 251(c)(6) of the Act, the incumbent LEC shall prove to the state 
commission that the equipment is not necessary for interconnection or 
access to unbundled network elements under the standards set forth in 
paragraph (b) of this section. An incumbent LEC may not object to the 
collocation of equipment on the grounds that the equipment does not 
comply with safety or engineering standards that are more stringent than 
the safety or engineering standards that the incumbent LEC applies to 
its own equipment. An incumbent LEC may not object to the collocation of 
equipment on the ground that the equipment fails to comply with Network 
Equipment and Building Specifications performance standards or any other 
performance standards. An incumbent LEC that denies collocation of a 
competitor's equipment, citing safety standards, must provide to the 
competitive LEC within five business days of the denial a list of all 
equipment that the incumbent LEC locates at the premises in question, 
together with an affidavit attesting that all of that equipment meets or 
exceeds the safety standard that the incumbent LEC contends the 
competitor's equipment fails to meet. This affidavit must set forth in 
detail: the exact safety requirement that the requesting carrier's 
equipment does not satisfy; the incumbent LEC's basis for concluding 
that the requesting carrier's equipment does not meet this safety 
requirement; and the incumbent LEC's basis for concluding why 
collocation of equipment not meeting this safety requirement would 
compromise network safety.
    (d) When an incumbent LEC provides physical collocation, virtual 
collocation, or both, the incumbent LEC shall:
    (1) Provide an interconnection point or points, physically 
accessible by both the incumbent LEC and the collocating 
telecommunications carrier, at which the fiber optic cable carrying an 
interconnector's circuits can enter the incumbent LEC's premises, 
provided that the incumbent LEC shall designate interconnection points 
as close as reasonably possible to its premises;
    (2) Provide at least two such interconnection points at each 
incumbent LEC premises at which there are at least two entry points for 
the incumbent LEC's cable facilities, and at which space is available 
for new facilities in at least two of those entry points;
    (3) Permit interconnection of copper or coaxial cable if such 
interconnection

[[Page 41]]

is first approved by the state commission; and
    (4) Permit physical collocation of microwave transmission facilities 
except where such collocation is not practical for technical reasons or 
because of space limitations, in which case virtual collocation of such 
facilities is required where technically feasible.
    (e) When providing virtual collocation, an incumbent LEC shall, at a 
minimum, install, maintain, and repair collocated equipment meeting the 
standards set forth in paragraph (b) of this section within the same 
time periods and with failure rates that are no greater than those that 
apply to the performance of similar functions for comparable equipment 
of the incumbent LEC itself.
    (f) An incumbent LEC shall provide space for the collocation of 
equipment meeting the standards set forth in paragraph (b) of this 
section in accordance with the following requirements:
    (1) An incumbent LEC shall make space available within or on its 
premises to requesting telecommunications carriers on a first-come, 
first-served basis, provided, however, that the incumbent LEC shall not 
be required to lease or construct additional space to provide for 
physical collocation when existing space has been exhausted;
    (2) To the extent possible, an incumbent LEC shall make contiguous 
space available to requesting telecommunications carriers that seek to 
expand their existing collocation space;
    (3) When planning renovations of existing facilities or constructing 
or leasing new facilities, an incumbent LEC shall take into account 
projected demand for collocation of equipment;
    (4) An incumbent LEC may retain a limited amount of floor space for 
its own specific future uses, provided, however, that neither the 
incumbent LEC nor any of its affiliates may reserve space for future use 
on terms more favorable than those that apply to other 
telecommunications carriers seeking to reserve collocation space for 
their own future use;
    (5) An incumbent LEC shall relinquish any space held for future use 
before denying a request for virtual collocation on the grounds of space 
limitations, unless the incumbent LEC proves to the state commission 
that virtual collocation at that point is not technically feasible; and
    (6) An incumbent LEC may impose reasonable restrictions on the 
warehousing of unused space by collocating telecommunications carriers, 
provided, however, that the incumbent LEC shall not set maximum space 
limitations applicable to such carriers unless the incumbent LEC proves 
to the state commission that space constraints make such restrictions 
necessary.
    (7) An incumbent LEC must assign collocation space to requesting 
carriers in a just, reasonable, and nondiscriminatory manner. An 
incumbent LEC must allow each carrier requesting physical collocation to 
submit space preferences prior to assigning physical collocation space 
to that carrier. At a minimum, an incumbent LEC's space assignment 
policies and practices must meet the following principles:
    (A) An incumbent LEC's space assignment policies and practices must 
not materially increase a requesting carrier's collocation costs.
    (B) An incumbent LEC's space assignment policies and practices must 
not materially delay a requesting carrier occupation and use of the 
incumbent LEC's premises.
    (C) An incumbent LEC must not assign physical collocation space that 
will impair the quality of service or impose other limitations on the 
service a requesting carrier wishes to offer.
    (D) An incumbent LEC's space assignment policies and practices must 
not reduce unreasonably the total space available for physical 
collocation or preclude unreasonably physical collocation within the 
incumbent's premises.
    (g) An incumbent LEC shall permit collocating telecommunications 
carriers to collocate equipment and connect such equipment to unbundled 
network transmission elements obtained from the incumbent LEC, and shall 
not require such telecommunications carriers to bring their own 
transmission facilities to the incumbent LEC's premises in which they 
seek to collocate equipment.

[[Page 42]]

    (h) As described in paragraphs (1) and (2) of this section, an 
incumbent LEC shall permit a collocating telecommunications carrier to 
interconnect its network with that of another collocating 
telecommunications carrier at the incumbent LEC's premises and to 
connect its collocated equipment to the collocated equipment of another 
telecommunications carrier within the same premises, provided that the 
collocated equipment is also used for interconnection with the incumbent 
LEC or for access to the incumbent LEC's unbundled network elements.
    (1) An incumbent LEC shall provide, at the request of a collocating 
telecommunications carrier, a connection between the equipment in the 
collocated spaces of two or more telecommunications carriers, except to 
the extent the incumbent LEC permits the collocating parties to provide 
the requested connection for themselves or a connection is not required 
under paragraph (h)(2) of this section. Where technically feasible, the 
incumbent LEC shall provide the connection using copper, dark fiber, lit 
fiber, or other transmission medium, as requested by the collocating 
telecommunications carrier.
    (2) An incumbent LEC is not required to provide a connection between 
the equipment in the collocated spaces of two or more telecommunications 
carriers if the connection is requested pursuant to section 201 of the 
Act, unless the requesting carrier submits to the incumbent LEC a 
certification that more than 10 percent of the amount of traffic to be 
transmitted through the connection will be interstate. The incumbent LEC 
cannot refuse to accept the certification, but instead must provision 
the service promptly. Any incumbent LEC may file a section 208 complaint 
with the Commission challenging the certification if it believes that 
the certification is deficient. No such certification is required for a 
request for such connection under section 251 of the Act.
    (i) As provided herein, an incumbent LEC may require reasonable 
security arrangements to protect its equipment and ensure network 
reliability. An incumbent LEC may only impose security arrangements that 
are as stringent as the security arrangements that the incumbent LEC 
maintains at its own premises for its own employees or authorized 
contractors. An incumbent LEC must allow collocating parties to access 
their collocated equipment 24 hours a day, seven days a week, without 
requiring either a security escort of any kind or delaying a 
competitor's employees' entry into the incumbent LEC's premises. An 
incumbent LEC may require a collocating carrier to pay only for the 
least expensive, effective security option that is viable for the 
physical collocation space assigned. Reasonable security measures that 
the incumbent LEC may adopt include:
    (1) Installing security cameras or other monitoring systems; or
    (2) Requiring competitive LEC personnel to use badges with 
computerized tracking systems; or
    (3) Requiring competitive LEC employees to undergo the same level of 
security training, or its equivalent, that the incumbent's own 
employees, or third party contractors providing similar functions, must 
undergo; provided, however, that the incumbent LEC may not require 
competitive LEC employees to receive such training from the incumbent 
LEC itself, but must provide information to the competitive LEC on the 
specific type of training required so the competitive LEC's employees 
can conduct their own training.
    (4) Restricting physical collocation to space separated from space 
housing the incumbent LEC's equipment, provided that each of the 
following conditions is met:
    (i) Either legitimate security concerns, or operational constraints 
unrelated to the incumbent's or any of its affiliates' or subsidiaries 
competitive concerns, warrant such separation;
    (ii) Any physical collocation space assigned to an affiliate or 
subsidiary of the incumbent LEC is separated from space housing the 
incumbent LEC's equipment;
    (iii) The separated space will be available in the same time frame 
as, or a shorter time frame than, non-separated space;

[[Page 43]]

    (iv) The cost of the separated space to the requesting carrier will 
not be materially higher than the cost of non-separated space; and
    (v) The separated space is comparable, from a technical and 
engineering standpoint, to non-separated space.
    (5) Requiring the employees and contractors of collocating carriers 
to use a central or separate entrance to the incumbent's building, 
provided, however, that where an incumbent LEC requires that the 
employees or contractors of collocating carriers access collocated 
equipment only through a separate entrance, employees and contractors of 
the incumbent LEC's affiliates and subsidiaries must be subject to the 
same restriction.
    (6) Constructing or requiring the construction of a separate 
entrance to access physical collocation space, provided that each of the 
following conditions is met:
    (i) Construction of a separate entrance is technically feasible;
    (ii) Either legitimate security concerns, or operational constraints 
unrelated to the incumbent's or any of its affiliates' or subsidiaries 
competitive concerns, warrant such separation;
    (iii) Construction of a separate entrance will not artificially 
delay collocation provisioning; and
    (iv) Construction of a separate entrance will not materially 
increase the requesting carrier's costs.
    (j) An incumbent LEC shall permit a collocating telecommunications 
carrier to subcontract the construction of physical collocation 
arrangements with contractors approved by the incumbent LEC, provided, 
however, that the incumbent LEC shall not unreasonably withhold approval 
of contractors. Approval by an incumbent LEC shall be based on the same 
criteria it uses in approving contractors for its own purposes.
    (k) An incumbent LEC's physical collocation offering must include 
the following:
    (1) Shared collocation cages. A shared collocation cage is a caged 
collocation space shared by two or more competitive LECs pursuant to 
terms and conditions agreed to by the competitive LECs. In making shared 
cage arrangements available, an incumbent LEC may not increase the cost 
of site preparation or nonrecurring charges above the cost for 
provisioning such a cage of similar dimensions and material to a single 
collocating party. In addition, the incumbent must prorate the charge 
for site conditioning and preparation undertaken by the incumbent to 
construct the shared collocation cage or condition the space for 
collocation use, regardless of how many carriers actually collocate in 
that cage, by determining the total charge for site preparation and 
allocating that charge to a collocating carrier based on the percentage 
of the total space utilized by that carrier. An incumbent LEC must make 
shared collocation space available in single-bay increments or their 
equivalent, i.e., a competing carrier can purchase space in increments 
small enough to collocate a single rack, or bay, of equipment.
    (2) Cageless collocation. Incumbent LECs must allow competitors to 
collocate without requiring the construction of a cage or similar 
structure. Incumbent LECs must permit collocating carriers to have 
direct access to their equipment. An incumbent LEC may not require 
competitors to use an intermediate interconnection arrangement in lieu 
of direct connection to the incumbent's network if technically feasible. 
An incumbent LEC must make cageless collocation space available in 
single-bay increments, meaning that a competing carrier can purchase 
space in increments small enough to collocate a single rack, or bay, of 
equipment.
    (3) Adjacent space collocation. An incumbent LEC must make 
available, where physical collocation space is legitimately exhausted in 
a particular incumbent LEC structure, collocation in adjacent controlled 
environmental vaults, controlled environmental huts, or similar 
structures located at the incumbent LEC premises to the extent 
technically feasible. The incumbent LEC must permit a requesting 
telecommunications carrier to construct or otherwise procure such an 
adjacent structure, subject only to reasonable safety and maintenance 
requirements. The incumbent must provide power and

[[Page 44]]

physical collocation services and facilities, subject to the same 
nondiscrimination requirements as applicable to any other physical 
collocation arrangement. The incumbent LEC must permit the requesting 
carrier to place its own equipment, including, but not limited to, 
copper cables, coaxial cables, fiber cables, and telecommunications 
equipment, in adjacent facilities constructed by the incumbent LEC, the 
requesting carrier, or a third-party. If physical collocation space 
becomes available in a previously exhausted incumbent LEC structure, the 
incumbent LEC must not require a carrier to move, or prohibit a 
competitive LEC from moving, a collocation arrangement into that 
structure. Instead, the incumbent LEC must continue to allow the carrier 
to collocate in any adjacent controlled environmental vault, controlled 
environmental vault, or similar structure that the carrier has 
constructed or otherwise procured.
    (l) An incumbent LEC must offer to provide and provide all forms of 
physical collocation (i.e., caged, cageless, shared, and adjacent) 
within the following deadlines, except to the extent a state sets its 
own deadlines or the incumbent LEC has demonstrated to the state 
commission that physical collocation is not practical for technical 
reasons or because of space limitations.
    (1) Within ten days after receiving an application for physical 
collocation, an incumbent LEC must inform the requesting carrier whether 
the application meets each of the incumbent LEC's established 
collocation standards. A requesting carrier that resubmits a revised 
application curing any deficiencies in an application for physical 
collocation within ten days after being informed of them retains its 
position within any collocation queue that the incumbent LEC maintains 
pursuant to paragraph (f)(1) of this section.
    (2) Except as stated in paragraphs (l)(3) and (l)(4) of this 
section, an incumbent LEC must complete provisioning of a requested 
physical collocation arrangement within 90 days after receiving an 
application that meets the incumbent LEC's established collocation 
application standards.
    (3) An incumbent LEC need not meet the deadline set forth in 
paragraph (l)(2) of this section if, after receipt of any price 
quotation provided by the incumbent LEC, the telecommunications carrier 
requesting collocation does not notify the incumbent LEC that physical 
collocation should proceed.
    (4) If, within seven days of the requesting carrier's receipt of any 
price quotation provided by the incumbent LEC, the telecommunications 
carrier requesting collocation does not notify the incumbent LEC that 
physical collocation should proceed, then the incumbent LEC need not 
complete provisioning of a requested physical collocation arrangement 
until 90 days after receiving such notification from the requesting 
telecommunications carrier.

[61 FR 45619, Aug. 28, 1996, as amended at 64 FR 23242, Apr. 30, 1999; 
65 FR 54439, Sept. 8, 2000; 66 FR 43521, Aug. 20, 2001]



Sec. 51.325  Notice of network changes: Public notice requirement.

    (a) An incumbent local exchange carrier (``LEC'') must provide 
public notice regarding any network change that:
    (1) Will affect a competing service provider's performance or 
ability to provide service;
    (2) Will affect the incumbent LEC's interoperability with other 
service providers; or
    (3) Will affect the manner in which customer premises equipment is 
attached to the interstate network.
    (4) Will result in the retirement of copper, as defined in 
Sec. 51.332.
    (b) For purposes of this section, interoperability means the ability 
of two or more facilities, or networks, to be connected, to exchange 
information, and to use the information that has been exchanged.
    (c) Until public notice has been given in accordance with 
Secs. 51.325 through 51.335, an incumbent LEC may not disclose to 
separate affiliates, separated affiliates, or unaffiliated entities 
(including actual or potential competing service providers or 
competitors), information about planned network changes that are subject 
to this section.
    (d) For the purposes of Secs. 51.325 through 51.335, the term 
services means

[[Page 45]]

telecommunications services or information services.
    (e) Notices of network changes involving the retirement of copper, 
as defined in Sec. 51.332, are subject only to the requirements set 
forth in this section and Secs. 51.329(c), 51.332, and 51.335.

[61 FR 47351, Sept. 6, 1996, as amended at 64 FR 14148, Mar. 24, 1999; 
68 FR 52305, Sept. 2, 2003; 69 FR 77954, Dec. 29, 2004; 80 FR 63371, 
Oct. 19, 2015]



Sec. 51.327  Notice of network changes: Content of notice.

    (a) Public notice of planned network changes must, at a minimum, 
include:
    (1) The carrier's name and address;
    (2) The name and telephone number of a contact person who can supply 
additional information regarding the planned changes;
    (3) The implementation date of the planned changes;
    (4) The location(s) at which the changes will occur;
    (5) A description of the type of changes planned (Information 
provided to satisfy this requirement must include, as applicable, but is 
not limited to, references to technical specifications, protocols, and 
standards regarding transmission, signaling, routing, and facility 
assignment as well as references to technical standards that would be 
applicable to any new technologies or equipment, or that may otherwise 
affect interconnection); and
    (6) A description of the reasonably foreseeable impact of the 
planned changes.
    (b) The incumbent LEC also shall follow, as necessary, procedures 
relating to confidential or proprietary information contained in 
Sec. 51.335.

[61 FR 47351, Sept. 6, 1996]



Sec. 51.329  Notice of network changes: Methods for providing notice.

    (a) In providing the required notice to the public of network 
changes, an incumbent LEC may use one of the following methods:
    (1) Filing a public notice with the Commission; or
    (2) Providing public notice through industry fora, industry 
publications, or the carrier's publicly accessible Internet site. If an 
incumbent LEC uses any of the methods specified in paragraph (a)(2) of 
this section, it also must file a certification with the Commission that 
includes:
    (i) A statement that identifies the proposed changes;
    (ii) A statement that public notice has been given in compliance 
with Secs. 51.325 through 51.335; and
    (iii) A statement identifying the location of the change information 
and describing how this information can be obtained.
    (b) Until the planned change is implemented, an incumbent LEC must 
keep the notice available for public inspection, and amend the notice to 
keep the information complete, accurate and up-to-date.
    (c) Specific filing requirements. Commission filings under this 
section must be made as follows:
    (1) The public notice or certification must be labeled with one of 
the following titles, as appropriate: ``Public Notice of Network Change 
Under Rule 51.329(a),'' ``Certification of Public Notice of Network 
Change Under Rule 51.329(a),'' ``Short Term Public Notice Under Rule 
51.333(a),'' ``Certification of Short Term Public Notice Under Rule 
51.333(a),'' ``Public Notice of Copper Retirement Under Rule 51.332,'' 
or ``Certification of Public Notice of Copper Retirement Under Rule 
51.332.''
    (2) The incumbent LEC's public notice and any associated 
certifications shall be filed through the Commission's Electronic 
Comment Filing System (ECFS), using the ``Submit a Non-Docketed Filing'' 
module. All subsequent filings responsive to a notice may be filed using 
the Commission's ECFS under the docket number set forth in the 
Commission's public notice for the proceeding. Subsequent filings 
responsive to a notice also may be filed by sending one paper copy of 
the filing to ``Secretary, Federal Communications Commission, 
Washington, DC 20554'' and one paper copy of the filing to ``Federal 
Communications Commission, Wireline Bureau, Competition Policy Division, 
Washington, DC 20554.'' For notices filed using the Commission's ECFS, 
the date on which the filing is received by that system will be 
considered the official filing date. For notices filed via paper copy, 
the date on which the filing is received by the

[[Page 46]]

Secretary or the FCC Mailroom is considered the official filing date. 
All subsequent filings responsive to a notice shall refer to the ECFS 
docket number assigned to the notice.

[61 FR 47351, Sept. 6, 1996, as amended at 67 FR 13225, Mar. 21, 2002; 
71 FR 65750, Nov. 9, 2006; 80 FR 1588, Jan. 13, 2015; 81 FR 62655, Sept. 
12, 2016]

    Effective Date Note: At 81 FR 62655, Sept. 12, 2016, Sec. 51.329 
(c)(1) was revised. This paragraph contains information collection and 
recordkeeping requirements and will not become effective until approval 
has been given by the Office of Management and Budget.



Sec. 51.331  Notice of network changes: Timing of notice.

    (a) An incumbent LEC shall give public notice of planned changes at 
the make/buy point, as defined in paragraph (b) of this section, but at 
least 12 months before implementation, except as provided below:
    (1) If the changes can be implemented within twelve months of the 
make/buy point, public notice must be given at the make/buy point, but 
at least six months before implementation.
    (2) If the changes can be implemented within six months of the make/
buy point, public notice may be given pursuant to the short term notice 
procedures provided in Sec. 51.333.
    (b) For purposes of this section, the make/buy point is the time at 
which an incumbent LEC decides to make for itself, or to procure from 
another entity, any product the design of which affects or relies on a 
new or changed network interface. If an incumbent LEC's planned changes 
do not require it to make or to procure a product, then the make/buy 
point is the point at which the incumbent LEC makes a definite decision 
to implement a network change.
    (1) For purposes of this section, a product is any hardware r 
software for use in an incumbent LEC's network or in conjunction with 
its facilities that, when installed, could affect the compatibility of 
an interconnected service provider's network, facilities or services 
with an incumbent LEC's existing telephone network, facilities or 
services, or with any of an incumbent carrier's services or 
capabilities.
    (2) For purposes of this section a definite decision is reached when 
an incumbent LEC determines that the change is warranted, establishes a 
timetable for anticipated implementation, and takes any action toward 
implementation of the change within its network.

[61 FR 47352, Sept. 6, 1996, as amended at 68 FR 52305, Sept. 2, 2003; 
69 FR 77954, Dec. 29, 2004; 80 FR 63371, Oct. 19, 2015]



Sec. 51.332  Notice of network changes: Copper retirement.

    (a) Definition. For purposes of this section, the retirement of 
copper is defined as:
    (1) Removal or disabling of copper loops, subloops, or the feeder 
portion of such loops or subloops;
    (2) The replacement of such loops with fiber-to-the-home loops or 
fiber-to-the-curb loops, as those terms are defined in 
Sec. 51.319(a)(3); or
    (3) The failure to maintain copper loops, subloops, or the feeder 
portion of such loops or subloops that is the functional equivalent of 
removal or disabling.
    (b) Methods for providing public notice. In providing the required 
notice to the public of network changes under this section, an incumbent 
LEC must comply with the following requirements:
    (1) The incumbent LEC must file a notice with the Commission.
    (2) The incumbent LEC must provide each entity within the affected 
service area that directly interconnects with the incumbent LEC's 
network with a copy of the notice filed with the Commission pursuant to 
paragraph (b)(1) of this section.
    (3) If the copper retirement will result in the retirement of copper 
loops to the premises, the incumbent LEC must directly provide notice 
through electronic mail or postal mail to all retail customers within 
the affected service area who have not consented to the retirement; 
except that the incumbent LEC is not required to provide notice of the 
copper retirement to retail customers where:
    (i) The copper facilities being retired under the terms of paragraph 
(a) of this section are no longer in use in the affected service area; 
or
    (ii) The retirement of facilities pursuant to paragraph (a)(3) of 
this section

[[Page 47]]

is undertaken to resolve a service quality concern raised by the 
customer to the incumbent LEC.
    (iii) The contents of any such notice must comply with the 
requirements of paragraph (c)(2) of this section.
    (iv) Notice to each retail customer to whom notice is required shall 
be in writing unless the Commission authorizes in advance, for good 
cause shown, another form of notice. If an incumbent LEC uses email to 
provide notice to retail customers, it must comply with the following 
requirements in addition to the requirements generally applicable to the 
notice:
    (A) The incumbent LEC must have previously obtained express, 
verifiable, prior approval from retail customers to send notices via 
email regarding their service in general, or planned network changes in 
particular;
    (B) Email notices that are returned to the carrier as undeliverable 
must be sent to the retail customer in another form before carriers may 
consider the retail customer to have received notice; and
    (C) An incumbent LEC must ensure that the subject line of the 
message clearly and accurately identifies the subject matter of the 
email.
    (4) The incumbent LEC shall notify and submit a copy of its notice 
pursuant to paragraph (b)(1) of this section to the public utility 
commission and to the Governor of the State in which the network change 
is proposed, to the Tribal entity with authority over the Tribal lands 
in which the network change is proposed, and to the Secretary of 
Defense, Attn. Special Assistant for Telecommunications, Pentagon, 
Washington, DC 20301.
    (c) Content of notice--(1) Non-retail. The notices required by 
paragraphs (b)(1), (2), and (4) of this section must set forth the 
information required by Sec. 51.327. In addition, the notices required 
by paragraphs (b)(1), (2), and (4) of this section must include a 
description of any changes in prices, terms, or conditions that will 
accompany the planned changes.
    (2) Retail. (i) The notice to retail customers required by paragraph 
(b)(3) of this section must provide sufficient information to enable the 
retail customer to make an informed decision as to whether to continue 
subscribing to the service to be affected by the planned network 
changes, including but not limited to the following provided in a manner 
that is clear and conspicuous to the average consumer:
    (A) The information required by Sec. 51.327(a)(1) through (4) and 
(a)(6);
    (B) A statement that the retail customer will still be able to 
purchase the existing service(s) to which he or she subscribes with the 
same functionalities and features as the service he or she currently 
purchases from the incumbent LEC, except that if this statement would be 
inaccurate, the incumbent LEC must include a statement identifying any 
changes to the service(s) and the functionality and features thereof; 
and
    (C) A neutral statement of the services available to the retail 
customers from the incumbent LEC, which shall include a toll-free number 
for a customer service help line, a URL for a related Web page on the 
provider's Web site with relevant information, contact information for 
the Federal Communications Commission including the URL for the Federal 
Communications Commission's consumer complaint portal, and contact 
information for the relevant state public utility commission.
    (ii) If any portion of a notice is translated into another language, 
then all portions of the notice must be translated into that language.
    (iii) An incumbent LEC may not include in the notice required by 
paragraph (b)(3) of this section any statement attempting to encourage a 
customer to purchase a service other than the service to which the 
customer currently subscribes.
    (iv) For purposes of this section, a statement is ``clear and 
conspicuous'' if it is disclosed in such size, color, contrast, and/or 
location that it is readily noticeable, readable, and understandable. In 
addition:
    (A) The statement may not contradict or be inconsistent with any 
other information with which it is presented.
    (B) If a statement materially modifies, explains or clarifies other 
information with which it is presented, then the statement must be 
presented in

[[Page 48]]

proximity to the information it modifies, explains or clarifies, in a 
manner that is readily noticeable, readable, and understandable, and not 
obscured in any manner.
    (C) Hyperlinks included as part of the message must be clearly 
labeled or described.
    (d) Certification. No later than ninety (90) days after the 
Commission's release of the public notice identified in paragraph (f) of 
this section, an incumbent LEC must file with the Commission a 
certification that is executed by an officer or other authorized 
representative of the applicant and meets the requirements of Sec. 1.16 
of this chapter. This certification shall include:
    (1) A statement that identifies the proposed changes;
    (2) A statement that notice has been given in compliance with 
paragraph (b)(1) of this section;
    (3) A statement that the incumbent LEC timely served a copy of its 
notice filed pursuant to paragraph (b)(1) of this section upon each 
entity within the affected service area that directly interconnects with 
the incumbent LEC's network;
    (4) The name and address of each entity referred to in paragraph 
(d)(3) of this section upon which written notice was served;
    (5) A statement that the incumbent LEC timely notified and submitted 
a copy of its public notice to the public utility commission and to the 
Governor of the State in which the network change is proposed, to any 
federally recognized Tribal Nations with authority over the Tribal lands 
in which the network change is proposed, and to the Secretary of Defense 
in compliance with paragraph (b)(4) of this section;
    (6) If customer notice is required by paragraph (b)(3) of this 
section, a statement that the incumbent LEC timely served the customer 
notice required by paragraph (b)(3) of this section upon all retail 
customers to whom notice is required;
    (7) If a customer notice is required by paragraph (b)(3) of this 
section, a copy of the written notice provided to retail customers;
    (8) A statement that the incumbent LEC has complied with the 
notification requirements of Sec. 68.110(b) of this chapter or that the 
notification requirements of Sec. 68.110(b) do not apply;
    (9) A statement that the incumbent LEC has complied with the good 
faith communication requirements of paragraph (g) of this section and 
that it will continue to do so until implementation of the planned 
copper retirement is complete; and
    (10) The docket number and NCD number assigned by the Commission to 
the incumbent LEC's notice provided pursuant to paragraph (b)(1) of this 
section.
    (e) Timing of notice. (1) Except pursuant to paragraph (e)(2) of 
this section, an incumbent LEC must provide the notices required by 
paragraphs (b)(2) and (4) of this section no later than the same date on 
which it files the notice required by paragraph (b)(1) of this section.
    (2) Where the copper facilities being retired under the terms of 
paragraph (a) of this section are no longer being used to serve any 
customers, whether wholesale or retail, in the affected service area, an 
incumbent LEC must provide the notices required by paragraphs (b)(2) and 
(4) of this section no later than ninety (90) days after the 
Commission's release of the public notice identified in paragraph (f) of 
this section.
    (3) An incumbent LEC must provide any notice required by paragraph 
(b)(3) of this section to all non-residential customers to whom notice 
must be provided no later than the same date on which it files the 
notice required by paragraph (b)(1) of this section.
    (4) An incumbent LEC must provide any notice required by paragraph 
(b)(3) of this section to all residential customers to whom notice must 
be provided no later than ninety (90) days after the Commission's 
release of the public notice identified in paragraph (f) of this 
section.
    (f) Implementation date. The Commission will release a public notice 
of filings of the notice of copper retirement pursuant to paragraph 
(b)(1) of this section. The public notice will set forth the docket 
number and NCD number assigned by the Commission to the incumbent LEC's 
notice. The notices of copper retirement required by paragraph (b) of 
this section shall be

[[Page 49]]

deemed approved on the 180th day after the release of the Commission's 
public notice of the filing.
    (g) Good faith requirement. An entity within the affected service 
area that directly interconnects with the incumbent LEC's network may 
request that the incumbent LEC provide additional information to allow 
the interconnecting entity where necessary to accommodate the incumbent 
LEC's changes with no disruption of service to the interconnecting 
entity's end user customers. Incumbent LECs must work with such 
requesting interconnecting entities in good faith to provide such 
additional information.

[80 FR 63371, Oct. 19, 2015]



Sec. 51.333  Notice of network changes: Short term notice, objections
thereto.

    (a) Certificate of service. If an incumbent LEC wishes to provide 
less than six months notice of planned network changes, the public 
notice or certification that it files with the Commission must include a 
certificate of service in addition to the information required by 
Sec. 51.327(a) or Sec. 51.329(a)(2), as applicable. The certificate of 
service shall include:
    (1) A statement that, at least five business days in advance of its 
filing with the Commission, the incumbent LEC served a copy of its 
public notice upon each telephone exchange service provider that 
directly interconnects with the incumbent LEC's network; and
    (2) The name and address of each such telephone exchange service 
provider upon which the notice was served.
    (b) Implementation date. The Commission will release a public notice 
of filings of such short term notices. The public notice will set forth 
the docket number assigned by the Commission to the incumbent LEC's 
notice. The effective date of the network changes referenced in those 
filings shall be deemed final on the tenth business day after the 
release of the Commission's public notice, unless an objection is filed 
pursuant to paragraph (c) of this section.
    (c) Objection procedures for short term notice. An objection to an 
incumbent LEC's short term notice may be filed by an information service 
provider or telecommunications service provider that directly 
interconnects with the incumbent LEC's network. Such objections must be 
filed with the Commission, and served on the incumbent LEC, no later 
than the ninth business day following the release of the Commission's 
public notice. All objections filed under this section must:
    (1) State specific reasons why the objector cannot accommodate the 
incumbent LEC's changes by the date stated in the incumbent LEC's public 
notice and must indicate any specific technical information or other 
assistance required that would enable the objector to accommodate those 
changes;
    (2) List steps the objector is taking to accommodate the incumbent 
LEC's changes on an expedited basis;
    (3) State the earliest possible date (not to exceed six months from 
the date the incumbent LEC gave its original public notice under this 
section) by which the objector anticipates that it can accommodate the 
incumbent LEC's changes, assuming it receives the technical information 
or other assistance requested under paragraph (c)(1) of this section;
    (4) Provide any other information relevant to the objection; and
    (5) Provide the following affidavit, executed by the objector's 
president, chief executive officer, or other corporate officer or 
official, who has appropriate authority to bind the corporation, and 
knowledge of the details of the objector's inability to adjust its 
network on a timely basis:
    ``I, (name and title), under oath and subject to penalty for 
perjury, certify that I have read this objection, that the statements 
contained in it are true, that there is good ground to support the 
objection, and that it is not interposed for purposes of delay. I have 
appropriate authority to make this certification on behalf of (objector) 
and I agree to provide any information the Commission may request to 
allow the Commission to evaluate the truthfulness and validity of the 
statements contained in this objection.''
    (d) Response to objections. If an objection is filed, an incumbent 
LEC shall have until no later than the fourteenth business day following 
the release of

[[Page 50]]

the Commission's public notice to file with the Commission a response to 
the objection and to serve the response on all parties that filed 
objections. An incumbent LEC's response must:
    (1) Provide information responsive to the allegations and concerns 
identified by the objectors;
    (2) State whether the implementation date(s) proposed by the 
objector(s) are acceptable;
    (3) Indicate any specific technical assistance that the incumbent 
LEC is willing to give to the objectors; and
    (4) Provide any other relevant information.
    (e) Resolution. If an objection is filed pursuant to paragraph (c) 
of this section, then the Chief, Wireline Competition Bureau, will issue 
an order determining a reasonable public notice period, provided 
however, that if an incumbent LEC does not file a response within the 
time period allotted, or if the incumbent LEC's response accepts the 
latest implementation date stated by an objector, then the incumbent 
LEC's public notice shall be deemed amended to specify the 
implementation date requested by the objector, without further 
Commission action. An incumbent LEC must amend its public notice to 
reflect any change in the applicable implementation date pursuant to 
Sec. 51.329(b).

[61 FR 47352, Sept. 6, 1996, as amended at 67 FR 13226, Mar. 21, 2002; 
68 FR 52305, Sept. 2, 2003; 69 FR 77954; Dec. 29, 2004; 80 FR 63371, 
Oct. 19, 2015]



Sec. 51.335  Notice of network changes: Confidential or proprietary
information.

    (a) If an incumbent LEC claims that information otherwise required 
to be disclosed is confidential or proprietary, the incumbent LEC's 
public notice must include, in addition to the information identified in 
Sec. 51.327(a), a statement that the incumbent LEC will make further 
information available to those signing a nondisclosure agreement.
    (b) Tolling the public notice period. Upon receipt by an incumbent 
LEC of a competing service provider's request for disclosure of 
confidential or proprietary information, the applicable public notice 
period will be tolled until the parties agree on the terms of a 
nondisclosure agreement. An incumbent LEC receiving such a request must 
amend its public notice as follows:
    (1) On the date it receives a request from a competing service 
provider for disclosure of confidential or proprietary information, to 
state that the notice period is tolled; and
    (2) On the date the nondisclosure agreement is finalized, to specify 
a new implementation date.

[61 FR 47352, Sept. 6, 1996]



Subpart E_Exemptions, Suspensions, and Modifications of Requirements of 
                         Section 251 of the Act



Sec. 51.401  State authority.

    A state commission shall determine whether a telephone company is 
entitled, pursuant to section 251(f) of the Act, to exemption from, or 
suspension or modification of, the requirements of section 251 of the 
Act. Such determinations shall be made on a case-by-case basis.



Sec. 51.403  Carriers eligible for suspension or modification under
section 251(f)(2) of the Act.

    A LEC is not eligible for a suspension or modification of the 
requirements of section 251(b) or section 251(c) of the Act pursuant to 
section 251(f)(2) of the Act if such LEC, at the holding company level, 
has two percent or more of the subscriber lines installed in the 
aggregate nationwide.



Sec. 51.405  Burden of proof.

    (a) Upon receipt of a bona fide request for interconnection, 
services, or access to unbundled network elements, a rural telephone 
company must prove to the state commission that the rural telephone 
company should be entitled, pursuant to section 251(f)(1) of the Act, to 
continued exemption from the requirements of section 251(c) of the Act.
    (b) A LEC with fewer than two percent of the nation's subscriber 
lines installed in the aggregate nationwide must prove to the state 
commission, pursuant to section 251(f)(2) of the Act, that it is 
entitled to a suspension or

[[Page 51]]

modification of the application of a requirement or requirements of 
section 251(b) or 251(c) of the Act.
    (c) In order to justify continued exemption under section 251(f)(1) 
of the Act once a bona fide request has been made, an incumbent LEC must 
offer evidence that the application of the requirements of section 
251(c) of the Act would be likely to cause undue economic burden beyond 
the economic burden that is typically associated with efficient 
competitive entry.
    (d) In order to justify a suspension or modification under section 
251(f)(2) of the Act, a LEC must offer evidence that the application of 
section 251(b) or section 251(c) of the Act would be likely to cause 
undue economic burden beyond the economic burden that is typically 
associated with efficient competitive entry.



                      Subpart F_Pricing of Elements



Sec. 51.501  Scope.

    (a) The rules in this subpart apply to the pricing of network 
elements, interconnection, and methods of obtaining access to unbundled 
elements, including physical collocation and virtual collocation.
    (b) As used in this subpart, the term ``element'' includes network 
elements, interconnection, and methods of obtaining interconnection and 
access to unbundled elements.



Sec. 51.503  General pricing standard.

    (a) An incumbent LEC shall offer elements to requesting 
telecommunications carriers at rates, terms, and conditions that are 
just, reasonable, and nondiscriminatory.
    (b) An incumbent LEC's rates for each element it offers shall comply 
with the rate structure rules set forth in Secs. 51.507 and 51.509, and 
shall be established, at the election of the state commission--
    (1) Pursuant to the forward-looking economic cost-based pricing 
methodology set forth in Secs. 51.505 and 51.511; or
    (2) Consistent with the proxy ceilings and ranges set forth in 
Sec. 51.513.
    (c) The rates that an incumbent LEC assesses for elements shall not 
vary on the basis of the class of customers served by the requesting 
carrier, or on the type of services that the requesting carrier 
purchasing such elements uses them to provide.



Sec. 51.505  Forward-looking economic cost.

    (a) In general. The forward-looking economic cost of an element 
equals the sum of:
    (1) The total element long-run incremental cost of the element, as 
described in paragraph (b); and
    (2) A reasonable allocation of forward-looking common costs, as 
described in paragraph (c).
    (b) Total element long-run incremental cost. The total element long-
run incremental cost of an element is the forward-looking cost over the 
long run of the total quantity of the facilities and functions that are 
directly attributable to, or reasonably identifiable as incremental to, 
such element, calculated taking as a given the incumbent LEC's provision 
of other elements.
    (1) Efficient network configuration. The total element long-run 
incremental cost of an element should be measured based on the use of 
the most efficient telecommunications technology currently available and 
the lowest cost network configuration, given the existing location of 
the incumbent LEC's wire centers.
    (2) Forward-looking cost of capital. The forward-looking cost of 
capital shall be used in calculating the total element long-run 
incremental cost of an element.
    (3) Depreciation rates. The depreciation rates used in calculating 
forward-looking economic costs of elements shall be economic 
depreciation rates.
    (c) Reasonable allocation of forward-looking common costs--(1) 
Forward-looking common costs. Forward-looking common costs are economic 
costs efficiently incurred in providing a group of elements or services 
(which may include all elements or services provided by the incumbent 
LEC) that cannot be attributed directly to individual elements or 
services.
    (2) Reasonable allocation. (i) The sum of a reasonable allocation of 
forward-looking common costs and the total element long-run incremental 
cost of an element shall not exceed the stand-

[[Page 52]]

alone costs associated with the element. In this context, stand-alone 
costs are the total forward-looking costs, including corporate costs, 
that would be incurred to produce a given element if that element were 
provided by an efficient firm that produced nothing but the given 
element.
    (ii) The sum of the allocation of forward-looking common costs for 
all elements and services shall equal the total forward-looking common 
costs, exclusive of retail costs, attributable to operating the 
incumbent LEC's total network, so as to provide all the elements and 
services offered.
    (d) Factors that may not be considered. The following factors shall 
not be considered in a calculation of the forward-looking economic cost 
of an element:
    (1) Embedded costs. Embedded costs are the costs that the incumbent 
LEC incurred in the past and that are recorded in the incumbent LEC's 
books of accounts;
    (2) Retail costs. Retail costs include the costs of marketing, 
billing, collection, and other costs associated with offering retail 
telecommunications services to subscribers who are not 
telecommunications carriers, described in Sec. 51.609;
    (3) Opportunity costs. Opportunity costs include the revenues that 
the incumbent LEC would have received for the sale of telecommunications 
services, in the absence of competition from telecommunications carriers 
that purchase elements; and
    (4) Revenues to subsidize other services. Revenues to subsidize 
other services include revenues associated with elements or 
telecommunications service offerings other than the element for which a 
rate is being established.
    (e) Cost study requirements. An incumbent LEC must prove to the 
state commission that the rates for each element it offers do not exceed 
the forward-looking economic cost per unit of providing the element, 
using a cost study that complies with the methodology set forth in this 
section and Sec. 51.511.
    (1) A state commission may set a rate outside the proxy ranges or 
above the proxy ceilings described in Sec. 51.513 only if that 
commission has given full and fair effect to the economic cost based 
pricing methodology described in this section and Sec. 51.511 in a state 
proceeding that meets the requirements of paragraph (e)(2) of this 
section.
    (2) Any state proceeding conducted pursuant to this section shall 
provide notice and an opportunity for comment to affected parties and 
shall result in the creation of a written factual record that is 
sufficient for purposes of review. The record of any state proceeding in 
which a state commission considers a cost study for purposes of 
establishing rates under this section shall include any such cost study.



Sec. 51.507  General rate structure standard.

    (a) Element rates shall be structured consistently with the manner 
in which the costs of providing the elements are incurred.
    (b) The costs of dedicated facilities shall be recovered through 
flat-rated charges.
    (c) The costs of shared facilities shall be recovered in a manner 
that efficiently apportions costs among users. Costs of shared 
facilities may be apportioned either through usage-sensitive charges or 
capacity-based flat-rated charges, if the state commission finds that 
such rates reasonably reflect the costs imposed by the various users.
    (d) Recurring costs shall be recovered through recurring charges, 
unless an incumbent LEC proves to a state commission that such recurring 
costs are de minimis. Recurring costs shall be considered de minimis 
when the costs of administering the recurring charge would be excessive 
in relation to the amount of the recurring costs.
    (e) State commissions may, where reasonable, require incumbent LECs 
to recover nonrecurring costs through recurring charges over a 
reasonable period of time. Nonrecurring charges shall be allocated 
efficiently among requesting telecommunications carriers, and shall not 
permit an incumbent LEC to recover more than the total forward-looking 
economic cost of providing the applicable element.
    (f) State commissions shall establish different rates for elements 
in at least three defined geographic areas within the state to reflect 
geographic cost differences.

[[Page 53]]

    (1) To establish geographically-deaveraged rates, state commissions 
may use existing density-related zone pricing plans described in 
Sec. 69.123 of this chapter, or other such cost-related zone plans 
established pursuant to state law.
    (2) In states not using such existing plans, state commissions must 
create a minimum of three cost-related rate zones.

[61 FR 45619, Aug. 29, 1996, as amended at 64 FR 32207, June 16, 1999; 
64 FR 68637, Dec. 8, 1999]



Sec. 51.509  Rate structure standards for specific elements.

    In addition to the general rules set forth in Sec. 51.507, rates for 
specific elements shall comply with the following rate structure rules.
    (a) Local loop and subloop. Loop and subloop costs shall be 
recovered through flat-rated charges.
    (b) Local switching. Local switching costs shall be recovered 
through a combination of a flat-rated charge for line ports and one or 
more flat-rated or per-minute usage charges for the switching matrix and 
for trunk ports.
    (c) Dedicated transmission links. Dedicated transmission link costs 
shall be recovered through flat-rated charges.
    (d) Shared transmission facilities between tandem switches and end 
offices. The costs of shared transmission facilities between tandem 
switches and end offices may be recovered through usage-sensitive 
charges, or in another manner consistent with the manner that the 
incumbent LEC incurs those costs.
    (e) Tandem switching. Tandem switching costs may be recovered 
through usage-sensitive charges, or in another manner consistent with 
the manner that the incumbent LEC incurs those costs.
    (f) Signaling and call-related database services. Signaling and 
call-related database service costs shall be usage-sensitive, based on 
either the number of queries or the number of messages, with the 
exception of the dedicated circuits known as signaling links, the cost 
of which shall be recovered through flat-rated charges.
    (g) Collocation. Collocation costs shall be recovered consistent 
with the rate structure policies established in the Expanded 
Interconnection proceeding, CC Docket No. 91-141.
    (h) Network interface device. An incumbent LEC must establish a 
price for the network interface device when that unbundled network 
element is purchased on a stand-alone basis pursuant to Sec. 51.319(c).

[61 FR 45619, Aug. 29, 1996, as amended at 68 FR 52306, Sept. 2, 2003]



Sec. 51.511  Forward-looking economic cost per unit.

    (a) The forward-looking economic cost per unit of an element equals 
the forward-looking economic cost of the element, as defined in 
Sec. 51.505, divided by a reasonable projection of the sum of the total 
number of units of the element that the incumbent LEC is likely to 
provide to requesting telecommunications carriers and the total number 
of units of the element that the incumbent LEC is likely to use in 
offering its own services, during a reasonable measuring period.
    (b)(1) With respect to elements that an incumbent LEC offers on a 
flat-rate basis, the number of units is defined as the discrete number 
of elements (e.g., local loops or local switch ports) that the incumbent 
LEC uses or provides.
    (2) With respect to elements that an incumbent LEC offers on a 
usage-sensitive basis, the number of units is defined as the unit of 
measurement of the usage (e.g., minutes of use or call-related database 
queries) of the element.



Sec. 51.513  Proxies for forward-looking economic cost.

    (a) A state commission may determine that the cost information 
available to it with respect to one or more elements does not support 
the adoption of a rate or rates that are consistent with the 
requirements set forth in Secs. 51.505 and 51.511. In that event, the 
state commission may establish a rate for an element that is consistent 
with the proxies specified in this section, provided that:
    (1) Any rate established through use of such proxies shall be 
superseded once the state commission has completed review of a cost 
study that complies with the forward-looking economic cost based pricing 
methodology

[[Page 54]]

described in Secs. 51.505 and 51.511, and has concluded that such study 
is a reasonable basis for establishing element rates; and
    (2) The state commission sets forth in writing a reasonable basis 
for its selection of a particular rate for the element.
    (b) The constraints on proxy-based rates described in this section 
apply on a geographically averaged basis. For purposes of determining 
whether geographically deaveraged rates for elements comply with the 
provisions of this section, a geographically averaged proxy-based rate 
shall be computed based on the weighted average of the actual, 
geographically deaveraged rates that apply in separate geographic areas 
in a state.
    (c) Proxies for specific elements--(1) Local loops. For each state 
listed below, the proxy-based monthly rate for unbundled local loops, on 
a statewide weighted average basis, shall be no greater than the figures 
listed in the table below. (The Commission has not established a default 
proxy ceiling for loop rates in Alaska.)

                                  Table
------------------------------------------------------------------------
                                                                  Proxy
                             State                               ceiling
------------------------------------------------------------------------
Alabama.......................................................    $17.25
Arizona.......................................................     12.85
Arkansas......................................................     21.18
California....................................................     11.10
Colorado......................................................     14.97
Connecticut...................................................     13.23
Delaware......................................................     13.24
District of Columbia..........................................     10.81
Florida.......................................................     13.68
Georgia.......................................................     16.09
Hawaii........................................................     15.27
Idaho.........................................................     20.16
Illinois......................................................     13.12
Indiana.......................................................     13.29
Iowa..........................................................     15.94
Kansas........................................................     19.85
Kentucky......................................................     16.70
Louisiana.....................................................     16.98
Maine.........................................................     18.69
Maryland......................................................     13.36
Massachusetts.................................................      9.83
Michigan......................................................     15.27
Minnesota.....................................................     14.81
Mississippi...................................................     21.97
Missouri......................................................     18.32
Montana.......................................................     25.18
Nebraska......................................................     18.05
Nevada........................................................     18.95
New Hampshire.................................................     16.00
New Jersey....................................................     12.47
New Mexico....................................................     18.66
New York......................................................     11.75
North Carolina................................................     16.71
North Dakota..................................................     25.36
Ohio..........................................................     15.73
Oklahoma......................................................     17.63
Oregon........................................................     15.44
Pennsylvania..................................................     12.30
Puerto Rico...................................................     12.47
Rhode Island..................................................     11.48
South Carolina................................................     17.07
South Dakota..................................................     25.33
Tennessee.....................................................     17.41
Texas.........................................................     15.49
Utah..........................................................     15.12
Vermont.......................................................     20.13
Virginia......................................................     14.13
Washington....................................................     13.37
West Virginia.................................................     19.25
Wisconsin.....................................................     15.94
Wyoming.......................................................     25.11
------------------------------------------------------------------------

    (2) Local switching. (i) The blended proxy-based rate for the usage-
sensitive component of the unbundled local switching element, including 
the switching matrix, the functionalities used to provide vertical 
features, and the trunk ports, shall be no greater than 0.4 cents 
($0.004) per minute, and no less than 0.2 cents ($0.002) per minute, 
except that, where a state commission has, before August 8, 1996, 
established a rate less than or equal to 0.5 cents ($0.005) per minute, 
that rate may be retained pending completion of a forward-looking 
economic cost study. If a flat-rated charge is established for these 
components, it shall be converted to a per-minute rate by dividing the 
projected average minutes of use per flat-rated subelement, for purposes 
of assessing compliance with this proxy. A weighted average of such 
flat-rate or usage-sensitive charges shall be used in appropriate 
circumstances, such as when peak and off-peak charges are used.
    (ii) The blended proxy-based rate for the line port component of the 
local switching element shall be no less than $1.10, and no more than 
$2.00, per line port per month for ports used in the delivery of basic 
residential and business exchange services.
    (3) Dedicated transmission links. The proxy-based rates for 
dedicated transmission links shall be no greater than the incumbent 
LEC's tariffed interstate charges for comparable entrance facilities or 
direct-trunked transport offerings, as described in Secs. 69.110 and 
69.112 of this chapter.

[[Page 55]]

    (4) Shared transmission facilities between tandem switches and end 
offices. The proxy-based rates for shared transmission facilities 
between tandem switches and end offices shall be no greater than the 
weighted per-minute equivalent of DS1 and DS3 interoffice dedicated 
transmission link rates that reflects the relative number of DS1 and DS3 
circuits used in the tandem to end office links (or a surrogate based on 
the proportion of copper and fiber facilities in the interoffice 
network), calculated using a loading factor of 9,000 minutes per month 
per voice-grade circuit, as described in Sec. 69.112 of this chapter.
    (5) Tandem switching. The proxy-based rate for tandem switching 
shall be no greater than 0.15 cents ($0.0015) per minute of use.
    (6) Collocation. To the extent that the incumbent LEC offers a 
comparable form of collocation in its interstate expanded 
interconnection tariffs, as described in Secs. 64.1401 and 69.121 of 
this chapter, the proxy-based rates for collocation shall be no greater 
than the effective rates for equivalent services in the interstate 
expanded interconnection tariff. To the extent that the incumbent LEC 
does not offer a comparable form of collocation in its interstate 
expanded interconnection tariffs, a state commission may, in its 
discretion, establish a proxy-based rate, provided that the state 
commission sets forth in writing a reasonable basis for concluding that 
its rate would approximate the result of a forward-looking economic cost 
study, as described in Sec. 51.505.
    (7) Signaling, call-related database, and other elements. To the 
extent that the incumbent LEC has established rates for offerings 
comparable to other elements in its interstate access tariffs, and has 
provided cost support for those rates pursuant to Sec. 61.49(h) of this 
chapter, the proxy-based rates for those elements shall be no greater 
than the effective rates for equivalent services in the interstate 
access tariffs. In other cases, the proxy-based rate shall be no greater 
than a rate based on direct costs plus a reasonable allocation of 
overhead loadings, pursuant to Sec. 61.49(h) of this chapter.

[61 FR 45619, Aug. 29, 1996, as amended at 61 FR 52709, Oct. 8, 1996]



Sec. 51.515  Application of access charges.

    (a)-(b) [Reserved]
    (c) Notwithstanding Secs. 51.505, 51.511, and 51.513(d)(2) and 
paragraph (a) of this section, an incumbent LEC may assess upon 
telecommunications carriers that purchase unbundled local switching 
elements, as described in Sec. 51.319(c)(1), for intrastate toll minutes 
of use traversing such unbundled local switching elements, intrastate 
access charges comparable to those listed in paragraph (b) and any 
explicit intrastate universal service mechanism based on access charges, 
only until the earliest of the following, and not thereafter:
    (1) June 30, 1997;
    (2) The effective date of a state commission decision that an 
incumbent LEC may not assess such charges; or
    (3) With respect to a Bell operating company only, the date on which 
that company is authorized to offer in-region interLATA service in the 
state pursuant to section 271 of the Act. The end date for Bell 
operating companies that are authorized to offer interLATA service shall 
apply only to the recovery of access charges in those states in which 
the Bell operating company is authorized to offer such service.
    (d) Interstate access charges described in part 69 shall not be 
assessed by incumbent LECs on each element purchased by requesting 
carriers providing both telephone exchange and exchange access services 
to such requesting carriers' end users.

[61 FR 45619, Aug. 29, 1996, as amended at 62 FR 45587, Aug. 28, 1997; 
71 FR 65750, Nov. 9, 2006]



                            Subpart G_Resale



Sec. 51.601  Scope of resale rules.

    The provisions of this subpart govern the terms and conditions under 
which LECs offer telecommunications services to requesting 
telecommunications carriers for resale.

[[Page 56]]



Sec. 51.603  Resale obligation of all local exchange carriers.

    (a) A LEC shall make its telecommunications services available for 
resale to requesting telecommunications carriers on terms and conditions 
that are reasonable and non-discriminatory.
    (b) A LEC must provide services to requesting telecommunications 
carriers for resale that are equal in quality, subject to the same 
conditions, and provided within the same provisioning time intervals 
that the LEC provides these services to others, including end users.



Sec. 51.605  Additional obligations of incumbent local exchange carriers.

    (a) An incumbent LEC shall offer to any requesting 
telecommunications carrier any telecommunications service that the 
incumbent LEC offers on a retail basis to subscribers that are not 
telecommunications carriers for resale at wholesale rates that are, at 
the election of the state commission--
    (1) Consistent with the avoided cost methodology described in 
Secs. 51.607 and 51.609; or
    (2) Interim wholesale rates, pursuant to Sec. 51.611.
    (b) For purposes of this subpart, exchange access services, as 
defined in section 3 of the Act, shall not be considered to be 
telecommunications services that incumbent LECs must make available for 
resale at wholesale rates to requesting telecommunications carriers.
    (c) For purposes of this subpart, advanced telecommunications 
services sold to Internet Service Providers as an input component to the 
Internet Service Providers' retail Internet service offering shall not 
be considered to be telecommunications services offered on a retail 
basis that incumbent LECs must make available for resale at wholesale 
rates to requesting telecommunications carriers.
    (d) Notwithstanding paragraph (b) of this section, advanced 
telecommunications services that are classified as exchange access 
services are subject to the obligations of paragraph (a) of this section 
if such services are sold on a retail basis to residential and business 
end-users that are not telecommunications carriers.
    (e) Except as provided in Sec. 51.613, an incumbent LEC shall not 
impose restrictions on the resale by a requesting carrier of 
telecommunications services offered by the incumbent LEC.

[61 FR 45619, Aug. 29, 1996, as amended at 65 FR 6915, Feb. 11, 2000]



Sec. 51.607  Wholesale pricing standard.

    The wholesale rate that an incumbent LEC may charge for a 
telecommunications service provided for resale to other 
telecommunications carriers shall equal the rate for the 
telecommunications service, less avoided retail costs, as described in 
section 51.609. For purposes of this subpart, exchange access services, 
as defined in section 3 of the Act, shall not be considered to be 
telecommunications services that incumbent LECs must make available for 
resale at wholesale rates to requesting telecommunications carriers.

[65 FR 6915, Feb. 11, 2000]



Sec. 51.609  Determination of avoided retail costs.

    (a) Except as provided in Sec. 51.611, the amount of avoided retail 
costs shall be determined on the basis of a cost study that complies 
with the requirements of this section.
    (b) Avoided retail costs shall be those costs that reasonably can be 
avoided when an incumbent LEC provides a telecommunications service for 
resale at wholesale rates to a requesting carrier.
    (c) For incumbent LECs that are designated as Class A companies 
under Sec. 32.11 of this chapter, except as provided in paragraph (d) of 
this section, avoided retail costs shall:
    (1) Include as direct costs, the costs recorded in USOA accounts 
6611 (product management and sales), 6613 (product advertising), 6621 
(call completion services), 6622, (number services), and 6623 (customer 
services) (Secs. 32.6611, 32.6613, 32.6621, 32.6622, and 32.6623 of this 
chapter);

[[Page 57]]

    (2) Include, as indirect costs, a portion of the costs recorded in 
USOA accounts 6121-6124 (general support expenses), 6720 (corporate 
operations expenses), and uncollectible telecommunications revenue 
included in 5300 (uncollectible revenue) (Secs. 32.6121 through 32.6124, 
32.6720 and 32.5300 of this chapter); and
    (3) Not include plant-specific expenses and plant non-specific 
expenses, other than general support expenses (Secs. 32.6112-6114, 
32.6211-6565 of this chapter).
    (d) Costs included in accounts 6611, 6613 and 6621-6623 described in 
paragraph (c) of this section (Secs. 32.6611, 32.6613, and 32.6621-6623 
of this chapter) may be included in wholesale rates only to the extent 
that the incumbent LEC proves to a state commission that specific costs 
in these accounts will be incurred and are not avoidable with respect to 
services sold at wholesale, or that specific costs in these accounts are 
not included in the retail prices of resold services. Costs included in 
accounts 6112-6114 and 6211-6565 described in paragraph (c) of this 
section (Secs. 32.6112-32.6114, 32.6211-32.6565 of this chapter) may be 
treated as avoided retail costs, and excluded from wholesale rates, only 
to the extent that a party proves to a state commission that specific 
costs in these accounts can reasonably be avoided when an incumbent LEC 
provides a telecommunications service for resale to a requesting 
carrier.
    (e) For incumbent LECs that are designated as Class B companies 
under Sec. 32.11 of this chapter and that record information in summary 
accounts instead of specific USOA accounts, the entire relevant summary 
accounts may be used in lieu of the specific USOA accounts listed in 
paragraphs (c) and (d) of this section.

[61 FR 45619, Aug. 29, 1996, as amended at 67 FR 5700, Feb. 6, 2002; 69 
FR 53652, Sept. 2, 2004]



Sec. 51.611  Interim wholesale rates.

    (a) If a state commission cannot, based on the information available 
to it, establish a wholesale rate using the methodology prescribed in 
Sec. 51.609, then the state commission may elect to establish an interim 
wholesale rate as described in paragraph (b) of this section.
    (b) The state commission may establish interim wholesale rates that 
are at least 17 percent, and no more than 25 percent, below the 
incumbent LEC's existing retail rates, and shall articulate the basis 
for selecting a particular discount rate. The same discount percentage 
rate shall be used to establish interim wholesale rates for each 
telecommunications service.
    (c) A state commission that establishes interim wholesale rates 
shall, within a reasonable period of time thereafter, establish 
wholesale rates on the basis of an avoided retail cost study that 
complies with Sec. 51.609.



Sec. 51.613  Restrictions on resale.

    (a) Notwithstanding Sec. 51.605(b), the following types of 
restrictions on resale may be imposed:
    (1) Cross-class selling. A state commission may permit an incumbent 
LEC to prohibit a requesting telecommunications carrier that purchases 
at wholesale rates for resale, telecommunications services that the 
incumbent LEC makes available only to residential customers or to a 
limited class of residential customers, from offering such services to 
classes of customers that are not eligible to subscribe to such services 
from the incumbent LEC.
    (2) Short term promotions. An incumbent LEC shall apply the 
wholesale discount to the ordinary rate for a retail service rather than 
a special promotional rate only if:
    (i) Such promotions involve rates that will be in effect for no more 
than 90 days; and
    (ii) The incumbent LEC does not use such promotional offerings to 
evade the wholesale rate obligation, for example by making available a 
sequential series of 90-day promotional rates.
    (b) With respect to any restrictions on resale not permitted under 
paragraph (a), an incumbent LEC may impose a restriction only if it 
proves to the state commission that the restriction is reasonable and 
nondiscriminatory.
    (c) Branding. Where operator, call completion, or directory 
assistance service is part of the service or service

[[Page 58]]

package an incumbent LEC offers for resale, failure by an incumbent LEC 
to comply with reseller unbranding or rebranding requests shall 
constitute a restriction on resale.
    (1) An incumbent LEC may impose such a restriction only if it proves 
to the state commission that the restriction is reasonable and 
nondiscriminatory, such as by proving to a state commission that the 
incumbent LEC lacks the capability to comply with unbranding or 
rebranding requests.
    (2) For purposes of this subpart, unbranding or rebranding shall 
mean that operator, call completion, or directory assistance services 
are offered in such a manner that an incumbent LEC's brand name or other 
identifying information is not identified to subscribers, or that such 
services are offered in such a manner that identifies to subscribers the 
requesting carrier's brand name or other identifying information.



Sec. 51.615  Withdrawal of services.

    When an incumbent LEC makes a telecommunications service available 
only to a limited group of customers that have purchased such a service 
in the past, the incumbent LEC must also make such a service available 
at wholesale rates to requesting carriers to offer on a resale basis to 
the same limited group of customers that have purchased such a service 
in the past.



Sec. 51.617  Assessment of end user common line charge on resellers.

    (a) Notwithstanding the provision in Sec. 69.104(a) of this chapter 
that the end user common line charge be assessed upon end users, an 
incumbent LEC shall assess this charge, and the charge for changing the 
designated primary interexchange carrier, upon requesting carriers that 
purchase telephone exchange service for resale. The specific end user 
common line charge to be assessed will depend upon the identity of the 
end user served by the requesting carrier.
    (b) When an incumbent LEC provides telephone exchange service to a 
requesting carrier at wholesale rates for resale, the incumbent LEC 
shall continue to assess the interstate access charges provided in part 
69 of this chapter, other than the end user common line charge, upon 
interexchange carriers that use the incumbent LEC's facilities to 
provide interstate or international telecommunications services to the 
interexchange carriers' subscribers.



   Subpart H_Reciprocal Compensation for Transport and Termination of 
                       Telecommunications Traffic

    Editorial Note: Nomenclature changes to subpart H of part 51 appear 
at 66 FR 26806, May 15, 2001.



Sec. 51.700  Purpose of this subpart.

    The purpose of this subpart, as revised in 2011 by FCC 11-161 is to 
establish rules governing the transition of intercarrier compensation 
from a calling-party's-network pays system to a default bill-and-keep 
methodology. Following the transition, the exchange of 
telecommunications traffic between and among service providers will, by 
default, be governed by bill-and-keep arrangements.

    Note to Sec. 51.700: See FCC 11-161, figure 9 (chart identifying 
steps in the transition).

[76 FR 73854, Nov. 29, 2011]



Sec. 51.701  Scope of transport and termination pricing rules.

    (a) Effective December 29, 2011, compensation for telecommunications 
traffic exchanged between two telecommunications carriers that is 
interstate or intrastate exchange access, information access, or 
exchange services for such access, other than special access, is 
specified in subpart J of this part. The provisions of this subpart 
apply to Non-Access Reciprocal Compensation for transport and 
termination of Non-Access Telecommunications Traffic between LECs and 
other telecommunications carriers.
    (b) Non-Access Telecommunications Traffic. For purposes of this 
subpart, Non-Access Telecommunications Traffic means:
    (1) Telecommunications traffic exchanged between a LEC and a 
telecommunications carrier other than a

[[Page 59]]

CMRS provider, except for telecommunications traffic that is interstate 
or intrastate exchange access, information access, or exchange services 
for such access (see FCC 01-131, paragraphs 34, 36, 39, 42-43); or
    (2) Telecommunications traffic exchanged between a LEC and a CMRS 
provider that, at the beginning of the call, originates and terminates 
within the same Major Trading Area, as defined in Sec. 24.202(a) of this 
chapter.
    (3) This definition includes telecommunications traffic exchanged 
between a LEC and another telecommunications carrier in Time Division 
Multiplexing (TDM) format that originates and/or terminates in IP format 
and that otherwise meets the definitions in paragraphs (b)(1) or (b)(2) 
of this section. Telecommunications traffic originates and/or terminates 
in IP format if it originates from and/or terminates to an end-user 
customer of a service that requires Internet protocol-compatible 
customer premises equipment.
    (c) Transport. For purposes of this subpart, transport is the 
transmission and any necessary tandem switching of Non-Access 
Telecommunications Traffic subject to section 251(b)(5) of the 
Communications Act of 1934, as amended, 47 U.S.C. 251(b)(5), from the 
interconnection point between the two carriers to the terminating 
carrier's end office switch that directly serves the called party, or 
equivalent facility provided by a carrier other than an incumbent LEC.
    (d) Termination. For purposes of this subpart, termination is the 
switching of Non-Access Telecommunications Traffic at the terminating 
carrier's end office switch, or equivalent facility, and delivery of 
such traffic to the called party's premises.
    (e) Non-Access Reciprocal Compensation. For purposes of this 
subpart, a Non-Access Reciprocal Compensation arrangement between two 
carriers is either a bill-and-keep arrangement, per Sec. 51.713, or an 
arrangement in which each carrier receives intercarrier compensation for 
the transport and termination of Non-Access Telecommunications Traffic.

[61 FR 45619, Aug. 29, 1996, as amended at 66 FR 26806, May 15, 2001; 76 
FR 73855, Nov. 29, 2011]



Sec. 51.703  Non-Access reciprocal compensation obligation of LECs.

    (a) Each LEC shall establish Non-Access Reciprocal Compensation 
arrangements for transport and termination of Non-Access 
Telecommunications Traffic with any requesting telecommunications 
carrier.
    (b) A LEC may not assess charges on any other telecommunications 
carrier for Non-Access Telecommunications Traffic that originates on the 
LEC's network.
    (c) Notwithstanding any other provision of the Commission's rules, a 
LEC shall be entitled to assess and collect the full charges for the 
transport and termination of Non-Access Telecommunications Traffic, 
regardless of whether the local exchange carrier assessing the 
applicable charges itself delivers such traffic to the called party's 
premises or delivers the call to the called party's premises via 
contractual or other arrangements with an affiliated or unaffiliated 
provider of interconnected VoIP service, as defined in 47 U.S.C. 
153(25), or a non-interconnected VoIP service, as defined in 47 U.S.C. 
153(36), that does not itself seek to collect Non-Access Reciprocal 
Compensation charges for the transport and termination of that Non-
Access Telecommunications Traffic. In no event may the total charges 
that a LEC may assess for such service to the called location exceed the 
applicable transport and termination rate. For purposes of this section, 
the facilities used by the LEC and affiliated or unaffiliated provider 
of interconnected VoIP service or a non-interconnected VoIP service for 
the transport and termination of such traffic shall be deemed an 
equivalent facility under Sec. 51.701.

[76 FR 73855, Nov. 29, 2011]



Sec. 51.705  LECs' rates for transport and termination.

    (a) Notwithstanding any other provision of the Commission's rules, 
by default, transport and termination for

[[Page 60]]

Non-Access Telecommunications Traffic exchanged between a local exchange 
carrier and a CMRS provider within the scope of Sec. 51.701(b)(2) shall 
be pursuant to a bill-and-keep arrangement, as provided in Sec. 51.713.
    (b) Establishment of incumbent LECs' rates for transport and 
termination:
    (1) This provision applies when, in the absence of a negotiated 
agreement between parties, state commissions establish Non-Access 
Reciprocal Compensation rates for the exchange of Non-Access 
Telecommunications Traffic between a local exchange carrier and a 
telecommunications carrier other than a CMRS provider where the 
incumbent local exchange carriers did not have any such rates as of 
December 29, 2011. Any rates established pursuant to this provision 
apply between December 29, 2011 and the date at which they are 
superseded by the transition specified in paragraphs (c)(2) through 
(c)(5) of this section.
    (2) An incumbent LEC's rates for transport and termination of 
telecommunications traffic shall be established, at the election of the 
state commission, on the basis of:
    (i) The forward-looking economic costs of such offerings, using a 
cost study pursuant to Secs. 51.505 and 51.511; or
    (ii) A bill-and-keep arrangement, as provided in Sec. 51.713.
    (3) In cases where both carriers in a Non-Access Reciprocal 
Compensation arrangement are incumbent LECs, state commissions shall 
establish the rates of the smaller carrier on the basis of the larger 
carrier's forward-looking costs, pursuant to Sec. 51.711.
    (c) Except as provided by paragraph (a) of this section, and 
notwithstanding any other provision of the Commission's rules, default 
transitional Non-Access Reciprocal Compensation rates shall be 
determined as follows:
    (1) Effective December 29, 2011, no telecommunications carrier may 
increase a Non-Access Reciprocal Compensation for transport or 
termination above the level in effect on December 29, 2011. All Bill-
and-Keep Arrangements in effect on December 29, 2011 shall remain in 
place unless both parties mutually agree to an alternative arrangement.
    (2) Beginning July 1, 2012, if any telecommunications carrier's Non-
Access Reciprocal Compensation rates in effect on December 29, 2011 or 
established pursuant to paragraph (b) of this section subsequent to 
December 29, 2011, exceed that carrier's interstate access rates for 
functionally equivalent services in effect in the same state on December 
29, 2011, that carrier shall reduce its reciprocal compensation rate by 
one half of the difference between the Non-Access Reciprocal 
Compensation rate and the corresponding functionally equivalent 
interstate access rate.
    (3) Beginning July 1, 2013, no telecommunications carrier's Non-
Access Reciprocal Compensation rates shall exceed that carrier's 
tariffed interstate access rate in effect in the same state on January 1 
of that same year, for equivalent functionality.
    (4) After July 1, 2018, all Price-Cap Local Exchange Carrier's Non-
Access Reciprocal Compensation rates and all non-incumbent LECs that 
benchmark access rates to Price Cap Carrier shall be set pursuant to 
Bill-and-Keep arrangements for Non-Access Reciprocal Compensation as 
defined in this subpart.
    (5) After July 1, 2020, all Rate-of-Return Local Exchange Carrier's 
Non-Access Reciprocal Compensation rates and all non-incumbent LECs that 
benchmark access rates to Rate-of-Return Carriers shall be set pursuant 
to Bill-and-Keep arrangements for Non-Access Reciprocal Compensation as 
defined in this subpart.

[76 FR 73855, Nov. 29, 2011]



Sec. 51.707  [Reserved]



Sec. 51.709  Rate structure for transport and termination.

    (a) In state proceedings, where a rate for Non-Access Reciprocal 
Compensation does not exist as of December 29, 2011, a state commission 
shall establish initial rates for the transport and termination of Non-
Access Telecommunications Traffic that are structured consistently with 
the manner that carriers incur those costs, and consistently with the 
principles in this section.
    (b) The rate of a carrier providing transmission facilities 
dedicated to the

[[Page 61]]

transmission of non-access traffic between two carriers' networks shall 
recover only the costs of the proportion of that trunk capacity used by 
an interconnecting carrier to send non-access traffic that will 
terminate on the providing carrier's network. Such proportions may be 
measured during peak periods.
    (c) For Non-Access Telecommunications Traffic exchanged between a 
rate-of-return regulated rural telephone company as defined in Sec. 51.5 
and a CMRS provider, the rural rate-of-return incumbent local exchange 
carrier will be responsible for transport to the CMRS provider's 
interconnection point when it is located within the rural rate-of-return 
incumbent local exchange carrier's service area. When the CMRS 
provider's interconnection point is located outside the rural rate-of-
return incumbent local exchange carrier's service area, the rural rate-
of-return incumbent local exchange carrier's transport and provisioning 
obligation stops at its meet point and the CMRS provider is responsible 
for the remaining transport to its interconnection point. This paragraph 
(c) is a default provision and applicable in the absence of an existing 
agreement or arrangement otherwise.

[76 FR 73856, Nov. 29, 2011]



Sec. 51.711  Symmetrical reciprocal compensation.

    (a) Rates for transport and termination of Non-Access 
Telecommunications Traffic shall be symmetrical, unless carriers 
mutually agree otherwise, except as provided in paragraphs (b) and (c) 
of this section.
    (1) For purposes of this subpart, symmetrical rates are rates that a 
carrier other than an incumbent LEC assesses upon an incumbent LEC for 
transport and termination of Non-Access Telecommunications Traffic equal 
to those that the incumbent LEC assesses upon the other carrier for the 
same services.
    (2) In cases where both parties are incumbent LECs, or neither party 
is an incumbent LEC, a state commission shall establish the symmetrical 
rates for transport and termination based on the larger carrier's 
forward-looking costs.
    (3) Where the switch of a carrier other than an incumbent LEC serves 
a geographic area comparable to the area served by the incumbent LEC's 
tandem switch, the appropriate rate for the carrier other than an 
incumbent LEC is the incumbent LEC's tandem interconnection rate.
    (b) Except as provided in Sec. 51.705, a state commission may 
establish asymmetrical rates for transport and termination of Non-Access 
Telecommunications Traffic only if the carrier other than the incumbent 
LEC (or the smaller of two incumbent LECs) proves to the state 
commission on the basis of a cost study using the forward-looking 
economic cost based pricing methodology described in Secs. 51.505 and 
51.511, that the forward-looking costs for a network efficiently 
configured and operated by the carrier other than the incumbent LEC (or 
the smaller of two incumbent LECs), exceed the costs incurred by the 
incumbent LEC (or the larger incumbent LEC), and, consequently, that 
such that a higher rate is justified.
    (c) Pending further proceedings before the Commission, a state 
commission shall establish the rates that licensees in the Paging and 
Radiotelephone Service (defined in part 22, subpart E of this chapter), 
Narrowband Personal Communications Services (defined in part 24, subpart 
D of this chapter), and Paging Operations in the Private Land Mobile 
Radio Services (defined in part 90, subpart P of this chapter) may 
assess upon other carriers for the transport and termination of 
telecommunications traffic based on the forward-looking costs that such 
licensees incur in providing such services, pursuant to Secs. 51.505 and 
51.511. Such licensees' rates shall not be set based on the default 
proxies described in Sec. 51.707.

[61 FR 45619, Aug. 29, 1996 , as amended at 76 FR 73856, Nov. 29, 2011]



Sec. 51.713  Bill-and-keep arrangements.

    Bill-and-keep arrangements are those in which carriers exchanging 
telecommunications traffic do not charge each other for specific 
transport and/or termination functions or services.

[76 FR 73856, Nov. 29, 2011]

[[Page 62]]



Sec. 51.715  Interim transport and termination pricing.

    (a) Upon request from a telecommunications carrier without an 
existing interconnection arrangement with an incumbent LEC, the 
incumbent LEC shall provide transport and termination of Non-Access 
Telecommunications Traffic immediately under an interim arrangement, 
pending resolution of negotiation or arbitration regarding transport and 
termination rates and approval of such rates by a state commission under 
sections 251 and 252 of the Act.
    (1) This requirement shall not apply when the requesting carrier has 
an existing interconnection arrangement that provides for the transport 
and termination of Non-Access Telecommunications Traffic by the 
incumbent LEC.
    (2) A telecommunications carrier may take advantage of such an 
interim arrangement only after it has requested negotiation with the 
incumbent LEC pursuant to Sec. 51.301.
    (b) Upon receipt of a request as described in paragraph (a) of this 
section, an incumbent LEC must, without unreasonable delay, establish an 
interim arrangement for transport and termination of Non-Access 
Telecommunications Traffic at symmetrical rates.
    (1) In a state in which the state commission has established 
transport and termination rates based on forward-looking economic cost 
studies, an incumbent LEC shall use these state-determined rates as 
interim transport and termination rates.
    (2) In a state in which the state commission has not established 
transport and termination rates based on forward-looking economic cost 
studies, an incumbent LEC shall set interim transport and termination 
rates either at the default ceilings specified in Sec. 51.705(c) or in 
accordance with a bill-and-keep methodology as defined in Sec. 51.713.
    (3) In a state in which the state commission has neither established 
transport and termination rates based on forward-looking economic cost 
studies nor established transport and termination rates consistent with 
the default price ranges described in Sec. 51.707, an incumbent LEC 
shall set interim transport and termination rates at the default 
ceilings for end-office switching (0.4 cents per minute of use), tandem 
switching (0.15 cents per minute of use), and transport (as described in 
Sec. 51.707(b)(2)).
    (c) An interim arrangement shall cease to be in effect when one of 
the following occurs with respect to rates for transport and termination 
of telecommunications traffic subject to the interim arrangement:
    (1) A voluntary agreement has been negotiated and approved by a 
state commission;
    (2) An agreement has been arbitrated and approved by a state 
commission; or
    (3) The period for requesting arbitration has passed with no such 
request.
    (d) If the rates for transport and termination of Non-Access 
Telecommunications Traffic in an interim arrangement differ from the 
rates established by a state commission pursuant to Sec. 51.705, the 
state commission shall require carriers to make adjustments to past 
compensation. Such adjustments to past compensation shall allow each 
carrier to receive the level of compensation it would have received had 
the rates in the interim arrangement equalled the rates later 
established by the state commission pursuant to Sec. 51.705.

[61 FR 45619, Aug. 29, 1996, as amended at 76 FR 73856, Nov. 29, 2011]



Sec. 51.717  [Reserved]



    Subpart I_Procedures for Implementation of Section 252 of the Act



Sec. 51.801  Commission action upon a state commission's failure to act
to carry out its responsibility under section 252 of the Act.

    (a) If a state commission fails to act to carry out its 
responsibility under section 252 of the Act in any proceeding or other 
matter under section 252 of the Act, the Commission shall issue an order 
preempting the state commission's jurisdiction of that proceeding or 
matter within 90 days after being notified (or taking notice) of such 
failure, and shall assume the responsibility of the state commission 
under section 252

[[Page 63]]

of the Act with respect to the proceeding or matter and shall act for 
the state commission.
    (b) For purposes of this part, a state commission fails to act if 
the state commission fails to respond, within a reasonable time, to a 
request for mediation, as provided for in section 252(a)(2) of the Act, 
or for a request for arbitration, as provided for in section 252(b) of 
the Act, or fails to complete an arbitration within the time limits 
established in section 252(b)(4)(C) of the Act.
    (c) A state shall not be deemed to have failed to act for purposes 
of section 252(e)(5) of the Act if an agreement is deemed approved under 
section 252(e)(4) of the Act.



Sec. 51.803  Procedures for Commission notification of a state
commission's failure to act.

    (a) Any party seeking preemption of a state commission's 
jurisdiction, based on the state commission's failure to act, shall 
notify the Commission in accordance with following procedures:
    (1) Such party shall file with the Secretary of the Commission a 
petition, supported by an affidavit, that states with specificity the 
basis for the petition and any information that supports the claim that 
the state has failed to act, including, but not limited to, the 
applicable provisions of the Act and the factual circumstances 
supporting a finding that the state commission has failed to act;
    (2) Such party shall ensure that the state commission and the other 
parties to the proceeding or matter for which preemption is sought are 
served with the petition required in paragraph (a)(1) of this section on 
the same date that the petitioning party serves the petition on the 
Commission; and
    (3) Within fifteen days from the date of service of the petition 
required in paragraph (a)(1) of this section, the applicable state 
commission and parties to the proceeding may file with the Commission a 
response to the petition.
    (b) The party seeking preemption must prove that the state has 
failed to act to carry out its responsibilities under section 252 of the 
Act.
    (c) The Commission, pursuant to section 252(e)(5) of the Act, may 
take notice upon its own motion that a state commission has failed to 
act. In such a case, the Commission shall issue a public notice that the 
Commission has taken notice of a state commission's failure to act. The 
applicable state commission and the parties to a proceeding or matter in 
which the Commission has taken notice of the state commission's failure 
to act may file, within fifteen days of the issuance of the public 
notice, comments on whether the Commission is required to assume the 
responsibility of the state commission under section 252 of the Act with 
respect to the proceeding or matter.
    (d) The Commission shall issue an order determining whether it is 
required to preempt the state commission's jurisdiction of a proceeding 
or matter within 90 days after being notified under paragraph (a) of 
this section or taking notice under paragraph (c) of this section of a 
state commission's failure to carry out its responsibilities under 
section 252 of the Act.



Sec. 51.805  The Commission's authority over proceedings and matters.

    (a) If the Commission assumes responsibility for a proceeding or 
matter pursuant to section 252(e)(5) of the Act, the Commission shall 
retain jurisdiction over such proceeding or matter. At a minimum, the 
Commission shall approve or reject any interconnection agreement adopted 
by negotiation, mediation or arbitration for which the Commission, 
pursuant to section 252(e)(5) of the Act, has assumed the state's 
commission's responsibilities.
    (b) Agreements reached pursuant to mediation or arbitration by the 
Commission pursuant to section 252(e)(5) of the Act are not required to 
be submitted to the state commission for approval or rejection.



Sec. 51.807  Arbitration and mediation of agreements by the Commission
pursuant to section 252(e)(5) of the Act.

    (a) The rules established in this section shall apply only to 
instances in which the Commission assumes jurisdiction under section 
252(e)(5) of the Act.
    (b) When the Commission assumes responsibility for a proceeding or 
matter

[[Page 64]]

pursuant to section 252(e)(5) of the Act, it shall not be bound by state 
laws and standards that would have applied to the state commission in 
such proceeding or matter.
    (c) In resolving, by arbitration under section 252(b) of the Act, 
any open issues and in imposing conditions upon the parties to the 
agreement, the Commission shall:
    (1) Ensure that such resolution and conditions meet the requirements 
of section 251 of the Act, including the rules prescribed by the 
Commission pursuant to that section;
    (2) Establish any rates for interconnection, services, or network 
elements according to section 252(d) of the Act, including the rules 
prescribed by the Commission pursuant to that section; and
    (3) Provide a schedule for implementation of the terms and 
conditions by the parties to the agreement.
    (d) An arbitrator, acting pursuant to the Commission's authority 
under section 252(e)(5) of the Act, shall use final offer arbitration, 
except as otherwise provided in this section:
    (1) At the discretion of the arbitrator, final offer arbitration may 
take the form of either entire package final offer arbitration or issue-
by-issue final offer arbitration.
    (2) Negotiations among the parties may continue, with or without the 
assistance of the arbitrator, after final arbitration offers are 
submitted. Parties may submit subsequent final offers following such 
negotiations.
    (3) To provide an opportunity for final post-offer negotiations, the 
arbitrator will not issue a decision for at least fifteen days after 
submission to the arbitrator of the final offers by the parties.
    (e) Final offers submitted by the parties to the arbitrator shall be 
consistent with section 251 of the Act, including the rules prescribed 
by the Commission pursuant to that section.
    (f) Each final offer shall:
    (1) Meet the requirements of section 251, including the rules 
prescribed by the Commission pursuant to that section;
    (2) Establish rates for interconnection, services, or access to 
unbundled network elements according to section 252(d) of the Act, 
including the rules prescribed by the Commission pursuant to that 
section; and
    (3) Provide a schedule for implementation of the terms and 
conditions by the parties to the agreement. If a final offer submitted 
by one or more parties fails to comply with the requirements of this 
section or if the arbitrator determines in unique circumstances that 
another result would better implement the Communications Act, the 
arbitrator has discretion to take steps designed to result in an 
arbitrated agreement that satisfies the requirements of section 252(c) 
of the Act, including requiring parties to submit new final offers 
within a time frame specified by the arbitrator, or adopting a result 
not submitted by any party that is consistent with the requirements of 
section 252(c) of the Act, and the rules prescribed by the Commission 
pursuant to that section.
    (g) Participation in the arbitration proceeding will be limited to 
the requesting telecommunications carrier and the incumbent LEC, except 
that the Commission will consider requests by third parties to file 
written pleadings.
    (h) Absent mutual consent of the parties to change any terms and 
conditions adopted by the arbitrator, the decision of the arbitrator 
shall be binding on the parties.

[61 FR 45619, Aug. 29, 1996, as amended at 66 FR 8520, Feb. 1, 2001]



Sec. 51.809  Availability of agreements to other telecommunications
carriers under section 252(i) of the Act.

    (a) An incumbent LEC shall make available without unreasonable delay 
to any requesting telecommunications carrier any agreement in its 
entirety to which the incumbent LEC is a party that is approved by a 
state commission pursuant to section 252 of the Act, upon the same 
rates, terms, and conditions as those provided in the agreement. An 
incumbent LEC may not limit the availability of any agreement only to 
those requesting carriers serving a comparable class of subscribers or 
providing the same service (i.e., local, access, or interexchange) as 
the original party to the agreement.

[[Page 65]]

    (b) The obligations of paragraph (a) of this section shall not apply 
where the incumbent LEC proves to the state commission that:
    (1) The costs of providing a particular agreement to the requesting 
telecommunications carrier are greater than the costs of providing it to 
the telecommunications carrier that originally negotiated the agreement, 
or
    (2) The provision of a particular agreement to the requesting 
carrier is not technically feasible.
    (c) Individual agreements shall remain available for use by 
telecommunications carriers pursuant to this section for a reasonable 
period of time after the approved agreement is available for public 
inspection under section 252(h) of the Act.

[69 FR 43771, July 22, 2004]



              Subpart J_Transitional Access Service Pricing

    Source: 76 FR 73856, Nov. 29, 2011, unless otherwise noted.



Sec. 51.901  Purpose and scope of transitional access service pricing
rules.

    (a) The purpose of this section is to establish rules governing the 
transition of intercarrier compensation from a calling-party's-network 
pays system to a default bill-and-keep methodology. Following the 
transition, the exchange of traffic between and among service providers 
will, by default, be governed by bill-and-keep arrangements.
    (b) Effective December 29, 2011, the provisions of this subpart 
apply to reciprocal compensation for telecommunications traffic 
exchanged between telecommunications providers that is interstate or 
intrastate exchange access, information access, or exchange services for 
such access, other than special access.

    Note to Sec. 51.901: See FCC 11-161, figure 9 (chart identifying 
steps in the transition).



Sec. 51.903  Definitions.

    For the purposes of this subpart:
    (a) Competitive Local Exchange Carrier. A Competitive Local Exchange 
Carrier is any local exchange carrier, as defined in Sec. 51.5, that is 
not an incumbent local exchange carrier .
    (b) Composite Terminating End Office Access Rate means terminating 
End Office Access Service revenue, calculated using demand for a given 
time period, divided by end office switching minutes for the same time 
period.
    (c) Dedicated Transport Access Service means originating and 
terminating transport on circuits dedicated to the use of a single 
carrier or other customer provided by an incumbent local exchange 
carrier or any functional equivalent of the incumbent local exchange 
carrier access service provided by a non-incumbent local exchange 
carrier. Dedicated Transport Access Service rate elements for an 
incumbent local exchange carrier include the entrance facility rate 
elements specified in Sec. 69.110 of this chapter, the dedicated 
transport rate elements specified in Sec. 69.111 of this chapter, the 
direct-trunked transport rate elements specified in Sec. 69.112 of this 
chapter, and the intrastate rate elements for functionally equivalent 
access services. Dedicated Transport Access Service rate elements for a 
non-incumbent local exchange carrier include any functionally equivalent 
access services.
    (d) End Office Access Service means:
    (1) The switching of access traffic at the carrier's end office 
switch and the delivery to or from of such traffic to the called party's 
premises;
    (2) The routing of interexchange telecommunications traffic to or 
from the called party's premises, either directly or via contractual or 
other arrangements with an affiliated or unaffiliated entity, regardless 
of the specific functions provided or facilities used; or
    (3) Any functional equivalent of the incumbent local exchange 
carrier access service provided by a non-incumbent local exchange 
carrier. End Office Access Service rate elements for an incumbent local 
exchange carrier include the local switching rate elements specified in 
Sec. 69.106 of this chapter, the carrier common line rate elements 
specified in Sec. 69.154 of this chapter, and the intrastate rate 
elements for functionally equivalent access services. End Office Access 
Service rate elements for an incumbent local exchange carrier also 
include any rate elements assessed on local switching access minutes, 
including the information surcharge and

[[Page 66]]

residual rate elements. End office Access Service rate elements for a 
non-incumbent local exchange carrier include any functionally equivalent 
access service.

    Note to paragraph (d): For incumbent local exchange carriers, 
residual rate elements may include, for example, state Transport 
Interconnection Charges, Residual Interconnection Charges, and PICCs. 
For non-incumbent local exchange carriers, residual rate elements may 
include any functionally equivalent access service.

    (e) Fiscal Year 2011 means October 1, 2010 through September 30, 
2011.
    (f) Price Cap Carrier has the same meaning as that term is defined 
in Sec. 61.3(aa) of this chapter.
    (g) Rate-of-Return Carrier is any incumbent local exchange carrier 
not subject to price cap regulation as that term is defined in 
Sec. 61.3(aa) of this chapter, but only with respect to the territory in 
which it operates as an incumbent local exchange carrier.
    (h) Access Reciprocal Compensation means telecommunications traffic 
exchanged between telecommunications service providers that is 
interstate or intrastate exchange access, information access, or 
exchange services for such access, other than special access.
    (i) Tandem-Switched Transport Access Service means:
    (1) Tandem switching and common transport between the tandem switch 
and end office; or
    (2) Any functional equivalent of the incumbent local exchange 
carrier access service provided by a non-incumbent local exchange 
carrier via other facilities. Tandem-Switched Transport rate elements 
for an incumbent local exchange carrier include the rate elements 
specified in Sec. 69.111 of this chapter, except for the dedicated 
transport rate elements specified in that section, and intrastate rate 
elements for functionally equivalent service. Tandem Switched Transport 
Access Service rate elements for a non-incumbent local exchange carrier 
include any functionally equivalent access service.
    (j) Transitional Intrastate Access Service means terminating End 
Office Access Service that was subject to intrastate access rates as of 
December 31, 2011; terminating Tandem-Switched Transport Access Service 
that was subject to intrastate access rates as of December 31, 2011; and 
originating and terminating Dedicated Transport Access Service that was 
subject to intrastate access rates as of December 31, 2011.



Sec. 51.905  Implementation.

    (a) The rates set forth in this section are default rates. 
Notwithstanding any other provision of the Commission's rules, 
telecommunications carriers may agree to rates different from the 
default rates.
    (b) LECs who are otherwise required to file tariffs are required to 
tariff rates no higher than the default transitional rates specified by 
this subpart.
    (1) With respect to interstate switched access services governed by 
this subpart, LECs shall tariff rates for those services in their 
federal tariffs. Except as expressly superseded below, LECs shall follow 
the procedures specified in part 61 of this chapter when filing such 
tariffs.
    (2) With respect to Transitional Intrastate Access Services governed 
by this subpart, LECs shall follow the procedures specified by relevant 
state law when filing such tariffs, price lists or other instrument 
(referred to collectively as ``tariffs'').
    (c) Nothing in this section shall be construed to require a carrier 
to file or maintain a tariff or to amend an existing tariff if it is not 
otherwise required to do so under applicable law.



Sec. 51.907  Transition of price cap carrier access charges.

    (a) Notwithstanding any other provision of the Commission's rules, 
on December 29, 2011, a Price Cap Carrier shall cap the rates for all 
interstate and intrastate rate elements for services contained in the 
definitions of Interstate End Office Access Services, Tandem Switched 
Transport Access Services, and Dedicated Transport Access Services. In 
addition, a Price Cap Carrier shall also cap the rates for any 
interstate and intrastate rate elements in the traffic sensitive 
basket'' and the ``trunking basket'' as described in 47 CFR 61.42(d)(2) 
and (3) to the extent that such rate elements are not contained in the 
definitions of Interstate End Office Access Services, Tandem

[[Page 67]]

Switched Transport Access Services, and Dedicated Transport Access 
Services. Carriers will remove these services from price cap regulation 
in their July 1, 2012 annual tariff filing.
    (b) Step 1. Beginning July 1, 2012, notwithstanding any other 
provision of the Commission's rules:
    (1) Each Price Cap Carrier shall file tariffs, in accordance with 
Sec. 51.905(b)(2), with the appropriate state regulatory authority, that 
set forth the rates applicable to Transitional Intrastate Access Service 
in each state in which it provides Transitional Intrastate Access 
Service.
    (2) Each Price Cap Carrier shall establish the rates for 
Transitional Intrastate Access Service using the following methodology:
    (i) Calculate total revenue from Transitional Intrastate Access 
Service at the carrier's interstate access rates in effect on December 
29, 2011, using Fiscal Year 2011 intrastate switched access demand for 
each rate element.
    (ii) Calculate total revenue from Transitional Intrastate Access 
Service at the carrier's intrastate access rates in effect on December 
29, 2011, using Fiscal Year 2011 intrastate switched access demand for 
each rate element.
    (iii) Calculate the Step 1 Access Revenue Reduction. The Step 1 
Access Revenue Reduction is equal to one-half of the difference between 
the amount calculated in paragraph (b)(2)(i) of this section and the 
amount calculated in paragraph (b)(2)(ii) of this section.
    (iv) A Price Cap Carrier may elect to establish rates for 
Transitional Intrastate Access Service using its intrastate access rate 
structure. Carriers using this option shall establish rates for 
Transitional Intrastate Access Service such that Transitional Intrastate 
Access Service revenue at the proposed rates is no greater than 
Transitional Intrastate Access Service revenue at the intrastate rates 
in effect as of December 29, 2011 less the Step 1 Access Revenue 
Reduction, using Fiscal Year 2011 demand. Carriers electing to establish 
rates for Transitional Intrastate Access Service in this manner shall 
notify the appropriate state regulatory authority of their election in 
the filing required by Sec. 51.907(b)(1).
    (v) A Price Cap Carrier may elect to apply its interstate access 
rate structure and interstate rates to Transitional Intrastate Access 
Service. In addition to applicable interstate access rates, the carrier 
may, between July 1, 2012 and July 1, 2013, assess a transitional per-
minute charge on Transitional Intrastate Access Service end office 
switching minutes (previously billed as intrastate access). The 
transitional per-minute charge shall be no greater than the Step 1 
Access Revenue Reduction divided by Fiscal Year 2011 Transitional 
Intrastate Access Service end office switching minutes. Carriers 
electing to establish rates for Transitional Intrastate Access Service 
in this manner shall notify the appropriate state regulatory authority 
of their election in the filing required by paragraph (b)(1) of this 
section.
    (vi) Except as provided in paragraph (b)(3) of this section, nothing 
in this section obligates or allows a Price Cap Carrier that has 
intrastate rates lower than its functionally equivalent interstate rates 
to make any intrastate tariff filing or intrastate tariff revisions to 
increase such rates.
    (3) If a Price Cap Carrier must make an intrastate switched access 
rate reduction pursuant to paragraph (b)(2) of this section, and that 
Price Cap Carrier has an intrastate rate for a rate element that is 
below the comparable interstate rate for that element, the Price Cap 
Carrier shall:
    (i) Increase the rate for any intrastate rate element that is below 
the comparable interstate rate for that element to the interstate rate 
no later than July 1, 2013;
    (ii) Include any increases made pursuant to paragraph (b)(3)(i) of 
this section in the calculation of its eligible recovery for 2012.
    (c) Step 2. Beginning July 1, 2013, notwithstanding any other 
provision of the Commission's rules:
    (1) Transitional Intrastate Access Service rates shall be no higher 
than the Price Cap Carrier's interstate access rates. Once the Price Cap 
Carrier's Transitional Intrastate Access Service rates are equal to its 
functionally equivalent interstate access rates, they shall be subject 
to the same rate structure and all subsequent rate and rate

[[Page 68]]

structure modifications. Except as provided in paragraph (c)(4) of this 
section, nothing in this section obligates or allows a Price Cap Carrier 
that has intrastate rates lower than its functionally equivalent 
interstate rates to make any intrastate tariff filing or intrastate 
tariff revisions to increase such rates.
    (2) In cases where a Price Cap Carrier does not have intrastate 
rates that permit it to determine composite intrastate End Office Access 
Service rates, the carrier shall establish End Office Access Service 
rates such that the ratio between its composite intrastate End Office 
Access Service revenues and its total intrastate switched access 
revenues may not exceed the ratio between its composite interstate End 
Office Access Service revenues and its total interstate switched access 
revenues.
    (3) [Reserved]
    (4) If a Price Cap Carrier made an intrastate switched access rate 
reduction in 2012 pursuant to paragraph (b)(2) of this section, and that 
Price Cap Carrier has an intrastate rate for a rate element that is 
below the comparable interstate rate for that element, the Price Cap 
Carrier shall:
    (i) Increase the rate for any intrastate rate element that is below 
the comparable interstate rate for that element to the interstate rate 
on July 1, 2013; and
    (ii) Include any increases made pursuant to paragraph (b)(4)(i) of 
this section in the calculation of its eligible recovery for 2013.
    (d) Step 3. Beginning July 1, 2014, notwithstanding any other 
provision of the Commission's rules:
    (1) A Price Cap Carrier shall establish separate originating and 
terminating rate elements for all per-minute components within 
interstate and intrastate End Office Access Service. For fixed charges, 
the Price Cap Carrier shall divide the rate between originating and 
terminating rate elements based on relative originating and terminating 
end office switching minutes. If sufficient originating and terminating 
end office switching minute data is not available, the carrier shall 
divide such charges equally between originating and terminating 
elements.
    (2) Each Price Cap Carrier shall establish rates for interstate or 
intrastate terminating End Office Access Service using the following 
methodology:
    (i) Each Price Cap Carrier shall calculate the 2011 Baseline 
Composite Terminating End Office Access Rate. The 2011 Baseline 
Composite Terminating End Office Access Rate means the Composite 
Terminating End Office Access Rate calculated using Fiscal Year 2011 
interstate demand multiplied by the interstate End Office Access Service 
rates at the levels in effect on December 29, 2011, and then dividing 
the result by 2011 Fiscal Year interstate local switching demand.
    (ii) Each Price Cap Carrier shall calculate its 2014 Target 
Composite Terminating End Office Access Rate. The 2014 Target Composite 
Terminating End Office Access Rate means $0.0007 per minute plus two-
thirds of any difference between the 2011 Baseline Composite Terminating 
End Office Access Rate and $0.0007 per minute.
    (iii) Beginning July 1, 2014, no Price Cap Carrier's interstate 
Composite Terminating End Office Access Rate shall exceed its 2014 
Target Composite Terminating End Office Access Rate. A price cap carrier 
shall determine compliance by calculating interstate Composite 
Terminating End Office Access Rates using the relevant Fiscal Year 2011 
interstate demand multiplied by the respective interstate rates as of 
July 1, 2014, and then dividing the result by the relevant 2011 Fiscal 
Year interstate terminating local switching demand. A price cap 
carrier's intrastate terminating end office access rates may not exceed 
the comparable interstate terminating end office access rates. In the 
alternative, any Price Cap Carrier may elect to implement a single per 
minute rate element for both interstate and intrastate terminating End 
Office Access Service no greater than the 2014 Target Composite 
Terminating End Office Access Rate if its intrastate terminating end 
office access rates would be at rate parity with its interstate 
terminating end office access rates.
    (e) Step 4. Beginning July 1, 2015, notwithstanding any other 
provision of the Commission's rules:

[[Page 69]]

    (1) Each Price Cap Carrier shall establish interstate or intrastate 
rates for terminating End Office Access Service using the following 
methodology:
    (i) Each Price Cap Carrier shall calculate its 2015 Target Composite 
Terminating End Office Access Rate. The 2015 Target Composite 
Terminating End Office Access Rate means $0.0007 per minute plus one-
third of any difference between the 2011 Composite Terminating End 
Office Access Rate and $0.0007 per minute.
    (ii) Beginning July 1, 2015, no Price Cap Carrier's interstate 
Composite Terminating End Office Access Rate shall exceed its 2015 
Target Composite Terminating End Office Access Rate. A price cap carrier 
shall determine compliance by calculating interstate Composite 
Terminating End Office Access Rates using the relevant Fiscal Year 2011 
interstate demand multiplied by the respective interstate rates as of 
July 1, 2015, and then dividing the result by the relevant 2011 Fiscal 
Year interstate terminating local switching demand. A price cap 
carrier's intrastate terminating end office access rates may not exceed 
the comparable interstate terminating end office access rates. In the 
alternative, any Price Cap Carrier may elect to implement a single per 
minute rate element for both interstate and intrastate terminating End 
Office Access Service no greater than the 2015 Target Composite 
Terminating End Office Access Rate if its intrastate terminating end 
office access rates would be at rate parity with its interstate 
terminating end office access rates.
    (2) Nothing in this section obligates or allows a Price Cap Carrier 
that has intrastate rates lower than its functionally equivalent 
interstate rates to make any intrastate tariff filing or intrastate 
tariff revisions raising such rates.
    (f) Step 5. Beginning July 1, 2016, notwithstanding any other 
provision of the Commission's rules, each Price Cap Carrier shall 
establish interstate terminating End Office Access Service rates such 
that its Composite Terminating End Office Access Service rate does not 
exceed $0.0007 per minute. A price cap carrier shall determine 
compliance by calculating interstate Composite Terminating End Office 
Access Rates using the relevant Fiscal Year 2011 interstate demand 
multiplied by the respective interstate rates as of July 1, 2016, and 
then dividing the result by the relevant 2011 Fiscal Year interstate 
terminating local switching demand. A price cap carrier's intrastate 
terminating end office access rates may not exceed the comparable 
interstate terminating end office access rates. In the alternative, any 
Price Cap Carrier may elect to implement a single per-minute rate 
element for both interstate and intrastate Terminating End Office Access 
Service no greater than the 2016 Target Composite Terminating End Office 
Access Rate if its intrastate terminating end office access rates would 
be at rate parity with its interstate terminating end office access 
rates. Nothing in this section obligates or allows a Price Cap Carrier 
that has intrastate rates lower than its functionally equivalent 
interstate rates to make any intrastate tariff filing or intrastate 
tariff revisions raising such rates.
    (g) Step 6. Beginning July 1, 2017, notwithstanding any other 
provision of the Commission's rules:
    (1) Each Price Cap Carrier shall, in accordance with a bill-and-keep 
methodology, refile its interstate access tariffs and any state tariffs, 
in accordance with Sec. 51.905(b)(2), removing any intercarrier charges 
for terminating End Office Access Service.
    (2) Each Price Cap Carrier shall establish, for interstate and 
intrastate terminating traffic traversing a tandem switch that the 
terminating carrier or its affiliates owns, Tandem-Switched Transport 
Access Service rates no greater than $0.0007 per minute.
    (3) Nothing in this section obligates or allows a Price Cap Carrier 
that has intrastate rates lower than its functionally equivalent 
interstate rates to make any intrastate tariff filing or intrastate 
tariff revisions raising such rates.
    (h) Step 7. Beginning July 1, 2018, notwithstanding any other 
provision of the Commission's rules, each Price Cap carrier shall, in 
accordance with bill-and-keep, as defined in Sec. 51.713, revise

[[Page 70]]

and refile its interstate switched access tariffs and any state tariffs 
to remove any intercarrier charges applicable to terminating tandem-
switched access service traversing a tandem switch that the terminating 
carrier or its affiliate owns.

[76 FR 73856, Nov. 29, 2011, as amended at 77 FR 48452, Aug. 14, 2012; 
79 FR 28844, May 20, 2014]



Sec. 51.909  Transition of rate-of-return carrier access charges.

    (a) Notwithstanding any other provision of the Commission's rules, 
on December 29, 2011, a Rate-of-Return Carrier shall:
    (1) Cap the rates for all rate elements for services contained in 
the definitions of End Office Access Service, Tandem Switched Transport 
Access Service, and Dedicated Transport Access Service, as well as all 
other interstate switched access rate elements, in its interstate 
switched access tariffs at the rate that was in effect on the December 
29, 2011; and
    (2) Cap, in accordance with Sec. 51.505(b)(2), the rates for rate 
all elements in its intrastate switched access tariffs associated with 
the provision of terminating End Office Access Service and terminating 
Tandem-Switched Transport Access Service at the rates that were in 
effect on the December 29, 2011,
    (i) Using the terminating rates if specifically identified; or
    (ii) Using the rate for the applicable rate element if the tariff 
does not distinguish between originating and terminating.
    (3) Except as provided in paragraphs (a)(6) and (b)(4) of this 
section, nothing in this section obligates or allows a Rate-of-Return 
Carrier that has intrastate rates lower than its functionally equivalent 
interstate rates to make any intrastate tariff filing or intrastate 
tariff revisions raising such rates.
    (4) Notwithstanding the requirements of paragraph (a)(1) of this 
section, if a Rate-of-Return Carrier enters or exits the National 
Exchange Carrier Association (Association), as defined in Sec. 69.2(d) 
of this chapter, traffic-sensitive tariff pursuant to the provisions of 
Sec. 69.3(e)(6) of this chapter, the Association shall adjust its 
switched access rate caps referenced in paragraph (a)(1) of this 
section.
    (i) For each entering Rate-of-Return Carrier, the Association shall:
    (A) Determine each entering Rate-of-Return Carrier's interstate 
switched access revenues for the preceding calendar year;
    (B) Determine the revenues that would have been realized by the 
entering Rate-of-Return Carrier in the preceding calendar year if it had 
used the Association's switched access rates (employing the rates for 
the appropriate bands) as of December 31 of the preceding year and the 
entering Rate-of-Return Carrier's switched access demand used to 
determine switched access revenues under paragraph (a)(4)(i)(A) of this 
section; and
    (C) Subtract the sum of the revenues determined pursuant to 
paragraph (a)(4)(i)(B) of this section from the sum of the revenues 
determined pursuant to paragraph (a)(4)(i)(A) of this section.
    (ii) The Association shall determine the amount by which each 
exiting Rate-of-Return Carrier is a net contributor or net recipient to 
or from the switched access segment of the Association pool as follows:
    (A) The Association shall calculate the difference between each 
exiting Rate-of-Return Carrier's 2011-2012 tariff year projected 
interstate switched access revenues excluding Local Switching Support 
and the Rate-of-Return Carrier's projected switched access pool 
settlements excluding Local Switching Support for the same period with a 
net contribution amount being treated as a positive amount and a net 
recipient amount being treated as a negative amount. The Association 
shall divide the calculated difference by the Rate-of-Return Carrier's 
2011-2012 tariff year projected interstate switched access revenues 
excluding Local Switching Support to produce a percent net contribution 
or net receipt factor.
    (B) The Association shall multiply the factor calculated in 
paragraph (a)(4)(ii)(A) of this section by the Rate-of-Return Carrier's 
switched access revenues for the preceding calendar year to yield the 
amount of the Rate-of-Return Carrier's net contribution or net receipts 
for the calendar year.

[[Page 71]]

    (iii) To determine the Association's adjusted switched access rate 
caps, the Association shall:
    (A) Add the amounts calculated under paragraphs (a)(4)(i) and 
(a)(4)(ii) of this section;
    (B) Divide the amount determined in paragraph (a)(4)(iii)(A) of this 
section by the preceding year's switched access revenues of the Rate-of-
Return Carriers that will participate in the Association traffic-
sensitive tariff for the next annual tariff period;
    (C) The Association shall proportionately adjust its June 30 
switched access rate caps by the percentage amount determined in 
paragraph (a)(4)(iii)(B) of this section.
    (iv) The interstate switched access rate caps determined pursuant to 
paragraph (a)(4)(iii)(C) of this section shall be the new capped 
interstate switched access rates for purposes of Sec. 51.909(a). The 
Association shall provide support in its annual access tariff filing to 
justify the revised interstate switched access rate caps, the Access 
Recovery Charges that will be assessed, and the amount of Connect 
America Fund ICC support each carrier will be eligible to receive.
    (5) A Rate-of-Return Carrier exiting the Association traffic-
sensitive tariff pursuant to Sec. 69.3(e)(6) of this chapter must 
establish new switched access rate caps as follows:
    (i) The Rate-of-Return Carrier shall multiply the factor determined 
in paragraph (a)(4)(ii)(A) of this section by negative one and then 
proportionately adjust the Association's capped switched access rates as 
of the date preceding the effective date of the exiting Rate-of-Return 
Carrier's next annual tariff filing by this percentage. A Rate-of-Return 
Carrier that was a net contributor to the pool will have rate caps that 
are lower than the Association's switched access rate caps, while a net 
recipient will have switched access rate caps that are higher than the 
Association's switched access rate caps;
    (ii) The interstate switched access rate caps determined pursuant to 
paragraph (a)(5)(i) of this section shall be the new capped interstate 
switched access rates of the exiting Rate-of-Return Carrier for purposes 
of Sec. 51.909(a). An exiting Rate-of-Return Carrier shall provide 
support in its annual access tariff filing to justify the revised 
interstate switched access rate caps, the Access Recovery Charges that 
will be assessed, and the amount of Connect America Fund ICC support the 
carrier will be eligible to receive.
    (6) If the Association revises its interstate switched access rate 
caps pursuant to paragraph (a)(4) of this section, each Rate-of-Return 
Carrier participating in the upcoming annual Association traffic-
sensitive tariff shall:
    (i) Revise any of its intrastate switched access rates that would 
have reached parity with its interstate switched access rates in 2013 to 
parity with the revised interstate switched access rate levels;
    (ii) The Association shall provide Rate-of-Return Carriers that are 
participating in the Association traffic-sensitive pool with notice of 
any revisions the Association proposes under paragraph (a)(4) of this 
section no later than May 1.
    (b) Step 1. Beginning July 1, 2012, notwithstanding any other 
provision of the Commission's rules:
    (1) Each Rate-of-Return Carrier shall file intrastate access tariff 
provisions, in accordance with Sec. 51.505(b)(2), that set forth the 
rates applicable to Transitional Intrastate Access Service in each state 
in which it provides Transitional Intrastate Access Service.
    (2) Each Rate-of-Return Carrier shall establish the rates for 
Transitional Intrastate Access Service using the following methodology:
    (i) Calculate total revenue from Transitional Intrastate Access 
Service at the carrier's interstate access rates in effect on December 
29, 2011, using Fiscal Year 2011 intrastate switched access demand for 
each rate element.
    (ii) Calculate total revenue from Transitional Intrastate Access 
Service at the carrier's intrastate access rates in effect on December 
29, 2011, using Fiscal Year 2011 intrastate switched access demand for 
each rate element.
    (iii) Calculate the Step 1 Access Revenue Reduction. The Step 1 
Access Revenue Reduction is equal to one-half of the difference between 
the amount calculated in (b)(2)(i) of this section

[[Page 72]]

and the amount calculated in (b)(2)(ii) of this section.
    (iv) A Rate-of-Return Carrier may elect to establish rates for 
Transitional Intrastate Access Service using its intrastate access rate 
structure. Carriers using this option shall establish rates for 
Transitional Intrastate Access Service such that Transitional Intrastate 
Access Service revenue at the proposed rates is no greater than 
Transitional Intrastate Access Service revenue at the intrastate rates 
in effect as of December 29, 2011 less the Step 1 Access Revenue 
Reduction, using Fiscal Year 2011 intrastate switched access demand. 
Carriers electing to establish rates for Transitional Intrastate Access 
Service in this manner shall notify the appropriate state regulatory 
authority of their election in the filing required by Sec. 51.907(b)(1).
    (v) A Rate-of-Return Carrier may elect to apply its interstate 
access rate structure and interstate rates to Transitional Intrastate 
Access Service. In addition to applicable interstate access rates, the 
carrier may, between July 1, 2012 and July 1, 2013, assess a 
transitional per-minute charge on Transitional Intrastate Access Service 
end office switching minutes (previously billed as intrastate access). 
The transitional per-minute charge shall be no greater than the Step 1 
Access Revenue Reduction divided by Fiscal Year 2011 Transitional 
Intrastate Access Service end office switching minutes. Carriers 
electing to establish rates for Transitional Intrastate Access Service 
in this manner shall notify the appropriate state regulatory authority 
of their election in the filing required by Sec. 51.907(b)(1).
    (3) Except as provided in paragraph (b)(4) of this section, nothing 
in this section obligates or allows a Rate-of-Return carrier that has 
intrastate rates lower than its functionally equivalent interstate rates 
to make any intrastate tariff filing or intrastate tariff revisions 
raising such rates.
    (4) If a Rate-of-Return Carrier must make an intrastate switched 
access rate reduction pursuant to paragraph (b)(2) of this section, and 
that Rate-of-Return Carrier has an intrastate rate for a rate element 
that is below the comparable interstate rate for that element, the Rate-
of-Return Carrier shall:
    (i) Increase the rate for any intrastate rate element that is below 
the comparable interstate rate for that element to the interstate rate 
no later than July 1, 2013;
    (ii) Include any increases made pursuant to paragraph (b)(4)(i) of 
this section in the calculation of its eligible recovery for 2012.
    (c) Step 2. Beginning July 1, 2013, notwithstanding any other 
provision of the Commission's rules:
    (1) Transitional Intrastate Access Service rates shall be no higher 
than the Rate-of-Return Carrier's interstate Terminating End Office 
Access Service, Terminating Tandem-Switched Transport Access Service, 
and Originating and Terminating Dedicated Transport Access Service rates 
and subject to the same rate structure and all subsequent rate and rate 
structure modifications. Except as provided in paragraph (c)(2) of this 
section, nothing in this section obligates or allows a Rate-of-Return 
Carrier that has intrastate rates lower than its functionally equivalent 
interstate rates to make any intrastate tariff filing or intrastate 
tariff revisions to increase such rates.
    (2) If a Rate-of-Return Carrier made an intrastate switched access 
rate reduction in 2012 pursuant to paragraph (b)(2) of this section, and 
that Rate-of-Return Carrier has an intrastate rate for a rate element 
that is below the comparable interstate rate for that element, the Rate-
of-Return Carrier shall:
    (i) Increase any intrastate rate element that is below the 
comparable interstate rate to the interstate rate by July 1, 2013; and
    (ii) Include any increases made pursuant to paragraph (c)(2)(i) of 
this section in the calculation of its eligible recovery for 2013.
    (d) Step 3. Beginning July 1, 2014, notwithstanding any other 
provision of the Commission's rules:
    (1) Notwithstanding the rate structure rules set forth in 
Sec. 69.106 of this chapter or anything else in the Commission's rules, 
a Rate-of-Return Carrier shall establish separate originating and 
terminating interstate and

[[Page 73]]

intrastate rate elements for all components within interstate End Office 
Access Service. For fixed charges, the Rate-of-Return Carrier shall 
divide the amount based on relative originating and terminating end 
office switching minutes. If sufficient originating and terminating end 
office switching minute data is not available, the carrier shall divide 
such charges equally between originating and terminating elements.
    (2) Nothing in this Step shall affect Tandem-Switched Transport 
Access Service or Dedicated Transport Access Service.
    (3) Each Rate-of-Return Carrier shall establish rates for interstate 
and intrastate terminating End Office Access Service using the following 
methodology:
    (i) Each Rate-of-Return Carrier shall calculate the 2011 Baseline 
Composite Terminating End Office Access Rate. The 2011 Baseline 
Composite Terminating End Office Access Rate means the Composite 
Terminating End Office Access Rate calculated using Fiscal Year 2011 
interstate demand and the interstate End Office Access Service rates at 
the levels in effect on December 29, 2011.
    (ii) Each Rate-of-Return Carrier shall calculate its 2014 Target 
Composite Terminating End Office Access Rate. The 2014 Target Composite 
Terminating End Office Access Rate means $0.005 per minute plus two-
thirds of any difference between the 2011 Baseline Composite Terminating 
End Office Access Rate and $0.005 per minute.
    (iii) Beginning July 1, 2014, no Rate-of-Return Carrier's interstate 
Composite Terminating End Office Access Rate shall exceed its 2014 
Target Composite Terminating End Office Access Rate. A rate-of-return 
carrier shall determine compliance by calculating interstate Composite 
Terminating End Office Access Rates using the relevant projected 
interstate demand for the tariff period multiplied by the respective 
interstate rates as of July 1, 2014, and then dividing by the projected 
interstate terminating end office local switching demand for the tariff 
period. A rate-of-return carrier's intrastate terminating end office 
access rates may not exceed the comparable interstate terminating end 
office access rates. In the alternative, any Rate-of-Return Carrier may 
elect to implement a single per minute rate element for both interstate 
and intrastate terminating End Office Access Service no greater than the 
2014 Target Composite Terminating End Office Access Rate if its 
intrastate terminating end office access rates would be at rate parity 
with its interstate terminating end office access rates.
    (4) Nothing in this section obligates or allows a Rate-of-Return 
Carrier that has intrastate rates lower than its functionally equivalent 
interstate rates to make any intrastate tariff filing or intrastate 
tariff revisions raising such rates.
    (e) Step 4. Beginning July 1, 2015, notwithstanding any other 
provision of the Commission's rules:
    (1) Each Rate-of-Return Carrier shall establish rates for interstate 
and intrastate terminating End Office Access Service using the following 
methodology:
    (i) Each Rate-of-Return Carrier shall calculate its 2015 Target 
Composite Terminating End Office Access Rate. The 2015 Target Composite 
Terminating End Office Access Rate means $0.005 per minute plus one-
third of any difference between the 2011 Baseline Composite Terminating 
End Office Access Rate and $0.005 per minute.
    (ii) Beginning July 1, 2015, no Rate-of-Return Carrier's interstate 
Composite Terminating End Office Access Rate shall exceed its 2015 
Target Composite Terminating End Office Access Rate. A rate-of-return 
carrier shall determine compliance by calculating interstate Composite 
Terminating End Office Access Rates using the relevant projected 
interstate demand for the tariff period multiplied by the respective 
interstate rates as of July 1, 2015, and then dividing by the projected 
interstate terminating end office local switching demand for the tariff 
period. A rate-of-return carrier's intrastate terminating end office 
access rates may not exceed the comparable interstate terminating end 
office access rates. In the alternative, any Rate-of-Return Carrier may 
elect to implement a single per minute rate element for

[[Page 74]]

both interstate and intrastate terminating End Office Access Service no 
greater than the 2015 Target Composite Terminating End Office Access 
Rate if its intrastate terminating end office access rates would be at 
rate parity with its interstate terminating end office access rates. 
Nothing in this section obligates or allows a Rate-of-Return Carrier 
that has intrastate rates lower than its functionally equivalent 
interstate rates to make any intrastate tariff filing or intrastate 
tariff revisions raising such rates.
    (2) [Reserved]
    (f) Step 5. Beginning July 1, 2016, notwithstanding any other 
provision of the Commission's rules, each Rate-of-Return Carrier shall 
establish interstate terminating End Office Access Service rates such 
that its interstate Composite Terminating End Office Access Service rate 
does not exceed $0.005 per minute. A rate-of-return carrier shall 
determine compliance by calculating interstate Composite Terminating End 
Office Access Rates using the relevant projected interstate demand for 
the tariff period multiplied by the respective interstate rates as of 
July 1, 2016, and then dividing by the projected interstate terminating 
end office local switching demand for the tariff period. A rate-of-
return carrier's intrastate terminating end office access rates may not 
exceed the comparable interstate terminating end office access rates. In 
the alternative, any Rate-of-Return Carrier may elect to implement a 
single per minute rate element for both interstate and intrastate 
terminating End Office Access Service no greater than the 2016 Target 
Composite Terminating End Office Access Rate if its intrastate 
terminating end office access rates would be at rate parity with its 
interstate terminating end office access rates. Nothing in this section 
obligates or allows a Rate-of-Return Carrier that has intrastate rates 
lower than its functionally equivalent interstate rates to make any 
intrastate tariff filing or intrastate tariff revisions raising such 
rates.
    (g) Step 6. Beginning July 1, 2017, notwithstanding any other 
provision of the Commission's rules:
    (1) Each Rate-of-Return Carrier shall establish interstate and 
intrastate rates for terminating End Office Access Service using the 
following methodology:
    (i) Each Rate-of-Return Carrier shall calculate its 2017 Target 
Composite Terminating End Office Access Rate. The 2017 Target Composite 
Terminating End Office Access Rate means $0.0007 per minute plus two-
thirds of any difference between that carrier's 2016 Target Composite 
Terminating End Office Access Rate and $0.0007 per minute.
    (ii) Beginning July 1, 2017, no Rate-of-Return Carrier's interstate 
Composite Terminating End Office Access Rate shall exceed its 2017 
Target Composite Terminating End Office Access Rate. A rate-of-return 
carrier shall determine compliance by calculating interstate Composite 
Terminating End Office Access Rates using the relevant projected 
interstate demand for the tariff period multiplied by the respective 
interstate rates as of July 1, 2017, and then dividing by the projected 
interstate terminating end office local switching demand for the tariff 
period. A rate-of-return carrier's intrastate terminating end office 
access rates may not exceed the comparable interstate terminating end 
office access rates. In the alternative, any Rate-of-Return Carrier may 
elect to implement a single per minute rate element for both interstate 
and intrastate terminating End Office Access Service no greater than the 
2017 Target Composite Terminating End Office Access Rate if its 
intrastate terminating end office access rates would be at rate parity 
with its interstate terminating end office access rates. Nothing in this 
section obligates or allows a Rate-of-Return Carrier that has intrastate 
rates lower than its functionally equivalent interstate rates to make 
any intrastate tariff filing or intrastate tariff revisions raising such 
rates.
    (2) [Reserved]
    (h) Step 7. Beginning July 1, 2018, notwithstanding any other 
provision of the Commission's rules:
    (1) Each Rate-of-Return Carrier shall establish interstate and 
intrastate rates for terminating End Office Access Service using the 
following methodology:

[[Page 75]]

    (i) Each Rate-of-Return Carrier shall calculate its 2018 Target 
Composite Terminating End Office Access Rate. The 2018 Target Composite 
Terminating End Office Access Rate means $0.0007 per minute plus one-
third of any difference between that carrier's 2016 Target Composite 
Terminating End Office Access Rate and $0.0007 per minute.
    (ii) Beginning July 1, 2018, no Rate-of-Return Carrier's interstate 
Composite Terminating End Office Access Rate shall exceed its 2018 
Target Composite Terminating End Office Access Rate. A rate-of-return 
carrier shall determine compliance by calculating interstate Composite 
Terminating End Office Access Rates using the relevant projected 
interstate demand for the tariff period multiplied by the respective 
interstate rates as of July 1, 2018 and then dividing by the projected 
interstate terminating end office local switching demand for the tariff 
period. A rate-of-return carrier's intrastate terminating end office 
access rates may not exceed the comparable interstate terminating end 
office access rates. In the alternative, any Rate-of-Return Carrier may 
elect to implement a single per minute rate element for both interstate 
and intrastate terminating End Office Access Service no greater than the 
2018 interstate Target Composite Terminating End Office Access Rate if 
its intrastate terminating end office access rates would be at rate 
parity with its interstate terminating end office access rates. Nothing 
in this section obligates or allows a Rate-of-Return Carrier that has 
intrastate rates lower than its functionally equivalent interstate rates 
to make any intrastate tariff filing or intrastate tariff revisions 
raising such rates.
    (2) [Reserved]
    (i) Step 8. Beginning July 1, 2019, notwithstanding any other 
provision of the Commission's rules, each Rate-of-Return Carrier shall 
establish interstate and intrastate rates for terminating End Office 
Access Service that do not exceed $0.0007 per minute.
    (j) Step 9. Beginning July 1, 2020, notwithstanding any other 
provision of the Commission's rules, each Rate-of-Return Carrier shall, 
in accordance with a bill-and-keep methodology, revise and refile its 
federal access tariffs and any state tariffs to remove any intercarrier 
charges for terminating End Office Access Service.
    (k) As set forth in FCC 11-161, states will facilitate 
implementation of changes to intrastate access rates to ensure 
compliance with the Order. Nothing in this section shall alter the 
authority of a state to monitor and oversee filing of intrastate 
tariffs.

[76 FR 73856, Nov. 29, 2011, as amended at 77 FR 48452, Aug. 14, 2012; 
78 FR 26267, May 6, 2013; 79 FR 28845, May 20, 2014]



Sec. 51.911  Access reciprocal compensation rates for competitive LECs.

    (a) Caps on Access Reciprocal Compensation and switched access 
rates. Notwithstanding any other provision of the Commission's rules:
    (1) In the case of Competitive LECs operating in an area served by a 
Price Cap Carrier, no such Competitive LEC may increase the rate for any 
originating or terminating intrastate switched access service above the 
rate for such service in effect on December 29, 2011.
    (2) In the case of Competitive LEC operating in an area served by an 
incumbent local exchange carrier that is a Rate-of-Return Carrier or 
Competitive LECs that are subject to the rural exemption in 
Sec. 61.26(e) of this chapter, no such Competitive LEC may increase the 
rate for any originating or terminating intrastate switched access 
service above the rate for such service in effect on December 29, 2011, 
with the exception of intrastate originating access service. For such 
Competitive LECs, intrastate originating access service subject to this 
subpart shall remain subject to the same state rate regulation in effect 
December 31, 2011, as may be modified by the state thereafter.
    (b) Except as provided in paragraph (b)(7) of this section, 
beginning July 3, 2012, notwithstanding any other provision of the 
Commission's rules, each Competitive LEC that has tariffs on file with 
state regulatory authorities shall file intrastate access tariff 
provisions, in accordance with Sec. 51.505(b)(2), that set forth the 
rates applicable to Transitional Intrastate Access Service in each state 
in which it provides Transitional Intrastate Access Service.

[[Page 76]]

Each Competitive Local Exchange Carrier shall establish the rates for 
Transitional Intrastate Access Service using the following methodology.
    (1) Calculate total revenue from Transitional Intrastate Access 
Service at the carrier's interstate access rates in effect on December 
29, 2011, using Fiscal Year 2011 intrastate switched access demand for 
each rate element.
    (2) Calculate total revenue from Transitional Intrastate Access 
Service at the carrier's intrastate access rates in effect on December 
29, 2011, using Fiscal Year 2011 intrastate switched access demand for 
each rate element.
    (3) Calculate the Step 1 Access Revenue Reduction. The Step 1 Access 
Revenue Reduction is equal to one-half of the difference between the 
amount calculated in (b)(1) of this section and the amount calculated in 
(b)(2) of this section.
    (4) A Competitive Local Exchange Carrier may elect to establish 
rates for Transitional Intrastate Access Service using its intrastate 
access rate structure. Carriers using this option shall establish rates 
for Transitional Intrastate Access Service such that Transitional 
Intrastate Access Service revenue at the proposed rates is no greater 
than Transitional Intrastate Access Service revenue at the intrastate 
rates in effect as of December 29, 2011 less the Step 1 Access Revenue 
Reduction, using Fiscal year 2011 intrastate switched access demand.
    (5) In the alternative, a Competitive Local Exchange Carrier may 
elect to apply its interstate access rate structure and interstate rates 
to Transitional Intrastate Access Service. In addition to applicable 
interstate access rates, the carrier may assess a transitional per-
minute charge on Transitional Intrastate Access Service end office 
switching minutes (previously billed as intrastate access). The 
transitional charge shall be no greater than the Step 1 Access Revenue 
Reduction divided by Fiscal year 2011 intrastate switched access demand
    (6) Except as provided in paragraph (b)(7) of this section, nothing 
in this section obligates or allows a Competitive LEC that has 
intrastate rates lower than its functionally equivalent interstate rates 
to make any intrastate tariff filing or intrastate tariff revisions 
raising such rates.
    (7) If a Competitive LEC must make an intrastate switched access 
rate reduction pursuant to paragraph (b) of this section, and that 
Competitive LEC has an intrastate rate for a rate element that is below 
the comparable interstate rate for that element, the Competitive LEC may 
increase the rate for any intrastate rate element that is below the 
comparable interstate rate for that element to the interstate rate no 
later than July 1, 2013;
    (c) Beginning July 1, 2013, notwithstanding any other provision of 
the Commission's rules, all Competitive Local Exchange Carrier Access 
Reciprocal Compensation rates for switched exchange access services 
subject to this subpart shall be no higher than the Access Reciprocal 
Compensation rates charged by the competing incumbent local exchange 
carrier, in accordance with the same procedures specified in Sec. 61.26 
of this chapter.

[76 FR 73856, Nov. 29, 2011, as amended at 77 FR 48452, Aug. 14, 2012]



Sec. 51.913  Transition for VoIP-PSTN traffic.

    (a)(1) Terminating Access Reciprocal Compensation subject to this 
subpart exchanged between a local exchange carrier and another 
telecommunications carrier in Time Division Multiplexing (TDM) format 
that originates and/or terminates in IP format shall be subject to a 
rate equal to the relevant interstate terminating access charges 
specified by this subpart. Interstate originating Access Reciprocal 
Compensation subject to this subpart exchanged between a local exchange 
carrier and another telecommunications carrier in Time Division 
Multiplexing (TDM) format that originates and/or terminates in IP format 
shall be subject to a rate equal to the relevant interstate originating 
access charges specified by this subpart.
    (2) Until June 30, 2014, intrastate originating Access Reciprocal 
Compensation subject to this subpart exchanged between a local exchange 
carrier and another telecommunications carrier in Time Division 
Multiplexing (TDM) format that originates and/or

[[Page 77]]

terminates in IP format shall be subject to a rate equal to the relevant 
intrastate originating access charges specified by this subpart. 
Effective July 1, 2014, originating Access Reciprocal Compensation 
subject to this subpart exchanged between a local exchange carrier and 
another telecommunications carrier in Time Division Multiplexing (TDM) 
format that originates and/or terminates in IP format shall be subject 
to a rate equal to the relevant interstate originating access charges 
specified by this subpart.
    (3) Telecommunications traffic originates and/or terminates in IP 
format if it originates from and/or terminates to an end-user customer 
of a service that requires Internet protocol-compatible customer 
premises equipment.
    (b) Notwithstanding any other provision of the Commission's rules, a 
local exchange carrier shall be entitled to assess and collect the full 
Access Reciprocal Compensation charges prescribed by this subpart that 
are set forth in a local exchange carrier's interstate or intrastate 
tariff for the access services defined in Sec. 51.903 regardless of 
whether the local exchange carrier itself delivers such traffic to the 
called party's premises or delivers the call to the called party's 
premises via contractual or other arrangements with an affiliated or 
unaffiliated provider of interconnected VoIP service, as defined in 47 
U.S.C. 153(25), or a non-interconnected VoIP service, as defined in 47 
U.S.C. 153(36), that does not itself seek to collect Access Reciprocal 
Compensation charges prescribed by this subpart for that traffic. This 
rule does not permit a local exchange carrier to charge for functions 
not performed by the local exchange carrier itself or the affiliated or 
unaffiliated provider of interconnected VoIP service or non-
interconnected VoIP service. For purposes of this provision, functions 
provided by a LEC as part of transmitting telecommunications between 
designated points using, in whole or in part, technology other than TDM 
transmission in a manner that is comparable to a service offered by a 
local exchange carrier constitutes the functional equivalent of the 
incumbent local exchange carrier access service.

[76 FR 73856, Nov. 29, 2011, as amended at 77 FR 31536, May 29, 2012]



Sec. 51.915  Recovery mechanism for price cap carriers.

    (a) Scope. This section sets forth the extent to which Price Cap 
Carriers may recover certain revenues, through the recovery mechanism 
outlined below, to implement reforms adopted in FCC 11-161 and as 
required by Sec. 20.11(b) of this chapter, and Secs. 51.705 and 51.907.
    (b) Definitions. As used in this section and Sec. 51.917, the 
following terms mean:
    (1) CALLS Study Area. A CALLS Study Area means a Price Cap Carrier 
study area that participated in the CALLS plan at its inception. See 
Access Charge Reform, Price Cap Performance Review for Local Exchange 
Carriers, Low-Volume Long-Distance Users, Federal-State Joint Board on 
Universal Service, Sixth Report and Order in CC Docket Nos. 96-262 and 
94-1, Report and Order in CC Docket No. 99-249, Eleventh Report and 
Order in CC Docket No. 96-45, 15 FCC Rcd 12962 (2000).
    (2) CALLS Study Area Base Factor. The CALLS Study Area Base Factor 
is equal to ninety (90) percent.
    (3) CMRS Net Reciprocal Compensation Revenues. CMRS Net Reciprocal 
Compensation Revenues means the reduction in net reciprocal compensation 
revenues required by Sec. 20.11 of this chapter associated with CMRS 
traffic as described in Sec. 51.701(b)(2), which is equal to its Fiscal 
Year 2011 net reciprocal compensation revenues from CMRS carriers.
    (4) Expected Revenues for Access Recovery Charges. Expected Revenues 
for Access Recovery Charges are calculated using the tariffed Access 
Recovery Charge rate for each class of service and the forecast demand 
for each class of service.
    (5) Initial Composite Terminating End Office Access Rate. Initial 
Composite Terminating End Office Access Rate means Fiscal Year 2011 
terminating interstate End Office Access Service revenue divided by 
Fiscal Year 2011 terminating interstate end office switching minutes.
    (6) Lifeline Customer. A Lifeline Customer is a residential lifeline 
subscriber

[[Page 78]]

as defined by Sec. 54.400(a) of this chapter that does not pay a 
Residential and/or Single-Line Business End User Common Line Charge.
    (7) Net Reciprocal Compensation. Net Reciprocal Compensation means 
the difference between a carrier's reciprocal compensation revenues from 
non-access traffic less its reciprocal compensation payments for non-
access traffic during a stated period of time. For purposes of the 
calculations made under Secs. 51.915 and 51.917, the term does not 
include reciprocal compensation revenues for non-access traffic 
exchanged between Local Exchange Carriers and CMRS providers; recovery 
for such traffic is addressed separately in these sections.
    (8) Non-CALLS Study Area. Non-CALLS Study Area means a Price Cap 
Carrier study area that did not participate in the CALLS plan at its 
inception.
    (9) Non-CALLS Study Area Base Factor. The Non-CALLS Study Area Base 
Factor is equal to one hundred (100) percent for five (5) years 
beginning July 1, 2012. Beginning July 1, 2017, the Non-CALLS Price Cap 
Carrier Base Factor will be equal to ninety (90) percent.
    (10) Price Cap Carrier Traffic Demand Factor. The Price Cap Carrier 
Traffic Demand Factor, as used in calculating eligible recovery, is 
equal to ninety (90) percent for the one-year period beginning July 1, 
2012. It is reduced by ten (10) percent of its previous value in each 
subsequent annual tariff filing.
    (11) Rate Ceiling Component Charges. The Rate Ceiling Component 
Charges consists of the federal end user common line charge and the 
Access Recovery Charge; the flat rate for residential local service 
(sometimes know as the ``1FR'' or ``R1'' rate), mandatory extended area 
service charges, and state subscriber line charges; per-line state high 
cost and/or state access replacement universal service contributions, 
state E911 charges, and state TRS charges.
    (12) Residential Rate Ceiling. The Residential Rate Ceiling, which 
consists of the total of the Rate Ceiling Component Charges, is set at 
$30 per month. The Residential Rate Ceiling will be the higher of the 
rate in effect on January 1, 2012, or the rate in effect on January 1 in 
any subsequent year.
    (13) True-up Revenues for Access Recovery Charge. True-up revenues 
for Access Recovery Charge are equal to (projected demand minus actual 
realized demand for Access Recovery Charges) times the tariffed Access 
Recovery Charge. This calculation shall be made separately for each 
class of service and shall be adjusted to reflect any changes in 
tariffed rates for the Access Recovery Charge. Realized demand is the 
demand for which payment has been received by the time the true-up is 
made.
    (14) Intrastate 2014 Composite Terminating End Office Access Rate. 
The Intrastate 2014 Composite Terminating End Office Access Rate as used 
in this section is determined by
    (i) If a separate terminating rate is not already generally 
available, developing separate intrastate originating and terminating 
end office rates in accordance with Sec. 51.907(d)(1) using end office 
access rates at their June 30, 2014, rate caps;
    (ii) Multiplying the existing terminating June 30, 2014, intrastate 
end office access rates, or the terminating rates developed in paragraph 
(b)(14)(i) of this section, by the relevant Fiscal Year 2011 intrastate 
demand; and
    (iii) Dividing the sum of the revenues determined in paragraph 
(b)(14)(ii) of this section by 2011 Fiscal Year intrastate terminating 
local switching minutes.
    (c) 2011 Price Cap Carrier Base Period Revenue. 2011 Price Cap 
Carrier Base Period Revenue is equal to the sum of the following three 
components:
    (1) Terminating interstate end office switched access revenues and 
interstate Tandem-Switched Transport Access Service revenues for Fiscal 
Year 2011 received by March 31, 2012;
    (2) Fiscal Year 2011 revenues from Transitional Intrastate Access 
Service received by March 31, 2012; and
    (3) Fiscal Year 2011 reciprocal compensation revenues received by 
March 31, 2012, less fiscal year 2011 reciprocal compensation payments 
made by March 31, 2012.
    (d) Eligible recovery for Price Cap Carriers. (1) Notwithstanding 
any other provision of the Commission's rules, a Price Cap Carrier may 
recover the

[[Page 79]]

amounts specified in this paragraph through the mechanisms described in 
paragraphs (e) and (f) of this section.
    (i) Beginning July 1, 2012, a Price Cap Carrier's eligible recovery 
will be equal to the CALLS Study Area Base Factor and/or the Non-CALLS 
Study Area Base Factor, as applicable, multiplied by the sum of the 
following three components:
    (A) The amount of the reduction in Transitional Intrastate Access 
Service revenues determined pursuant to Sec. 51.907(b)(2) multiplied by 
the Price Cap Carrier Traffic Demand Factor;
    (B) CMRS Net Reciprocal Compensation Revenues multiplied by the 
Price Cap Carrier Traffic Demand Factor; and
    (C) A Price Cap Carrier's reductions in Fiscal Year 2011 net 
reciprocal compensation revenues resulting from rate reductions required 
by Sec. 51.705, other than those associated with CMRS traffic as 
described in Sec. 51.701(b)(2), which may be calculated in one of the 
following ways:
    (1) Calculate the reduction in Fiscal Year 2011 net reciprocal 
compensation revenue as a result of rate reductions required by 
Sec. 51.705 using Fiscal Year 2011 reciprocal compensation demand, and 
then multiply by the Price Cap Carrier Traffic Demand Factor;
    (2) By using a composite reciprocal compensation rate as follows:
    (i) Establish a composite reciprocal compensation rate for its 
Fiscal Year 2011 reciprocal compensation receipts and its Fiscal Year 
2011 reciprocal compensation payments by dividing its Fiscal Year 2011 
reciprocal compensation receipts and payments by its respective Fiscal 
Year 2011 demand excluding demand for traffic exchanged pursuant to a 
bill-and-keep arrangement;
    (ii) Calculate the difference between each of the composite 
reciprocal compensation rates and the target reciprocal compensation 
rate set forth in Sec. 51.705 for the year beginning July 1, 2012 
multiply by the appropriate Fiscal Year 2011 demand, and then multiply 
by the Price Cap Carrier Traffic Demand Factor; or
    (3) For the purpose of establishing its recovery for net reciprocal 
compensation, a Price Cap Carrier may elect to forgo this step and 
receive no recovery for reductions in net reciprocal compensation. If a 
carrier elects this option, it may not change its election at a later 
date.
    (ii) Beginning July 1, 2013, a Price Cap Carrier's eligible recovery 
will be equal to the CALLS Study Area Base Factor and/or the Non-CALLS 
Study Area Base Factor, as applicable, multiplied by the sum of the 
following three components:
    (A) The cumulative amount of the reduction in Transitional 
Intrastate Access Service revenues determined pursuant to 
Sec. 51.907(b)(2) and (c) multiplied by the Price Cap Carrier Traffic 
Demand Factor; and
    (B) CMRS Net Reciprocal Compensation Revenues multiplied by the 
Price Cap Carrier Traffic Demand Factor; and
    (C) A Price Cap Carrier's cumulative reductions in Fiscal Year 2011 
net reciprocal compensation revenues other than those associated with 
CMRS traffic as described in Sec. 51.701(b)(2) resulting from rate 
reductions required by Sec. 51.705 may be calculated in one of the 
following ways:
    (1) Calculate the cumulative reduction in Fiscal Year 2011 net 
reciprocal compensation revenue as a result of rate reductions required 
by Sec. 51.705 using Fiscal Year 2011 reciprocal compensation demand and 
then multiply by the Price Cap Carrier Traffic Demand Factor;
    (2) By using a composite reciprocal compensation rate as follows:
    (i) Establish a composite reciprocal compensation rate for its 
Fiscal Year 2011 reciprocal compensation receipts and its Fiscal Year 
2011 reciprocal compensation payments by dividing its Fiscal Year 2011 
reciprocal compensation receipts and payments by its respective Fiscal 
Year 2011 demand excluding demand for traffic exchanged pursuant to a 
bill-and-keep arrangement;
    (ii) Calculate the difference between each of the composite 
reciprocal compensation rates and the target reciprocal compensation 
rate set forth in Sec. 51.705 for the year beginning July 1, 2013, using 
the appropriate Fiscal Year 2011 demand, and then multiply by the Price 
Cap Carrier Traffic Demand Factor; or

[[Page 80]]

    (3) For the purpose of establishing its recovery for net reciprocal 
compensation, a Price Cap Carrier may elect to forgo this step and 
receive no recovery for reductions in net reciprocal compensation. If a 
carrier elects this option, it may not change its election at a later 
date.
    (iii) Beginning July 1, 2014, a Price Cap Carrier's eligible 
recovery will be equal to the CALLS Study Area Base Factor and/or the 
Non-CALLS Study Area Base Factor, as applicable, multiplied by the sum 
of the amounts in paragraphs (d)(1)(iii)(A) through (d)(1)(iii)(E), of 
this section, and then adding the amount in paragraph (d)(1)(iii)(F) of 
this section to that amount:
    (A) The amount of the reduction in Transitional Intrastate Access 
Service revenues determined pursuant to Sec. 51.907(b)(2) and (c) 
multiplied by the Price Cap Carrier Traffic Demand Factor; and
    (B) The reduction in interstate switched access revenues equal to 
the difference between the 2011 Baseline Composite Terminating End 
Office Access Rate and the 2014 Target Composite Terminating End Office 
Access Rate determined pursuant to Sec. 51.907(d) using Fiscal Year 2011 
terminating interstate end office switching minutes, and then multiply 
by the Price Cap Carrier Traffic Demand Factor;
    (C) If the carrier reduced its 2014 Intrastate Terminating End 
Office Access Rate(s) pursuant to Sec. 51.907(d)(2), the reduction in 
revenues equal to the difference between either the Intrastate 2014 
Composite Terminating End Office Access Rate and the Composite 
Terminating End Office Access Rate based on the maximum terminating end 
office rates that could have been charged on July 1, 2014, or the 2014 
Target Composite Terminating End Office Access Rate, as applicable, 
using Fiscal Year 2011 terminating intrastate end office switching 
minutes, and then multiply by the Price Cap Carrier Traffic Demand 
Factor;
    (D) CMRS Net Reciprocal Compensation Revenues multiplied by the 
Price Cap Carrier Traffic Demand Factor; and
    (E) A Price Cap Carrier's cumulative reductions in Fiscal Year 2011 
net reciprocal compensation revenues other than those associated with 
CMRS traffic as described in Sec. 51.701(b)(2) resulting from rate 
reductions required by Sec. 51.705 may be calculated in one of the 
following ways:
    (1) Calculate the cumulative reduction in Fiscal Year 2011 net 
reciprocal compensation revenue as a result of rate reductions required 
by Sec. 51.705 using Fiscal Year 2011 reciprocal compensation demand, 
and then multiply by the Price Cap Carrier Traffic Demand Factor;
    (2) By using a composite reciprocal compensation rate as follows:
    (i) Establish a composite reciprocal compensation rate for its 
Fiscal Year 2011 reciprocal compensation receipts and its Fiscal Year 
2011 reciprocal compensation payments by dividing its Fiscal Year 2011 
reciprocal compensation receipts and payments by its respective Fiscal 
Year 2011 demand excluding demand for traffic exchanged pursuant to a 
bill-and-keep arrangement;
    (ii) Calculate the difference between each of the composite 
reciprocal compensation rates and the target reciprocal compensation 
rate set forth in Sec. 51.705 for the year beginning July 1, 2014, using 
the appropriate Fiscal Year 2011 demand, and then multiply by the Price 
Cap Carrier Traffic Demand Factor; or
    (3) For the purpose of establishing its recovery for net reciprocal 
compensation, a Price Cap Carrier may elect to forgo this step and 
receive no recovery for reductions in net reciprocal compensation. If a 
carrier elects this option, it may not change its election at a later 
date.
    (F) An amount equal to True-up Revenues for Access Recovery Charges 
for the year beginning July 1, 2012.
    (iv) Beginning July 1, 2015, a Price Cap Carrier's eligible recovery 
will be equal to the CALLS Study Area Base Factor and/or the Non-CALLS 
Study Area Base Factor, as applicable, multiplied by the sum of the 
amounts in paragraphs (d)(1)(iv)(A) through (d)(1)(iv)(E) of this 
section and then adding the amount in paragraph (d)(1)(iv)(F) of this 
section to that amount:
    (A) The amount of the reduction in Transitional Intrastate Access 
Service

[[Page 81]]

revenues determined pursuant to Sec. 51.907(b)(2) and (c) multiplied by 
the Price Cap Carrier Traffic Demand Factor;
    (B) The reduction in interstate switched access revenues equal to 
the difference between the 2011 Baseline Composite Terminating End 
Office Access Rate and the 2015 Target Composite Terminating End Office 
Access Rate determined pursuant to Sec. 51.907(e) using Fiscal Year 2011 
terminating interstate end office switching minutes, and then multiply 
by the Price Cap Carrier Traffic Demand Factor;
    (C) If the carrier reduced its Intrastate Terminating End Office 
Access Rate(s) pursuant to Sec. 51.907(e)(1), the reduction in 
intrastate switched access revenues equal to the difference between 
either the intrastate 2014 Composite Terminating End Office Access Rate 
and the Composite Terminating End Office Access Rate based on the 
maximum terminating end office rates that could have been charged on 
July 1, 2015, or the 2015 Target Composite Terminating End Office Access 
Rate, as applicable, using Fiscal Year 2011 terminating intrastate end 
office switching minutes, and then multiply by the Price Cap Carrier 
Traffic Demand Factor; and
    (D) CMRS Net Reciprocal Compensation Revenues multiplied by the 
Price Cap Carrier Traffic Demand Factor;
    (E) A Price Cap Carrier's cumulative reductions in Fiscal Year 2011 
net reciprocal compensation revenues other than those associated with 
CMRS traffic as described in Sec. 51.701(b)(2) resulting from rate 
reductions required by Sec. 51.705 may be calculated in one of the 
following ways:
    (1) Calculate the cumulative reduction in Fiscal Year 2011 net 
reciprocal compensation revenue as a result of rate reductions required 
by Sec. 51.705 using Fiscal Year 2011 reciprocal compensation demand, 
and then multiply by the Price Cap Carrier Traffic Demand Factor;
    (2) By using a composite reciprocal compensation rate as follows:
    (i) Establish a composite reciprocal compensation rate for its 
Fiscal Year 2011 reciprocal compensation receipts and its Fiscal Year 
2011 reciprocal compensation payments by dividing its Fiscal Year 2011 
reciprocal compensation receipts and payments by its respective Fiscal 
Year 2011 demand excluding demand for traffic exchanged pursuant to a 
bill-and-keep arrangement;
    (ii) Calculate the difference between each of the composite 
reciprocal compensation rates and the target reciprocal compensation 
rate set forth in Sec. 51.705 for the year beginning July 1, 2015, using 
the appropriate Fiscal Year 2011 demand, and then multiply by the Price 
Cap Carrier Traffic Demand Factor; or
    (3) For the purpose of establishing its recovery for net reciprocal 
compensation, a Price Cap Carrier may elect to forgo this step and 
receive no recovery for reductions in net reciprocal compensation. If a 
carrier elects this option, it may not change its election at a later 
date.
    (F) An amount equal to True-up Revenues for Access Recovery Charges 
for the year beginning July 1, 2013.
    (v) Beginning July 1, 2016, a Price Cap Carrier's eligible recovery 
will be equal to the CALLS Study Area Base Factor and/or the Non-CALLS 
Study Area Base Factor, as applicable, multiplied by the sum of the 
amounts in paragraphs (d)(1)(v)(A) through (d)(1)(v)(E), of this section 
and then adding the amount in paragraph (d)(1)(v)(F) of this section to 
that amount:
    (A) The amount of the reduction in Transitional Intrastate Access 
Service revenues determined pursuant to Sec. 51.907(b)(2) and (c) 
multiplied by the Price Cap Carrier Traffic Demand Factor;
    (B) The reduction in interstate switched access revenues equal to 
the difference between the 2011 Baseline Composite Terminating End 
Office Access Rate and $0.0007 determined pursuant to Sec. 51.907(f) 
using Fiscal Year 2011 terminating interstate end office switching 
minutes, and then multiply by the Price Cap Carrier Traffic Demand 
Factor;
    (C) If the carrier reduced its Intrastate Terminating End Office 
Access Rate(s) pursuant to Sec. 51.907(f), the reduction in revenues 
equal to the difference between either the Intrastate 2014 Composite 
Terminating End Office Access Rate and $0.0007 based on the

[[Page 82]]

maximum terminating end office rates that could have been charged on 
July 1, 2016, or the 2016 Target Composite Terminating End Office Access 
Rate, as applicable, using Fiscal Year 2011 terminating intrastate end 
office minutes, and then multiply by the Price Cap Carrier Traffic 
Demand Factor;
    (D) CMRS Net Reciprocal Compensation Revenues multiplied by the 
Price Cap Carrier Traffic Demand Factor;
    (E) A Price Cap Carrier's cumulative reductions in Fiscal Year 2011 
net reciprocal compensation revenues other than those associated with 
CMRS traffic as described in Sec. 51.701(b)(2) resulting from rate 
reductions required by Sec. 51.705 may be calculated in one of the 
following ways:
    (1) Calculate the cumulative reduction in Fiscal Year 2011 net 
reciprocal compensation revenue as a result of rate reductions required 
by Sec. 51.705 using Fiscal Year 2011 reciprocal compensation demand, 
and then multiply by the Price Cap Carrier Traffic Demand Factor;
    (2) By using a composite reciprocal compensation rate as follows:
    (i) Establish a composite reciprocal compensation rate for its 
Fiscal Year 2011 reciprocal compensation receipts and its Fiscal Year 
2011 reciprocal compensation payments by dividing its Fiscal Year 2011 
reciprocal compensation receipts and payments by its respective Fiscal 
Year 2011 demand excluding demand for traffic exchanged pursuant to a 
bill-and-keep arrangement;
    (ii) Calculate the difference between each of the composite 
reciprocal compensation rates and the target reciprocal compensation 
rate set forth in Sec. 51.705 for the year beginning July 1, 2016, using 
the appropriate Fiscal Year 2011 demand, and then multiply by the Price 
Cap Carrier Traffic Demand Factor; or
    (3) For the purpose of establishing its recovery for net reciprocal 
compensation, a Price Cap Carrier may elect to forgo this step and 
receive no recovery for reductions in net reciprocal compensation. If a 
carrier elects this option, it may not change its election at a later 
date.
    (F) An amount equal to True-up Revenues for Access Recovery Charges 
for the year beginning July 1, 2014.
    (vi) Beginning July 1, 2017, a Price Cap Carrier's eligible recovery 
will be equal to ninety (90) percent of the sum of the amounts in 
paragraphs (d)(1)(vi) through (d)(1)(vi)(F) of this section, and then 
adding the amount in paragraph (d)(1)(vi)(G) f this section to that 
amount:
    (A) The amount of the reduction in Transitional Intrastate Access 
Service revenues determined pursuant to Sec. 51.907(b)(2) and (c) 
multiplied by the Price Cap Carrier Traffic Demand Factor; and
    (B) The reduction in interstate switched access revenues equal to 
the 2011 Baseline Composite Terminating End Office Access Rate using 
Fiscal Year 2011 terminating interstate end office switching minutes, 
and then multiply by the Price Cap Carrier Traffic Demand Factor;
    (C) The reduction in revenues equal to the intrastate 2014 Composite 
terminating End Office Access Rate using Fiscal Year 2011 terminating 
intrastate end office switching minutes, and then multiply by the Price 
Cap Carrier Traffic Demand Factor;
    (D) The reduction in revenues resulting from reducing the 
terminating Tandem-Switched Transport Access Service rate to $0.0007 
pursuant to Sec. 51.907(g)(2) using Fiscal Year 2011 terminating tandem-
switched minutes, and then multiply by the Price Cap Carrier Traffic 
Demand Factor;
    (E) CMRS Net Reciprocal Compensation Revenues multiplied by the 
Price Cap Carrier Traffic Demand Factor; and
    (F) A Price Cap Carrier's cumulative reductions in Fiscal Year 2011 
net reciprocal compensation revenues other than those associated with 
CMRS traffic as described in Sec. 51.701(b)(2) resulting from rate 
reductions required by Sec. 51.705 may be calculated in one of the 
following ways:
    (1) Calculate the cumulative reduction in Fiscal Year 2011 net 
reciprocal compensation revenue as a result of rate reductions required 
by Sec. 51.705 using Fiscal Year 2011 reciprocal compensation demand, 
and then multiply by the Price Cap Carrier Traffic Demand Factor;
    (2) By using a composite reciprocal compensation rate as follows:

[[Page 83]]

    (i) Establish a composite reciprocal compensation rate for its 
Fiscal Year 2011 reciprocal compensation receipts and its Fiscal Year 
2011 reciprocal compensation payments by dividing its Fiscal Year 2011 
reciprocal compensation receipts and payments by its respective Fiscal 
Year 2011 demand excluding demand for traffic exchanged pursuant to a 
bill-and-keep arrangement;
    (ii) Calculate the difference between each of the composite 
reciprocal compensation rates and the target reciprocal compensation 
rate set forth in Sec. 51.705 for the year beginning July 1, 2017, using 
the appropriate Fiscal Year 2011 demand, and then multiply by the Price 
Cap Carrier Traffic Demand Factor; or
    (3) For the purpose of establishing its recovery for net reciprocal 
compensation, a Price Cap Carrier may elect to forgo this step and 
receive no recovery for reductions in net reciprocal compensation. If a 
carrier elects this option, it may not change its election at a later 
date.
    (G) An amount equal to True-up Revenues for Access Recovery Charges 
for the year beginning July 1, 2015.
    (vii) Beginning July 1, 2018, a Price Cap Carrier's eligible 
recovery will be equal to ninety (90) percent of the sum of the amounts 
in paragraphs (d)(1)(vii)(A) though (d)(1)(vii)(G) of this section, and 
then adding the amount in paragraph (d)(1)(vii)(H) of this section to 
that amount:
    (A) The amount of the reduction in Transitional Intrastate Access 
Service revenues determined pursuant to Sec. 51.907(b)(2) and (c) 
multiplied by the Price Cap Carrier Traffic Demand Factor; and:
    (B) The reduction in interstate switched access revenues equal to 
the 2011 Baseline Composite Terminating End Office Access Rate using 
Fiscal Year 2011 terminating interstate end office switching minutes, 
and then multiply by the Price Cap Carrier Traffic Demand Factor;
    (C) The reduction in revenues equal to the intrastate 2014 Composite 
terminating End Office Access Rate using Fiscal Year 2011 terminating 
intrastate end office switching minutes, and then multiply by the Price 
Cap Carrier Traffic Demand Factor;
    (D) The reduction in revenues resulting from reducing the 
terminating Tandem-Switched Transport Access Service rate to $0.0007 
pursuant to Sec. 51.907(g)(2) using Fiscal Year 2011 terminating tandem-
switched minutes, and then multiply by the Price Cap Carrier Traffic 
Demand Factor;
    (E) The reduction in revenues resulting from moving from a 
terminating Tandem-Switched Transport Access Service rate tariffed at a 
maximum of $0.0007 to removal of intercarrier charges pursuant to 
Sec. 51.907(h), if applicable, using Fiscal Year 2011 terminating 
tandem-switched minutes, and then multiply by the Price Cap Carrier 
Traffic Demand Factor;
    (F) CMRS Net Reciprocal Compensation Revenues multiplied by the 
Price Cap Carrier Traffic Demand Factor; and
    (G) A Price Cap Carrier's cumulative reductions in Fiscal Year 2011 
net reciprocal compensation revenues other than those associated with 
CMRS traffic as described in Sec. 51.701(b)(2) resulting from rate 
reductions required by Sec. 51.705 may be calculated in one of the 
following ways:
    (1) Calculate the cumulative reduction in Fiscal Year 2011 net 
reciprocal compensation revenue as a result of rate reductions required 
by Sec. 51.705 using Fiscal Year 2011 reciprocal compensation demand, 
and then multiply by the Price Cap Carrier Traffic Demand Factor;
    (2) By using a composite reciprocal compensation rate as follows:
    (i) Establish a composite reciprocal compensation rate for its 
Fiscal Year 2011 reciprocal compensation receipts and its Fiscal Year 
2011 reciprocal compensation payments by dividing its Fiscal Year 2011 
reciprocal compensation receipts and payments by its respective Fiscal 
Year 2011 demand excluding demand for traffic exchanged pursuant to a 
bill-and-keep arrangement;
    (ii) Calculate the difference between each of the composite 
reciprocal compensation rates and the target reciprocal compensation 
rate set forth in Sec. 51.705 for the year beginning July 1, 2018, using 
the appropriate Fiscal Year 2011 demand, and then multiply by the Price 
Cap Carrier Traffic Demand Factor; or

[[Page 84]]

    (3) For the purpose of establishing its recovery for net reciprocal 
compensation, a Price Cap Carrier may elect to forgo this step and 
receive no recovery for reductions in net reciprocal compensation. If a 
carrier elects this option, it may not change its election at a later 
date.
    (H) An amount equal to True-up Revenues for Access Recovery Charges 
for the year beginning July 1, 2016.
    (viii) Beginning July 1, 2019, and in subsequent years, a Price Cap 
Carrier's eligible recovery will be equal to the amount calculated in 
paragraph (d)(1)(vii)(A) through (d)(1)(vii)(H) of this section before 
the application of the Price Cap Carrier Traffic Demand Factor 
applicable in 2018 multiplied by the appropriate Price Cap Carrier 
Traffic Demand Factor for the year in question, and then adding an 
amount equal to True-up Revenues for Access Recovery Charges for the 
year beginning July 1 two years earlier.
    (2) If a Price Cap Carrier recovers any costs or revenues that are 
already being recovered through Access Recovery Charges or the Connect 
America Fund from another source, that carrier's ability to recover 
reduced switched access revenue from Access Recovery Charges or the 
Connect America Fund shall be reduced to the extent it receives 
duplicative recovery. Any duplicative recovery shall be reflected as a 
reduction to a carrier's Eligible Recovery calculated pursuant to 
Sec. 51.915(d).
    (3) A Price Cap Carrier seeking revenue recovery must annually 
certify as part of its tariff filings to the Commission and to the 
relevant state commission that the carrier is not seeking duplicative 
recovery in the state jurisdiction for any Eligible Recovery subject to 
the recovery mechanism.
    (4) If a Price Cap Carrier receives payment for Access Recovery 
Charges after the period used to measure the adjustment to reflect the 
differences between estimated and actual revenues, it shall treat such 
payments as actual revenues in the year the payment is received and 
shall reflect this as an additional adjustment for that year.
    (e) Access Recovery Charge. (1) A charge that is expressed in 
dollars and cents per line per month may be assessed upon end users that 
may be assessed an end user common line charge pursuant to Sec. 69.152 
of this chapter, to the extent necessary to allow the Price Cap Carrier 
to recover some or all of its eligible recovery determined pursuant to 
paragraph (d) of this section, subject to the caps described in 
paragraph (e)(5) of this section. A Price Cap Carrier may elect to forgo 
charging some or all of the Access Recovery Charge.
    (2) Total Access Recovery Charges calculated by multiplying the 
tariffed Access Recovery Charge by the projected demand for the year in 
question may not recover more than the amount of eligible recovery 
calculated pursuant to paragraph (d) of this section for the year 
beginning on July 1.
    (3) For the purposes of this section, a Price Cap Carrier holding 
company includes all of its wholly-owned operating companies that are 
price cap incumbent local exchange carriers. A Price Cap Carrier Holding 
Company may recover the eligible recovery attributable to any price cap 
study areas operated by its wholly-owned operating companies through 
assessments of the Access Recovery Charge on end users in any price cap 
study areas operated by its wholly owned operating companies that are 
price cap incumbent local exchange carriers.
    (4) Distribution of Access Recovery Charges among lines of different 
types. (i) A Price Cap Carrier holding company that does not receive 
ICC-replacement CAF support (whether because it elects not to or because 
it does not have sufficient eligible recovery after the Access Recovery 
Charge is assessed or imputed) may not recover a higher fraction of its 
total revenue recovery from Access Recovery Charges assessed on 
Residential and Single Line Business lines than:
    (A) The number of Residential and Single-Line Business lines divided 
by
    (B) The sum of the number of Residential and Single-Line Business 
lines and two (2) times the number of End User Common Line charges 
assessed on Multi-Line Business customers.
    (ii) For purposes of this subpart, Residential and Single Line 
Business lines are lines (other than lines of Lifeline

[[Page 85]]

Customers) assessed the residential and single line business end user 
common line charge and lines assessed the non-primary residential end 
user common line charge.
    (iii) For purposes of this subpart, Multi-Line Business Lines are 
lines assessed the multi-line business end user common line charge.
    (5) Per-line caps and other limitations on Access Recovery Charges
    (i) For each line other than lines of Lifeline Customers assessed a 
primary residential or single-line business end user common line charge 
or a non-primary residential end user common line charge pursuant to 
Sec. 69.152 of this Chapter, a Price Cap Carrier may assess an Access 
Recovery Charge as follows:
    (A) Beginning July 1, 2012, a maximum of $0.50 per month for each 
line;
    (B) Beginning July 1, 2013, a maximum of $1.00 per month for each 
line;
    (C) Beginning July 1, 2014, a maximum of $1.50 per month for each 
line;
    (D) Beginning July 1, 2015, a maximum of $2.00 per month for each 
line; and
    (E) Beginning July 1, 2016, a maximum of $2.50 per month for each 
line.
    (ii) For each line assessed a multi-line business end user common 
line charge pursuant to Sec. 69.152 of this chapter, a Price Cap Carrier 
may assess an Access Recovery Charge as follows:
    (A) Beginning July 1, 2012, a maximum of $1.00 per month for each 
multi-line business end user common line charge assessed;
    (B) Beginning July 1, 2013, a maximum of $2.00 per month for each 
multi-line business end user common line charge assessed;
    (C) Beginning July 1, 2014, a maximum of $3.00 per month for each 
multi-line business end user common line charge assessed;
    (D) Beginning July 1, 2015, a maximum of $4.00 per month for each 
multi-line business end user common line charge assessed; and
    (E) Beginning July 1, 2016, a maximum of $5.00 per month for each 
multi-line business end user common line charge assessed.
    (iii) The Access Recovery Charge allowed by paragraph (e)(5)(i) of 
this section may not be assessed to the extent that its assessment would 
bring the total of the Rate Ceiling Component Charges above the 
Residential Rate Ceiling on January 1 of that year. This limitation 
applies only to the first residential line obtained by a residential end 
user and does not apply to single-line business customers.
    (iv) The Access Recovery Charge allowed by paragraph (e)(5)(ii) of 
this section may not be assessed to the extent that its assessment would 
bring the total of the multi-line business end user common line charge 
and the Access Recovery Charge above $12.20 per line.
    (v) The Access Recovery Charge assessed on lines assessed the non-
primary residential line end user common line charge in a study area may 
not exceed the Access Recovery Charge assessed on residential end-users' 
first residential line in that study area.
    (vi) The Access Recovery Charge may not be assessed on lines of any 
Lifeline Customers.
    (vii) If in any year, the Price Cap Carrier's Access Recovery Charge 
is not at its maximum, the succeeding year's Access Recovery Charge may 
not increase more than $.0.50 per line per month for charges assessed 
under paragraph (e)(5)(i) of this section or $1.00 per line per month 
for charges assessed under paragraph (e)(5)(ii) of this section.
    (f) Price Cap Carrier eligibility for CAF ICC Support. (1) A Price 
Cap Carrier shall elect in its July 1, 2012 access tariff filing whether 
it will receive CAF ICC Support under this paragraph. A Price Cap 
Carrier eligible to receive CAF ICC Support subsequently may elect at 
any time not to receive such funding. Once it makes the election not to 
receive CAFF ICC Support, it may not elect to receive such funding at a 
later date.
    (2) Beginning July 1, 2012, a Price Cap Carrier may recover any 
eligible recovery allowed by paragraph (d) that it could not have 
recovered through charges assessed pursuant to paragraph (e) of this 
section from CAF ICC Support pursuant to Sec. 54.304. For this purpose, 
the Price Cap Carrier must impute the maximum charges it could have 
assessed under paragraph (e)of this section.

[[Page 86]]

    (3) Beginning July 1, 2017, a Price Cap Carrier may recover two-
thirds (\2/3\) of the amount it otherwise would have been eligible to 
recover under paragraph (f)(2) from CAF ICC Support.
    (4) Beginning July 1, 2018, a Price Cap Carrier may recover one-
third (1/3) of the amount it otherwise would have been eligible to 
recover under paragraph (f)(2) of this section from CAF ICC Support.
    (5) Beginning July 1, 2019, a Price Cap Carrier may no longer 
recover any amount related to revenue recovery under this paragraph from 
CAF ICC Support.
    (6) A Price Cap Carrier that elects to receive CAF ICC support must 
certify with its annual access tariff filing that it has complied with 
paragraphs (d) and (e) of this section, and, after doing so, is eligible 
to receive the CAF ICC support requested pursuant to paragraph (f) of 
this section.

[76 FR 73856, Nov. 29, 2011, as amended at 77 FR 48453, Aug. 14, 2012; 
78 FR 26268, May 6, 2013;79 FR 28846, May 20, 2014]



Sec. 51.917  Revenue recovery for Rate-of-Return Carriers.

    (a) Scope. This section sets forth the extent to which Rate-of-
Return Carriers may recover, through the recovery mechanism outlined in 
paragraphs (d) through (f) of this section, a portion of revenues lost 
due to rate reductions required by Sec. 20.11(b) of this chapter, and 
Secs. 51.705 and 51.909.
    (b) Definitions.
    (1) 2011 Interstate Switched Access Revenue Requirement. 2011 
Interstate Switched Access Revenue Requirement means:
    (i) For a Rate-of-Return Carrier that participated in the NECA 2011 
annual switched access tariff filing, its projected interstate switched 
access revenue requirement associated with the NECA 2011 annual 
interstate switched access tariff filing;
    (ii) For a Rate-of-Return Carrier subject to Sec. 61.38 of this 
chapter that filed its own annual access tariff in 2010 and did not 
participate in the NECA 2011 annual switched access tariff filing, its 
projected interstate switched access revenue requirement in its 2010 
annual interstate switched access tariff filing; and
    (iii) For a Rate-of-Return Carrier subject to Sec. 61.39 of this 
chapter that filed its own annual switched access tariff in 2011, its 
historically-determined annual interstate switched access revenue 
requirement filed with its 2011 annual interstate switched access tariff 
filing.
    (2) Expected Revenues. Expected Revenues from an access service are 
calculated using the default transition rate for that service specified 
by Sec. 51.909 and forecast demand for that service. Expected Revenues 
from a non-access service are calculated using the default transition 
rate for that service specified by Sec. 20.11 of this chapter or 
Sec. 51.705 of this chapter and forecast net demand for that service.
    (3) Rate-of-Return Carrier Baseline Adjustment Factor. The Rate-of-
Return Carrier Baseline Adjustment Factor, as used in calculating 
eligible recovery for Rate-of-Return Carriers, is equal to ninety-five 
(95) percent for the period beginning July 1, 2012. It is reduced by 
five (5) percent of its previous value in each subsequent annual tariff 
filing.
    (4) Revenue Requirement. Revenue Requirement is equal to a carrier's 
regulated operating costs plus an 11.25 percent return on a carrier's 
net rate base calculated in compliance with the provisions of parts 36, 
65 and 69 of this chapter. For an average schedule carrier, its Revenue 
Requirement shall be equal to the average schedule settlements it 
received from the pool, adjusted to reflect an 11.25 percent rate of 
return, or what it would have received if it had been a participant in 
the pool. If the reference is to an operating segment, these references 
are to the Revenue Requirement associated with that segment.
    (5) True-up Adjustment. The True-up Adjustment is equal to the True-
up Revenues for any particular service for the period in question.
    (6) True-up Revenues. True-up Revenues from an access service are 
equal to (projected demand minus actual realized demand for that 
service) times the default transition rate for that service specified by 
Sec. 51.909. True-up Revenues from a non-access service are equal to 
(projected demand minus actual realized net demand for that service) 
times the default transition rate

[[Page 87]]

for that service specified by Sec. 20.11(b) of this chapter or 
Sec. 51.705. Realized demand is the demand for which payment has been 
received, or has been made, as appropriate, by the time the true-up is 
made.
    (7) 2011 Rate-of-Return Carrier Base Period Revenue. 2011 Rate-of-
Return Carrier Base Period Revenue is the sum of:
    (i) 2011 Interstate Switched Access Revenue Requirement;
    (ii) Fiscal Year 2011 revenues from Transitional Intrastate Access 
Service received by March 31, 2012; and
    (iii) Fiscal Year 2011 reciprocal compensation revenues received by 
March 31, 2012, less Fiscal Year 2011 reciprocal compensation payments 
paid and/or payable by March 31, 2012
    (c) 2011 Rate-of-Return Carrier Base Period Revenue shall be 
adjusted to reflect the removal of any increases in revenue requirement 
or revenues resulting from access stimulation activity the Rate-of-
Return Carrier engaged in during the relevant measuring period. A Rate-
of-Return Carrier should make this adjustment for its initial July 1, 
2012, tariff filing, but the adjustment may result from a subsequent 
Commission or court ruling.
    (d) Eligible Recovery for Rate-of-Return Carriers. (1) 
Notwithstanding any other provision of the Commission's rules, a Rate-
of-Return Carrier may recover the amounts specified in this paragraph 
through the mechanisms described in paragraphs (e) and (f) of this 
section.
    (i) Beginning July 1, 2012, a Rate-of-Return Carrier's eligible 
recovery will be equal to the 2011 Rate-of-Return Carrier Base Period 
Revenue multiplied by the Rate-of-Return Carrier Baseline Adjustment 
Factor less:
    (A) The Expected Revenues from Transitional Intrastate Access 
Service for the year beginning July 1, 2012, reflecting forecasted 
demand multiplied by the rates in the rate transition contained in 
Sec. 51.909;
    (B) The Expected Revenues from interstate switched access for the 
year beginning July 1, 2012, reflecting forecasted demand multiplied by 
the rates in the rate transition contained in Sec. 51.909; and
    (C) Expected Net Reciprocal Compensation Revenues for the year 
beginning July 1, 2012 using the target methodology required by 
Sec. 51.705.
    (ii) Beginning July 1, 2013, a Rate-of-Return Carrier's eligible 
recovery will be equal to the 2011 Rate-of-Return Carrier Base Period 
Revenue multiplied by the Rate-of-Return Carrier Baseline Adjustment 
Factor less:
    (A) The Expected Revenues from Transitional Intrastate Access 
Service for the year beginning July 1, 2013, reflecting forecasted 
demand multiplied by the rates in the rate transition contained in 
Sec. 51.909;
    (B) The Expected Revenues from interstate switched access for the 
year beginning July 1, 2013, reflecting forecasted demand multiplied by 
the rates in the rate transition contained in Sec. 51.909; and
    (C) Expected Net Reciprocal Compensation Revenues for the year 
beginning July 1, 2013 using the target methodology required by 
Sec. 51.705.
    (iii) Beginning July 1, 2014, a Rate-of-Return Carrier's eligible 
recovery will be equal to the 2011 Rate-of-Return Carrier Base Period 
Revenue multiplied by the Rate-of-Return Carrier Baseline Adjustment 
Factor less:
    (A) The Expected Revenues from Transitional Intrastate Access 
Service for the year beginning July 1, 2014, reflecting forecasted 
demand multiplied by the rates in the rate transition contained in 
Sec. 51.909 (including the reduction in intrastate End Office Switched 
Access Service rates), adjusted to reflect the True-Up Adjustment for 
Transitional Intrastate Access Service for the year beginning July 1, 
2012;
    (B) The Expected Revenues from interstate switched access for the 
year beginning July 1, 2014, reflecting forecasted demand multiplied by 
the rates in the rate transition contained in Sec. 51.909, adjusted to 
reflect the True-Up Adjustment for Interstate Switched Access for the 
year beginning July 1, 2012; and
    (C) Expected Net Reciprocal Compensation Revenues for the year 
beginning July 1, 2014 using the target methodology required by 
Sec. 51.705, adjusted to reflect the True-Up Adjustment for Reciprocal 
Compensation for the year beginning July 1, 2012.
    (D) An amount equal to True-up Revenues for Access Recovery Charges 
for

[[Page 88]]

the year beginning July 1, 2012 multiplied by negative one.
    (iv) Beginning July 1, 2015, and for all subsequent years, a Rate-
of-Return Carrier's eligible recovery will be calculated by updating the 
procedures set forth in paragraph (d)(1)(iii) of this section for the 
period beginning July 1, 2014, to reflect the passage of an additional 
year in each subsequent year.
    (v) If a Rate-of-Return Carrier receives payments for intrastate or 
interstate switched access services or for Access Recovery Charges after 
the period used to measure the adjustments to reflect the differences 
between estimated and actual revenues, it shall treat such payments as 
actual revenue in the year the payment is received and shall reflect 
this as an additional adjustment for that year.
    (vi) If a Rate-of-Return Carrier receives or makes reciprocal 
compensation payments after the period used to measure the adjustments 
to reflect the differences between estimated and actual net reciprocal 
compensation revenues, it shall treat such amounts as actual revenues or 
payments in the year the payment is received or made and shall reflect 
this as an additional adjustment for that year.
    (vii) If a Rate-of-Return Carrier recovers any costs or revenues 
that are already being recovered as Eligible Recovery through Access 
Recovery Charges or the Connect America Fund from another source, that 
carrier's ability to recover reduced switched access revenue from Access 
Recovery Charges or the Connect America Fund shall be reduced to the 
extent it receives duplicative recovery. Any duplicative recovery shall 
be reflected as a reduction to a carrier's Eligible Recovery calculated 
pursuant to Sec. 51.917(d). A Rate-of-Return Carrier seeking revenue 
recovery must annually certify as part of its tariff filings to the 
Commission and to the relevant state commission that the carrier is not 
seeking duplicative recovery in the state jurisdiction for any Eligible 
Recovery subject to the recovery mechanism.
    (viii)(A) If a Rate-of-Return Carrier in any tariff period 
underestimates its projected demand for services covered by 
Sec. 51.917(b)(6) or 51.915(b)(13), and thus has too much Eligible 
Recovery in that tariff period, it shall refund the amount of any such 
True-up Revenues or True-up Revenues for Access Recovery Charge that are 
not offset by the Rate-of-Return Carrier's Eligible Recovery (calculated 
before including the true-up amounts in the Eligible Recovery 
calculation) in the true-up tariff period to the Administrator by August 
1 following the date of the Rate-of-Return Carrier's annual access 
tariff filing.
    (B) If a Rate-of-Return Carrier in any tariff period receives too 
little Eligible Recovery because it overestimates its projected demand 
for services covered by Sec. 51.917(b)(6) or 51.915(b)(13), which True-
up Revenues and True-up Revenues for Access Recovery Charge it cannot 
recover in the true-up tariff period because the Rate-of-Return Carrier 
has a negative Eligible Recovery in the true-up tariff period (before 
calculating the true-up amount in the Eligible Recovery calculation), 
the Rate-of-Return Carrier shall treat the unrecoverable true-up amount 
as its Eligible Recovery for the true-up tariff period.
    (e) Access Recovery Charge. (1) A charge that is expressed in 
dollars and cents per line per month may be assessed upon end users that 
may be assessed a subscriber line charge pursuant to Sec. 69.104 of this 
chapter, to the extent necessary to allow the Rate-of-Return Carrier to 
recover some or all of its Eligible Recovery determined pursuant to 
paragraph (d) of this section, subject to the caps described in 
paragraph (e)(6) of this section. A Rate-of-Return Carrier may elect to 
forgo charging some or all of the Access Recovery Charge.
    (2) Total Access Recovery Charges calculated by multiplying the 
tariffed Access Recovery Charge by the projected demand for the year may 
not recover more than the amount of eligible recovery calculated 
pursuant to paragraph (d) of this section for the year beginning on July 
1.
    (3) For the purposes of this section, a Rate-of-Return Carrier 
holding company includes all of its wholly-owned operating companies. A 
Rate-of-Return Carrier Holding Company may recover the eligible recovery 
attributable to

[[Page 89]]

any Rate-of-Return study areas operated by its wholly-owned operating 
companies that are Rate-of-Return incumbent local exchange carriers 
through assessments of the Access Recovery Charge on end users in any 
Rate-of-Return study areas operated by its wholly-owned operating 
companies that are Rate-of-Return incumbent local exchange carriers.
    (4) Distribution of Access Recovery Charges among lines of different 
types
    (i) A Rate-of-Return Carrier that does not receive ICC-replacement 
CAF support (whether because they elect not to or because they do not 
have sufficient eligible recovery after the Access Recovery Charge is 
assessed or imputed) may not recover a higher ratio of its total revenue 
recovery from Access Recovery Charges assessed on Residential and Single 
Line Business lines than the following ratio (using holding company 
lines):
    (A) The number of Residential and Single-Line Business lines 
assessed an End User Common Line charge (excluding Lifeline Customers), 
divided by
    (B) The sum of the number of Residential and Single-Line Business 
lines assessed an End User Common Line charge (excluding Lifeline 
Customers), and two (2) times the number of End User Common Line charges 
assessed on Multi-Line Business customers.
    (5) For purposes of this subpart, Residential and Single Line 
Business lines are lines (other than lines of Lifeline Customers) 
assessed the residential and single line business end user common line 
charge.
    (i) For purposes of this subpart, Multi-Line Business Lines are 
lines assessed the multi-line business end user common line charge.
    (ii) [Reserved]
    (6) Per-line caps and other limitations on Access Recovery Charges. 
(i) For each line other than lines of Lifeline Customers assessed a 
primary residential or single-line business end user common line charge 
pursuant to Sec. 69.104 of this chapter, a Rate-of-Return Carrier may 
assess an Access Recovery Charge as follows:
    (A) Beginning July 1, 2012, a maximum of $0.50 per month for each 
line;
    (B) Beginning July 1, 2013, a maximum of $1.00 per month for each 
line;
    (C) Beginning July 1, 2014, a maximum of $1.50 per month for each 
line;
    (D) Beginning July 1, 2015, a maximum of $2.00 per month for each 
line;
    (E) Beginning July 1, 2016, a maximum of $2.50 per month for each 
line; and
    (F) Beginning July 1, 2017, a maximum of $3.00 per month for each 
line.
    (ii) For each line assessed a multi-line business end user common 
line charge pursuant to Sec. 69.104 of this chapter, a Rate-of-Return 
Carrier may assess an Access Recovery Charge as follows:
    (A) Beginning July 1, 2012, a maximum of $1.00 per month for each 
multi-line business end user common line charge assessed;
    (B) Beginning July 1, 2013, a maximum of $2.00 per month for each 
multi-line business end user common line charge assessed;
    (C) Beginning July 1, 2014, a maximum of $3.00 per month for each 
multi-line business end user common line charge assessed;
    (D) Beginning July 1, 2015, a maximum of $4.00 per month for each 
multi-line business end user common line charge assessed;
    (E) Beginning July 1, 2016, a maximum of $5.00 per month for each 
multi-line business end user common line charge assessed; and
    (F) Beginning July 1, 2017, a maximum of $6.00 per month for each 
multi-line business end user common line charge assessed.
    (iii) The Access Recovery Charge allowed by paragraph (e)(6)(i) of 
this section may not be assessed to the extent that its assessment would 
bring the total of the Rate Ceiling Component Charges above the 
Residential Rate Ceiling. This limitation does not apply to single-line 
business customers.
    (iv) The Access Recovery Charge allowed by paragraph (e)(6)(ii) of 
this section may not be assessed to the extent that its assessment would 
bring the total of the multi-line business end user common line charge 
and the Access Recovery Charge above $12.20 per line.
    (v) The Access Recovery Charge may not be assessed on lines of 
Lifeline Customers.

[[Page 90]]

    (vi) If in any year, the Rate of return carriers' Access Recovery 
Charge is not at its maximum, the succeeding year's Access Recovery 
Charge may not increase more than $0.50 per line for charges under 
paragraph (e)(6)(i) of this section or $1.00 per line for charges 
assessed under paragraph (e)(6)(ii) of this section.
    (vii) A Price Cap Carrier with study areas that are subject to rate-
of-return regulation shall recover its eligible recovery for such study 
areas through the recovery procedures specified in this section. For 
that purpose, the provisions of paragraph (e)(3) of this section shall 
apply to the rate-of-return study areas if the applicable conditions in 
paragraph (e)(3) of this section are met.
    (f) Rate-of-Return Carrier eligibility for CAF ICC Recovery. (1) A 
Rate-of-Return Carrier shall elect in its July 1, 2012 access tariff 
filing whether it will receive CAF ICC Support under this paragraph. A 
Rate-of-Return Carrier eligible to receive CAF ICC Support subsequently 
may elect at any time not to receive such funding. Once it makes the 
election not to receive CAF ICC Support, it may not elect to receive 
such funding at a later date.
    (2) Beginning July 1, 2012, a Rate-of-Return Carrier may recover any 
eligible recovery allowed by paragraph (d) of this section that it could 
not have recovered through charges assessed pursuant to paragraph (e) of 
this section from CAF ICC Support pursuant to Sec. 54.304. For this 
purpose, the Rate-of-Return Carrier must impute the maximum charges it 
could have assessed under paragraph (e) of this section.
    (3) A Rate-of-Return Carrier that elects to receive CAF ICC support 
must certify with its annual access tariff filing that it has complied 
with paragraphs (d) and (e), and, after doing so, is eligible to receive 
the CAF ICC support requested pursuant to paragraph (f) of this section.
    (4) A Rate-of-Return Carrier must impute an amount equal to the 
Access Recovery Charge for each Consumer Broadband-Only Loop line that 
receives support pursuant to Sec. 54.901 of this chapter, with the 
imputation applied before CAF-ICC recovery is determined. The per line 
per month imputation amount shall be equal to the Access Recovery Charge 
amount prescribed by paragraph (e) of this section, consistent with the 
residential or single-line business or multi-line business status of the 
retail customer.

[76 FR 73856, Nov. 29, 2011, as amended at 77 FR 14302, Mar. 9, 2012; 78 
FR 26268, May 6, 2013; 79 FR 28847, May 20, 2014; 80 FR 15909, Mar. 26, 
2015; 81 FR 24337, Apr. 25, 2016]

    Effective Date Note: At 81 FR 24337, Apr. 25, 2016, 
Sec. 51.917(f)(4) was added. This paragraph contains information 
collection and recordkeeping requirements and will not become effective 
until approval has been given by the Office of Management and Budget.



Sec. 51.919  Reporting and monitoring.

    (a) A Price Cap Carrier that elects to participate in the recovery 
mechanism outlined in Sec. 51.915 shall, beginning in 2012, file with 
the Commission the data consistent with Section XIII (f)(3) of FCC 11-
161 with its annual access tariff filing.
    (b) A Rate-of-Return Carrier that elects to participate in the 
recovery mechanism outlined in Sec. 51.917 shall file with the 
Commission the data consistent with Section XIII (f)(3) of FCC 11-161 
with its annual interstate access tariff filing, or on the date such a 
filing would have been required if it had been required to file in that 
year.

    Effective Date Note: At 76 FR 73856, Nov. 29, 2011, Sec. 51.919 was 
added. This section contains information collection and recordkeeping 
requirements and will not become effective until approval has been given 
by the Office of Management and Budget.



PART 52_NUMBERING--Table of Contents



                      Subpart A_Scope and Authority

Sec.
52.1  Basis and purpose.
52.3  General.
52.5  Definitions.

                        Subpart B_Administration

52.7  Definitions.
52.9  General requirements.
52.11  North American Numbering Council.
52.12  North American Numbering Plan Administrator and B&C Agent.
52.13  North American Numbering Plan Administrator.
52.15  Central office code administration.
52.16  Billing and Collection Agent.

[[Page 91]]

52.17  Costs of number administration.
52.19  Area code relief.

                      Subpart C_Number Portability

52.20  Thousands-block number pooling.
52.21  Definitions.
52.23  Deployment of long-term database methods for number portability 
          by LECs.
52.25  Database architecture and administration.
52.26  NANC Recommendations on Local Number Portability Administration.
52.31  Deployment of long-term database methods for number portability 
          by CMRS providers.
52.32  Allocation of the shared costs of long-term number portability.
52.33  Recovery of carrier-specific costs directly related to providing 
          long-term number portability.
52.34  Obligations regarding local number porting to and from 
          interconnected VoIP or Internet-based TRS providers.
52.35  Porting Intervals.
52.36  Standard data fields for simple port order processing.
52.37-52.99  [Reserved]

                       Subpart D_Toll Free Numbers

52.101  General definitions.
52.103  Lag times.
52.105  Warehousing.
52.107  Hoarding.
52.109  Permanent cap on number reservations.
52.111  Toll free number assignment.

Appendix to Part 52--Deployment Schedule for Long-Term Database Methods 
          for Local Number Portability

    Authority: Secs. 1, 2, 4, 5, 48 Stat. 1066, as amended; 47 U.S.C. 
151, 152, 154 and 155 unless otherwise noted. Interpret or apply secs. 
3, 4, 201-05, 207-09, 218, 225-27, 251-52, 271 and 332, 48 Stat. 1070, 
as amended, 1077; 47 U.S.C. 153, 154, 201-05, 207-09, 218, 225-27, 251-
52, 271 and 332 unless otherwise noted.

    Source: 61 FR 38637, July 25, 1996, unless otherwise noted.



                      Subpart A_Scope and Authority

    Source: 61 FR 47353, Sept. 6, 1996, unless otherwise noted.



Sec. 52.1  Basis and purpose.

    (a) Basis. These rules are issued pursuant to the Communications Act 
of 1934, as amended, 47 U.S.C. 151 et. seq.
    (b) Purpose. The purpose of these rules is to establish, for the 
United States, requirements and conditions for the administration and 
use of telecommunications numbers for provision of telecommunications 
services.



Sec. 52.3  General.

    The Commission shall have exclusive authority over those portions of 
the North American Numbering Plan (NANP) that pertain to the United 
States. The Commission may delegate to the States or other entities any 
portion of such jurisdiction.



Sec. 52.5  Definitions.

    (a) Incumbent local exchange carrier. With respect to an area, an 
``incumbent local exchange carrier'' is a local exchange carrier that:
    (1) On February 8, 1996, provided telephone exchange service in such 
area; and
    (2)(i) On February 8, 1996, was deemed to be a member of the 
exchange carrier Association pursuant to Sec. 69.601(b) of this chapter 
(47 CFR 69.601(b)); or
    (ii) Is a person or entity that, on or after February 8, 1996, 
became a successor or assign of a member described in paragraph 
(a)(2)(i) of this section.
    (b) Interconnected Voice over Internet Protocol (VoIP) service 
provider. The term ``interconnected VoIP service provider'' is an entity 
that provides interconnected VoIP service, as that term is defined in 47 
U.S.C. Section 153(25).
    (c) North American Numbering Council (NANC). The ``North American 
Numbering Council'' is an advisory committee created under the Federal 
Advisory Committee Act, 5 U.S.C., App (1988), to advise the Commission 
and to make recommendations, reached through consensus, that foster 
efficient and impartial number administration.
    (d) North American Numbering Plan (NANP). The ``North American 
Numbering Plan'' is the basic numbering scheme for the 
telecommunications networks located in American Samoa, Anguilla, 
Antigua, Bahamas, Barbados, Bermuda, British Virgin Islands, Canada, 
Cayman Islands, Dominica, Dominican Republic, Grenada, Jamaica, 
Montserrat, Sint Maarten, St. Kitts & Nevis, St. Lucia, St. Vincent, 
Turks & Caicos Islands, Trinidad & Tobago, and the United States 
(including Puerto Rico, the U.S. Virgin Islands, Guam,

[[Page 92]]

the Commonwealth of the Northern Mariana Islands).
    (e) Service provider. The term ``service provider'' refers to a 
telecommunications carrier or other entity that receives numbering 
resources from the NANPA, a Pooling Administrator or a 
telecommunications carrier for the purpose of providing or establishing 
telecommunications service. For the purposes of this part, the term 
``service provider'' includes an interconnected VoIP service provider.
    (f) State. The term ``state'' includes the District of Columbia and 
the Territories and possessions.
    (g) State commission. The term ``state commission'' means the 
commission, board, or official (by whatever name designated) which under 
the laws of any state has regulatory jurisdiction with respect to 
intrastate operations of carriers.
    (h) Telecommunications. ``Telecommunications'' means the 
transmission, between or among points specified by the user, of 
information of the user's choosing, without change in the form or 
content of the information as sent and received.
    (i) Telecommunications carrier or carrier. A ``telecommunications 
carrier'' or ``carrier'' is any provider of telecommunications services, 
except that such term does not include aggregators of telecommunications 
services (as defined in 47 U.S.C. 226(a)(2)). For the purposes of this 
part, the term ``telecommunications carrier'' or ``carrier'' includes an 
interconnected VoIP service provider.
    (j) Telecommunications service. The term ``telecommunications 
service'' refers to the offering of telecommunications for a fee 
directly to the public, or to such classes of users as to be effectively 
available directly to the public, regardless of the facilities used. For 
purposes of this part, the term ``telecommunications service'' includes 
interconnected VoIP service as that term is defined in 47 U.S.C. 
153(25).

[80 FR 66477, Oct. 29, 2015, as amended at 80 FR 1131, Jan. 11, 2016]



                        Subpart B_Administration

    Source: 61 FR 47353, Sept. 6, 1996, unless otherwise noted.



Sec. 52.7  Definitions.

    As used in this subpart:
    (a) Area code or numbering plan area (NPA). The term ``area code or 
numbering plan area'' refers to the first three digits (NXX) of a ten-
digit telephone number in the form NXX-NXX-XXXX, where N represents any 
one of the numbers 2 through 9 and X represents any one of the numbers 0 
through 9.
    (b) Area code relief. The term ``area code relief'' refers to the 
process by which central office codes are made available when there are 
few or no unassigned central office codes remaining in an existing area 
code and a new area code is introduced. Area code relief includes 
planning for area code ``jeopardy,'' which is a situation where central 
office codes may become exhausted before an area code relief plan can be 
implemented.
    (c) Central office (CO) code. The term ``central office code'' 
refers to the second three digits (NXX) of a ten-digit telephone number 
in the form NXX-NXX-XXXX, where N represents any one of the numbers 2 
through 9 and X represents any one of the numbers 0 through 9.
    (d) Central office (CO) code administrator. The term ``central 
office code administrator'' refers to the entity or entities responsible 
for managing central office codes in each area code.
    (e) North American Numbering Plan Administrator (NANPA). The term 
``North American Numbering Plan Administrator'' refers to the entity or 
entities responsible for managing the NANP.
    (f) Billing and Collection Agent. The term ``Billing & Collection 
Agent'' (``B&C Agent'') refers to the entity responsible for the 
collection of funds to support numbering administration for 
telecommunications services from the United States telecommunications 
industry and NANP member countries.
    (g) Pooling Administrator (PA). The term ``Pooling Administrator'' 
refers to the entity or entities responsible for administering a 
thousands-block number pool.
    (h) Contamination. Contamination occurs when at least one telephone 
number within a block of telephone numbers is not available for 
assignment to

[[Page 93]]

end users or customers. For purposes of this provision, a telephone 
number is ``not available for assignment'' if it is classified as 
administrative, aging, assigned, intermediate, or reserved as defined in 
Sec. 52.15(f)(1).
    (i) Donation. The term ``donation'' refers to the process by which 
carriers are required to contribute telephone numbers to a thousands-
block number pool.
    (j) Inventory. The term ``inventory'' refers to all telephone 
numbers distributed, assigned or allocated:
    (1) To a service provider; or
    (2) To a pooling administrator for the purpose of establishing or 
maintaining a thousands-block number pool.

[61 FR 47353, Sept. 6, 1996, as amended at 62 FR 55180, Oct. 23, 1997; 
65 FR 37707, June 16, 2000]



Sec. 52.9  General requirements.

    (a) To ensure that telecommunications numbers are made available on 
an equitable basis, the administration of telecommunications numbers 
shall, in addition to the specific requirements set forth in this 
subpart:
    (1) Facilitate entry into the telecommunications marketplace by 
making telecommunications numbering resources available on an efficient, 
timely basis to telecommunications carriers;
    (2) Not unduly favor or disfavor any particular telecommunications 
industry segment or group of telecommunications consumers; and
    (3) Not unduly favor one telecommunications technology over another.
    (b) If the Commission delegates any telecommunications numbering 
administration functions to any State or other entity pursuant to 47 
U.S.C. 251(e)(1), such State or entity shall perform these functions in 
a manner consistent with this part.



Sec. 52.11  North American Numbering Council.

    The duties of the North American Numbering Council (NANC), may 
include, but are not limited to:
    (a) Advising the Commission on policy matters relating to the 
administration of the NANP in the United States;
    (b) Making recommendations, reached through consensus, that foster 
efficient and impartial number administration;
    (c) Initially resolving disputes, through consensus, that foster 
efficient and impartial number administration in the United States by 
adopting and utilizing dispute resolution procedures that provide 
disputants, regulators, and the public notice of the matters at issue, a 
reasonable opportunity to make oral and written presentations, a 
reasoned recommended solution, and a written report summarizing the 
recommendation and the reasons therefore;
    (d) [Reserved]
    (e) Recommending to the Commission an appropriate mechanism for 
recovering the costs of NANP administration in the United States, 
consistent with Sec. 52.17;
    (f) Carrying out the duties described in Sec. 52.25; and
    (g) Carrying out this part as directed by the Commission;
    (h) Monitoring the performance of the NANPA and the B&C Agent on at 
least an annual basis; and
    (i) Implementing, at the direction of the Commission, any action 
necessary to correct identified problems with the performance of the 
NANPA and the B&C Agent, as deemed necessary.

[61 FR 47353, Sept. 6, 1996, as amended at 62 FR 55180, Oct. 23, 1997; 
71 FR 65750, Nov. 9, 2006]



Sec. 52.12  North American Numbering Plan Administrator and B&C Agent.

    The North American Numbering Plan Administrator (``NANPA'') and the 
associated ``B&C Agent'' will conduct their respective operations in 
accordance with this section. The NANPA and the B&C Agent will conduct 
their respective operations with oversight from the Federal 
Communications Commission (the ``Commission'') and with recommendations 
from the North American Numbering Council (``NANC'').
    (a)(1) Neutrality. The NANPA and the B&C Agent shall be non-
governmental entities that are impartial and not

[[Page 94]]

aligned with any particular telecommunication industry segment. 
Accordingly, while conducting their respective operations under this 
section, the NANPA and B&C Agent shall ensure that they comply with the 
following neutrality criteria:
    (i) The NANPA and B&C Agent may not be an affiliate of any 
telecommunications service provider(s) as defined in the 
Telecommunications Act of 1996, or an affiliate of any interconnected 
VoIP provider as that term is defined in Sec. 52.21(h). ``Affiliate'' is 
a person who controls, is controlled by, or is under the direct or 
indirect common control with another person. A person shall be deemed to 
control another if such person possesses, directly or indirectly--
    (A) An equity interest by stock, partnership (general or limited) 
interest, joint venture participation, or member interest in the other 
person ten (10%) percent or more of the total outstanding equity 
interests in the other person, or
    (B) The power to vote ten (10%) percent or more of the securities 
(by stock, partnership (general or limited) interest, joint venture 
participation, or member interest) having ordinary voting power for the 
election of directors, general partner, or management of such other 
person, or
    (C) The power to direct or cause the direction of the management and 
policies of such other person, whether through the ownership of or right 
to vote voting rights attributable to the stock, partnership (general or 
limited) interest, joint venture participation, or member interest) of 
such other person, by contract (including but not limited to stockholder 
agreement, partnership (general or limited) agreement, joint venture 
agreement, or operating agreement), or otherwise;
    (ii) The NANPA and B&C Agent, and any affiliate thereof, may not 
issue a majority of its debt to, nor may it derive a majority of its 
revenues from, any telecommunications service provider. ``Majority'' 
shall mean greater than 50 percent, and ``debt'' shall mean stocks, 
bonds, securities, notes, loans or any other instrument of indebtedness; 
and
    (iii) Notwithstanding the neutrality criteria set forth in 
paragraphs (a)(1) (i) and (ii) of this section, the NANPA and B&C Agent 
may be determined to be or not to be subject to undue influence by 
parties with a vested interest in the outcome of numbering 
administration and activities. NANC may conduct an evaluation to 
determine whether the NANPA and B&C Agent meet the undue influence 
criterion.
    (2) Any subcontractor that performs--
    (i) NANP administration and central office code administration, or
    (ii) Billing and Collection functions, for the NANPA or for the B&C 
Agent must also meet the neutrality criteria described in paragraph 
(a)(1).
    (b) Term of administration. The NANPA shall provide numbering 
administration, including central office code administration, for the 
United States portion of the North American Numbering Plan (``NANP'') 
for an initial period of five (5) years. At any time prior to the 
termination of the initial or subsequent term of administration, such 
term may be renewed for up to five (5) years with the approval of the 
Commission and the agreement of the NANPA. The B&C Agent shall provide 
billing and collection functions for an initial period of five (5) 
years. At any time prior to the termination of the initial or subsequent 
term of administration, such term may be renewed for up to five (5) 
years with the approval of the Commission and the agreement of the B&C 
Agent.
    (c) Changes to regulations, rules, guidelines or directives. In the 
event that regulatory authorities or industry groups (including, for 
example, the Industry Numbering Committee--INC, or its successor) issue 
rules, requirements, guidelines or policy directives which may affect 
the functions performed by the NANPA and the B&C Agent, the NANPA and 
the B&C Agent shall, within 10 business days from the date of official 
notice of such rules, requirements, guidelines or policy directives, 
assess the impact on its operations and advise the Commission of any 
changes required. NANPA and the B&C Agent shall provide written 
explanation why such changes are required. To the extent the Commission 
deems such changes are necessary, the Commission will recommend to the 
NANP member

[[Page 95]]

countries appropriate cost recovery adjustments, if necessary.
    (d) Performance review process. NANPA and the B&C Agent shall 
develop and implement an internal, documented performance monitoring 
mechanism and shall provide such performance review on request of the 
Commission on at least an annual basis. The annual assessment process 
will not preclude telecommunications industry participants from 
identifying performance problems to the NANPA, the B&C Agent and the 
NANC as they occur, and from seeking expeditious resolution. If 
performance problems are identified by a telecommunications industry 
participant, the NANC, B&C Agent or NANPA shall investigate and report 
within 10 business days of notice to the participant of corrective 
action, if any, taken or to be taken. The NANPA, B&C Agent or NANC (as 
appropriate) shall be permitted reasonable time to take corrective 
action, including the necessity of obtaining the required consent of the 
Commission.
    (e) Termination. If the Commission determines at any time that the 
NANPA or the B&C Agent fails to comply with the neutrality criteria set 
forth in paragraph (a) of this section or substantially or materially 
defaults in the performance of its obligations, the Commission shall 
advise immediately the NANPA or the B&C Agent of said failure or 
default, request immediate corrective action, and permit the NANPA or 
B&C Agent reasonable time to correct such failure or default. If the 
NANPA or B&C Agent is unwilling or unable to take corrective action, the 
Commission may, in a manner consistent with the requirements of the 
Administrative Procedure Act and the Communications Act of 1934, as 
amended, take any action that it deems appropriate, including 
termination of the NANPA's or B&C Agent's term of administration.
    (f) Required and optional enterprise services. Enterprise Services, 
which are services beyond those described in Sec. 52.13 that may be 
provided by the new NANPA for specified fees, may be offered with prior 
approval of the Commission.
    (1) Required Enterprise Services. At the request of a code holder, 
the NANPA shall, in accordance with industry standards and for 
reasonable fees, enter certain routing and rating information, into the 
industry-approved database(s) for dissemination of such information. 
This task shall include reviewing the information and assisting in its 
preparation.
    (2) Optional Enterprise Services. The NANPA may, subject to prior 
approval and for reasonable fees, offer ``Optional Enterprise Services'' 
which are any services not described elsewhere in this section.
    (3) Annual report. NANPA shall identify and record all direct costs 
associated with providing Enterprise Services separately from the costs 
associated with the non-enterprise NANPA functions. The NANPA shall 
submit an annual report to the NANC summarizing the revenues and costs 
for providing each Enterprise Service. NANPA shall be audited by an 
independent auditor after the first year of operations and every two 
years thereafter, and submit the report to the Commission for 
appropriate review and action.

[63 FR 55180, Oct. 23, 1997, as amended at 73 FR 9481, Feb. 21, 2008]



Sec. 52.13  North American Numbering Plan Administrator.

    (a) The North American Numbering Plan Administrator (NANPA) shall be 
an independent and impartial non-government entity.
    (b) The NANPA shall administer the numbering resources identified in 
paragraph (d) of this section. It shall assign and administer NANP 
resources in an efficient, effective, fair, unbiased, and non-
discriminatory manner consistent with industry-developed guidelines and 
Commission regulations. It shall support the Commission's efforts to 
accommodate current and future numbering needs. It shall perform 
additional functions, including but not limited to:
    (1) Ensuring the efficient and effective administration and 
assignment of numbering resources by performing day-to-day number 
resource assignment and administrative activities;

[[Page 96]]

    (2) Planning for the long-term need for NANP resources to ensure the 
continued viability of the NANP by implementing a plan for number 
resource administration that uses effective forecasting and management 
skills in order to make the industry aware of the availability of 
numbering resources and to meet the current and future needs of the 
industry;
    (3) Complying with guidelines of the North American Industry 
Numbering Committee (INC) or its successor, related industry 
documentation, Commission regulations and orders, and the guidelines of 
other appropriate policy-making authorities;
    (4) Providing management supervision for all of the services it 
provides, including responsibility for achieving performance measures 
established by the NANC and the INC in industry guidelines;
    (5) Participating in the NANC annual performance review as described 
in Secs. 52.11 and 52.12;
    (6) Establishing and maintaining relationships with current 
governmental and regulatory bodies, and their successors, including the 
United States Federal Communications Commission, Industry Canada, the 
Canadian Radio-television and Telecommunications Commission, and other 
United States, Canadian, and Caribbean numbering authorities and 
regulatory agencies, and addressing policy directives from these bodies;
    (7) Cooperating with and actively participating in numbering 
standards bodies and industry fora, such as INC and, upon request, the 
Canadian Steering Committee on Numbering (CSCN);
    (8) Representing the NANP to national and international numbering 
bodies;
    (9) Developing and maintaining communications channels with other 
countries who also participate in the NANP to ensure that numbering 
needs of all countries served by the NANP are met;
    (10) Attending United States Study Group A meetings and maintaining 
a working knowledge of Study Group 2 International Telecommunications 
Union activities on behalf of the United States telecommunications 
industry;
    (11) Reviewing requests for all numbering resources to implement new 
applications and services and making assignments in accordance with 
industry-developed resource planning and assignment guidelines;
    (12) Referring requests for particular numbering resources to the 
appropriate industry body where guidelines do not exist for those 
resources;
    (13) Participating in industry activities to determine whether, when 
new telecommunications services requiring numbers are proposed, NANP 
numbers are appropriate and what level of resource is required (e.g., 
line numbers, central office codes, NPA codes);
    (14) Maintaining necessary administrative staff to handle the legal, 
financial, technical, staffing, industry, and regulatory issues relevant 
to the management of all numbering resources, as well as maintaining the 
necessary equipment, facilities, and proper billing arrangements 
associated with day-to-day management of all numbering resources;
    (15) Managing the NANP in accordance with published guidelines 
adopted in conjunction with the industry and the appropriate NANP member 
countries' governing agencies, and referring issues to the appropriate 
industry body for resolution when they have not been addressed by the 
industry;
    (16) Responding to requests from the industry and from regulators 
for information about the NANP and its administration, as the primary 
repository for numbering information in the industry;
    (17) Providing upon request information regarding how to obtain 
current documents related to NANP administration;
    (18) Providing assistance to users of numbering resources and 
suggesting numbering administration options, when possible, that will 
optimize number resource utilization;
    (19) Coordinating its numbering resource activities with the 
Canadian Number Administrator and other NANP member countries' 
administrators to ensure efficient and effective management of NANP 
numbering resources; and

[[Page 97]]

    (20) Determining the final allocation methodology for sharing costs 
between NANP countries.
    (c) In performing the functions outlined in paragraph (b) of this 
section, the NANPA shall:
    (1) Ensure that the interests of all NANP member countries are 
considered;
    (2) Assess fairly requests for assignments of NANP numbering 
resources and ensure the assignment of numbering resources to 
appropriate service providers;
    (3) Develop, operate and maintain the computer hardware, software 
(database) and mechanized systems required to perform the NANPA and 
central office (CO) Code Administration functions;
    (4) Manage projects such as Numbering Plan Area (NPA) relief (area 
code relief) planning, Numbering Resource Utilization and Forecast 
(NRUF) data collection, and NPA and NANP exhaust projection;
    (5) Facilitate NPA relief planning meetings;
    (6) Participate in appropriate industry activities;
    (7) Manage proprietary data and competitively sensitive information 
and maintain the confidentiality thereof;
    (8) Act as an information resource for the industry concerning all 
aspects of numbering (i.e., knowledge and experience in numbering 
resource issues, International Telecommunications Union (ITU) 
Recommendation E.164, the North American Numbering Plan (NANP), NANP 
Administration, INC, NANP area country regulatory issues affecting 
numbering, number resource assignment guidelines, central office code 
administration, relief planning, international numbering issues, etc.); 
and
    (9) Ensure that any action taken with respect to number 
administration is consistent with this part.
    (d) The NANPA and, to the extent applicable, the B&C Agent, shall 
administer numbering resources in an efficient and non-discriminatory 
manner, in accordance with Commission rules and regulations and the 
guidelines developed by the INC and other industry groups pertaining to 
administration and assignment of numbering resources, including, but not 
limited to:
    (1) Numbering Plan Area (NPA) codes,
    (2) Central Office codes for the 809 area,
    (3) International Inbound NPA 456 NXX codes,
    (4) (NPA) 500 NXX codes,
    (5) (NPA) 900 NXX codes,
    (6) N11 Service codes,
    (7) 855-XXXX line numbers,
    (8) 555-XXXX line numbers,
    (9) Carrier Identification Codes,
    (10) Vertical Service Codes,
    (11) ANI Information Integer (II) Digit Pairs,
    (12) Non Dialable Toll Points, and
    (13) New numbering resources as may be defined.
    (e) Relationships with other NANP member countries' administrators 
and authorities. The NANPA shall address policy directives from other 
NANP member countries' governmental and regulatory authorities and 
coordinate its activities with other NANP member countries' 
administrators, if any, to ensure efficient and effective management of 
NANP resources.
    (f) Transition plan. The NANPA shall implement a transition plan, 
subject to Commission approval, leading to its assumption of NANPA 
functions within 90 days of the effective date of a Commission order 
announcing the selection of the NANPA.
    (g) Transfer of intellectual property. The new NANPA must make 
available any and all intellectual property and associated hardware 
resulting from its activities as numbering administrator including, but 
not limited to, systems and the data contained therein, software, 
interface specifications and supporting documentation and make such 
property available to whomever NANC directs free of charge. The new 
NANPA must specify any intellectual property it proposes to exclude from 
the provisions of this paragraph based on the existence of such property 
prior to its selection as NANPA.

[61 FR 47353, Sept. 6, 1996, as amended at 62 FR 55181, Oct. 23, 1997; 
71 FR 65750, Nov. 9, 2006]

[[Page 98]]



Sec. 52.15  Central office code administration.

    (a) Central Office Code Administration shall be performed by the 
NANPA, or another entity or entities, as designated by the Commission.
    (b) Duties of the entity or entities performing central office code 
administration may include, but are not limited to:
    (1) Processing central office code assignment applications and 
assigning such codes in a manner that is consistent with this part;
    (2) Accessing and maintaining central office code assignment 
databases;
    (3) Conducting the Numbering Resource Utilization and Forecast 
(NRUF) data collection;
    (4) Monitoring the use of central office codes within each area code 
and forecasting the date by which all central office codes within that 
area code will be assigned; and
    (5) Planning for and initiating area code relief, consistent with 
Sec. 52.19.
    (c) [Reserved]
    (d) Central Office (CO) Code Administration functional requirements. 
The NANPA shall manage the United States CO code numbering resource, 
including CO code request processing, NPA code relief and jeopardy 
planning, and industry notification functions. The NANPA shall perform 
its CO Code administration functions in accordance with the published 
industry numbering resource administration guidelines and Commission 
orders and regulations of 47 CFR chapter I.
    (e) [Reserved]
    (f) Mandatory reporting requirements--(1) Number use categories. 
Numbering resources must be classified in one of the following 
categories:
    (i) Administrative numbers are numbers used by telecommunications 
carriers to perform internal administrative or operational functions 
necessary to maintain reasonable quality of service standards.
    (ii) Aging numbers are disconnected numbers that are not available 
for assignment to another end user or customer for a specified period of 
time. Numbers previously assigned to residential customers may be aged 
for no more than 90 days. Numbers previously assigned to business 
customers may be aged for no more than 365 days.
    (iii) Assigned numbers are numbers working in the Public Switched 
Telephone Network under an agreement such as a contract or tariff at the 
request of specific end users or customers for their use, or numbers not 
yet working but having a customer service order pending. Numbers that 
are not yet working and have a service order pending for more than five 
days shall not be classified as assigned numbers.
    (iv) Available numbers are numbers that are available for assignment 
to subscriber access lines, or their equivalents, within a switching 
entity or point of interconnection and are not classified as assigned, 
intermediate, administrative, aging, or reserved.
    (v) Intermediate numbers are numbers that are made available for use 
by another telecommunications carrier or non-carrier entity for the 
purpose of providing telecommunications service to an end user or 
customer. Numbers ported for the purpose of transferring an established 
customer's service to another service provider shall not be classified 
as intermediate numbers.
    (vi) Reserved numbers are numbers that are held by service providers 
at the request of specific end users or customers for their future use. 
Numbers held for specific end users or customers for more than 180 days 
shall not be classified as reserved numbers.
    (2) Reporting carrier. The term ``reporting carrier'' refers to a 
telecommunications carrier that receives numbering resources from the 
NANPA, a Pooling Administrator or another telecommunications carrier.
    (3) Data collection procedures. (i) Reporting carriers shall report 
utilization and forecast data to the NANPA.
    (ii) Reporting shall be by separate legal entity and must include 
company name, company headquarters address, Operating Company Number 
(OCN), parent company OCN, and the primary type of business in which the 
reporting carrier is engaged. The term ``parent company'' refers to the 
highest related legal entity located within the state for which the 
reporting carrier is reporting data.

[[Page 99]]

    (iii) All data shall be filed electronically in a format approved by 
the Common Carrier Bureau.
    (4) Forecast data reporting. (i) Reporting carriers shall submit to 
the NANPA a five-year forecast of their yearly numbering resource 
requirements.
    (ii) In areas where thousands-block number pooling has been 
implemented:
    (A) Reporting carriers that are required to participate in 
thousands-block number pooling shall report forecast data at the 
thousands-block (NXX-X) level per rate center;
    (B) Reporting carriers that are not required to participate in 
thousands-block number pooling shall report forecast data at the central 
office code (NXX) level per rate center.
    (iii) In areas where thousands-block number pooling has not been 
implemented, reporting carriers shall report forecast data at the 
central office code (NXX) level per NPA.
    (iv) Reporting carriers shall identify and report separately initial 
numbering resources and growth numbering resources.
    (5) Utilization data reporting. (i) Reporting carriers shall submit 
to the NANPA a utilization report of their current inventory of 
numbering resources. The report shall classify numbering resources in 
the following number use categories: assigned, intermediate, reserved, 
aging, and administrative.
    (ii) Rural telephone companies, as defined in the Communications Act 
of 1934, as amended, 47 U.S.C. 153(37), that provide telecommunications 
service in areas where local number portability has not been implemented 
shall report utilization data at the central office code (NXX) level per 
rate center in those areas.
    (iii) All other reporting carriers shall report utilization data at 
the thousands-block (NXX-X) level per rate center.
    (6) Reporting frequency. (i) Reporting carriers shall file forecast 
and utilization reports semi-annually on or before February 1 for the 
preceding reporting period ending on December 31, and on or before 
August 1 for the preceding reporting period ending on June 30. Mandatory 
reporting shall commence August 1, 2000.
    (ii) State commissions may reduce the reporting frequency for NPAs 
in their states to annual. Reporting carriers operating in such NPAs 
shall file forecast and utilization reports annually on or before August 
1 for the preceding reporting period ending on June 30, commencing 
August 1, 2000.
    (iii) A state commission seeking to reduce the reporting frequency 
pursuant to paragraph (f) (6)(ii) of this section shall notify the 
Wireline Competition Bureau and the NANPA in writing prior to reducing 
the reporting frequency.
    (7) Access to data and confidentiality--States shall have access to 
data reported to the NANPA provided that they have appropriate 
protections in place to prevent public disclosure of disaggregated, 
carrier-specific data.
    (g) Applications for numbering resources--
    (1) General requirements. An applicant for numbering resources must 
include in its application the applicant's company name, company 
headquarters address, OCN, parent company's OCN(s), and the primary type 
of business in which the numbering resources will be used.
    (2) Initial numbering resources. An applicant for initial numbering 
resources must include in its application evidence that the applicant is 
authorized to provide service in the area for which the numbering 
resources are requested; and that the applicant is or will be capable of 
providing service within sixty (60) days of the numbering resources 
activation date. A provider of VoIP Positioning Center (VPC) services 
that is unable to demonstrate authorization to provide service in a 
state may instead demonstrate that the state does not certify VPC 
service providers in order to request pseudo-Automatic Numbering 
Identification (p-ANI) codes directly from the Numbering Administrators 
for purposes of providing 911 and E-911 service.
    (3) Commission authorization process. A provider of interconnected 
VoIP service may show a Commission authorization obtained pursuant to 
this paragraph as evidence that it is authorized

[[Page 100]]

to provide service under paragraph (g)(2) of this section.
    (i) Contents of the application for interconnected VoIP provider 
numbering authorization. An application for authorization must reference 
this section and must contain the following:
    (A) The applicant's name, address, and telephone number, and contact 
information for personnel qualified to address issues relating to 
regulatory requirements, compliance with Commission's rules, 911, and 
law enforcement;
    (B) An acknowledgment that the authorization granted under this 
paragraph is subject to compliance with applicable Commission numbering 
rules; numbering authority delegated to the states; and industry 
guidelines and practices regarding numbering as applicable to 
telecommunications carriers;
    (C) An acknowledgement that the applicant must file requests for 
numbers with the relevant state commission(s) at least 30 days before 
requesting numbers from the Numbering Administrators;
    (D) Proof that the applicant is or will be capable of providing 
service within sixty (60) days of the numbering resources activation 
date in accordance with paragraph (g)(2) of this section;
    (E) Certification that the applicant complies with its Universal 
Service Fund contribution obligations under 47 CFR part 54, subpart H, 
its Telecommunications Relay Service contribution obligations under 47 
CFR 64.604(c)(5)(iii), its NANP and LNP administration contribution 
obligations under 47 CFR 52.17 and 52.32, its obligations to pay 
regulatory fees under 47 CFR 1.1154, and its 911 obligations under 47 
CFR part 9; and
    (F) Certification that the applicant possesses the financial, 
managerial, and technical expertise to provide reliable service. This 
certification must include the name of applicant's key management and 
technical personnel, such as the Chief Operating Officer and the Chief 
Technology Officer, or equivalent, and state that none of the identified 
personnel are being or have been investigated by the Federal 
Communications Commission or any law enforcement or regulatory agency 
for failure to comply with any law, rule, or order; and
    (G) Certification pursuant to Sections 1.2001 and 1.2002 of this 
chapter that no party to the application is subject to a denial of 
Federal benefits pursuant to section 5301 of the Anti-Drug Abuse Act of 
1988. See 21 U.S.C. 862.
    (ii) An applicant for Commission authorization under this section 
must file its application electronically through the ``Submit a Non-
Docketed Filing'' module of the Commission's Electronic Comment Filing 
System (ECFS). Once the Commission reviews the application and assigns a 
docket number, the applicant must make all subsequent filings relating 
to its application in this docket. Parties may file comments addressing 
an application for authorization no later than 15 days after the 
Commission releases a public notice stating that the application has 
been accepted for filing, unless the public notice specifies a different 
filing date.
    (iii) An application under this section is deemed granted by the 
Commission on the 31st day after the Commission releases a public notice 
stating that the application has been accepted for filing, unless the 
Wireline Competition Bureau (Bureau) notifies the applicant that the 
grant will not be automatically effective. The Bureau may halt this 
auto-grant process if;
    (A) An applicant fails to respond promptly to Commission inquiries,
    (B) An application is associated with a non-routine request for 
waiver of the Commission's rules,
    (C) Timely-filed comments on the application raise public interest 
concerns that require further Commission review, or
    (D) The Bureau determines that the application requires further 
analysis to determine whether granting the application serves the public 
interest. The Commission reserves the right to request additional 
information after its initial review of an application.
    (iv) Conditions applicable to all interconnected VoIP provider 
numbering authorizations. An interconnected VoIP provider authorized to 
request numbering resources directly from the Numbering Administrators 
under this section must adhere to the following requirements:

[[Page 101]]

    (A) Maintain the accuracy of all contact information and 
certifications in its application. If any contact information or 
certification is no longer accurate, the provider must file a correction 
with the Commission and each applicable state within thirty (30) days of 
the change of contact information or certification. The Commission may 
use the updated information or certification to determine whether a 
change in authorization status is warranted;
    (B) Comply with the applicable Commission numbering rules; numbering 
authority delegated to the states; and industry guidelines and practices 
regarding numbering as applicable to telecommunications carriers;
    (C) File requests for numbers with the relevant state commission(s) 
at least thirty (30) days before requesting numbers from the Numbering 
Administrators;
    (D) Provide accurate regulatory and numbering contact information to 
each state commission when requesting numbers in that state.
    (4) Growth numbering resources. (i) Applications for growth 
numbering resources shall include:
    (A) A Months-to-Exhaust Worksheet that provides utilization by rate 
center for the preceding six months and projected monthly utilization 
for the next twelve (12) months; and
    (B) The applicant's current numbering resource utilization level for 
the rate center in which it is seeking growth numbering resources.
    (ii) The numbering resource utilization level shall be calculated by 
dividing all assigned numbers by the total numbering resources in the 
applicant's inventory and multiplying the result by 100. Numbering 
resources activated in the Local Exchange Routing Guide (LERG) within 
the preceding 90 days of reporting utilization levels may be excluded 
from the utilization calculation.
    (iii) All service providers shall maintain no more than a six-month 
inventory of telephone numbers in each rate center or service area in 
which it provides telecommunications service.
    (iv) The NANPA shall withhold numbering resources from any U.S. 
carrier that fails to comply with the reporting and numbering resource 
application requirements established in this part. The NANPA shall not 
issue numbering resources to a carrier without an OCN. The NANPA must 
notify the carrier in writing of its decision to withhold numbering 
resources within ten (10) days of receiving a request for numbering 
resources. The carrier may challenge the NANPA's decision to the 
appropriate state regulatory commission. The state commission may affirm 
or overturn the NANPA's decision to withhold numbering resources from 
the carrier based on its determination of compliance with the reporting 
and numbering resource application requirements herein.
    (5) Non-compliance. The NANPA shall withhold numbering resources 
from any U.S. carrier that fails to comply with the reporting and 
numbering resource application requirements established in this part. 
The NANPA shall not issue numbering resources to a carrier without an 
Operating Company Number (OCN). The NANPA must notify the carrier in 
writing of its decision to withhold numbering resources within ten (10) 
days of receiving a request for numbering resources. The carrier may 
challenge the NANPA's decision to the appropriate state regulatory 
commission. The state commission may affirm, or may overturn, the 
NANPA's decision to withhold numbering resources from the carrier based 
on its determination that the carrier has complied with the reporting 
and numbering resource application requirements herein. The state 
commission also may overturn the NANPA's decision to withhold numbering 
resources from the carrier based on its determination that the carrier 
has demonstrated a verifiable need for numbering resources and has 
exhausted all other available remedies.
    (6) State access to applications. State regulatory commissions shall 
have access to service provider's applications for numbering resources. 
The state commissions should request copies of such applications from 
the service providers operating within their states, and service 
providers must comply with state commission requests for copies of 
numbering resource applications. Carriers that fail to comply with

[[Page 102]]

a state commission request for numbering resource application materials 
shall be denied numbering resources.
    (h) National utilization threshold. All applicants for growth 
numbering resources shall achieve a 60% utilization threshold, 
calculated in accordance with paragraph (g)(3)(ii) of this section, for 
the rate center in which they are requesting growth numbering resources. 
This 60% utilization threshold shall increase by 5% on June 30, 2002, 
and annually thereafter until the utilization threshold reaches 75%.
    (i) Reclamation of numbering resources. (1) Reclamation refers to 
the process by which service providers are required to return numbering 
resources to the NANPA or the Pooling Administrator.
    (2) State commissions may investigate and determine whether service 
providers have activated their numbering resources and may request proof 
from all service providers that numbering resources have been activated 
and assignment of telephone numbers has commenced.
    (3) Service providers may be required to reduce contamination levels 
to facilitate reclamation and/or pooling.
    (4) State commissions shall provide service providers an opportunity 
to explain the circumstances causing the delay in activating and 
commencing assignment of their numbering resources prior to initiating 
reclamation.
    (5) The NANPA and the Pooling Administrator shall abide by the state 
commission's determination to reclaim numbering resources if the state 
commission is satisfied that the service provider has not activated and 
commenced assignment to end users of their numbering resources within 
six months of receipt.
    (6) The NANPA and Pooling Administrator shall initiate reclamation 
within sixty days of expiration of the service provider's applicable 
activation deadline.
    (7) If a state commission declines to exercise the authority 
delegated to it in this paragraph, the entity or entities designated by 
the Commission to serve as the NANPA shall exercise this authority with 
respect to NXX codes and the Pooling Administrator shall exercise this 
authority with respect to thousands-blocks. The NANPA and the Pooling 
Administrator shall consult with the Wireline Competition Bureau prior 
to exercising the authority delegated to it in this provision.
    (j) Sequential number assignment. (1) All service providers shall 
assign all available telephone numbers within an opened thousands-block 
before assigning telephone numbers from an uncontaminated thousands-
block, unless the available numbers in the opened thousands-block are 
not sufficient to meet a specific customer request. This requirement 
shall apply to a service provider's existing numbering resources as well 
as any new numbering resources it obtains in the future.
    (2) A service provider that opens an uncontaminated thousands-block 
prior to assigning all available telephone numbers within an opened 
thousands-block should be prepared to demonstrate to the state 
commission:
    (i) A genuine request from a customer detailing the specific need 
for telephone numbers; and
    (ii) The service provider's inability to meet the specific customer 
request for telephone numbers from the available numbers within the 
service provider's opened thousands-blocks.
    (3) Upon a finding by a state commission that a service provider 
inappropriately assigned telephone numbers from an uncontaminated 
thousands-block, the NANPA or the Pooling Administrator shall suspend 
assignment or allocation of any additional numbering resources to that 
service provider in the applicable NPA until the service provider 
demonstrates that it does not have sufficient numbering resources to 
meet a specific customer request.
    (k) Numbering audits. (1) All telecommunications service providers 
shall be subject to ``for cause'' and random audits to verify carrier 
compliance with Commission regulations and applicable industry 
guidelines relating to numbering administration.
    (2) The Enforcement Bureau will oversee the conduct and scope of all 
numbering audits conducted under the Commission's jurisdiction, and 
determine the audit procedures necessary to perform the audit. Numbering 
audits

[[Page 103]]

performed by independent auditors pursuant to this section shall be 
conducted in accordance with generally accepted auditing standards and 
the American Institute of Certified Public Accountants' standards for 
compliance attestation engagements, as supplemented by the guidance and 
direction of the Chief of the Enforcement Bureau.
    (3) Requests for ``for cause'' audits shall be forwarded to the 
Chief of the Enforcement Bureau, with a copy to the Chief of the Common 
Carrier Bureau. Requests must state the reason for which a ``for cause'' 
audit is being requested and include documentation of the alleged 
anomaly, inconsistency, or violation of the Commission rules or orders 
or applicable industry guidelines. The Chief of the Enforcement Bureau 
will provide carriers up to 30 days to provide a written response to a 
request for a ``for cause'' audit.

[61 FR 47353, Sept. 6, 1996, as amended at 62 FR 55182, Oct. 23, 1997; 
65 FR 37707, June 16, 2000; 66 FR 9531, Feb. 8, 2001; 67 FR 6434, Feb. 
12, 2002; 67 FR 13226, Mar. 21, 2002; 68 FR 25843, May 14, 2003; 71 FR 
65750, Nov. 9, 2006; 80 FR 66479, Oct. 29, 2015]



Sec. 52.16  Billing and Collection Agent.

    The B&C Agent shall:
    (a) Calculate, assess, bill and collect payments for all numbering 
administration functions and distribute funds to the NANPA, or other 
agent designated by the Common Carrier Bureau that performs functions 
related to numbering administration, on a monthly basis;
    (b) Distribute to carriers the ``Telecommunications Reporting 
Worksheet,'' described in Sec. 52.17(b).
    (c) Keep confidential all data obtained from carriers and not 
disclose such data in company-specific form unless authorized by the 
Commission. Subject to any restrictions imposed by the Chief of the 
Wireline Competition Bureau, the B & C Agent may share data obtained 
from carriers with the administrators of the universal service support 
mechanism (See 47 CFR 54.701 of this chapter), the TRS Fund (See 47 CFR 
64.604(c)(4)(iii)(H) of this chapter), and the local number portability 
cost recovery (See 47 CFR 52.32). The B & C Agent shall keep 
confidential all data obtained from other administrators. The B & C 
Agent shall use such data, from carriers or administrators, only for 
calculating, collecting and verifying payments. The Commission shall 
have access to all data reported to the Administrator. Contributors may 
make requests for Commission nondisclosure of company-specific revenue 
information under Sec. 0.459 of this chapter by so indicating on the 
Telecommunications Reporting Worksheet at the time that the subject data 
are submitted. The Commission shall make all decisions regarding 
nondisclosure of company-specific information.
    (d) Develop procedures to monitor industry compliance with reporting 
requirements and propose specific procedures to address reporting 
failures and late payments;
    (e) File annual reports with the appropriate regulatory authorities 
of the NANP member countries as requested; and
    (f) Obtain an audit from an independent auditor after the first year 
of operations and annually thereafter, which shall evaluate the validity 
of calculated payments. The B&C Agent shall submit the audit report to 
the Commission for appropriate review and action.

[62 FR 55183, Oct. 23, 1997, as amended at 64 FR 41330, July 30, 1999; 
66 FR 9532, Feb. 8, 2001; 67 FR 13226, Mar. 21, 2002; 73 FR 9481, Feb. 
21, 2008; 80 FR 66479, Oct. 29, 2015]



Sec. 52.17  Costs of number administration.

    All telecommunications carriers in the United States shall 
contribute on a competitively neutral basis to meet the costs of 
establishing numbering administration.
    (a) Contributions to support numbering administration shall be the 
product of the contributors' end-user telecommunications revenues for 
the prior calendar year and a contribution factor determined annually by 
the Chief of the Common Carrier Bureau; such contributions to be no less 
than twenty-five dollars ($25). The contribution factor shall be based 
on the ratio of expected number administration expenses to end-user 
telecommunications revenues. Carriers that have no end-user 
telecommunications revenues

[[Page 104]]

shall contribute twenty-five dollars ($25). In the event that 
contributions exceed or are inadequate to cover administrative costs, 
the contribution factor for the following year shall be adjusted by an 
appropriate amount.
    (b) All telecommunications carriers in the United States shall 
complete and submit a ``Telecommunications Reporting Worksheet'' (as 
published by the Commission in the Federal Register), which sets forth 
the information needed to calculate contributions referred to in 
paragraph (a) of this section. The worksheet shall be certified to by an 
officer of the contributor, and subject to verification by the 
Commission or the B & C Agent at the discretion of the Commission. The 
Chief of the Common Carrier Bureau may waive, reduce, modify, or 
eliminate contributor reporting requirements that prove unnecessary and 
require additional reporting requirements that the Bureau deems 
necessary to the sound and efficient administration of the number 
administration cost recovery.

[64 FR 41331, July 30, 1999, as amended at 73 FR 9481, Feb. 21, 2008; 80 
FR 66479, Oct. 29, 2015]



Sec. 52.19  Area code relief.

    (a) State commissions may resolve matters involving the introduction 
of new area codes within their states. Such matters may include, but are 
not limited to: Directing whether area code relief will take the form of 
a geographic split, an overlay area code, or a boundary realignment; 
establishing new area code boundaries; establishing necessary dates for 
the implementation of area code relief plans; and directing public 
education efforts regarding area code changes.
    (b) State commissions may perform any or all functions related to 
initiation and development of area code relief plans, so long as they 
act consistently with the guidelines enumerated in this part, and 
subject to paragraph (b)(2) of this section. For the purposes of this 
paragraph, initiation and development of area code relief planning 
encompasses all functions related to the implementation of new area 
codes that were performed by central office code administrators prior to 
February 8, 1996. Such functions may include: declaring that the area 
code relief planning process should begin; convening and conducting 
meetings to which the telecommunications industry and the public are 
invited on area code relief for a particular area code; and developing 
the details of a proposed area code relief plan or plans.
    (1) The entity or entities designated by the Commission to serve as 
central office code administrator(s) shall initiate and develop area 
code relief plans for each area code in each state that has not notified 
such entity or entities, pursuant to paragraph (b)(2) of this section, 
that the state will handle such functions.
    (2) Pursuant to paragraph (b)(1) of this section, a state commission 
must notify the entity or entities designated by the Commission to serve 
as central office code administrator(s) for its state that such state 
commission intends to perform matters related to initiation and 
development of area code relief planning efforts in its state. 
Notification shall be written and shall include a description of the 
specific functions the state commission intends to perform. Where the 
NANP Administrator serves as the central office code administrator, such 
notification must be made within 120 days of the selection of the NANP 
Administrator.
    (c) New area codes may be introduced through the use of:
    (1) A geographic area code split, which occurs when the geographic 
area served by an area code in which there are few or no central office 
codes left for assignment is split into two or more geographic parts;
    (2) An area code boundary realignment, which occurs when the 
boundary lines between two adjacent area codes are shifted to allow the 
transfer of some central office codes from an area code for which 
central office codes remain unassigned to an area code for which few or 
no central office codes are left for assignment; or
    (3) An all services area code overlay, which occurs when a new area 
code is introduced to serve the same geographic area as one or more 
existing area code(s), subject to the following conditions:

[[Page 105]]

    (i) No all services area code overlay may be implemented unless all 
numbering resources in the new overlay area code are assigned to those 
entities requesting assignment on a first-come, first-serve basis, 
regardless of the identity of, technology used by, or type of service 
provided by that entity, except to the extent that a technology- or 
service-specific overlay is authorized by the Commission. No group of 
telecommunications carriers shall be excluded from assignment of 
numbering resources in the existing area code, or be assigned such 
resources only from the all services overlay area code, based solely on 
that group's provision of a specific type of telecommunications service 
or use of a particular technology; and
    (ii) No area code overlay may be implemented unless there exists, at 
the time of implementation, mandatory ten-digit dialing for every 
telephone call within and between all area codes in the geographic area 
covered by the overlay area code.
    (4) A technology-specific or service-specific overlay, which occurs 
when a new area code is introduced to serve the same geographic area as 
one or more existing area code(s) and numbering resources in the new 
area code overlay are assigned to a specific technology(ies) or 
service(s). State commissions may not implement a technology-specific or 
service-specific overlay without express authority from the Commission.

[61 FR 47353, Sept. 6, 1996, as amended at 64 FR 63617, Nov. 16, 1998; 
64 FR 62984, Nov. 18, 1999; 67 FR 6434, Feb. 12, 2002]



                      Subpart C_Number Portability

    Source: 61 FR 38637, July 25, 1996, unless otherwise noted. 
Redesignated at 61 FR 47353, Sept. 6, 1996.



Sec. 52.20  Thousands-block number pooling.

    (a) Definition. Thousands-block number pooling is a process by which 
the 10,000 numbers in a central office code (NXX) are separated into ten 
sequential blocks of 1,000 numbers each (thousands-blocks), and 
allocated separately within a rate center.
    (b) General requirements. Pursuant to the Commission's adoption of 
thousands-block number pooling as a mandatory nationwide numbering 
resource optimization strategy, all carriers, except those exempted by 
the Commission, must participate in thousands-block number pooling where 
it is implemented and in accordance with the national thousands-block 
number pooling framework and implementation schedule established by the 
Commission.
    (c) Donation of thousands-blocks. (1) All service providers required 
to participate in thousands-block number pooling shall donate thousands-
blocks with ten percent or less contamination to the thousands-block 
number pool for the rate center within which the numbering resources are 
assigned.
    (2) All service providers required to participate in thousands-block 
number pooling shall be allowed to retain at least one thousands-block 
per rate center, even if the thousands-block is ten percent or less 
contaminated, as an initial block or footprint block.
    (d) Thousands-Block Pooling Administrator. (1) The Pooling 
Administrator shall be a non-governmental entity that is impartial and 
not aligned with any particular telecommunication industry segment, and 
shall comply with the same neutrality requirements that the NANPA is 
subject to under this part.
    (2) The Pooling Administrator shall maintain no more than a six-
month inventory of telephone numbers in each thousands-block number 
pool.

[65 FR 37709, June 16, 2000, as amended at 66 FR 9532, Feb. 8, 2001; 68 
FR 43009, July 21, 2003]



Sec. 52.21  Definitions.

    As used in this subpart:
    (a) The term 100 largest MSAs includes the 100 largest MSAs as 
identified in the 1990 U.S. Census reports, as set forth in the Appendix 
to this part, as well as those areas identified as one of the largest 
100 MSAs on subsequent updates to the U.S. Census reports.
    (b) The term broadband PCS has the same meaning as that term is 
defined in Sec. 24.5 of this chapter.

[[Page 106]]

    (c) The term cellular service has the same meaning as that term is 
defined in Sec. 22.99 of this chapter.
    (d) The term covered CMRS means broadband PCS, cellular, and 800/900 
MHz SMR licensees that hold geographic area licenses or are incumbent 
SMR wide area licensees, and offer real-time, two-way switched voice 
service, are interconnected with the public switched network, and 
utilize an in-network switching facility that enables such CMRS systems 
to reuse frequencies and accomplish seamless hand-offs of subscriber 
calls.
    (e) The term database method means a number portability method that 
utilizes one or more external databases for providing called party 
routing information.
    (f) The term downstream database means a database owned and operated 
by an individual carrier for the purpose of providing number portability 
in conjunction with other functions and services.
    (g) The term incumbent wide area SMR licensee has the same meaning 
as that term is defined in Sec. 20.3 of this chapter.
    (h) The term IP Relay provider means an entity that provides IP 
Relay as defined by 47 CFR 64.601.
    (i) The term local exchange carrier means any person that is engaged 
in the provision of telephone exchange service or exchange access. For 
purposes of this subpart, such term does not include a person insofar as 
such person is engaged in the provision of a commercial mobile service 
under 47 U.S.C. 332(c).
    (j) The term local number portability administrator (LNPA) means an 
independent, non-governmental entity, not aligned with any particular 
telecommunications industry segment, whose duties are determined by the 
NANC.
    (k) The term location portability means the ability of users of 
telecommunications services to retain existing telecommunications 
numbers without impairment of quality, reliability, or convenience when 
moving from one physical location to another.
    (l) The term long-term database method means a database method that 
complies with the performance criteria set forth in Sec. 52.3(a).
    (m) The term number portability means the ability of users of 
telecommunications services to retain, at the same location, existing 
telecommunications numbers without impairment of quality, reliability, 
or convenience when switching from one telecommunications carrier to 
another.
    (n) The term regional database means an SMS database or an SMS/SCP 
pair that contains information necessary for carriers to provide number 
portability in a region as determined by the NANC.
    (o) The term Registered Internet-based TRS User has the meaning set 
forth in 47 CFR 64.601.
    (p) The term service control point (SCP) means a database in the 
public switched network which contains information and call processing 
instructions needed to process and complete a telephone call. The 
network switches access an SCP to obtain such information. Typically, 
the information contained in an SCP is obtained from the SMS.
    (q) The term service management system (SMS) means a database or 
computer system not part of the public switched network that, among 
other things:
    (1) Interconnects to an SCP and sends to that SCP the information 
and call processing instructions needed for a network switch to process 
and complete a telephone call; and
    (2) Provides telecommunications carriers with the capability of 
entering and storing data regarding the processing and completing of a 
telephone call.
    (r) The term service portability means the ability of users of 
telecommunications services to retain existing telecommunications 
numbers without impairment of quality, reliability, or convenience when 
switching from one telecommunications service to another, without 
switching from one telecommunications carrier to another.
    (s) The term service provider portability means the ability of users 
of telecommunications services to retain, at the same location, existing 
telecommunications numbers without impairment of quality, reliability, 
or convenience when switching from one telecommunications carrier to 
another.

[[Page 107]]

    (t) The term transitional number portability measure means a method 
that allows one local exchange carrier to transfer telephone numbers 
from its network to the network of another telecommunications carrier, 
but does not comply with the performance criteria set forth in 52.3(a). 
Transitional number portability measures are technically feasible 
methods of providing number portability including Remote Call Forwarding 
(RCF), Direct Inward Dialing (DID), Route Indexing--Portability Hub (RI-
PH), Directory Number Route Indexing (DNRI) and other comparable 
methods.
    (u) The term VRS provider means an entity that provides VRS as 
defined by 47 CFR 64.601.
    (v) The term 2009 LNP Porting Intervals Order refers to In the 
Matters of Local Number Portability Porting Interval and Validation 
Requirements; Telephone Number Portability, WC Docket No. 07-244, CC 
Docket No. 95-116, Report and Order and Further Notice of Proposed 
Rulemaking, FCC 09-41 (2009).

[61 FR 38637, July 25, 1996. Redesignated at 61 FR 47353, Sept. 6, 1996, 
as amended at 61 FR 47355, Sept. 6, 1996; 63 FR 68203, Dec. 10, 1998; 67 
FR 6435, Feb. 12, 2002; 68 FR 43009, July 21, 2003; 73 FR 9481, Feb. 21, 
2008; 73 FR 41293, July 18, 2008; 74 FR 31638, July 2, 2009; 80 FR 
66479, Oct. 29, 2015]



Sec. 52.23  Deployment of long-term database methods for number
portability by LECs.

    (a) Subject to paragraphs (b) and (c) of this section, all local 
exchange carriers (LECs) must provide number portability in compliance 
with the following performance criteria:
    (1) Supports network services, features, and capabilities existing 
at the time number portability is implemented, including but not limited 
to emergency services, CLASS features, operator and directory assistance 
services, and intercept capabilities;
    (2) Efficiently uses numbering resources;
    (3) Does not require end users to change their telecommunications 
numbers;
    (4) Does not result in unreasonable degradation in service quality 
or network reliability when implemented;
    (5) Does not result in any degradation in service quality or network 
reliability when customers switch carriers;
    (6) Does not result in a carrier having a proprietary interest;
    (7) Is able to migrate to location and service portability; and
    (8) Has no significant adverse impact outside the areas where number 
portability is deployed.
    (b)(1) All LECs must provide a long-term database method for number 
portability in the 100 largest Metropolitan Statistical Areas (MSAs), as 
defined in Sec. 52.21(k), in switches for which another carrier has made 
a specific request for the provision of number portability, subject to 
paragraph (b)(2) of this section.
    (2) Any procedure to identify and request switches for deployment of 
number portability must comply with the following criteria:
    (i) Any wireline carrier that is certified (or has applied for 
certification) to provide local exchange service in a state, or any 
licensed CMRS provider, must be permitted to make a request for 
deployment of number portability in that state;
    (ii) Carriers must submit requests for deployment at least nine 
months before the deployment deadline for the MSA;
    (iii) A LEC must make available upon request to any interested 
parties a list of its switches for which number portability has been 
requested and a list of its switches for which number portability has 
not been requested; and
    (iv) After the deadline for deployment of number portability in an 
MSA in the 100 largest MSAs, according to the deployment schedule set 
forth in the appendix to this part, a LEC must deploy number portability 
in that MSA in additional switches upon request within the following 
time frames:
    (A) For remote switches supported by a host switch equipped for 
portability (``Equipped Remote Switches''), within 30 days;
    (B) For switches that require software but not hardware changes to 
provide portability (``Hardware Capable Switches''), within 60 days;
    (C) For switches that require hardware changes to provide 
portability

[[Page 108]]

(``Capable Switches Requiring Hardware''), within 180 days; and
    (D) For switches not capable of portability that must be replaced 
(``Non-Capable Switches''), within 180 days.
    (c) Beginning January 1, 1999, all LECs must make a long-term 
database method for number portability available within six months after 
a specific request by another telecommunications carrier in areas in 
which that telecommunications carrier is operating or plans to operate.
    (d) The Chief, Common Carrier Bureau, may waive or stay any of the 
dates in the implementation schedule, as the Chief determines is 
necessary to ensure the efficient development of number portability, for 
a period not to exceed 9 months (i.e., no later than September 30, 
1999).
    (e) In the event a LEC is unable to meet the Commission's deadlines 
for implementing a long-term database method for number portability, it 
may file with the Commission at least 60 days in advance of the deadline 
a petition to extend the time by which implementation in its network 
will be completed. A LEC seeking such relief must demonstrate through 
substantial, credible evidence the basis for its contention that it is 
unable to comply with the deployment schedule set forth in the appendix 
to this part 52. Such requests must set forth:
    (1) The facts that demonstrate why the carrier is unable to meet the 
Commission's deployment schedule;
    (2) A detailed explanation of the activities that the carrier has 
undertaken to meet the implementation schedule prior to requesting an 
extension of time;
    (3) An identification of the particular switches for which the 
extension is requested;
    (4) The time within which the carrier will complete deployment in 
the affected switches; and
    (5) A proposed schedule with milestones for meeting the deployment 
date.
    (f) The Chief, Wireline Competition Bureau, shall monitor the 
progress of local exchange carriers implementing number portability, and 
may direct such carriers to take any actions necessary to ensure 
compliance with the deployment schedule set forth in the appendix to 
this part 52.
    (g) Carriers that are members of the Illinois Local Number 
Portability Workshop must conduct a field test of any technically 
feasible long-term database method for number portability in the 
Chicago, Illinois, area. The carriers participating in the test must 
jointly file with the Common Carrier Bureau a report of their findings 
within 30 days following completion of the test. The Chief, Common 
Carrier Bureau, shall monitor developments during the field test, and 
may adjust the field test completion deadline as necessary.
    (h)(1) Porting from a wireline carrier to a wireless carrier is 
required where the requesting wireless carrier's ``coverage area,'' as 
defined in paragraph (h)(2) of this section, overlaps the geographic 
location in which the customer's wireline number is provisioned, 
provided that the porting-in carrier maintains the number's original 
rate center designation following the port.
    (2) The wireless ``coverage area'' is defined as the area in which 
wireless service can be received from the wireless carrier.

[61 FR 38637, July 25, 1996, as amended at 62 FR 18294, Apr. 15, 1997; 
67 FR 13226, Mar. 21, 2002; 68 FR 43009, July 21, 2003; 73 FR 9481, Feb. 
21, 2008]



Sec. 52.25  Database architecture and administration.

    (a) The North American Numbering Council (NANC) shall direct 
establishment of a nationwide system of regional SMS databases for the 
provision of long-term database methods for number portability.
    (b) All telecommunications carriers shall have equal and open access 
to the regional databases.
    (c) The NANC shall select a local number portability 
administrator(s) (LNPA(s)) to administer the regional databases within 
seven months of the initial meeting of the NANC.
    (d) The NANC shall determine whether one or multiple 
administrator(s) should be selected, whether the LNPA(s) can be the same 
entity selected to be the North American Numbering Plan Administrator, 
how the

[[Page 109]]

LNPA(s) should be selected, the specific duties of the LNPA(s), the 
geographic coverage of the regional databases, the technical 
interoperability and operational standards, the user interface between 
telecommunications carriers and the LNPA(s), the network interface 
between the SMS and the downstream databases, and the technical 
specifications for the regional databases.
    (e) Once the NANC has selected the LNPA(s) and determined the 
locations of the regional databases, it must report its decisions to the 
Commission.
    (f) The information contained in the regional databases shall be 
limited to the information necessary to route telephone calls to the 
appropriate telecommunications carriers. The NANC shall determine what 
specific information is necessary.
    (g) Any state may opt out of its designated regional database and 
implement a state-specific database. A state must notify the Wireline 
Competition Bureau and NANC that it plans to implement a state-specific 
database within 60 days from the release date of the Public Notice 
issued by the Chief, Wireline Competition Bureau, identifying the 
administrator selected by the NANC and the proposed locations of the 
regional databases. Carriers may challenge a state's decision to opt out 
of the regional database system by filing a petition with the 
Commission.
    (h) Individual state databases must meet the national requirements 
and operational standards recommended by the NANC and adopted by the 
Commission. In addition, such state databases must be technically 
compatible with the regional system of databases and must not interfere 
with the scheduled implementation of the regional databases.
    (i) Individual carriers may download information necessary to 
provide number portability from the regional databases into their own 
downstream databases. Individual carriers may mix information needed to 
provide other services or functions with the information downloaded from 
the regional databases at their own downstream databases. Carriers may 
not withhold any information necessary to provide number portability 
from the regional databases on the grounds that such data has been 
combined with other information in its downstream database.

[61 FR 38637, July 25, 1996. Redesignated at 61 FR 47353, Sept. 6, 1996, 
as amended at 67 FR 13226, Mar. 21, 2002]



Sec. 52.26  NANC Recommendations on Local Number Portability
Administration.

    (a) Local number portability administration shall comply with the 
recommendations of the North American Numbering Council (NANC) as set 
forth in the report to the Commission prepared by the NANC's Local 
Number Portability Administration Selection Working Group, dated April 
25, 1997 (Working Group Report) and its appendices, which are 
incorporated by reference pursuant to 5 U.S.C. 552(a) and 1 CFR part 51. 
Except that: Section 7.10 of Appendix D and the following portions of 
Appendix E: Section 7, Issue Statement I of Appendix A, and Appendix B 
in the Working Group Report are not incorporated herein.
    (b) In addition to the requirements set forth in the Working Group 
Report, the following requirements are established:
    (1) If a telecommunictions carrier transmits a telephone call to a 
local exchange carrier's switch that contains any ported numbers, and 
the telecommunications carrier has failed to perform a database query to 
determine if the telephone number has been ported to another local 
exchange carrier, the local exchange carrier may block the unqueried 
call only if performing the database query is likely to impair network 
reliability;
    (2) The regional limited liability companies (LLCs), already 
established by telecommunications carriers in each of the original Bell 
Operating Company regions, shall manage and oversee the local number 
portability administrators, subject to review by the NANC, but only on 
an interim basis, until the conclusion of a rulemaking to examine the 
issue of local number portability administrator oversight and management 
and the question of whether the LLCs should continue to act in this 
capacity; and

[[Page 110]]

    (3) The NANC shall provide ongoing oversight of number portability 
administration, including oversight of the regional LLCs, subject to 
Commission review. Parties shall attempt to resolve issues regarding 
number portability deployment among themselves and, if necessary, under 
the auspices of the NANC. If any party objects to the NANC's proposed 
resolution, the NANC shall issue a written report summarizing the 
positions of the parties and the basis for the recommendation adopted by 
the NANC. The NANC Chair shall submit its proposed resolution of the 
dispuited issue to the Chief of the Wireline Competition Bureau as a 
recommendation for Commission review. The Chief of the Wireline 
Competition Bureau will place the NANC's proposed resolution on public 
notice. Recommendations adopted by the NANC and forwarded to the Bureau 
may be implemented by the parties pending review of the recommendation. 
Within 90 days of the conclusion of the comment cycle, the Chief of the 
Wireline Competition Bureau may issue an order adopting, modifying, or 
rejecting the recommendation. If the Chief does not act within 90 days 
of the conclusion of the comment cycle, the recommendation will be 
deemed to have been adopted by the Bureau.
    (c) The Director of the Federal Register approves this incorporation 
by reference in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. 
Copies of the Working Group Report and its appendices can be obtained 
from the Commission's contract copier, Best Copy and Printing, Inc. 
(BCPI), Portals II, 445 12th Street, SW, Room CY-B402, Washington, DC 
20554, (202) 488-5300, or via e-mail at [email protected], and can be 
inspected during normal business hours at the following locations: 
Reference Information Center, 445 12th Street, SW., Room CY--A257, 
Washington, DC 20554 or at the National Archives and Records 
Administration (NARA). For information on the availability of this 
material at NARA, call (202) 741-6030, or go to: http://
www.archives.gov/federal-register/cfr/ibr-locations.html. The Working 
Group Report and its appendices are also available on the Internet at 
http://www.fcc.gov/wcb/cpd/Nanc/lnpastuf.html.

[62 FR 48786, Sept. 17, 1997, as amended at 65 FR 58466, Sept. 29, 2000; 
67 FR 13226, Mar. 21, 2002; 69 FR 18803, Apr. 9, 2004; 74 FR 31638, July 
2, 2009; 75 FR 35315, June 22, 2010]



Sec. 52.31  Deployment of long-term database methods for number
portability by CMRS providers.

    (a) By November 24, 2003, all covered CMRS providers must provide a 
long-term database method for number portability, including the ability 
to support roaming, in the 100 largest MSAs, as defined in 
Sec. 52.21(k), in compliance with the performance criteria set forth in 
section 52.23(a) of this part, in switches for which another carrier has 
made a specific request for the provision of number portability, subject 
to paragraph (a)(1) of this section. A licensee may have more than one 
CMRS system, but only the systems that satisfy the definition of covered 
CMRS are required to provide number portability.
    (1) Any procedure to identify and request switches for development 
of number portability must comply with the following criteria:
    (i) Any wireline carrier that is certified (or has applied for 
certification) to provide local exchange service in a state, or any 
licensed CMRS provider, must be permitted to make a request for 
deployment of number portability in that state;
    (ii) Carries requesting deployment in the 100 largest MSAs by 
November 24, 2003 must submit requests by February 24, 2003.
    (iii) A covered CMRS provider must make available upon request to 
any interested parties a list of its switches for which number 
portability has been requested and a list of its switches for which 
number portability has not been requested;
    (iv) After November 24, 2003, a covered CMRS provider must deploy 
number portability in additional switches serving the 100 largest MSAs 
upon request within the following time frames:
    (A) For remote switches supported by a host switch equipped for 
portability (``Equipped Remote Switches''), within 30 days;

[[Page 111]]

    (B) For switches that require software but not hardware changes to 
provide portability (``Hardware Capable Switches''), within 60 days;
    (C) For switches that require hardware changes to provide 
portability (``Capable Switches Requiring Hardware''), within 180 days; 
and
    (D) For switches not capable of portability that must be replaced 
(``Non-Capable Switches''), within 180 days.
    (v) Carriers must be able to request deployment in any wireless 
switch that serves any area within the MSA, even if the wireless switch 
is outside that MSA, or outside any of the MSAs identified in the 
Appendix to this part.
    (2) By November 24, 2002, all covered CMRS providers must be able to 
support roaming nationwide.
    (b) By December 31, 1998, all covered CMRS providers must have the 
capability to obtain routing information, either by querying the 
appropriate database themselves or by making arrangements with other 
carriers that are capable of performing database queries, so that they 
can deliver calls from their networks to any party that has retained its 
number after switching from one telecommunications carrier to another.
    (c) [Reserved]
    (d) In the event a carrier subject to paragraphs (a) and (b) of this 
section is unable to meet the Commission's deadlines for implementing a 
long-term number portability method, it may file with the Commission at 
least 60 days in advance of the deadline a petition to extend the time 
by which implementation in its network will be completed. A carrier 
seeking such relief must demonstrate through substantial, credible 
evidence the basis for its contention that it is unable to comply with 
paragraphs (a) and (b) of this section. Such requests must set forth:
    (1) The facts that demonstrate why the carrier is unable to meet our 
deployment schedule;
    (2) A detailed explanation of the activities that the carrier has 
undertaken to meet the implementation schedule prior to requesting an 
extension of time;
    (3) An identification of the particular switches for which the 
extension is requested;
    (4) The time within which the carrier will complete deployment in 
the affected switches; and
    (5) A proposed schedule with milestones for meeting the deployment 
date.
    (e) The Chief, Wireless Telecommunications Bureau, may establish 
reporting requirements in order to monitor the progress of covered CMRS 
providers implementing number portability, and may direct such carriers 
to take any actions necessary to ensure compliance with this deployment 
schedule.

[61 FR 38637, July 25, 1996, as amended at 62 FR 18295, Apr. 15, 1997; 
63 FR 68204, Dec. 10, 1998; 64 FR 22563, Apr. 27, 1999; 68 FR 43009, 
July 21, 2003; 71 FR 65750, Nov. 9, 2006]



Sec. 52.32  Allocation of the shared costs of long-term number portability.

    (a) The local number portability administrator, as defined in 
Sec. 52.21(h), of each regional database, as defined in Sec. 52.21(1), 
shall recover the shared costs of long-term number portability 
attributable to that regional database from all telecommunications 
carriers providing telecommunications service in areas that regional 
database serves. Pursuant to its duties under Sec. 52.26, the local 
number portability administrator shall collect sufficient revenues to 
fund the operation of the regional database by:
    (1) Assessing a $100 yearly contribution on each telecommunications 
carrier identified in paragraph (a) introductory text that has no 
intrastate, interstate, or international end-user telecommunications 
revenue derived from providing telecommunications service in the areas 
that regional database serves, and
    (2) Assessing on each of the other telecommunications carriers 
providing telecommunications service in areas that regional database 
serves, a charge that recovers the remaining shared costs of long-term 
number portability attributable to that regional database in proportion 
to the ratio of:
    (i) The sum of the intrastate, interstate, and international end-
user telecommunications revenues that such telecommunications carrier 
derives from providing telecommunications

[[Page 112]]

service in the areas that regional database serves, ii) to the sum of 
the intrastate, interstate, and international end-user 
telecommunications revenues that all telecommunications carriers derive 
from providing telecommunications service in the areas that regional 
database serves.
    (b) All telecommunications carriers providing service in the United 
States shall complete and submit a ``Telecommunications Reporting 
Worksheet'' (as published by the Commission in the Federal Register), 
which sets forth the information needed to calculate contributions 
referred to in paragraph (a) of this section. The worksheet shall be 
certified to by an officer of the contributor, and subject to 
verification by the Commission or the administrator at the discretion of 
the Commission. The Chief of the Wireline Competition Bureau may waive, 
reduce, modify, or eliminate contributor reporting requirements that 
prove unnecessary and require additional reporting requirements that the 
Bureau deems necessary to the sound and efficient administration of 
long-term number portability.
    (c) Local number portability administrators shall keep all data 
obtained from contributors confidential and shall not disclose such data 
in company-specific form unless directed to do so by the Commission. 
Subject to any restrictions imposed by the Chief of the Wireline 
Competition Bureau, the local number portability administrators may 
share data obtained from carriers with the administrators of the 
universal service support mechanism (See 47 CFR 54.701 of this chapter), 
the TRS Fund (See 47 CFR 64.604(c)(4)(iii)(H) of this chapter), and the 
North American Numbering Plan cost recovery (See 47 CFR 52.16). The 
local number portability administrators shall keep confidential all data 
obtained from other administrators. The administrators shall use such 
data, from carriers or administrators, only for purposes of 
administering local number portability. The Commission shall have access 
to all data reported to the Administrator. Contributors may make 
requests for Commission nondisclosure of company-specific revenue 
information under Sec. 0.459 of this chapter by so indicating on the 
Telecommunications Reporting Worksheet at the time that the subject data 
are submitted. The Commission shall make all decisions regarding 
nondisclosure of company-specific information.
    (d) Once a telecommunications carrier has been allocated, pursuant 
to paragraph (a)(1) or (a)(2) of this section, its portion of the shared 
costs of long-term number portability attributable to a regional 
database, the carrier shall treat that portion as a carrier-specific 
cost directly related to providing number portability.

[63 FR 35160, June 29, 1998, as amended at 64 FR 41331, July 30, 1999; 
67 FR 13226, Mar. 21, 2002; 73 FR 9481, Feb. 21, 2008; 80 FR 66479, Oct. 
29, 2015]



Sec. 52.33  Recovery of carrier-specific costs directly related to
providing long-term number portability.

    (a) Incumbent local exchange carriers may recover their carrier-
specific costs directly related to providing long-term number 
portability by establishing in tariffs filed with the Federal 
Communications Commission a monthly number-portability charge, as 
specified in paragraph (a)(1) of this section, a number portability 
query-service charge, as specified in paragraph (a)(2) of this section, 
and a monthly number-portability query/administration charge, as 
specified in paragraph (a)(3) of this section.
    (1) The monthly number-portability charge may take effect no earlier 
than February 1, 1999, on a date the incumbent local exchange carrier 
selects, and may end no later than 5 five years after the incumbent 
local exchange carrier's monthly number-portability charge takes effect.
    (i) An incumbent local exchange carrier may assess each end user it 
serves in the 100 largest metropolitan statistical areas, and each end 
user it serves from a number-portability-capable switch outside the 100 
largest metropolitan statistical areas, one monthly number-portability 
charge per line except that:
    (A) One PBX trunk shall receive nine monthly number-portability 
charges.
    (B) One PRI ISDN line shall receive five monthly number-portability 
charges.

[[Page 113]]

    (C) Lifeline Assistance Program customers shall not receive the 
monthly number-portability charge.
    (ii) An incumbent local exchange carrier may assess on carriers that 
purchase the incumbent local exchange carrier's switching ports as 
unbundled network elements under section 251 of the Communications Act, 
and/or Feature Group A access lines, and resellers of the incumbent 
local exchange carrier's local service, the same charges as described in 
paragraph (a)(1)(i) of this section, as if the incumbent local exchange 
carrier were serving those carriers' end users.
    (iii) An incumbent local exchange carrier may not assess a monthly 
number-portability charge for local loops carriers purchase as unbundled 
network elements under section 251.
    (iv) The incumbent local exchange carrier shall levelize the monthly 
number-portability charge over five years by setting a rate for the 
charge at which the present value of the revenue recovered by the charge 
does not exceed the present value of the cost being recovered, using a 
discount rate equal to the rate of return on investment which the 
Commission has prescribed for interstate access services pursuant to 
Part 65 of the Commission's Rules.
    (2) The number portability query-service charge may recover only 
carrier-specific costs directly related to providing long-term number 
portability that the incumbent local exchange carrier incurs to provide 
long-term number portability query service to carriers on a prearranged 
and default basis.
    (3) An incumbent local exchange carrier serving an area outside the 
100 largest metropolitan statistical areas that is not number-
portability capable but that participates in an extended area service 
calling plan with any one of the 100 largest metropolitan statistical 
areas or with an adjacent number portability-capable local exchange 
carrier may assess each end user it serves one monthly number-
portability query/administration charge per line to recover the costs of 
queries, as specified in paragraph (a)(2) of this section, and carrier-
specific costs directly related to the carrier's allocated share of the 
regional local number portability administrator's costs, except that 
per-line monthly number-portability query/administration charges shall 
be assigned as specified in paragraph (a)(1) of this section with 
respect to monthly number-portability charges.
    (i) Such incumbent local exchange carriers may assess a separate 
monthly number-portability charge as specified in paragraph (a)(1) of 
this section but such charge may recover only the costs incurred to 
implement number portability functionality and shall not include costs 
recovered through the monthly number-portability query/administration 
charge.
    (ii) The monthly number-portability query/administration charge may 
end no later than five years after the incumbent local exchange 
carrier's monthly number-portability query/administration charge takes 
effect. The monthly number-portability query/administration charge may 
be collected over a different five-year period than the monthly number-
portability charge. These five-year periods may run either consecutively 
or concurrently, in whole or in part.
    (b) All telecommunications carriers other than incumbent local 
exchange carriers may recover their number portability costs in any 
manner consistent with applicable state and federal laws and 
regulations.

[63 FR 35161, June 29, 1998, as amended at 67 FR 40620, June 13, 2002; 
73 FR 9481, Feb. 21, 2008; 80 FR 66479, Oct. 29, 2015]



Sec. 52.34  Obligations regarding local number porting to and from
interconnected VoIP or Internet-based TRS providers.

    (a) An interconnected VoIP or VRS or IP Relay provider must 
facilitate an end-user customer's or a Registered Internet-based TRS 
User's valid number portability request, as it is defined in this 
subpart, either to or from a telecommunications carrier or an 
interconnected VoIP or VRS or IP Relay provider. ``Facilitate'' is 
defined as the interconnected VoIP or VRS or IP Relay provider's 
affirmative legal obligation to take all steps necessary to initiate or 
allow a port-in or port-out itself or through the telecommunications 
carriers, if any, that it relies

[[Page 114]]

on to obtain numbering resources, subject to a valid port request, 
without unreasonable delay or unreasonable procedures that have the 
effect of delaying or denying porting of the NANP-based telephone 
number.
    (b) An interconnected VoIP or VRS or IP Relay provider may not enter 
into any agreement that would prohibit an end-user customer or a 
Registered Internet-based TRS User from porting between interconnected 
VoIP or VRS or IP Relay providers, or to or from a telecommunications 
carrier.
    (c) Telecommunications carriers must facilitate an end-user 
customer's valid number portability request either to or from an 
interconnected VoIP or VRS or IP Relay provider. ``Facilitate'' is 
defined as the telecommunication carrier's affirmative legal obligation 
to take all steps necessary to initiate or allow a port-in or port-out 
itself, subject to a valid port request, without unreasonable delay or 
unreasonable procedures that have the effect of delaying or denying 
porting of the NANP-based telephone number.

[73 FR 9481, Feb. 21, 2008, as amended at 73 FR 41294, July 18, 2008; 80 
FR 66479, Oct. 29, 2015]



Sec. 52.35  Porting Intervals.

    (a) All telecommunications carriers required by the Commission to 
port telephone numbers must complete a simple wireline-to-wireline or 
simple intermodal port request within one business day unless a longer 
period is requested by the new provider or by the customer. The 
traditional work week of Monday through Friday represents mandatory 
business days and 8 a.m. to 5 p.m. represents minimum business hours, 
excluding the current service provider's company-defined holidays. An 
accurate and complete Local Service Request (LSR) must be received by 
the current service provider between 8 a.m. and 1 p.m. local time for a 
simple port request to be eligible for activation at midnight on the 
same day. Any simple port LSRs received after this time will be 
considered received on the following business day at 8 a.m. local time.
    (b) Small providers, as described in the 2009 LNP Porting Interval 
Order, must comply with this section by February 2, 2011.
    (c) Unless directed otherwise by the Commission, any 
telecommunications carrier granted a waiver by the Commission of the 
one-business day porting interval described in paragraph (a) must 
complete a simple wireline-to-wireline or simple intermodal port request 
within four business days unless a longer period is requested by the new 
provider or by the customer.
    (d) All telecommunications carriers required by the Commission to 
port telephone numbers must complete a non-simple wireline-to-wireline 
or non-simple intermodal port request within four business days unless a 
longer period is requested by the new provider or by the customer.
    (e) For purposes of this section:
    (1) The term ``local time'' means the predominant time zone of the 
Number Portability Administration Center (NPAC) Region in which the 
telephone number is being ported; and
    (2) The term ``intermodal ports'' includes
    (i) Wireline-to-wireless ports;
    (ii) Wireless-to-wireline ports; and
    (iii) Ports involving interconnected VoIP service.

[75 FR 35315, June 22, 2010, as amended at 80 FR 66480, Oct. 29, 2015]



Sec. 52.36  Standard data fields for simple port order processing.

    (a) A telecommunications carrier may require only the data described 
in paragraphs (b) and (c) of this section to accomplish a simple port 
order request from an end user customer's new telecommunication's 
carrier.
    (b) Required standard data fields.
    (1) Ported telephone number;
    (2) Account number;
    (3) Zip code;
    (4) Company code;
    (5) New network service provider;
    (6) Desired due date;
    (7) Purchase order number;
    (8) Version;
    (9) Number portability direction indicator;
    (10) Customer carrier name abbreviation;
    (11) Requisition type and status;
    (12) Activity;

[[Page 115]]

    (13) Telephone number of initiator; and
    (14) Agency authority status.
    (c) Optional standard data field. The Passcode field shall be 
optional unless the passcode has been requested and assigned by the end 
user.

[75 FR 35315, June 22, 2010, as amended at 80 FR 66480, Oct. 29, 2015]



Secs. 52.37-52.99  [Reserved]



                       Subpart D_Toll Free Numbers

    Source: 62 FR 20127, Apr. 25, 1997, unless otherwise noted.



Sec. 52.101  General definitions.

    As used in this part:
    (a) Number Administration and Service Center (``NASC''). The entity 
that provides user support for the Service Management System database 
and administers the Service Management System database on a day-to-day 
basis.
    (b) Responsible Organization (``RespOrg''). The entity chosen by a 
toll free subscriber to manage and administer the appropriate records in 
the toll free Service Management System for the toll free subscriber.
    (c) Service Control Points. The regional databases in the toll free 
network.
    (d) Service Management System Database (``SMS Database''). The 
administrative database system for toll free numbers. The Service 
Management System is a computer system that enables Responsible 
Organizations to enter and amend the data about toll free numbers within 
their control. The Service Management System shares this information 
with the Service Control Points. The entire system is the SMS database.
    (e) Toll Free Subscriber. The entity that requests a Responsible 
Organization to reserve a toll free number from the SMS database.
    (f) Toll Free Number. A telephone number for which the toll charges 
for completed calls are paid by the toll free subscriber. The toll free 
subscriber's specific geographic location has no bearing on what toll 
free number it can obtain from the SMS database.



Sec. 52.103  Lag times.

    (a) Definitions. As used in this section, the following definitions 
apply:
    (1) Assigned Status. A toll free number record that has specific 
subscriber routing information entered by the Responsible Organization 
in the Service Management System database and is pending activation in 
the Service Control Points.
    (2) Disconnect Status. The toll free number has been discontinued 
and an exchange carrier intercept recording is being provided.
    (3) Lag Time. The interval between a toll free number's reservation 
in the Service Management System database and its conversion to working 
status, as well as the period of time between disconnection or 
cancellation of a toll free number and the point at which that toll free 
number may be reassigned to another toll free subscriber.
    (4) Reserved Status. The toll free number has been reserved from the 
Service Management System database by a Responsible Organization for a 
toll free subscriber.
    (5) Seasonal Numbers. Toll free numbers held by toll free 
subscribers who do not have a year-round need for a toll free number.
    (6) Spare Status. The toll free number is available for assignment 
by a Responsible Organization.
    (7) Suspend Status. The toll free service has been temporarily 
disconnected and is scheduled to be reactivated.
    (8) Unavailable Status. The toll free number is not available for 
assignment due to an unusual condition.
    (9) Working Status. The toll free number is loaded in the Service 
Control Points and is being utilized to complete toll free service 
calls.
    (b) Reserved Status. Toll free numbers may remain in reserved status 
for up to 45 days. There shall be no extension of the reservation period 
after expiration of the initial 45-day interval.
    (c) Assigned Status. Toll free numbers may remain in assigned status 
until changed to working status or for a maximum of 6 months, whichever 
occurs first. Toll free numbers that, because of special circumstances, 
require that they be designated for a particular

[[Page 116]]

subscriber far in advance of their actual usage shall not be placed in 
assigned status, but instead shall be placed in unavailable status.
    (d) Disconnect Status. Toll free numbers may remain in disconnect 
status for up to 4 months. No requests for extension of the 4-month 
disconnect interval shall be granted. All toll free numbers in 
disconnect status must go directly into the spare category upon 
expiration of the 4-month disconnect interval. Responsible Organizations 
shall not retrieve a toll free number from disconnect status and return 
that number directly to working status at the expiration of the 4-month 
disconnect interval.
    (e) Suspend Status. Toll free numbers may remain in suspend status 
until changed to working status or for a maximum of 8 months, whichever 
occurs first. Only numbers involved in billing disputes shall be 
eligible for suspend status.
    (f) Unavailable Status. (1) Written requests to make a specific toll 
free number unavailable must be submitted to DSMI by the Responsible 
Organization managing the records of the toll free number. The request 
shall include the appropriate documentation of the reason for the 
request. DSMI is the only entity that can assign this status to or 
remove this status from a number. Responsible Organizations that have a 
toll free subscriber with special circumstances requiring that a toll 
free number be designated for that particular subscriber far in advance 
of its actual usage may request that DSMI place such a number in 
unavailable status.
    (2) Seasonal numbers shall be placed in unavailable status. The 
Responsible Organization for a toll free subscriber who does not have a 
year round need for a toll free number shall follow the procedures 
outlined in Sec. 52.103(f)(1) of these rules if it wants DSMI to place a 
particular toll free number in unavailable status.



Sec. 52.105  Warehousing.

    (a) As used in this section, warehousing is the practice whereby 
Responsible Organizations, either directly or indirectly through an 
affiliate, reserve toll free numbers from the Service Management System 
database without having an actual toll free subscriber for whom those 
numbers are being reserved.
    (b) Responsible Organizations shall not warehouse toll free numbers. 
There shall be a rebuttable presumption that a Responsible Organization 
is warehousing toll free numbers if:
    (1) The Responsible Organization does not have an identified toll 
free subscriber agreeing to be billed for service associated with each 
toll free number reserved from the Service Management System database; 
or
    (2) The Responsible Organization does not have an identified toll 
free subscriber agreeing to be billed for service associated with a toll 
free number before switching that toll free number from reserved or 
assigned to working status.
    (c) Responsible Organizations shall not maintain a toll free number 
in reserved status if there is not a prospective toll free subscriber 
requesting that toll free number.
    (d) A Responsible Organization's act of reserving a number from the 
Service Management System database shall serve as that Responsible 
Organization's certification that there is an identified toll free 
subscriber agreeing to be billed for service associated with the toll 
free number.
    (e) Tariff Provision. The following provision shall be included in 
the Service Management System tariff and in the local exchange carriers' 
toll free database access tariffs:

    [T]he Federal Communications Commission (``FCC'') has concluded that 
warehousing, which the FCC defines as Responsible Organizations, either 
directly or indirectly through an affiliate, reserving toll free numbers 
from the SMS database without having an identified toll free subscriber 
from whom those numbers are being reserved, is an unreasonable practice 
under Sec. 201(b) of the Communications Act and is inconsistent with the 
Commission's obligation under Sec. 251(e) of the Communications Act to 
ensure that numbers are made available on an equitable basis; and if a 
Responsible Organization does not have an identified toll free 
subscriber agreeing to be billed for service associated with each toll 
free number reserved from the database, or if a Responsible Organization 
does not have an identified, billed toll free subscriber before 
switching a number from reserved or assigned to working

[[Page 117]]

status, then there is a rebuttable presumption that the Responsible 
Organization is warehousing numbers. Responsible Organizations that 
warehouse numbers will be subject to penalties.



Sec. 52.107  Hoarding.

    (a) As used in this section, hoarding is the acquisition by a toll 
free subscriber from a Responsible Organization of more toll free 
numbers than the toll free subscriber intends to use for the provision 
of toll free service. The definition of hoarding also includes number 
brokering, which is the selling of a toll free number by a private 
entity for a fee.
    (1) Toll free subscribers shall not hoard toll free numbers.
    (2) No person or entity shall acquire a toll free number for the 
purpose of selling the toll free number to another entity or to a person 
for a fee.
    (3) Routing multiple toll free numbers to a single toll free 
subscriber will create a rebuttable presumption that the toll free 
subscriber is hoarding or brokering toll free numbers.
    (b) Tariff Provision. The following provision shall be included in 
the Service Management System tariff and in the local exchange carriers' 
toll free database access tariffs:

    [T]he Federal Communications Commission (``FCC'') has concluded that 
hoarding, defined as the acquisition of more toll free numbers than one 
intends to use for the provision of toll free service, as well as the 
sale of a toll free number by a private entity for a fee, is contrary to 
the public interest in the conservation of the scarce toll free number 
resource and contrary to the FCC's responsibility to promote the orderly 
use and allocation of toll free numbers.



Sec. 52.109  Permanent cap on number reservations.

    (a) A Responsible Organization may have in reserve status, at any 
one time, either 2000 toll free numbers or 7.5 percent of that 
Responsible Organization's numbers in working status, whichever is 
greater.
    (b) A Responsible Organization shall never reserve more than 3 
percent of the quantity of toll free numbers in spare status as of the 
previous Sunday at 12:01 a.m. Eastern Time.
    (c) The Wireline Competition Bureau shall modify the quantity of 
numbers a Responsible Organization may have in reserve status or the 
percentage of numbers in the spare poll that a Responsible Organization 
may reserve when exigent circumstances make such action necessary. The 
Wireline Competition Bureau shall establish, modify, and monitor toll 
free number conservation plans when exigent circumstances necessitate 
such action.

[62 FR 20127, Apr. 25, 1997, as amended at 67 FR 13226, Mar. 21, 2002]



Sec. 52.111  Toll free number assignment.

    Toll free numbers shall be made available on a first-come, first-
served basis unless otherwise directed by the Commission.

[63 FR 16441, Apr. 3, 1998]



  Sec. Appendix to Part 52--Deployment Schedule for Long-Term Database 
                  Methods for Local Number Portability

    Implementation must be completed by the carriers in the relevant 
MSAs during the periods specified below:

                        Phase I--10/1/97-3/31/98
 
Chicago, IL...................................................         3
Philadelphia, PA..............................................         4
Atlanta, GA...................................................         8
New York, NY..................................................         2
Los Angeles, CA...............................................         1
Houston, TX...................................................         7
Minneapolis, MN...............................................        12
 
                        Phase II--1/1/98-5/15/98
 
Detroit, MI...................................................         6
Cleveland, OH.................................................        20
Washington, DC................................................         5
Baltimore, MD.................................................        18
Miami, FL.....................................................        24
Fort Lauderdale, FL...........................................        39
Orlando, FL...................................................        40
Cincinnati, OH................................................        30
Tampa, FL.....................................................        23
Boston, MA....................................................         9
Riverside, CA.................................................        10
San Diego, CA.................................................        14
Dallas, TX....................................................        11
St. Louis, MO.................................................        16
Phoenix, AZ...................................................        17
Seattle, WA...................................................        22
 
                        Phase III--4/1/98-6/30/98
 
Indianapolis, IN..............................................        34
Milwaukee, WI.................................................        35
Columbus, OH..................................................        38
Pittsburgh, PA................................................        19

[[Page 118]]

 
Newark, NJ....................................................        25
Norfolk, VA...................................................        32
New Orleans, LA...............................................        41
Charlotte, NC.................................................        43
Greensboro, NC................................................        48
Nashville, TN.................................................        51
Las Vegas, NV.................................................        50
Nassau, NY....................................................        13
Buffalo, NY...................................................        44
Orange Co, CA.................................................        15
Oakland, CA...................................................        21
San Francisco, CA.............................................        29
Rochester, NY.................................................        49
Kansas City, KS...............................................        28
Fort Worth, TX................................................        33
Hartford, CT..................................................        46
Denver, CO....................................................        26
Portland, OR..................................................        27
 
                        Phase IV--7/1/98-9/30/98
 
Grand Rapids, MI..............................................        56
Dayton, OH....................................................        61
Akron, OH.....................................................        73
Gary, IN......................................................        80
Bergen, NJ....................................................        42
Middlesex, NJ.................................................        52
Monmouth, NJ..................................................        54
Richmond, VA..................................................        63
Memphis, TN...................................................        53
Louisville, KY................................................        57
Jacksonville, FL..............................................        58
Raleigh, NC...................................................        59
West Palm Beach, FL...........................................        62
Greenville, SC................................................        66
Honolulu, HI..................................................        65
Providence, RI................................................        47
Albany, NY....................................................        64
San Jose, CA..................................................        31
Sacramento, CA................................................        36
Fresno, CA....................................................        68
San Antonio, TX...............................................        37
Oklahoma City, OK.............................................        55
Austin, TX....................................................        60
Salt Lake City, UT............................................        45
Tucson, AZ....................................................        71
 
                        Phase V--10/1/98-12/31/98
 
Toledo, OH....................................................        81
Youngstown, OH................................................        85
Ann Arbor, MI.................................................        95
Fort Wayne, IN................................................       100
Scranton, PA..................................................        78
Allentown, PA.................................................        82
Harrisburg, PA................................................        83
Jersey City, NJ...............................................        88
Wilmington, DE................................................        89
Birmingham, AL................................................        67
Knoxville, KY.................................................        79
Baton Rouge, LA...............................................        87
Charleston, SC................................................        92
Sarasota, FL..................................................        93
Mobile, AL....................................................        96
Columbia, SC..................................................        98
Tulsa, OK.....................................................        70
Syracuse, NY..................................................        69
Springfield, MA...............................................        86
Ventura, CA...................................................        72
Bakersfield, CA...............................................        84
Stockton, CA..................................................        94
Vallejo, CA...................................................        99
El Paso, TX...................................................        74
Little Rock, AR...............................................        90
Wichita, KS...................................................        97
New Haven, CT.................................................        91
Omaha, NE.....................................................        75
Albuquerque, NM...............................................        76
Tacoma, WA....................................................        77
 


[62 FR 18295, Apr. 15, 1997]



PART 53_SPECIAL PROVISIONS CONCERNING BELL OPERATING COMPANIES
--Table of Contents



                      Subpart A_General Information

Sec.
53.1  Basis and purpose.
53.3  Terms and definitions.

Subpart B--Bell Operating Company Entry Into InterLATA Services [Reserved]

                Subpart C_Separate Affiliate; Safeguards

53.201  Services for which a section 272 affiliate is required.
53.203  Structural and transactional requirements.
53.205  Fulfillment of certain requests. [Reserved]
53.207  Successor or assign.
53.209  Biennial audit.
53.211  Audit planning.
53.213  Audit analysis and evaluation.

           Subpart D_Manufacturing by Bell Operating Companies

53.301  [Reserved]

       Subpart E_Electronic Publishing by Bell Operating Companies

53.401  [Reserved]

                   Subpart F_Alarm Monitoring Services

53.501  [Reserved]

    Authority: Sections 1-5, 7, 201-05, 218, 251, 253, 271-75, 48 Stat. 
1070, as amended, 1077; 47 U.S.C. 151-55, 157, 201-05, 218, 251, 253, 
271-75, unless otherwise noted.

    Source: 62 FR 2967, Jan. 21, 1997, unless otherwise noted.

[[Page 119]]



                      Subpart A_General Information



Sec. 53.1  Basis and purpose.

    (a) Basis. The rules in this part are issued pursuant to the 
Communications Act of 1934, as amended.
    (b) Purpose. The purpose of the rules in this part is to implement 
sections 271 and 272 of the Communications Act of 1934, as amended, 47 
U.S.C. 271 and 272.



Sec. 53.3  Terms and definitions.

    Terms used in this part have the following meanings:
    Act. The Act means the Communications Act of 1934, as amended.
    Affiliate. An affiliate is a person that (directly or indirectly) 
owns or controls, is owned or controlled by, or is under common 
ownership or control with, another person. For purposes of this part, 
the term ``own'' means to own an equity interest (or the equivalent 
thereof) of more than 10 percent.
    AT&T Consent Decree. The AT&T Consent Decree is the order entered 
August 24, 1982, in the antitrust action styled United States v. Western 
Electric, Civil Action No. 82-0192, in the United States District Court 
for the District of Columbia, and any judgment or order with respect to 
such action entered on or after August 24, 1982.
    Bell Operating Company (BOC). The term Bell operating company
    (1) Means any of the following companies: Bell Telephone Company of 
Nevada, Illinois Bell Telephone Company, Indiana Bell Telephone Company, 
Incorporated, Michigan Bell Telephone Company, New England Telephone and 
Telegraph Company, New Jersey Bell Telephone Company, New York Telephone 
Company, U S West Communications Company, South Central Bell Telephone 
Company, Southern Bell Telephone and Telegraph Company, Southwestern 
Bell Telephone Company, The Bell Telephone Company of Pennsylvania, The 
Chesapeake and Potomac Telephone Company, The Chesapeake and Potomac 
Telephone Company of Maryland, The Chesapeake and Potomac Telephone 
Company of Virginia, The Chesapeake and Potomac Telephone Company of 
West Virginia, The Diamond State Telephone Company, The Ohio Bell 
Telephone Company, The Pacific Telephone and Telegraph Company, or 
Wisconsin Telephone Company; and
    (2) Includes any successor or assign of any such company that 
provides wireline telephone exchange service; but
    (3) Does not include an affiliate of any such company, other than an 
affiliate described in paragraphs (1) or (2) of this definition.
    In-Region InterLATA service. In-region interLATA service is 
interLATA service that originates in any of a BOC's in-region states, 
which are the states in which the BOC or any of its affiliates was 
authorized to provide wireline telephone exchange service pursuant to 
the reorganization plan approved under the AT&T Consent Decree, as in 
effect on February 7, 1996. For the purposes of this part, 800 service, 
private line service, or equivalent services that terminate in a BOC's 
in-region state and allow the called party to determine the interLATA 
carrier are considered to be in-region interLATA service.
    InterLATA Information Service. An interLATA information service is 
an information service that incorporates as a necessary, bundled element 
an interLATA telecommunications transmission component, provided to the 
customer for a single charge.
    InterLATA Service. An interLATA service is a service that involves 
telecommunications between a point located in a LATA and a point located 
outside such area. The term ``interLATA service'' includes both 
interLATA telecommunications services and interLATA information 
services.
    Local Access and Transport Area (LATA). A LATA is a contiguous 
geographic area:
    (1) Established before February 8, 1996 by a BOC such that no 
exchange area includes points within more than one metropolitan 
statistical area, consolidated metropolitan statistical area, or state, 
except as expressly permitted under the AT&T Consent Decree; or
    (2) Established or modified by a BOC after February 8, 1996 and 
approved by the Commission.
    Local Exchange Carrier (LEC). A LEC is any person that is engaged in 
the provision of telephone exchange service

[[Page 120]]

or exchange access. Such term does not include a person insofar as such 
person is engaged in the provision of commercial mobile service under 
section 332(c) of the Act, except to the extent that the Commission 
finds that such service should be included in the definition of such 
term.
    Out-of-Region InterLATA service. Out-of-region interLATA service is 
interLATA service that originates outside a BOC's in-region states.
    Section 272 affiliate. A section 272 affiliate is a BOC affiliate 
that complies with the separate affiliate requirements of section 272(b) 
of the Act and the regulations contained in this part.

Subpart B--Bell Operating Company Entry Into InterLATA Services [Reserved]



                Subpart C_Separate Affiliate; Safeguards



Sec. 53.201  Services for which a section 272 affiliate is required.

    For the purposes of applying section 272(a)(2) of the Act:
    (a) Previously authorized activities. When providing previously 
authorized activities described in section 271(f) of the Act, a BOC 
shall comply with the following:
    (1) A BOC shall provide previously authorized interLATA information 
services and manufacturing activities through a section 272 affiliate no 
later than February 8, 1997.
    (2) A BOC shall provide previously authorized interLATA 
telecommunications services in accordance with the terms and conditions 
of the orders entered by the United States District Court for the 
District of Columbia pursuant to section VII or VIII(C) of the AT&T 
Consent Decree that authorized such services.
    (b) InterLATA information services. A BOC shall provide an interLATA 
information service through a section 272 affiliate when it provides the 
interLATA telecommunications transmission component of the service 
either over its own facilities, or by reselling the interLATA 
telecommunications services of an interexchange provider.
    (c) Out-of-region interLATA information services. A BOC shall 
provide out-of-region interLATA information services through a section 
272 affiliate.



Sec. 53.203  Structural and transactional requirements.

    (a) Operational independence. A section 272 affiliate and the BOC of 
which it is an affiliate shall not jointly own transmission and 
switching facilities or the land and buildings where those facilities 
are located.
    (b) Separate books, records, and accounts. A section 272 affiliate 
shall maintain books, records, and accounts, which shall be separate 
from the books, records, and accounts maintained by the BOC of which it 
is an affiliate.
    (c) Separate officers, directors, and employees. A section 272 
affiliate shall have separate officers, directors, and employees from 
the BOC of which it is an affiliate.
    (d) Credit arrangements. A section 272 affiliate shall not obtain 
credit under any arrangement that would permit a creditor, upon default, 
to have recourse to the assets of the BOC of which it is an affiliate.
    (e) Arm's-length transactions. A section 272 affiliate shall conduct 
all transactions with the BOC of which it is an affiliate on an arm's 
length basis, pursuant to the accounting rules described in Sec. 32.27 
of this chapter, with any such transactions reduced to writing and 
available for public inspection.

[62 FR 2967, Jan. 21, 1997, as amended at 69 FR 16496, Mar. 30, 2004; 70 
FR 55302, Sept. 21, 2005]



Sec. 53.205  Fulfillment of certain requests. [Reserved]



Sec. 53.207  Successor or assign.

    If a BOC transfers to an affiliated entity ownership of any network 
elements that must be provided on an unbundled basis pursuant to section 
251(c)(3) of the Act, such entity will be deemed to be an ``assign'' of 
the BOC under section 3(4) of the Act with respect to such transferred 
network elements. A BOC affiliate shall not be deemed a ``successor or 
assign'' of a BOC solely because it obtains network

[[Page 121]]

elements from the BOC pursuant to section 251(c)(3) of the Act.

[62 FR 2967, Jan. 21, 1997; 63 FR 34604, June 25, 1998]



Sec. 53.209  Biennial audit.

    (a) A Bell operating company required to operate a separate 
affiliate under section 272 of the Act shall obtain and pay for a 
Federal/State joint audit every two years conducted by an independent 
auditor to determine whether the Bell operating company has complied 
with the rules promulgated under section 272 and particularly the audit 
requirements listed in paragraph (b) of this section.
    (b) The independent audit shall determine:
    (1) Whether the separate affiliate required under section 272 of the 
Act has:
    (i) Operated independently of the Bell operating company;
    (ii) Maintained books, records, and accounts in the manner 
prescribed by the Commission that are separate from the books, records 
and accounts maintained by the Bell operating company;
    (iii) Officers, directors and employees that are separate from those 
of the Bell operating company;
    (iv) Not obtained credit under any arrangement that would permit a 
creditor, upon default, to have recourse to the assets of the Bell 
operating company; and
    (v) Conducted all transactions with the Bell operating company on an 
arm's length basis with the transactions reduced to writing and 
available for public inspection.
    (2) Whether or not the Bell operating company has:
    (i) Discriminated between the separate affiliate and any other 
entity in the provision or procurement of goods, services, facilities, 
and information, or the establishment of standards;
    (ii) Accounted for all transactions with the separate affiliate in 
accordance with the accounting principles and rules approved by the 
Commission.
    (3) Whether or not the Bell operating company and an affiliate 
subject to section 251(c) of the Act:
    (i) Have fulfilled requests from unaffiliated entities for telephone 
exchange service and exchange access within a period no longer than the 
period in which it provides such telephone exchange service and exchange 
access to itself or its affiliates;
    (ii) Have made available facilities, services, or information 
concerning its provision of exchange access to other providers of 
interLATA services on the same terms and conditions as it has to its 
affiliate required under section 272 that operates in the same market;
    (iii) Have charged its separate affiliate under section 272, or 
imputed to itself (if using the access for its provision of its own 
services), an amount for access to its telephone exchange service and 
exchange access that is no less than the amount charged to any 
unaffiliated interexchange carriers for such service; and
    (iv) Have provided any interLATA or intraLATA facilities or services 
to its interLATA affiliate and made available such services or 
facilities to all carriers at the same rates and on the same terms and 
conditions, and allocated the associated costs appropriately.
    (c) An independent audit shall be performed on the first full year 
of operations of the separate affiliate required under section 272 of 
the Act, and biennially thereafter.
    (d) The Chief, Enforcement Bureau, shall work with the regulatory 
agencies in the states having jurisdiction over the Bell operating 
company's local telephone services, to attempt to form a Federal/State 
joint audit team with the responsibility for overseeing the planning of 
the audit as specified in Sec. 53.211 and the analysis and evaluation of 
the audit as specified in Sec. 53.213. The Federal/State joint audit 
team may direct the independent auditor to take any actions necessary to 
ensure compliance with the audit requirements listed in paragraph (b) of 
this section. If the state regulatory agencies having jurisdiction 
choose not to participate in the Federal/State joint audit team, the 
Chief, Enforcement Bureau, shall establish an FCC audit team to oversee 
and direct the independent auditor to take any actions necessary to 
ensure compliance with the audit requirements in paragraph (b) of this 
section.

[62 FR 2926, Jan. 21, 1997, as amended at 67 FR 13226, Mar. 21, 2002]

[[Page 122]]



Sec. 53.211  Audit planning.

    (a) Before selecting an independent auditor, the Bell operating 
company shall submit preliminary audit requirements, including the 
proposed scope of the audit and the extent of compliance and substantive 
testing, to the Federal/State joint audit team organized pursuant to 
Sec. 53.209(d);
    (b) The Federal/State joint audit team shall review the preliminary 
audit requirements to determine whether it is adequate to meet the audit 
requirements in Sec. 53.209 (b). The Federal/State joint audit shall 
have 30 days to review the audit requirements and determine any 
modifications that shall be incorporated into the final audit 
requirements.
    (c) After the audit requirements have been approved by the Federal/
State joint audit team, the Bell operating company shall engage within 
30 days an independent auditor to conduct the biennial audit. In making 
its selection, the Bell operating company shall not engage any 
independent auditor who has been instrumental during the past two years 
in designing any of the accounting or reporting systems under review in 
the biennial audit.
    (d) The independent auditor selected by the Bell operating company 
to conduct the audit shall develop a detailed audit program based on the 
final audit requirements and submit it to the Federal/State joint audit 
team. The Federal/State joint audit team shall have 30 days to review 
the audit program and determine any modifications that shall be 
incorporated into the final audit program.
    (e) During the course of the biennial audit, the independent 
auditor, among other things, shall:
    (1) Inform the Federal/State joint audit team of any revisions to 
the final audit program or to the scope of the audit.
    (2) Notify the Federal/State joint audit team of any meetings with 
the Bell operating company or its separate affiliate in which audit 
findings are discussed.
    (3) Submit to the Chief, Enforcement Bureau, any accounting or rule 
interpretations necessary to complete the audit.

[62 FR 2926, Jan. 21, 1997, as amended at 67 FR 13226, Mar. 21, 2002]



Sec. 53.213  Audit analysis and evaluation.

    (a) Within 60 dates after the end of the audit period, but prior to 
discussing the audit findings with the Bell operating company or the 
separate affiliate, the independent auditor shall submit a draft of the 
audit report to the Federal/State joint audit team.
    (1) The Federal/State joint audit team shall have 45 days to review 
the audit findings and audit workpapers, and offer its recommendations 
concerning the conduct of the audit or the audit findings to the 
independent auditor. Exceptions of the Federal/State joint audit team to 
the finding and conclusions of the independent auditor that remain 
unresolved shall be included in the final audit report.
    (2) Within 15 days after receiving the Federal/State joint audit 
team's recommendations and making appropriate revisions to the audit 
report, the independent auditor shall submit the audit report to the 
Bell operating company for its response to the audit findings and send a 
copy to the Federal/State joint audit team. The independent auditor may 
request additional time to perform additional audit work as recommended 
by the Federal/State joint audit team.
    (b) Within 30 days after receiving the audit report, the Bell 
operating company will respond to the audit findings and send a copy of 
its response to the Federal/State joint audit team. The Bell operating 
company's response shall be included as part of the final audit report 
along with any reply that the independent auditor wishes to make to the 
response.
    (c) Within 10 days after receiving the response of the Bell 
operating company, the independent auditor shall make available for 
public inspection the final audit report by filing it with the 
Commission and the state regulatory agencies participating on the joint 
audit team.
    (d) Interested parties may file comments with the Commission within 
60

[[Page 123]]

days after the audit report is made available for public inspection.

[62 FR 2927, Jan. 21, 1997]



           Subpart D_Manufacturing by Bell Operating Companies



Sec. 53.301  [Reserved]



       Subpart E_Electronic Publishing by Bell Operating Companies



Sec. 53.401  [Reserved]



                   Subpart F_Alarm Monitoring Services



Sec. 53.501  [Reserved]



PART 54_UNIVERSAL SERVICE--Table of Contents



                      Subpart A_General Information

Sec.
54.1  Basis and purpose.
54.5  Terms and definitions.
54.7  Intended use of federal universal service support.
54.8  Prohibition on participation: suspension and debarment.

                Subpart B_Services Designated for Support

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

        Subpart C_Carriers Eligible for Universal Service Support

54.201  Definition of eligible telecommunications carriers, generally.
54.202  Additional requirements for Commission designation of eligible 
          telecommunications carriers.
54.203  Designation of eligible telecommunications carriers for unserved 
          areas.
54.205  Relinquishment of universal service.
54.207  Service areas.

         Subpart D_Universal Service Support for High Cost Areas

54.302  Monthly per-line limit on universal service support.
54.303  Eligible Capital Investment and Operating Expenses.
54.304  Administration of Connect America Fund Intercarrier Compensation 
          Replacement.
54.305  Sale or transfer of exchanges.
54.306  Alaska Plan for Rate-of-Return Carriers Serving Alaska.
54.307  Support to a competitive eligible telecommunications carrier.
54.308  Broadband public interest obligations for recipients of high-
          cost support.
54.309  Connect America Fund Phase II Public Interest Obligations.
54.310  Connect America Fund for Price Cap Territories--Phase II
54.311  Connect America Fund Alternative-Connect America Cost Model 
          Support.
54.312  Connect America Fund for Price Cap Territories--Phase I.
54.313  Annual reporting requirements for high-cost recipients.
54.314  Certification of support for eligible telecommunications 
          carriers.
54.315  Application process for phase II support distributed through 
          competitive bidding.
54.316  Broadband deployment reporting and certification requirements 
          for high-cost recipients.
54.317  Alaska Plan for competitive eligible telecommunications carriers 
          serving remote Alaska.
54.318  High-cost support; limitations on high-cost support.
54.319  Elimination of high-cost support in areas with 100 percent 
          coverage by an unsubsidized competitor.
54.320  Compliance and recordkeeping for the high-cost program.
54.321  Reporting and certification requirements for Alaska Plan 
          participants.

      Subpart E_Universal Service Support for Low Income Consumers

54.400  Terms and definitions.
54.401  Lifeline defined.
54.403  Lifeline support amount.
54.404  The National Lifeline Accountability Database.
54.405  Carrier obligation to offer Lifeline.
54.407  Reimbursement for offering Lifeline.
54.408  Minimum service standards.
54.409  Consumer qualification for Lifeline.
54.410  Subscriber eligibility determination and certification.
54.411  Lifeline benefit portability.
54.412  Off reservation Tribal lands designation process.
54.413  Link Up for Tribal lands.
54.414  Reimbursement for Tribal Link Up.
54.416  Annual certifications by eligible telecommunications carriers.
54.417  Recordkeeping requirements.
54.418  Digital television transition notices by eligible 
          telecommunications carriers.
54.419  Validity of electronic signatures.
54.420  Low income program audits.
54.422  Annual reporting for eligible telecommunications carriers that 
          receive low-income support.
54.423  Budget.

[[Page 124]]

      Subpart F_Universal Service Support for Schools and Libraries

54.500  Terms and definitions.
54.501  Eligible recipients.
54.502  Eligible services.
54.503  Competitive bidding requirements.
54.504  Requests for services.
54.505  Discounts.
54.506  [Reserved]
54.507  Cap.
54.508-54.509  [Reserved]
54.511  Ordering services.
54.513  Resale and transfer of services.
54.514  Payment for discounted services.
54.515  Distributing support.
54.516  Auditing and inspections.
54.517-54.518  [Reserved]
54.519  State telecommunications networks.
54.520  Children's Internet Protection Act certifications required from 
          recipients of discounts under the federal universal service 
          support mechanism for schools and libraries.
54.522  [Reserved]
54.523  Payment for the non-discount portion of supported services.

      Subpart G_Universal Service Support for Health Care Providers

                      Defined Terms and Eligibility

54.600  Terms and definitions.
54.601  Health care provider eligibility.
54.602  Health care support mechanism.

                       Telecommunications Program

54.603  Competitive bidding and certification requirements.
54.604  Consortia, telecommunications services, and existing contracts.
54.605  Determining the urban rate.
54.607  Determining the rural rate.
54.609  Calculating support.
54.613  Limitations on supported services for rural health care 
          providers.
54.615  Obtaining services.
54.619  Audits and recordkeeping.
54.623  Annual filing and funding commitment requirement.
54.625  Support for telecommunications services beyond the maximum 
          supported distance for rural health care providers.

                         Healthcare Connect Fund

54.630  Eligible recipients.
54.631  Designation of Consortium Leader.
54.632  Letters of agency (LOA).
54.633  Health care provider contribution.
54.634  Eligible services.
54.635  Eligible equipment.
54.636  Eligible participant-constructed and owned network facilities 
          for consortium applicants.
54.637  Off-site data centers and off-site administrative offices.
54.638  Upfront payments.
54.639  Ineligible expenses.
54.640  Eligible vendors.
54.642  Competitive bidding requirement and exemptions.
54.643  Funding commitments.
54.644  Multi-year commitments.
54.645  Payment process.
54.646  Site and service substitutions.
54.647  Data collection and reporting.
54.648  Audits and recordkeeping.
54.649  Certifications.

                           General Provisions

54.671  Resale.
54.672  Duplicate support.
54.675   Cap.
54.679  Election to offset support against annual universal service fund 
          contribution.
54.680  Validity of electronic signatures.

                        Subpart H_Administration

54.701  Administrator of universal service support mechanisms.
54.702  Administrator's functions and responsibilities.
54.703  The Administrator's Board of Directors.
54.704  The Administrator's Chief Executive Officer.
54.705  Committees of the Administrator's Board of Directors.
54.706  Contributions.
54.707  Audit controls.
54.708  De minimis exemption.
54.709  Computations of required contributions to universal service 
          support mechanisms.
54.711  Contributor reporting requirements.
54.712  Contributor recovery of universal service costs from end users.
54.713  Contributors' failure to report or to contribute.
54.715  Administrative expenses of the Administrator.
54.717  Audits of the Administrator.

        Subpart I_Review of Decisions Issued by the Administrator

54.719  Parties permitted to seek review of Administrator decision.
54.720  Filing deadlines.
54.721  General filing requirements.
54.722  Review by the Wireline Competition Bureau or the Commission.
54.723  Standard of review.
54.724  Time periods for Commission approval of Administrator decisions.
54.725  Universal service disbursements during pendency of a request for 
          review and Administrator decision.

                       Subpart J_Remote Areas Fund

54.801  Use of competitive bidding for Remote Areas Fund.

[[Page 125]]

54.802  Geographic areas eligible for Remote Areas Fund support.
54.803  Provider eligibility.
54.804  Application process.
54.805  [Reserved]
54.806  Remote Areas Fund reporting obligations.

 Subpart K_Interstate Common Line Support Mechanism for Rate-of-Return 
                                Carriers

54.901  Calculation of Connect America Fund Broadband Loop Support.
54.902  Calculation of CAF BLS Support for transferred exchanges.
54.903  Obligations of rate-of-return carriers and the Administrator.

                         Subpart L_Mobility Fund

54.1001  Mobility Fund--Phase I.
54.1002  Geographic areas eligible for support.
54.1003  Provider eligibility.
54.1004  Service to Tribal Lands.
54.1005  Application process.
54.1006  Public interest obligations.
54.1007  Letter of credit.
54.1008  Mobility Fund Phase I disbursements.
54.1009  Annual reports.
54.1010  Record retention for Mobility Fund Phase I.
54.1011  Mobility Fund--Phase II.
54.1012  Geographic areas eligible for support.
54.1013  Provider eligibility.
54.1014  Application process.
54.1015  Public interest obligations.
54.1016  Letter of credit.
54.1017  Compliance for Mobility Fund Phase II.
54.1018  Mobility Fund Phase II disbursements.
54.1019  Annual reports.
54.1020  Milestone reports.
54.1021  Record retention for Mobility Fund Phase II.

      Subpart M_High Cost Loop Support for Rate-of-Return Carriers

54.1301  General.
54.1302  Calculation of incumbent local exchange carrier portion of 
          nationwide loop cost expense adjustment for rate-of-return 
          carriers.
54.1303  Calculation of the rural growth factor.
54.1304  Calculation of safety net additive.
54.1305  Submission of information to the National Exchange Carrier 
          Association (NECA).
54.1306  Updating information submitted to the National Exchange Carrier 
          Association.
54.1307  Submission of information by the National Exchange Carrier 
          Association.
54.1308  Study area total unseparated loop cost.
54.1309  National and study area average unseparated loop costs.
54.1310  Expense adjustment.

    Authority: 47 U.S.C. 151, 154(i), 155, 201, 205, 214, 219, 220, 254, 
303(r), 403, and 1302 unless otherwise noted.

    Source: 62 FR 32948, June 17, 1997, unless otherwise noted.



                      Subpart A_General Information



Sec. 54.1  Basis and purpose.

    (a) Basis. These rules are issued pursuant to the Communications Act 
of 1934, as amended.
    (b) Purpose. The purpose of these rules is to implement section 254 
of the Communications Act of 1934, as amended, 47 USC 254.



Sec. 54.5  Terms and definitions.

    Terms used in this part have the following meanings:
    Act. The term ``Act'' refers to the Communications Act of 1934, as 
amended.
    Administrator. The term ``Administrator'' shall refer to the 
Universal Service Administrative Company that is an independent 
subsidiary of the National Exchange Carrier Association, Inc., and that 
has been appointed the permanent Administrator of the federal universal 
service support mechanisms.
    Community anchor institutions. For the purpose of high-cost support, 
``community anchor institutions'' refers to schools, libraries, health 
care providers, community colleges, other institutions of higher 
education, and other community support organizations and entities.
    Competitive eligible telecommunications carrier. A ``competitive 
eligible telecommunications carrier'' is a carrier that meets the 
definition of an ``eligible telecommunications carrier'' below and does 
not meet the definition of an ``incumbent local exchange carrier'' in 
Sec. 51.5 of this chapter.
    Contributor. The term ``contributor'' shall refer to an entity 
required to contribute to the universal service support mechanisms 
pursuant to Sec. 54.706.

[[Page 126]]

    Eligible telecommunications carrier. ``Eligible telecommunications 
carrier'' means a carrier designated as such under subpart C of this 
part.
    High-cost support. ``High-cost support'' refers to those support 
mechanisms in existence as of October 1, 2011, specifically, high-cost 
loop support, safety net additive and safety valve provided pursuant to 
subpart F of part 36, local switching support pursuant to Sec. 54.301, 
forward-looking support pursuant to Sec. 54.309, interstate access 
support pursuant to Secs. 54.800 through 54.809, and interstate common 
line support pursuant to Secs. 54.901 through 54.904, support provided 
pursuant to Secs. 51.915, 51.917, and 54.304, support provided to 
competitive eligible telecommunications carriers as set forth in 
Sec. 54.307(e), Connect America Fund support provided pursuant to 
Sec. 54.312, and Mobility Fund support provided pursuant to subpart L of 
this part.
    Incumbent local exchange carrier. ``Incumbent local exchange 
carrier'' or ``ILEC'' has the same meaning as that term is defined in 
Sec. 51.5 of this chapter.
    Information service. ``Information service'' is the offering of a 
capability for generating, acquiring, storing, transforming, processing, 
retrieving, utilizing, or making available information via 
telecommunications, and includes electronic publishing, but does not 
include any use of any such capability for the management, control, or 
operation of a telecommunications system or the management of a 
telecommunications service.
    Interconnected VoIP Provider. An ``interconnected VoIP provider'' is 
an entity that provides interconnected VoIP service, as that term is 
defined in section 9.3 of these rules.
    Internet access. ``Internet access'' includes the following 
elements:
    (1) The transmission of information as common carriage; and
    (2) The transmission of information as part of a gateway to an 
information service, when that transmission does not involve the 
generation or alteration of the content of information, but may include 
data transmission, address translation, protocol conversion, billing 
management, introductory information content, and navigational systems 
that enable users to access information services, and that do not affect 
the presentation of such information to users.
    Interstate telecommunication. ``Interstate telecommunication'' is a 
communication or transmission:
    (1) From any State, Territory, or possession of the United States 
(other than the Canal zone), or the District of Columbia, to any other 
State, Territory, or possession of the United States (other than the 
Canal Zone), or the District of Columbia,
    (2) From or to the United States to or from the Canal Zone, insofar 
as such communication or transmission takes place within the United 
States, or
    (3) Between points within the United States but through a foreign 
country.
    Interstate transmission. ``Interstate transmission'' is the same as 
interstate telecommunication.
    Intrastate telecommunication. ``Intrastate telecommunication'' is a 
communication or transmission from within any State, Territory, or 
possession of the United States, or the District of Columbia to a 
location within that same State, Territory, or possession of the United 
States, or the District of Columbia.
    Intrastate transmission. ``Intrastate transmission'' is the same as 
intrastate telecommunication.
    LAN. ``LAN'' is a local area network, which is a set of high-speed 
links connecting devices, generally computers, on a single shared 
medium, usually on the user's premises.
    Qualifying competitor. A ``qualifying competitor'' is a facilities-
based terrestrial provider of residential fixed voice and broadband 
service access meeting or exceeding 3 Mbps downstream and 768 kbps 
upstream.
    Rate-of-return carrier. ``Rate-of-return carrier'' shall refer to 
any incumbent local exchange carrier not subject to price cap regulation 
as that term is defined in Sec. 61.3(ee) of this chapter.
    Rural incumbent local exchange carrier. ``Rural incumbent local 
exchange carrier'' is a carrier that meets the definitions of ``rural 
telephone company'' and ``incumbent local exchange carrier,'' as those 
terms are defined in Sec. 51.5 of this chapter.
    Rural telephone company. ``Rural telephone company'' has the same 
meaning

[[Page 127]]

as that term is defined in Sec. 51.5 of this chapter.
    State commission. The term ``state commission'' means the 
commission, board or official (by whatever name designated) that, under 
the laws of any state, has regulatory jurisdiction with respect to 
intrastate operations of carriers.
    Technically feasible. ``Technically feasible'' means capable of 
accomplishment as evidenced by prior success under similar 
circumstances. For example, preexisting access at a particular point 
evidences the technical feasibility of access at substantially similar 
points. A determination of technical feasibility does not consider 
economic, accounting, billing, space or site except that space and site 
may be considered if there is no possibility of expanding available 
space.
    Telecommunications. ``Telecommunications'' is the transmission, 
between or among points specified by the user, of information of the 
user's choosing, without change in the form or content of the 
information as sent and received.
    Telecommunications carrier. A ``telecommunications carrier'' is any 
provider of telecommunications services, except that such term does not 
include aggregators of telecommunications services as defined in section 
226 of the Act. A telecommunications carrier shall be treated as a 
common carrier under the Act only to the extent that it is engaged in 
providing telecommunications services, except that the Commission shall 
determine whether the provision of fixed and mobile satellite service 
shall be treated as common carriage. This definition includes cellular 
mobile radio service (CMRS) providers, interexchange carriers (IXCs) 
and, to the extent they are acting as telecommunications carriers, 
companies that provide both telecommunications and information services. 
Private mobile radio service (PMRS) providers are telecommunications 
carriers to the extent they provide domestic or international 
telecommunications for a fee directly to the public.
    Telecommunications channel. ``Telecommunications channel'' means a 
telephone line, or, in the case of wireless communications, a 
transmittal line or cell site.
    Telecommunications service. ``Telecommunications service'' is the 
offering of telecommunications for a fee directly to the public, or to 
such classes of users as to be effectively available directly to the 
public, regardless of the facilities used.
    Tribal lands. For the purposes of high-cost support, ``Tribal 
lands'' include any federally recognized Indian tribe's reservation, 
pueblo or colony, including former reservations in Oklahoma, Alaska 
Native regions established pursuant to the Alaska Native Claims 
Settlement Act (85 Stat. 688) and Indian Allotments, see Sec. 54.400(e), 
as well as Hawaiian Home Lands--areas held in trust for native Hawaiians 
by the state of Hawaii, pursuant to the Hawaiian Homes Commission Act, 
1920, July 9, 1921, 42 Stat 108, et seq., as amended.
    Unsubsidized competitor. An ``unsubsidized competitor'' is a 
facilities-based provider of residential fixed voice and broadband 
service that does not receive high-cost support.
    Website. The term ``website'' shall refer to any websites operated 
by the Administrator in connection with the schools and libraries 
support mechanism, the rural health care support mechanism, the high 
cost mechanism, and the low income mechanism.
    Wire center. A wire center is the location of a local switching 
facility containing one or more central offices, as defined in the 
Appendix to part 36 of this chapter. The wire center boundaries define 
the area in which all customers served by a given wire center are 
located.

[62 FR 32948, June 17, 1997]

    Editorial Note: For Federal Register citations affecting Sec. 54.5, 
see the List of CFR Sections Affected, which appears in the Finding Aids 
section of the printed volume and at www.fdsys.gov.



Sec. 54.7  Intended use of federal universal service support.

    (a) A carrier that receives federal universal service support shall 
use that support only for the provision, maintenance, and upgrading of 
facilities and services for which the support is intended.

[[Page 128]]

    (b) The use of federal universal service support that is authorized 
by paragraph (a) of this section shall include investments in plant that 
can, either as built or with the addition of plant elements, when 
available, provide access to advanced telecommunications and information 
services.

[76 FR 73869, Nov. 29, 2011]



Sec. 54.8  Prohibition on participation: suspension and debarment.

    (a) Definitions--(1) Activities associated with or related to the 
schools and libraries support mechanism, the high-cost support 
mechanism, the rural health care support mechanism, and the low-income 
support mechanism. Such matters include the receipt of funds or 
discounted services through one or more of these support mechanisms, or 
consulting with, assisting, or advising applicants or service providers 
regarding one or more of these support mechanisms.
    (2) Civil liability. The disposition of a civil action by any court 
of competent jurisdiction, whether entered by verdict, decision, 
settlement with admission of liability, stipulation, or otherwise 
creating a civil liability for the wrongful acts complained of, or a 
final determination of liability under the Program Fraud Civil Remedies 
Act of 1988 (31 U.S.C. 3801-12).
    (3) Consultant. A person that for consideration advises or consults 
a person regarding the schools and libraries support mechanism, but who 
is not employed by the person receiving the advice or consultation.
    (4) Conviction. A judgment or conviction of a criminal offense by 
any court of competent jurisdiction, whether entered by verdict or a 
plea, including a plea of nolo contendere.
    (5) Debarment. Any action taken by the Commission in accordance with 
these regulations to exclude a person from activities associated with or 
relating to the schools and libraries support mechanism, the high-cost 
support mechanism, the rural health care support mechanism, and the low-
income support mechanism. A person so excluded is ``debarred.''
    (6) Person. Any individual, group of individuals, corporation, 
partnership, association, unit of government or legal entity, however 
organized.
    (7) Suspension. An action taken by the Commission in accordance with 
these regulations that immediately excludes a person from activities 
associated with or relating to the schools and libraries support 
mechanism, the high-cost support mechanism, the rural health care 
support mechanism, and the low-income support mechanism for a temporary 
period, pending completion of the debarment proceedings. A person so 
excluded is ``suspended.''
    (b) Suspension and debarment in general. The Commission shall 
suspend and debar a person for any of the causes in paragraph (c) of 
this section using procedures established in this section, absent 
extraordinary circumstances.
    (c) Causes for suspension and debarment. Causes for suspension and 
debarment are conviction of or civil judgment for attempt or commission 
of criminal fraud, theft, embezzlement, forgery, bribery, falsification 
or destruction of records, making false statements, receiving stolen 
property, making false claims, obstruction of justice and other fraud or 
criminal offense arising out of activities associated with or related to 
the schools and libraries support mechanism, the high-cost support 
mechanism, the rural health care support mechanism, and the low-income 
support mechanism.
    (d) Effect of suspension and debarment. Unless otherwise ordered, 
any persons suspended or debarred shall be excluded from activities 
associated with or related to the schools and libraries support 
mechanism, the high-cost support mechanism, the rural health care 
support mechanism, and the low-income support mechanism. Suspension and 
debarment of a person other than an individual constitutes suspension 
and debarment of all divisions and/or other organizational elements from 
participation in the program for the suspension and debarment period, 
unless the notice of suspension and proposed debarment is limited by its 
terms to one or more specifically identified individuals, divisions, or 
other organizational elements or to specific types of transactions.

[[Page 129]]

    (e) Procedures for suspension and debarment. The suspension and 
debarment process shall proceed as follows:
    (1) Upon evidence that there exists cause for suspension and 
debarment, the Commission shall provide prompt notice of suspension and 
proposed debarment to the person. Suspension shall be effective upon the 
earlier of receipt of notification or publication in the Federal 
Register.
    (2) The notice shall:
    (i) Give the reasons for the proposed debarment in terms sufficient 
to put a person on notice of the conduct or transaction(s) upon which it 
is based and the cause relied upon, namely, the entry of a criminal 
conviction or civil judgment arising out of activities associated with 
or related to the schools and libraries support mechanism, the high-cost 
support mechanism, the rural health care support mechanism, and the low-
income support mechanism;
    (ii) Explain the applicable debarment procedures;
    (iii) Describe the effect of debarment.
    (3) A person subject to proposed debarment, or who has an existing 
contract with a person subject to proposed debarment or intends to 
contract with such a person to provide or receive services in matters 
arising out of activities associated with or related to the schools and 
libraries support mechanism, the high-cost support mechanism, the rural 
health care support mechanism, and the low-income support mechanism may 
contest debarment or the scope of the proposed debarment. A person 
contesting debarment or the scope of proposed debarment must file 
arguments and any relevant documentation within thirty (30) calendar 
days of receipt of notice or publication in the Federal Register, 
whichever is earlier.
    (4) A person subject to proposed debarment, or who has an existing 
contract with a person subject to proposed debarment or intends to 
contract with such a person to provide or receive services in matters 
arising out of activities associated with or related to the schools and 
libraries support mechanism, the high-cost support mechanism, the rural 
health care support mechanism, and the low-income support mechanism may 
also contest suspension or the scope of suspension, but such action will 
not ordinarily be granted. A person contesting suspension or the scope 
of suspension must file arguments and any relevant documentation within 
thirty (30) calendar days of receipt of notice or publication in the 
Federal Register, whichever is earlier.
    (5) Within ninety (90) days of receipt of any information submitted 
by the respondent, the Commission, in the absence of extraordinary 
circumstances, shall provide the respondent prompt notice of the 
decision to debar. Debarment shall be effective upon the earlier of 
receipt of notice or publication in the Federal Register.
    (f) Reversal or limitation of suspension or debarment. The 
Commission may reverse a suspension or debarment, or limit the scope or 
period of suspension or debarment, upon a finding of extraordinary 
circumstances, after due consideration following the filing of a 
petition by an interested party or upon motion by the Commission. 
Reversal of the conviction or civil judgment upon which the suspension 
and debarment was based is an example of extraordinary circumstances.
    (g) Time period for debarment. A debarred person shall be prohibited 
from involvement with the schools and libraries support mechanism for 
three (3) years from the date of debarment. The Commission may, if 
necessary to protect the public interest, set a longer period of 
debarment or extend the existing period of debarment. If multiple 
convictions or judgments have been rendered, the Commission shall 
determine based on the facts before it whether debarments shall run 
concurrently or consecutively.

[68 FR 36943, June 20, 2003. Redesignated and amended at 72 FR 54218, 
Sept. 24, 2007]



                Subpart B_Services Designated for Support



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

    (a) Services designated for support. Voice telephony services and 
broadband service shall be supported by federal universal service 
support mechanisms.

[[Page 130]]

    (1) 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 services to 
qualifying low-income consumers as provided in subpart E of this part.
    (2) Eligible broadband Internet access services must provide the 
capability to transmit data to and receive data by wire or radio from 
all or substantially all Internet endpoints, including any capabilities 
that are incidental to and enable the operation of the communications 
service, but excluding dial-up service.
    (b) An eligible telecommunications carrier eligible to receive high-
cost support must offer voice telephony service as set forth in 
paragraph (a)(1) of this section in order to receive federal universal 
service support.
    (c) An eligible telecommunications carrier (ETC) subject to a high-
cost public interest obligation to offer broadband Internet access 
services and not receiving Phase I frozen high-cost support must offer 
broadband services as set forth in paragraph (a)(2) of this section 
within the areas where it receives high-cost support consistent with the 
obligations set forth in this part and subparts D, K, L and M of this 
part.
    (d) Any ETC must comply with subpart E of this part.

[81 FR 33088, May 24, 2016]



        Subpart C_Carriers Eligible for Universal Service Support



Sec. 54.201  Definition of eligible telecommunications carriers, generally.

    (a) Carriers eligible to receive support.
    (1) Only eligible telecommunications carriers designated under this 
subpart shall receive universal service support distributed pursuant to 
subparts D and E of this part. Eligible telecommunications carriers 
designated under this subpart for purposes of receiving support only 
under subpart E of this part must provide Lifeline service directly to 
qualifying low-income consumers.
    (2) [Reserved]
    (3) This paragraph does not apply to offset or reimbursement support 
distributed pursuant to subpart G of this part.
    (4) This paragraph does not apply to support distributed pursuant to 
subpart F of this part.
    (b) A state commission shall upon its own motion or upon request 
designate a common carrier that meets the requirements of paragraph (d) 
of this section as an eligible telecommunications carrier for a service 
area designated by the state commission.
    (c) Upon request and consistent with the public interest, 
convenience, and necessity, the state commission may, in the case of an 
area served by a rural telephone company, and shall, in the case of all 
other areas, designate more than one common carrier as an eligible 
telecommunications carrier for a service area designated by the state 
commission, so long as each additional requesting carrier meets the 
requirements of paragraph (d) of this section. Before designating an 
additional eligible telecommunications carrier for an area served by a 
rural telephone company, the state commission shall find that the 
designation is in the public interest.
    (d) A common carrier designated as an eligible telecommunications 
carrier under this section shall be eligible to receive universal 
service support in accordance with section 254 of the Act and, except as 
described in paragraph (d)(3) of this section, shall throughout the 
service area for which the designation is received:
    (1) Offer the services that are supported by federal universal 
service support mechanisms under subpart B of this part and section 
254(c) of the Act, either using its own facilities or a combination of 
its own facilities and resale of another carrier's services (including 
the services offered by another eligible telecommunications carrier); 
and
    (2) Advertise the availability of such services and the charges 
therefore using media of general distribution.

[[Page 131]]

    (3) Exception. Price cap carriers that serve census blocks that are 
identified by the forward-looking cost model as low-cost, census blocks 
that are served by an unsubsidized competitor as defined in Sec. 54.5 
meeting the requisite public interest obligations specified in 
Sec. 54.309, or census blocks where a subsidized competitor is receiving 
federal high-cost support to deploy modern networks capable of providing 
voice and broadband to fixed locations, are not required to comply with 
paragraphs (d)(1) and (2) of this section in these specific geographic 
areas. Such price cap carriers remain obligated to maintain existing 
voice telephony service in these specific geographic areas unless and 
until a discontinuance is granted pursuant to Sec. 63.71 of this 
chapter.
    (e) For the purposes of this section, the term facilities means any 
physical components of the telecommunications network that are used in 
the transmission or routing of the services that are designated for 
support pursuant to subpart B of this part.
    (f) For the purposes of this section, the term ``own facilities'' 
includes, but is not limited to, facilities obtained as unbundled 
network elements pursuant to part 51 of this chapter, provided that such 
facilities meet the definition of the term ``facilities'' under this 
subpart.
    (g) A state commission shall not require a common carrier, in order 
to satisfy the requirements of paragraph (d)(1) of this section, to use 
facilities that are located within the relevant service area, as long as 
the carrier uses facilities to provide the services designated for 
support pursuant to subpart B of this part within the service area.
    (h) A state commission shall not designate a common carrier as an 
eligible telecommunications carrier for purposes of receiving support 
only under subpart E of this part unless the carrier seeking such 
designation has demonstrated that it is financially and technically 
capable of providing the supported Lifeline service in compliance with 
subpart E of this part.
    (i) A state commission shall not designate as an eligible 
telecommunications carrier a telecommunications carrier that offers the 
services supported by federal universal service support mechanisms 
exclusively through the resale of another carrier's services.
    (j) A state commission shall not designate a common carrier as a 
Lifeline Broadband Provider eligible telecommunications carrier.

[62 FR 32948, June 17, 1997, as amended at 63 FR 2125, Jan. 13, 1998; 64 
FR 62123, Nov. 16, 1999; 71 FR 65750, Nov. 9, 2006; 77 FR 12966, Mar. 2, 
2012; 80 FR 4476, Jan. 27, 2015; 80 FR 40935, July 14, 2015; 81 FR 
33089, May 24, 2016]



Sec. 54.202  Additional requirements for Commission designation of
eligible telecommunications carriers.

    (a) In order to be designated an eligible telecommunications carrier 
under section 214(e)(6), any common carrier in its application must:
    (1)(i) Certify that it will comply with the service requirements 
applicable to the support that it receives.
    (ii) Submit a five-year plan that describes with specificity 
proposed improvements or upgrades to the applicant's network throughout 
its proposed service area. Each applicant shall estimate the area and 
population that will be served as a result of the improvements. Except, 
a common carrier seeking designation as an eligible telecommunications 
carrier in order to provide supported services only under subpart E of 
this part does not need to submit such a five-year plan.
    (2) Demonstrate its ability to remain functional in emergency 
situations, including a demonstration that it has a reasonable amount of 
back-up power to ensure functionality without an external power source, 
is able to reroute traffic around damaged facilities, and is capable of 
managing traffic spikes resulting from emergency situations.
    (3) Demonstrate that it will satisfy applicable consumer protection 
and service quality standards. A commitment by wireless applicants to 
comply with the Cellular Telecommunications and Internet Association's 
Consumer Code for Wireless Service will satisfy this requirement. Other 
commitments will be considered on a case-by-case basis.
    (4) For common carriers seeking designation as an eligible 
telecommunications carrier for purposes of receiving support only under 
subpart E of

[[Page 132]]

this part, demonstrate that it is financially and technically capable of 
providing the Lifeline service in compliance with subpart E of this 
part.
    (5) For common carriers seeking designation as an eligible 
telecommunications carrier for purposes of receiving support only under 
subpart E of this part, submit information describing the terms and 
conditions of any voice telephony service plans offered to Lifeline 
subscribers, including details on the number of minutes provided as part 
of the plan, additional charges, if any, for toll calls, and rates for 
each such plan. To the extent the eligible telecommunications carrier 
offers plans to Lifeline subscribers that are generally available to the 
public, it may provide summary information regarding such plans, such as 
a link to a public Web site outlining the terms and conditions of such 
plans.
    (6) For common carriers seeking designation as an eligible 
telecommunications carrier for purposes of receiving support only under 
subpart E of this part, submit information describing the terms and 
conditions of any broadband Internet access service plans offered to 
Lifeline subscribers, including details on the speeds offered, data 
usage allotments, additional charges for particular uses, if any, and 
rates for each such plan. To the extent the eligible telecommunications 
carrier offers plans to Lifeline subscribers that are generally 
available to the public, it may provide summary information regarding 
such plans, such as a link to a public Web site outlining the terms and 
conditions of such plans.
    (b) Public interest standard. Prior to designating an eligible 
telecommunications carrier pursuant to section 214(e)(6), the Commission 
determines that such designation is in the public interest.
    (c) A common carrier seeking designation as an eligible 
telecommunications carrier under section 214(e)(6) for any part of 
Tribal lands shall provide a copy of its petition to the affected tribal 
government and tribal regulatory authority, as applicable, at the time 
it files its petition with the Federal Communications Commission. In 
addition, the Commission shall send any public notice seeking comment on 
any petition for designation as an eligible telecommunications carrier 
on Tribal lands, at the time it is released, to the affected tribal 
government and tribal regulatory authority, as applicable, by the most 
expeditious means available.
    (d) A common carrier seeking designation as a Lifeline Broadband 
Provider eligible telecommunications carrier must meet the requirements 
of paragraph (a) of this section. The Commission shall process such 
petitions for designation as follows:
    (1) If the petitioning common carrier has offered broadband Internet 
access service to the public for at least two years before the date of 
the filing and serves at least 1,000 non-Lifeline customers with voice 
telephony and/or broadband Internet access service as of the date of the 
filing, the common carrier's petition for designation as a Lifeline 
Broadband Provider eligible telecommunications carrier shall be deemed 
granted within 60 days of the submission of a completed filing unless 
the Commission notifies the common carrier that the grant will not be 
automatically effective.
    (2) If the petitioning common carrier provides service on Tribal 
lands and is a facilities-based provider more than 50 percent owned by 
one or more federally recognized Tribal Nations or Tribal consortia and 
actually controlled by one or more federally recognized Tribal Nations 
or Tribal consortia, the common carrier's petition for designation as a 
Lifeline Broadband Provider eligible telecommunications carrier shall be 
deemed granted within 60 days of the submission of a completed filing 
unless the Commission notifies the common carrier that the grant will 
not be automatically effective.
    (3) If the petitioning common carrier does not qualify under 
paragraph (d)(1) or (2) of this section, the common carrier's petition 
for designation as a Lifeline Broadband Provider eligible 
telecommunications carrier shall be acted upon within six months of the 
submission of a completed filing.
    (e) A provider designated as a Lifeline Broadband Provider (LBP) may 
obtain designation as an LBP in additional service areas by submitting 
to the Commission a request identifying

[[Page 133]]

the service areas in which the LBP plans to offer Lifeline-supported 
service and a certification that there has been no material change to 
the information submitted in the petition for which the LBP received 
designation as an LBP. Such a request shall be deemed granted five 
business days after it is submitted to the Commission, unless the 
Commission notifies the applicant that the grant will not be 
automatically effective.

[77 FR 12966, Mar. 2, 2012, as amended at 81 FR 33089, May 24, 2016]



Sec. 54.203  Designation of eligible telecommunications carriers for
unserved areas.

    (a) If no common carrier will provide the services that are 
supported by federal universal service support mechanisms under section 
254(c) of the Act and subpart B of this part to an unserved community or 
any portion thereof that requests such service, the Commission, with 
respect to interstate services, or a state commission, with respect to 
intrastate services, shall determine which common carrier or carriers 
are best able to provide such service to the requesting unserved 
community or portion thereof and shall order such carrier or carriers to 
provide such service for that unserved community or portion thereof.
    (b) Any carrier or carriers ordered to provide such service under 
this section shall meet the requirements of section 54.201(d) and shall 
be designated as an eligible telecommunications carrier for that 
community or portion thereof.



Sec. 54.205  Relinquishment of universal service.

    (a) A state commission shall permit an eligible telecommunications 
carrier to relinquish its designation as such a carrier in any area 
served by more than one eligible telecommunications carrier. An eligible 
telecommunications carrier that seeks to relinquish its eligible 
telecommunications carrier designation for an area served by more than 
one eligible telecommunications carrier shall give advance notice to the 
state commission of such relinquishment.
    (b) Prior to permitting a telecommunications carrier designated as 
an eligible telecommunications carrier to cease providing universal 
service in an area served by more than one eligible telecommunications 
carrier, the state commission shall require the remaining eligible 
telecommunications carrier or carriers to ensure that all customers 
served by the relinquishing carrier will continue to be served, and 
shall require sufficient notice to permit the purchase or construction 
of adequate facilities by any remaining eligible telecommunications 
carrier. The state commission shall establish a time, not to exceed one 
year after the state commission approves such relinquishment under this 
section, within which such purchase or construction shall be completed.
    (c) In the case of a Lifeline Broadband Provider eligible 
telecommunications carrier, a Lifeline Broadband Provider's notice of 
relinquishment shall be deemed granted by the Commission 60 days after 
the notice is filed, unless the Commission notifies the Lifeline 
Broadband Provider that the relinquishment will not be automatically 
effective. This paragraph (c) shall not apply to Lifeline Broadband 
Providers that also receive high-cost universal service support.

[81 FR 33089, May 24, 2016]



Sec. 54.207  Service areas.

    (a) The term service area means a geographic area established by a 
state commission for the purpose of determining universal service 
obligations and support mechanisms. A service area defines the overall 
area for which the carrier shall receive support from federal universal 
service support mechanisms.
    (b) In the case of a service area served by a rural telephone 
company, service area means such company's ``study area'' unless and 
until the Commission and the states, after taking into account 
recommendations of a Federal-State Joint Board instituted under section 
410(c) of the Act, establish a different definition of service area for 
such company.
    (c) If a state commission proposes to define a service area served 
by a rural telephone company to be other than such company's study area, 
the Commission will consider that proposed

[[Page 134]]

definition in accordance with the procedures set forth in this 
paragraph.
    (1) A state commission or other party seeking the Commission's 
agreement in redefining a service area served by a rural telephone 
company shall submit a petition to the Commission. The petition shall 
contain:
    (i) The definition proposed by the state commission; and
    (ii) The state commission's ruling or other official statement 
presenting the state commission's reasons for adopting its proposed 
definition, including an analysis that takes into account the 
recommendations of any Federal-State Joint Board convened to provide 
recommendations with respect to the definition of a service area served 
by a rural telephone company.
    (2) The Commission shall issue a Public Notice of any such petition 
within fourteen (14) days of its receipt.
    (3) The Commission may initiate a proceeding to consider the 
petition within ninety (90) days of the release date of the Public 
Notice.
    (i) If the Commission initiates a proceeding to consider the 
petition, the proposed definition shall not take effect until both the 
state commission and the Commission agree upon the definition of a rural 
service area, in accordance with paragraph (b) of this section and 
section 214(e)(5) of the Act.
    (ii) If the Commission does not act on the petition within ninety 
(90) days of the release date of the Public Notice, the definition 
proposed by the state commission will be deemed approved by the 
Commission and shall take effect in accordance with state procedures.
    (d) The Commission may, on its own motion, initiate a proceeding to 
consider a definition of a service area served by a rural telephone 
company that is different from that company's study area. If it proposes 
such different definition, the Commission shall seek the agreement of 
the state commission according to this paragraph.
    (1) The Commission shall submit a petition to the state commission 
according to that state commission's procedures. The petition submitted 
to the relevant state commission shall contain:
    (i) The definition proposed by the Commission; and
    (ii) The Commission's decision presenting its reasons for adopting 
the proposed definition, including an analysis that takes into account 
the recommendations of any Federal-State Joint Board convened to provide 
recommendations with respect to the definition of a service area served 
by a rural telephone company.
    (2) The Commission's proposed definition shall not take effect until 
both the state commission and the Commission agree upon the definition 
of a rural service area, in accordance with paragraph (b) of this 
section and section 214(e)(5) of the Act.
    (e) The Commission delegates its authority under paragraphs (c) and 
(d) of this section to the Chief, Wireline Competition Bureau.

[62 FR 32948, June 17, 1997, as amended at 67 FR 13226, Mar. 21, 2002]



         Subpart D_Universal Service Support for High Cost Areas



Sec. 54.302  Monthly per-line limit on universal service support.

    (a) Beginning July 1, 2012 and until June 30, 2013, each study 
area's universal service monthly support (not including Connect America 
Fund support provided pursuant to Sec. 54.304) on a per-line basis shall 
not exceed $250 per-line plus two-thirds of the difference between its 
uncapped per-line monthly support and $250. Beginning July 1, 2013 and 
until June 30, 2014, each study area's universal service monthly support 
on a per-line basis shall not exceed $250 per-line plus one third of the 
difference between its uncapped per-line monthly support and $250. 
Beginning July 1, 2014, each study area's universal service monthly per-
line support shall not exceed $250.
    (b) For purposes of this section, universal service support is 
defined as the sum of the amounts calculated pursuant to Secs. 54.1304, 
54.1310, 54.305, and 54.901 through 54.904. Line counts for purposes of 
this section shall be as of the most recent line counts reported 
pursuant to Sec. 54.903(a)(1).
    (c) The Administrator, in order to limit support to $250 for 
affected carriers, shall reduce safety net additive

[[Page 135]]

support, high-cost loop support, safety valve support, and Connect 
America Fund Broadband Loop Support in proportion to the relative 
amounts of each support the study area would receive absent such 
limitation.

[76 FR 73870, Nov. 29, 2011, as amended at 79 FR 39188, July 9, 2014; 82 
FR 14339, Mar. 20, 2017]



Sec. 54.303  Eligible Capital Investment and Operating Expenses.

    (a) Eligible Operating Expenses. Each study area's eligible 
operating expenses for purposes of calculating universal service support 
pursuant to subparts K and M of this part shall be adjusted as follows:
    (1) Total eligible annual operating expenses per location shall be 
limited as follows: Calculate Exp(Y + 1.5 * mean square error of the 
regression), where

Y = [alpha] + [beta]1X1 + 
[beta]2X2 + [beta]3X3

[alpha], [beta]1, [beta]2, and [beta]3 
          are the coefficients from the regression,
X1 is the natural log of the number of housing units in the 
          study area,
X2 is the natural log of the number of density (number of 
          housing units per square mile), and
X3 is the square of the natural log of the density

    (2) Eligible operating expenses are the sum of Cable and Wire 
Facilities Expense, Central Office Equipment Expense, Network Support 
and General Expense, Network Operations Expense, Limited Corporate 
Operations Expense, Information Origination/Termination Expense, Other 
Property Plant and Equipment Expenses, Customer Operations Expense: 
Marketing, and Customer Operations Expense: Services.
    (3) For purposes of this section, the number of housing units will 
be determined per the most recently available U.S Census data for each 
census block in that study area. If a census block is partially within a 
study area, the number of housing units in that portion of the census 
block will be determined based upon the percentage geographic area of 
the census block within the study area.
    (4) Notwithstanding the provisions of paragraph (a) of this section, 
total eligible annual operating expenses for 2016 will be limited to the 
total eligible annual operating expenses as defined in this section plus 
one half of the amount of total eligible annual expense as calculated 
prior to the application of this section.
    (5) For any study area subject to the limitation described in this 
paragraph, a required percentage reduction will be calculated for that 
study area's total eligible annual operating expenses. Each category or 
account used to determine that study area's total eligible annual 
operating expenses will then be reduced by this required percentage 
reduction.
    (b) Loop Plant Investment allowances. Data submitted by rate-of-
return carriers for purposes of obtaining high-cost support under 
subparts K and M of this part may include any Loop Plant Investment as 
described in paragraph (c)(1) of this section and any Excess Loop Plant 
Investment as described in paragraph (h) of this section, but may not 
include amounts in excess of the Annual Allowed Loop Plant Investment 
(AALPI) as described in paragraph (d) of this section. Amounts in excess 
of the AALPI will be removed from the categories or accounts described 
in paragraph (c)(1) of this section either on a direct basis when the 
amounts of the new loop plant investment can be directly assigned to a 
category or account, or on a pro-rata basis in accordance with each 
category or account's proportion to the total amount in each of the 
categories and accounts described in paragraph (c)(1) of this section 
when the new loop plant cannot be directly assigned. This limitation 
shall apply only with respect to Loop Plant Investment incurred after 
the effective date of this rule. If a carrier's required Loop Plant 
Investment exceeds the limitations set forth in this section as a result 
of deployment obligations in Sec. 54.308(a)(2), the carrier's AALPI will 
be increased to the actual Loop Plant Investment required by the 
carrier's deployment obligations, subject to the limitations of the 
Construction Allowance Adjustment in paragraph (f) of this section.
    (c) Definitions. For purposes of determining loop plant investment 
allowances, the following definitions apply:
    (1) Loop Plant Investment includes amounts booked to the accounts 
used

[[Page 136]]

for subparts K and M of this part, loop plant investment.
    (2) Total Loop Plant Investment equals amounts booked to the 
categories described in paragraph (b)(1) of this section, adjusted for 
inflation using the Department of Commerce's Gross Domestic Product 
Chain-type Price Index (GDP-CPI), as of December 31 of the Reference 
Year. Inflation adjustments shall be based on vintages where possible or 
otherwise calculated based on the year plant was put in service.
    (3) Total Allowed Loop Plant Investment equals Total Loop Plant 
Investment multiplied by the Loop Depreciation Factor.
    (4) Loop Depreciation Factor equals the ratio of total loop 
accumulated depreciation to gross loop plant during the Reference Year.
    (5) Reference Year is the year prior to the year the AALPI is 
determined.
    (d) Determination of AALPI. A carrier subject to this section shall 
have an AALPI set equal to its Total Loop Plant Investment for each 
study area multiplied by an AALPI Factor equal to (0.15 times the Loop 
Depreciation Factor + 0.05). The Administrator will calculate each rate 
of return carrier's AALPI for each Reference Year.
    (e) Broadband Deployment AALPI adjustment: The AALPI calculated in 
paragraph (d) of this section shall be adjusted by the Administrator 
based upon the difference between a carrier's broadband availability for 
each study area as reported on that carrier's most recent Form 477, and 
the weighted national average broadband availability for all rate-of-
return carriers based on Form 477 data, as announced annually by the 
Wireline Competition Bureau in a Public Notice. For every percentage 
point that the carrier's broadband availability exceeds the weighted 
national average broadband availability for the Reference Year, that 
carrier's AALPI will be reduced by one percentage point. For every 
percentage point that the carrier's broadband availability is below the 
weighted national average broadband availability for the Reference Year, 
that carrier's AALPI will be increased by one percentage point.
    (f) Construction allowance adjustment. Notwithstanding any other 
provisions of this section, a rate-of-return carrier must exclude from 
the data it submits for the purposes of obtaining high-cost support 
under subpart K or subpart M of this part the amount of Loop Plant 
Investment associated with a new construction project that exceeds the 
Maximum Average Per Location Construction Project Limitation for that 
project as determined by the Administrator according to the following 
formula:
    (1) Maximum Average Per Location Construction Project Loop Plant 
Investment Limitation equals the inflation adjusted equivalent to 
$10,000 in the Reference Year calculated by multiplying $10,000 times 
the applicable annual GDP-CPI. This inflation adjusted amount will be 
normalized across all study areas by multiplying the product above by 
(the Loop Cap Adjustment Factor times the Construction Limit Factor)


Where:


The Loop Cap Adjustment Factor equals the lesser of 1.0 or the 
annualized monthly per loop limit described in Sec. 54.302 (i.e., 
$3,000) divided by the unadjusted per loop support amount for the study 
area (the annual HCLS and CAF-BLS support amount per loop in the study 
not capped by Sec. 54.302)

and the


Construction Limitation Factor equals the study area Total Loop 
Investment per Location divided by the overall Total Loop Investment per 
Location for all rate-of-return study areas.
    (2) This limitation shall apply only with respect to Loop Plant 
Investment for which invoices were received by the carrier after the 
effective date of this rule.
    (3) A carrier subject to this section will maintain documentation 
necessary to demonstrate compliance with the above limitation.
    (g) Study area data. For each Reference Year, the Administrator will 
publish the following data for each study area of each rate-of-return 
carrier:
    (1) AALPI
    (2) The Broadband Deployment AALPI Adjustment

[[Page 137]]

    (3) The Maximum Average Per Location Construction Project Loop Plant 
Investment Limitation
    (4) The Loop Cap Adjustment Factor
    (5) The Construction Limit Factor
    (h) Excess Loop Plant Investment carry forward. Loop Plant 
Investment in a Reference Year in excess of the AALPI may be carried 
forward to future years and included in AALPI for such subsequent years, 
but may not cause the AALPI to exceed the Total Allowed Loop Plant 
Investment.
    (i) A carrier subject to this section will maintain subsidiary 
records of accumulated Excess Loop Plant Investment for accounts 
referenced in paragraph (c)(1) of this section in addition to the 
corresponding depreciation accounts. In the event a carrier makes Loop 
Plant Investment for an account at a level below the AALPI for the 
account, the carrier may reduce accumulated Excess Loop Plant Investment 
effective for the Reference Year by an amount up to, but not in excess 
of the amount by which AALPI for the Reference Year exceeds Loop Plant 
Investment for the account during the same year.
    (j) Treatment of unused AALPI. In the event a carrier's Loop Plant 
Investment is below its AALPI in a given Reference Year, there will be 
no carry forward to future years of unused AALPI. The Administrator's 
recalculation of AALPI for each Reference Year will reflect the revised 
AALPI, Loop Depreciation Factor, Total Loop Plant Investment, and Total 
Allowed Loop Plant Investment for the Reference Year.
    (k) Special circumstances. The AALPI for Loop Plant Investment may 
be adjusted by the Administrator by adding the applicable adjustment 
below to the amount of AALPI for the year in which additions to plant 
are booked to the accounts described in paragraph (c)(1) of this 
section, associated with any of the following:
    (1) Geographic areas within the study area where there are currently 
no existing wireline loop facilities;
    (2) Geographic areas within the study area where grant funds are 
used for Loop Plant Investment;
    (3) Geographic areas within the study area for which loan funds were 
disbursed for the purposes of Loop Plant Investment before the effective 
date of this rule; and
    (4) Construction projects for which the carrier, prior to the 
effective date of this rule, had awarded a contract to a vendor for a 
loop plant construction project within the study area.
    (l) Documentation requirements. The Administrator will not make 
these adjustments without appropriate documentation from the carrier.
    (m) Minimum AALPI. If a carrier has an AALPI that is less than $4 
million in any given year, the carrier shall be allowed to increase its 
AALPI for that year to the lesser of $4 million or its Total Allowed 
Loop Plant Investment.

[81 FR 24337, Apr. 25, 2016, as amended at 82 FR 14339, Mar. 20, 2017, 
82 FR 16127, Apr. 3, 2017, 82 FR 22903, May 19, 2017]



Sec. 54.304  Administration of Connect America Fund Intercarrier
Compensation Replacement.

    (a) The Administrator shall administer CAF ICC support pursuant to 
Sec. 51.915 and Sec. 51.917 of this chapter.
    (b) The funding period is the period beginning July 1 through June 
30 of the following year.
    (c) For price cap carriers that are eligible and elect, pursuant to 
Sec. 51.915(f) of this chapter, to receive CAF ICC support, the 
following provisions govern the filing of data with the Administrator, 
the Commission, and the relevant state commissions and the payment by 
the Administrator to those carriers of CAF ICC support amounts that the 
carrier is eligible to receive pursuant to Sec. 51.915 of this chapter.
    (1) A Price Cap Carrier seeking CAF ICC support pursuant to 
Sec. 51.915 of this chapter shall file data with the Administrator, the 
Commission, and the relevant state commissions no later than June 30, 
2012, for the first year, and on the date it files its annual access 
tariff filing with the Commission, in subsequent years, establishing the 
amount of the Price Cap Carrier's eligible CAF ICC funding during the 
upcoming funding period pursuant to Sec. 51.915 of this chapter. The 
amount shall include any true-ups, pursuant to Sec. 51.915 of this 
chapter, associated with an earlier funding period.

[[Page 138]]

    (2) The Administrator shall monthly pay each price cap carrier one-
twelfth (1/12) of the amount the carrier is eligible to receive during 
that funding period.
    (d) For rate-of-return carriers that are eligible and elect, 
pursuant to Sec. 51.917(f) of this chapter, to receive CAF ICC support, 
the following provisions govern the filing of data with the 
Administrator, the Commission, and the relevant state commissions and 
the payment by the Administrator to those carriers of CAF ICC support 
amounts that the rate-of-return carrier is eligible to receive pursuant 
to Sec. 51.917 of this chapter.
    (1) A Rate-of-Return Carrier seeking CAF ICC support shall file data 
with the Administrator, the Commission, and the relevant state 
commissions no later than June 30, 2012, for the first year, and on the 
date it files its annual access tariff filing with the Commission, in 
subsequent years, establishing the Rate-of-Return Carrier's projected 
eligibility for CAF ICC funding during the upcoming funding period 
pursuant to Sec. 51.917 of this chapter. The projected amount shall 
include any true-ups, pursuant to Sec. 51.917 of this chapter, 
associated with an earlier funding period.
    (2) The Administrator shall monthly pay each rate-of-return carrier 
one-twelfth (1/12) of the amount the carrier is to be eligible to 
receive during that funding period.

[76 FR 73871, Nov. 29, 2011, as amended at 78 FR 26268, May 6, 2013]



Sec. 54.305  Sale or transfer of exchanges.

    (a) The provisions of this section shall not be used to determine 
support for any price cap incumbent local exchange carrier or a rate-of-
return carrier, as that term is defined in Sec. 54.5, that is affiliated 
with a price cap incumbent local exchange carrier.
    (b) Beginning January 1, 2012, any carrier subject to the provisions 
of this paragraph shall receive support pursuant to this paragraph or 
support based on the actual costs of the acquired exchanges, whichever 
is less. Except as provided in paragraph (c) of this section, a carrier 
that acquires telephone exchanges from an unaffiliated carrier shall 
receive universal service support for the acquired exchanges at the same 
per-line support levels for which those exchanges were eligible prior to 
the transfer of the exchanges. If the acquired exchanges are 
incorporated into an existing rural incumbent local exchange carrier 
study area, the rural incumbent local exchange carrier shall maintain 
the costs associated with the acquired exchanges separate from the costs 
associated with its pre-acquisition study area. The transferred 
exchanges may be eligible for safety valve support for loop related 
costs pursuant to paragraph (d) of this section.
    (c) A carrier that has entered into a binding agreement to buy or 
acquire exchanges from an unaffiliated carrier prior to May 7, 1997 will 
receive universal service support for the newly acquired lines based 
upon the average cost of all of its lines, both those newly acquired and 
those it had prior to execution of the sales agreement.
    (d) Transferred exchanges in study areas operated by rural telephone 
companies that are subject to the limitations on loop-related universal 
service support in paragraph (b) of this section may be eligible for a 
safety valve loop cost expense adjustment based on the difference 
between the rural incumbent local exchange carrier's index year expense 
adjustment and subsequent year loop cost expense adjustments for the 
acquired exchanges. Safety valve loop cost expense adjustments shall 
only be available to rural incumbent local exchange carriers that, in 
the absence of restrictions on high-cost loop support in paragraph (b) 
of this section, would qualify for high-cost loop support for the 
acquired exchanges under Sec. 54.1310.
    (1) For carriers that buy or acquire telephone exchanges on or after 
January 10, 2005, from an unaffiliated carrier, the index year expense 
adjustment for the acquiring carrier's first year of operation shall 
equal the selling carrier's loop-related expense adjustment for the 
transferred exchanges for the 12-month period prior to the transfer of 
the exchanges. At the acquiring carrier's option, the first year of 
operation for the transferred exchanges, for purposes of calculating 
safety valve support, shall commence at the beginning of either the 
first calendar year or the next calendar quarter following the

[[Page 139]]

transfer of exchanges. For the first year of operation, a loop cost 
expense adjustment, using the costs of the acquired exchanges submitted 
in accordance with Secs. 54.1305 and 54.1306, shall be calculated 
pursuant to Sec. 54.1310 and then compared to the index year expense 
adjustment. Safety valve support for the first period of operation will 
then be calculated pursuant to paragraph (d)(3) of this section. The 
index year expense adjustment for years after the first year of 
operation shall be determined using cost data for the first year of 
operation of the transferred exchanges. Such cost data for the first 
year of operation shall be calculated in accordance with Secs. 54.1305, 
54.1306, and 54.1310. For each year, ending on the same calendar quarter 
as the first year of operation, a loop cost expense adjustment, using 
the loop costs of the acquired exchanges, shall be submitted and 
calculated pursuant to Secs. 54.1305, 54.1306, and 54.1310 and will be 
compared to the index year expense adjustment. Safety valve support for 
the second year of operation and thereafter will then be calculated 
pursuant to paragraph (d)(3) of this section.
    (2) For carriers that bought or acquired exchanges from an 
unaffiliated carrier before January 10, 2005, and are not subject to the 
exception in paragraph (c) of this section, the index year expense 
adjustment for acquired exchange(s) shall be equal to the rural 
incumbent local exchange carrier's high-cost loop expense adjustment for 
the acquired exchanges calculated for the carrier's first year of 
operation of the acquired exchange(s). At the carrier's option, the 
first year of operation of the transferred exchanges shall commence at 
the beginning of either the first calendar year or the next calendar 
quarter following the transfer of exchanges. The index year expense 
adjustment shall be determined using cost data for the acquired 
exchange(s) submitted in accordance with Secs. 54.1305 and 54.1306 and 
shall be calculated in accordance with Sec. 54.1310. The index year 
expense adjustment for rural telephone companies that have operated 
exchanges subject to this section for more than a full year on August 8, 
2014 shall be based on loop cost data submitted in accordance with 
Sec. 54.1306 for the year ending on the nearest calendar quarter 
following August 8, 2014. For each subsequent year, ending on the same 
calendar quarter as the index year, a loop cost expense adjustment, 
using the costs of the acquired exchanges, will be calculated pursuant 
to Sec. 54.1310 and will be compared to the index year expense 
adjustment. Safety valve support is calculated pursuant to paragraph 
(d)(3) of this section.
    (3) Up to fifty (50) percent of any positive difference between the 
transferred exchanges loop cost expense adjustment and the index year 
expense adjustment will be designated as the transferred exchange's 
safety valve loop cost expense adjustment and will be available in 
addition to the per-line loop-related support transferred from the 
selling carrier to the acquiring carrier pursuant to paragraph (b) of 
this section. In no event shall a study area's safety valve loop cost 
expense adjustment exceed the difference between the carrier's study 
area loop cost expense adjustment calculated pursuant to Sec. 54.1310 
and transferred support amounts available to the acquired exchange(s) 
under paragraph (b) of this section. Safety valve support shall not 
transfer with acquired exchanges.
    (e) The sum of the safety valve loop cost expense adjustment for all 
eligible study areas operated by rural telephone companies shall not 
exceed five (5) percent of the total rural incumbent local exchange 
carrier portion of the annual nationwide loop cost expense adjustment 
calculated pursuant to Sec. 54.1302. The five (5) percent cap on the 
safety valve mechanism shall be based on the lesser of the rural 
incumbent local exchange carrier portion of the annual nationwide loop 
cost expense adjustment calculated pursuant to Sec. 54.1302 or the sum 
of rural incumbent local exchange carrier expense adjustments calculated 
pursuant to Sec. 54.1310. The percentage multiplier used to derive study 
area safety valve loop cost expense adjustments for rural telephone 
companies shall be the lesser of fifty (50) percent or a percentage 
calculated to produce the maximum total safety valve loop cost expense 
adjustment for all eligible study areas pursuant to this paragraph. The 
safety valve

[[Page 140]]

loop cost expense adjustment of an individual rural incumbent local 
exchange carrier also may be further reduced as described in paragraph 
(d)(3) of this section.
    (f) Once an acquisition is complete, the acquiring rural incumbent 
local exchange carrier shall provide written notice to the Administrator 
that it has acquired access lines that may be eligible for safety valve 
support. Rural telephone companies also shall provide written notice to 
the Administrator defining their index year for those years after the 
first year of operation for purposes of calculating the safety valve 
loop cost expense adjustment.

[70 FR 10060, Mar. 2, 2005, as amended at 76 FR 73871, Nov. 29, 2011; 79 
FR 39188, July 9, 2014; 81 FR 24339, Apr. 25, 2016]



Sec. 54.306  Alaska Plan for Rate-of-Return Carriers Serving Alaska.

    (a) Election of support. For purposes of subparts A, B, C, D, H, I, 
J, K and M of this part, rate-of-return carriers (as that term is 
defined in Sec. 54.5) serving Alaska have a one-time option to elect to 
participate in the Alaska Plan on a state-wide basis. Carriers 
exercising this option shall receive the lesser of;
    (1) Support as described in paragraph (c) of this section or
    (2) $3,000 annually for each line for which the carrier is receiving 
support as of the effective date of this rule.
    (b) Performance plans. In order to receive support pursuant to this 
section, a rate-of-return carrier must be subject to a performance plan 
approved by the Wireline Competition Bureau. The performance plan must 
indicate specific deployment obligations and performance requirements 
sufficient to demonstrate that support is being used in the public 
interest and in accordance with the requirements adopted by the 
Commission for the Alaska Plan. Performance plans must commit to offer 
specified minimum speeds to a set number of locations by the end of the 
fifth year of support and by the end of the tenth year of support, or in 
the alternative commit to maintaining voice and Internet service at a 
specified minimum speeds for the 10-year term. The Bureau may reassess 
performance plans at the end of the fifth year of support. If the 
specific deployment obligations and performance requirements in the 
approved performance plan are not achieved, the carrier shall be subject 
to Sec. 54.320(c) and (d).
    (c) Support amounts and support term. For a period of 10 years 
beginning on or after January 1, 2017, at a date set by the Wireline 
Competition Bureau, each Alaska Plan participant shall receive monthly 
Alaska Plan support in an amount equal to:
    (1) One-twelfth (1/12) of the amount of Interstate Common Line 
Support disbursed to that carrier for 2011, less any reduction made to 
that carrier's support in 2012 pursuant to the corporate operations 
expense limit in effect in 2012, and without regard to prior period 
adjustments related to years other than 2011 and as determined by USAC 
on January 31, 2012; plus
    (2) One-twelfth (1/12) of the total expense adjustment (high cost 
loop support) disbursed to that carrier for 2011, without regard to 
prior period adjustments related to years other than 2011 and as 
determined by USAC on January 31, 2012.
    (d) Transfers. Notwithstanding any provisions of Sec. 54.305 or 
other sections in this part, to the extent an Alaska Plan participant 
(as defined in Sec. 54.306 or Sec. 54.317) transfers some or all of its 
customers in Alaska to another eligible telecommunications carrier, it 
may also transfer a proportionate amount of its Alaska Plan support and 
any associated performance obligations as determined by the Wireline 
Competition Bureau or Wireless Telecommunications Bureau if the 
acquiring eligible telecommunications carrier certifies it will meet the 
associated obligations agreed to in the approved performance plan.

[81 FR 69712, Oct. 7, 2016]



Sec. 54.307  Support to a competitive eligible telecommunications carrier.

    (a) Calculation of support. A competitive eligible 
telecommunications carrier shall receive universal service support to 
the extent that the competitive eligible telecommunications carrier 
captures the subscriber lines of an incumbent local exchange carrier 
(LEC) or serves new subscriber lines in the incumbent LEC's service 
area.

[[Page 141]]

    (1) A competitive eligible telecommunications carrier serving loops 
in the service area of a rural incumbent local exchange carrier, as that 
term is defined in Sec. 54.5 of this chapter, shall receive support for 
each line it serves in a particular service area based on the support 
the incumbent LEC would receive for each such line, disaggregated by 
cost zone if disaggregation zones have been established within the 
service area pursuant to Sec. 54.315 of this subpart. A competitive 
eligible telecommunications carrier serving loops in the service area of 
a non-rural incumbent local exchange carrier shall receive support for 
each line it serves in a particular wire center based on the support the 
incumbent LEC would receive for each such line. A competitive eligible 
telecommunications carrier serving loops in the service area of a rate-
of-return carrier shall be eligible to receive Interstate Common Line 
Support for each line it serves in the service area in accordance with 
the formula in Sec. 54.901.
    (2) A competitive eligible telecommunications carrier that uses 
switching purchased as unbundled network elements pursuant to 
Sec. 51.307 of this chapter to provide the supported services shall 
receive the lesser of the unbundled network element price for switching 
or the per-line DEM support of the incumbent LEC, if any. A competitive 
eligible telecommunications carrier that uses loops purchased as 
unbundled network elements pursuant to Sec. 51.307 of this chapter to 
provide the supported services shall receive the lesser of the unbundled 
network element price for the loop or the incumbent LEC's per-line 
payment from the high-cost loop support, LTS, and Interstate Common Line 
Support mechanisms, if any. The incumbent LEC providing 
nondiscriminatory access to unbundled network elements to such 
competitive eligible telecommunications carrier shall receive the 
difference between the level of universal service support provided to 
the competitive eligible telecommunications carrier and the per-customer 
level of support that the incumbent LEC would have received.
    (3) A competitive eligible telecommunications carrier that provides 
the supported services using neither unbundled network elements 
purchased pursuant to Sec. 51.307 of this chapter nor wholesale service 
purchased pursuant to section 251(c)(4) of the Act will receive the full 
amount of universal service support that the incumbent LEC would have 
received for that customer.
    (b) In order to receive support pursuant to this subpart, a 
competitive eligible telecommunications carrier must report to the 
Administrator the number of working loops it serves in a service area 
pursuant to the schedule set forth in paragraph (c) of this section. For 
a competitive eligible telecommunications carrier serving loops in the 
service area of a rural incumbent local exchange carrier, as that term 
is defined in Sec. 54.5, the carrier must report, by customer class, the 
number of working loops it serves in the service area, disaggregated by 
cost zone if disaggregation zones have been established within the 
service area pursuant to Sec. 54.315. For a competitive eligible 
telecommunications carrier serving loops in the service area of a non-
rural telephone company, the carrier must report the number of working 
loops it serves in the service area, by customer class if the non-rural 
telephone company receives Interstate Common Line Support pursuant to 
Sec. 54.901 and by disaggregation zone if disaggregation zones have been 
established within the service area pursuant to Sec. 54.315 of this 
subpart, and the number of working loops it serves in each wire center 
in the service area. For universal service support purposes, working 
loops are defined as the number of working Exchange Line C&WF loops used 
jointly for exchange and message telecommunications service, including 
C&WF subscriber lines associated with pay telephones in C&WF Category 1, 
but excluding WATS closed end access and TWX service. Competitive 
eligible telecommunications carriers providing mobile wireless service 
in an incumbent LEC's service area shall use the customer's billing 
address for purposes of identifying the service location of a mobile 
wireless customer in a service area.
    (c) A competitive eligible telecommunications carrier must submit

[[Page 142]]

the data required pursuant to paragraph (b) of this section according to 
the schedule.
    (1) No later than July 31st of each year, submit data as of December 
31st of the previous calendar year;
    (2) No later than September 30th of each year, submit data as of 
March 31st of the existing calendar year;
    (3) No later than December 30th of each year, submit data as of June 
30th of the existing calendar year;
    (4) No later than March 30th of each year, submit data as of 
September 30th of the previous calendar year.
    (d) Newly designated eligible telecommunications carriers. 
Notwithstanding the deadlines in paragraph (c) of this section, a 
carrier shall be eligible to receive support as of the effective date of 
its designation as an eligible telecommunications carrier under section 
214(e)(2) or (e)(6), provided that it submits the data required pursuant 
to paragraph (b) of this section within 60 days of that effective date. 
Thereafter, the eligible telecommunications carrier must submit the data 
required in paragraph (b) of this section pursuant to the schedule in 
paragraph (c) of this section.
    (e) Support Beginning January 1, 2012. Competitive eligible 
telecommunications carriers will, beginning January 1, 2012, receive 
support based on the methodology described in this paragraph and not 
based on paragraph (a) of this section.
    (1) Baseline Support Amount. Each competitive eligible 
telecommunication carrier will have a ``baseline support amount'' equal 
to its total 2011 support in a given study area, or an amount equal to 
$3,000 times the number of reported lines for 2011, whichever is lower. 
Each competitive eligible telecommunications carrier will have a 
``monthly baseline support amount'' equal to its baseline support amount 
divided by twelve.
    (i) ``Total 2011 support'' is the amount of support disbursed to a 
competitive eligible telecommunication carrier for 2011, without regard 
to prior period adjustments related to years other than 2011 and as 
determined by the Administrator on January 31, 2012.
    (ii) For the purpose of calculating the $3,000 per line limit, the 
average of lines reported by a competitive eligible telecommunication 
carrier pursuant to line count filings required for December 31, 2010, 
and December 31, 2011 shall be used. The $3,000 per line limit shall be 
applied to support amounts determined for each incumbent study area 
served by the competitive eligible telecommunications carrier.
    (2) Monthly Support Amounts. Competitive eligible telecommunications 
carriers shall receive the following support amounts, except as provided 
in paragraphs (e)(3) through (e)(6) of this section.
    (i) From January 1, 2012, to June 30, 2012, each competitive 
eligible telecommunications carrier shall receive its monthly baseline 
support amount each month.
    (ii) From July 1, 2012 to June 30, 2013, each competitive eligible 
telecommunications carrier shall receive 80 percent of its monthly 
baseline support amount each month.
    (iii) From July 1, 2013, to June 30, 2014, each competitive eligible 
telecommunications carrier shall receive 60 percent of its monthly 
baseline support amount each month.
    (iv) From July 1, 2014, to June 30, 2015, each competitive eligible 
telecommunications carrier shall receive 40 percent of its monthly 
baseline support amount each month.
    (v) From July 1, 2015, to June 30, 2016, each competitive eligible 
telecommunications carrier shall receive 20 percent of its monthly 
baseline support amount each month.
    (vi) Beginning July 1, 2016, no competitive eligible 
telecommunications carrier shall receive universal service support 
pursuant to this section.
    (3) Delayed Phase Down for Remote Areas in Alaska. Certain 
competitive eligible telecommunications carriers serving remote areas in 
Alaska shall have their support phased down on a later schedule than 
that described in paragraph (e)(2) of this section.
    (i) Remote Areas in Alaska. For the purpose of this paragraph, 
``remote areas in Alaska'' includes all of Alaska except;
    (A) The ACS-Anchorage incumbent study area;
    (B) The ACS-Juneau incumbent study area;

[[Page 143]]

    (C) The fairbankszone1 disaggregation zone in the ACS-Fairbanks 
incumbent study area; and
    (D) The Chugiak 1 and 2 and Eagle River 1 and 2 disaggregation zones 
of the Matunuska Telephone Association incumbent study area.
    (ii) Carriers Subject to Delayed Phase Down. A competitive eligible 
telecommunications carrier shall be subject to the delayed phase down 
described in paragraph (e)(3) of this section to the extent that it 
serves remote areas in Alaska, and it certified that it served covered 
locations in its September 30, 2011, filing of line counts with the 
Administrator. To the extent a competitive eligible telecommunications 
carrier serving Alaska is not subject to the delayed phase down, it will 
be subject to the phase down of support on the schedule described in 
paragraph (e)(2) of this section.
    (iii) Baseline for Delayed Phase Down. For purpose of the delayed 
phase down for remote areas in Alaska, the baseline amount for each 
competitive eligible telecommunications carrier subject to the delayed 
phase down shall be the annualized monthly support amount received for 
June 2014 or the last full month prior to the implementation of Mobility 
Fund Phase II, whichever is later.
    (iv) Monthly Support Amounts. Competitive eligible 
telecommunications carriers subject to the delayed phase down for remote 
areas in Alaska shall receive the following support amounts, except as 
provided in paragraphs (e)(4) through (e)(6) of this section.
    (A) From July 1, 2014 to June 30, 2015, each competitive eligible 
telecommunications carrier shall receive 80 percent of its monthly 
baseline support amount each month.
    (B) From July 1, 2015, to June 30, 2016, each competitive eligible 
telecommunications carrier shall receive 60 percent of its monthly 
baseline support amount each month.
    (C) From July 1, 2016, to June 30, 2017, each competitive eligible 
telecommunications carrier shall receive 40 percent of its monthly 
baseline support amount each month.
    (D) From July 1, 2017, to June 30, 2018, each competitive eligible 
telecommunications carrier shall receive 20 percent of its monthly 
baseline support amount each month.
    (E) Beginning July 1, 2018, no competitive eligible 
telecommunications carrier serving remote areas in Alaska shall receive 
universal service support pursuant to this section.
    (v) Interim Support for Remote Areas in Alaska. From January 1, 
2012, until June 30, 2014 or the last full month prior to the 
implementation of Mobility Fund Phase II, whichever is later, 
competitive eligible telecommunications carriers subject to the delayed 
phase down for remote areas in Alaska shall continue to receive the 
support, as calculated by the Administrator, that each competitive 
telecommunications carrier would have received under the frozen per-line 
support amount as of December 31, 2011 capped at $3,000 per year, 
provided that the total amount of support for all such competitive 
eligible telecommunications carriers shall be capped pursuant to 
paragraph (e)(3)(v)(A) of this section.
    (A) Cap Amount. The total amount of support available on an annual 
basis for competitive eligible telecommunications carriers subject to 
the delayed phase down for remote areas in Alaska shall be equal to the 
sum of ``total 2011 support,'' as defined in paragraph (e)(1)(i) of this 
section, received by all competitive eligible telecommunications 
carriers subject to the delayed phase down for serving remote areas in 
Alaska.
    (B) Reduction Factor. To effectuate the cap, the Administrator shall 
apply a reduction factor as necessary to the support that would 
otherwise be received by all competitive eligible telecommunications 
carriers serving remote areas in Alaska subject to the delayed phase 
down. The reduction factor will be calculated by dividing the total 
amount of support available amount by the total support amount 
calculated for those carriers in the absence of the cap.
    (4) Further reductions. If a competitive eligible telecommunications 
carrier ceases to provide services to high-cost areas it had previously 
served, the Commission may reduce its baseline support amount.

[[Page 144]]

    (5) Eligibility for support after Mobility Fund Phase II auction. 
(i) A mobile competitive eligible telecommunications carrier that 
receives monthly baseline support pursuant to this section and is a 
winning bidder in the Mobility Fund Phase II auction shall receive 
support at the same level as described in paragraph (e)(2)(iii) of this 
section for such area until the Wireless Telecommunications and Wireline 
Competition Bureaus determine whether to authorize the carrier to 
receive Mobility Fund Phase II support.
    (A) Upon the Wireless Telecommunications and Wireline Competition 
Bureaus' release of a public notice approving a mobile competitive 
eligible telecommunications carrier's application submitted pursuant to 
Sec. 54.104(b) and authorizing the carrier to receive Mobility Fund 
Phase II support, the carrier shall no longer receive support at the 
level of monthly baseline support pursuant to this section for such 
area. Thereafter, the carrier shall receive monthly support in the 
amount of its Mobility Fund Phase II winning bid, provided that USAC 
shall adjust the amount of the carrier's support to the extent necessary 
to account for any difference in support the carrier received during the 
period between the close of the Mobility Fund Phase II auction and the 
release of the public notice authorizing the carrier to receive Mobility 
Fund Phase II support.
    (B) A mobile competitive eligible telecommunications carrier that is 
a winning bidder in the Mobility Fund Phase II auction but is not 
authorized to receive Mobility Fund Phase II support shall receive 
monthly support as set forth in paragraphs (e)(5)(iii) and (iv) of this 
section for such area, as applicable, provided that USAC shall decrease 
such amounts to account for support payments received prior to the 
Wireless Telecommunications and Wireline Competition Bureaus' 
authorization determination that exceed the amount of support for such 
area as set forth in paragraphs (e)(5)(iii) and (iv), and the monthly 
support in the mobile competitive eligible telecommunications carrier's 
winning Mobility Fund Phase II, which USAC shall treat as the carrier's 
monthly baseline support for purposes of paragraphs (e)(5)(iii) and (iv) 
to the extent the carrier's winning bid is below that amount.
    (ii) A mobile competitive eligible telecommunications carrier that 
receives monthly baseline support pursuant to this section shall receive 
the following monthly support amounts for areas that are ineligible for 
Mobility Fund Phase II support, as determined by the Wireless 
Telecommunications and Wireline Competition Bureaus:
    (A) For 12 months starting the first day of the month following the 
close of the Mobility Fund Phase II auction, each mobile competitive 
eligible telecommunications carrier shall receive two-thirds (\2/3\) of 
the carrier's support pursuant to paragraph (e)(2)(iii) of this section 
for the ineligible area.
    (B) For 12 months starting the month following the period described 
in paragraph (e)(5)(ii)(A) of this section, each mobile competitive 
eligible telecommunications carrier shall receive one-third (\1/3\) of 
the carrier's support pursuant to paragraph (e)(2)(iii) of this section 
for the ineligible area.
    (C) Following the period described in paragraph (e)(5)(ii)(B) of 
this section, no mobile competitive eligible telecommunications carrier 
shall receive monthly baseline support for the ineligible area pursuant 
to this section.
    (iii) Except as provided in paragraph (e)(3) of this section, to the 
extent Mobility Fund Phase II support is not awarded at auction for an 
eligible area, as determined by the Wireless Telecommunications and 
Wireline Competition Bureaus, the mobile competitive eligible 
telecommunications carrier receiving the minimum level of sustainable 
support for the eligible area shall continue to receive support at the 
level described in paragraph (e)(2)(iii) of this section until further 
Commission action, but such support shall not extend for more than 60 
months from the first day of the month following the close of the 
Mobility Fund Phase II auction. The ``minimum level of sustainable 
support'' is the lowest monthly baseline support received by a mobile 
competitive eligible telecommunications carrier that deploys the highest 
technology for the eligible area.
    (iv) All other mobile competitive eligible telecommunications 
carriers

[[Page 145]]

shall receive the following monthly support amounts for areas that are 
eligible for Mobility Fund Phase II support, as determined by the 
Wireless Telecommunications and Wireline Competition Bureaus:
    (A) For 12 months starting the first day of the month following the 
close of the Mobility Fund Phase II auction, each mobile competitive 
eligible telecommunications carrier shall receive two-thirds (\2/3\) of 
the carrier's support pursuant to paragraph (e)(2)(iii) of this section 
for the eligible area.
    (B) For 12 months starting the month following the period described 
in paragraph (e)(5)(iv)(A) of this section, each mobile competitive 
eligible telecommunications carrier shall receive one-third (\1/3\) of 
the carrier's support pursuant to paragraph (e)(2)(iii) of this section 
for the eligible area.
    (C) Following the period described in paragraph (e)(5)(iv)(B) of 
this section, no mobile competitive eligible telecommunications carrier 
shall receive monthly baseline support for the eligible area pursuant to 
this section.
    (v) Notwithstanding the foregoing schedule, the phase-down of 
identical support below the level described in paragraph (e)(2)(iii) of 
this section shall be subject to the restrictions in Consolidated 
Appropriations Act, 2016, Public Law 114-113, Div. E, Title VI, section 
631, 129 Stat. 2242, 2470 (2015), unless and until such restrictions are 
no longer in effect.
    (6) [Reserved]
    (7) Line Count Filings. Competitive eligible telecommunications 
carriers, except those subject to the delayed phase down described in 
paragraph (e)(3) of this section, shall no longer be required to file 
line counts beginning January 1, 2012. Competitive eligible 
telecommunications carriers subject to the delayed phase down described 
in paragraph (e)(3) of this section shall no longer be required to file 
line counts beginning July 1, 2014, or the date after the first line 
count filing following the implementation of Mobility Fund Phase II, 
whichever is later.

[62 FR 32948, June 17, 1997, as amended at 63 FR 2128, Jan. 13, 1998; 64 
FR 67431, Dec. 1, 1999; 65 FR 26516, May 8, 2000; 66 FR 30087, June 5, 
2001; 66 FR 59726, Nov. 30, 2001; 68 FR 31623, May 28, 2003; 69 FR 
34602, June 22, 2004; 70 FR 29979, May 25, 2005; 76 FR 73871, Nov. 29, 
2011; 77 FR 14302, Mar. 9, 2012; 77 FR 30913, May 24, 2012; 77 FR 52618, 
Aug. 30, 2012; 82 FR 15449, Mar. 28, 2017]



Sec. 54.308  Broadband public interest obligations for recipients of
high-cost support.

    (a) Rate-of-return carrier recipients of high-cost support are 
required to offer broadband service, at speeds described below, with 
latency suitable for real-time applications, including Voice over 
Internet Protocol, and usage capacity that is reasonably comparable to 
comparable offerings in urban areas, at rates that are reasonably 
comparable to rates for comparable offerings in urban areas. For 
purposes of determining reasonable comparability of rates, recipients 
are presumed to meet this requirement if they offer rates at or below 
the applicable benchmark to be announced annually by public notice 
issued by the Wireline Competition Bureau.
    (1) Carriers that elect to receive Connect America Fund-Alternative 
Connect America Cost Model (CAF-ACAM) support pursuant to Sec. 54.311 
are required to offer broadband service at actual speeds of at least 10 
Mbps downstream/1 Mbps upstream to a defined number of locations as 
specified by public notice, with a minimum usage allowance of 150 GB per 
month, subject to the requirement that usage allowances remain 
consistent with median usage in the United States over the course of the 
ten-year term. In addition, such carriers must offer other speeds to 
subsets of locations, as specified below:
    (i) Fully funded locations. Fully funded locations are those 
locations identified by the Alternative-Connect America Cost Model (A-
CAM) where the average cost is above the funding benchmark and at or 
below the funding cap. Carriers are required to offer broadband speeds 
to locations that are

[[Page 146]]

fully funded, as specified by public notice at the time of 
authorization, as follows:
    (A) Carriers with a state-level density of more than 10 housing 
units per square mile, as specified by public notice at the time of 
election, are required to offer broadband speeds of at least 25 Mbps 
downstream/3 Mbps upstream to 75 percent of all fully funded locations 
in the state by the end of the ten-year period.
    (B) Carriers with a state-level density of 10 or fewer, but more 
than five, housing units per square mile, as specified by public notice 
at the time of election, are required to offer broadband speeds of at 
least 25 Mbps downstream/3 Mbps upstream to 50 percent of fully funded 
locations in the state by the end of the ten-year period.
    (C) Carriers with a state-level density of five or fewer housing 
units per square mile, as specified by public notice at the time of 
election, are required to offer broadband speeds of at least 25 Mbps 
downstream/3 Mbps upstream to 25 percent of fully funded locations in 
the state by the end of the ten-year period.
    (ii) Capped locations. Capped locations are those locations in 
census blocks for which A-CAM calculates an average cost per location 
above the funding cap. Carriers are required to offer broadband speeds 
to locations that are receiving capped support, as specified by public 
notice at the time of authorization, as follows:
    (A) Carriers with a state-level density of more than 10 housing 
units per square mile, as specified by public notice at the time of 
election, are required to offer broadband speeds of at least 4 Mbps 
downstream/1 Mbps upstream to 50 percent of all capped locations in the 
state by the end of the ten-year period.
    (B) Carriers with a state-level density of 10 or fewer housing units 
per square mile, as specified by public notice at the time of election, 
are required to offer broadband speeds of at least 4 Mbps downstream/1 
Mbps upstream to 25 percent of capped locations in the state by the end 
of the ten-year period.
    (C) Carriers shall provide to all other capped locations, upon 
reasonable request, broadband at actual speeds of at least 4 Mbps 
downstream/1 Mbps upstream.
    (2) Rate-of-return recipients of Connect America Fund Broadband Loop 
Support (CAF BLS) shall be required to offer broadband service at actual 
speeds of at least 10 Mbps downstream/1 Mbps upstream, over a five-year 
period, to a defined number of unserved locations as specified by public 
notice, as determined by the following methodology:
    (i) Percentage of CAF BLS. Each rate-of-return carrier is required 
to target a defined percentage of its five-year forecasted CAF-BLS 
support to the deployment of broadband service to locations that are 
unserved with 10 Mbps downstream/1 Mbps upstream broadband service as 
follows:
    (A) Rate-of-return carriers with less than 20 percent deployment of 
10/1 Mbps broadband service in their study areas, as determined by the 
Wireline Competition Bureau, will be required to utilize 35 percent of 
their five-year forecasted CAF-BLS support to extend broadband service 
where it is currently lacking.
    (B) Rate-of-return carriers with more than 20 percent but less than 
40 percent deployment of 10/1 Mbps broadband service in their study 
areas, as determined by the Wireline Competition Bureau, will be 
required to utilize 25 percent of their five-year forecasted CAF-BLS 
support to extend broadband service where it is currently lacking.
    (C) Rate-of-return carriers with more than 40 percent but less than 
80 percent deployment of 10/1 Mbps broadband service in their study 
areas, as determined by the Wireline Competition Bureau, will be 
required to utilize 20 percent of their five-year forecasted CAF-BLS 
support to extend broadband service where it is currently lacking.
    (ii) Cost per location. The deployment obligation shall be 
determined by dividing the amount of support set forth in paragraph 
(a)(2)(i) of this section by a cost per location figure based on one of 
two methodologies, at the carrier's election:
    (A) The higher of:
    (1) The weighted average unseparated cost per loop for carriers of 
similar density that offer 10/1 Mbps or better

[[Page 147]]

broadband service to at least 95 percent of locations, based on the most 
current FCC Form 477 data as determined by the Wireline Competition 
Bureau, but excluding carriers subject to the current $250 per line per 
month cap set forth in Sec. 54.302 and carriers subject to limitations 
on operating expenses set forth in Sec. 54.303; or
    (2) 150% of the weighted average of the cost per loop for carriers 
of similar density, but excluding carriers subject to the current $250 
per line per month cap set forth in Sec. 54.302 and carriers subject to 
limitations on operating expenses set forth in Sec. 54.303, with a 
similar level of deployment of 10/1 Mbps or better broadband based on 
the most current FCC Form 477 data, as determined by Wireline 
Competition Bureau; or
    (B) The average cost per location for census blocks lacking 10/1 
Mbps broadband service in the carrier's study area as determined by the 
A-CAM.
    (iii) Restrictions on deployment obligations. (A) No rate-of-return 
carrier shall deploy terrestrial wireline technology in any census block 
if doing so would result in total support per line in the study area to 
exceed the $250 per-line per-month cap in Sec. 54.302.
    (B) No rate-of-return carrier shall deploy terrestrial wireline 
technology to unserved locations to meet this obligation if that would 
exceed the per location/per project capital investment allowance set 
forth in Sec. 54.303(f)(1).
    (iv) Future deployment obligations. Prior to publishing the 
deployment obligations for subsequent five-year periods, the 
Administrator shall update the unseparated average cost per loop amounts 
for carriers with 95 percent or greater deployment of the then-current 
standard, based on the then-current NECA cost data, and the Wireline 
Competition Bureau shall examine the density groupings and make any 
necessary adjustments based on then-current U.S. Census data.
    (b) Rate-of-return carrier recipients of high-cost support are 
required upon reasonable request to bid on category one 
telecommunications and Internet access services in response to a posted 
FCC Form 470 seeking broadband service that meets the connectivity 
targets for the schools and libraries universal service support program 
for eligible schools and libraries (as described in Sec. 54.501) within 
that carrier's service area. Such bids must be at rates reasonably 
comparable to rates charged to eligible schools and libraries in urban 
areas for comparable offerings.
    (c) Alaskan rate-of-return carriers receiving support from the 
Alaska Plan pursuant to Sec. 54.306 are exempt from paragraph (a) of 
this section and are instead required to offer voice and broadband 
service with latency suitable for real-time applications, including 
Voice over Internet Protocol, and usage capacity that is reasonably 
comparable to comparable offerings in urban areas, at rates that are 
reasonably comparable to rates for comparable offerings in urban areas, 
subject to any limitations in access to backhaul as described in 
Sec. 54.313(g). Alaska Plan recipients' specific broadband deployment 
and speed obligations shall be governed by the terms of their approved 
performance plans as described in Sec. 54.306(b). Alaska Plan recipients 
must also comply with paragraph (b) of this section.
    (d) Mobile carriers that are receiving support from the Alaska Plan 
pursuant to Sec. 54.317(e) shall certify in their annual compliance 
filings that their rates are reasonably comparable to rates for 
comparable offerings in urban areas. The mobile carrier must also 
demonstrate compliance at the end of the five-year milestone and 10-year 
milestone and may do this by showing that its required stand-alone voice 
plan, and one service plan that offers broadband data services, if it 
offers such plans, are:
    (1) Substantially similar to a service plan offered by at least one 
mobile wireless service provider in the cellular market area (CMA) for 
Anchorage, Alaska, and
    (2) Offered for the same or a lower rate than the matching plan in 
the CMA for Anchorage.

[80 FR 4477, Jan. 27, 2015, as amended at 80 FR 5987, Feb. 4, 2015; 81 
FR 24339, Apr. 25, 2016; 81 FR 69712, Oct. 7, 2016; 82 FR 14339, Mar. 
20, 2017]

[[Page 148]]



Sec. 54.309  Connect America Fund Phase II Public Interest Obligations.

    (a) Recipients of Connect America Phase II support are required to 
offer broadband service with latency suitable for real-time 
applications, including Voice over Internet Protocol, and usage capacity 
that is reasonably comparable to comparable offerings in urban areas, at 
rates that are reasonably comparable to rates for comparable offerings 
in urban areas. For purposes of determining reasonable comparable usage 
capacity, recipients are presumed to meet this requirement if they meet 
or exceed the usage level announced by public notice issued by the 
Wireline Competition Bureau. For purposes of determining reasonable 
comparability of rates, recipients are presumed to meet this requirement 
if they offer rates at or below the applicable benchmark to be announced 
annually by public notice issued by the Wireline Competition Bureau, or 
no more than the non-promotional prices charged for a comparable fixed 
wireline service in urban areas in the state or U.S. Territory where the 
eligible telecommunications carrier receives support.
    (1) Recipients of Connect America Phase II model-based support are 
required to offer broadband service at actual speeds of at least 10 Mbps 
downstream/1 Mbps upstream.
    (2) Recipients of Connect America Phase II support awarded through a 
competitive bidding process are required to offer broadband service 
meeting the performance standards required in bid tiers based on 
performance standards.
    (i) Winning bidders meeting the minimum performance tier standards 
are required to offer broadband service at actual speeds of 10 Mbps 
downstream and 1 Mbps upstream and to offer at least 150 gigabytes of 
monthly usage.
    (ii) Winning bidders meeting the baseline performance tier standards 
are required to offer broadband service at actual speeds of at least 25 
Mbps downstream and 3 Mbps upstream and offer a minimum usage allowance 
of 150 GB per month, or that reflects the average usage of a majority of 
fixed broadband customers, using Measuring Broadband America data or a 
similar data source, whichever is higher, and announced annually by 
public notice issued by the Wireline Competition Bureau over the 10-year 
term.
    (iii) Winning bidders meeting the above-baseline performance tier 
standards are required to offer broadband service at actual speeds of at 
least 100 Mbps downstream and 20 Mbps upstream and offer an unlimited 
monthly usage allowance.
    (iv) Winning bidders meeting the Gigabit performance tier standards 
are required to offer broadband service at actual speeds of at least 1 
Gigabit per second downstream and 500 Mbps upstream and offer an 
unlimited monthly usage allowance.
    (v) For each of the tiers in paragraphs (a)(2)(i) through (iv) of 
this section, bidders are required to meet one of two latency 
performance levels:
    (A) Low latency bidders will be required to meet 95 percent or more 
of all peak period measurements of network round trip latency at or 
below 100 milliseconds; and
    (B) High latency bidders will be required to meet 95 percent or more 
of all peak period measurements of network round trip latency at or 
below 750 ms and, with respect to voice performance, demonstrate a score 
of four or higher using the Mean Opinion Score (MOS).
    (b) Recipients of Connect America Phase II model-based support, 
recipients of Phase II Connect America support awarded through a 
competitive bidding process, and non-contiguous price cap carriers 
receiving Phase II frozen support in lieu of model-based support are 
required to bid on category one telecommunications and Internet access 
services in response to a posted FCC Form 470 seeking broadband service 
that meets the connectivity targets for the schools and libraries 
universal service support program for eligible schools and libraries (as 
described in Sec. 54.501) located within any area in a census block 
where the carrier is receiving Phase II model-based support. Such bids 
must be at rates reasonably comparable to rates charged to eligible 
schools and libraries in urban areas for comparable offerings.

[80 FR 4477, Jan. 27, 2015, as amended at 80 FR 5987, Feb. 4, 2015; 81 
FR 44448, July 7, 2016]

[[Page 149]]



Sec. 54.310  Connect America Fund for Price Cap Territories--Phase II

    (a) Geographic areas eligible for support. Connect America Phase II 
support may be made available for census blocks or other areas 
identified as eligible by public notice, including locations identified 
by the forward-looking cost model as extremely high-cost. The number of 
supported locations will be identified for each area eligible for 
support will be identified by public notice.
    (b) Term of support. Connect America Phase II model-based support 
shall be provided to price cap carriers that elect to make a state-level 
commitment for six years. Connect America Phase II support awarded 
through a competitive bidding process shall be provided for ten years.
    (c) Deployment obligation. Recipients of Connect America Phase II 
model-based support must complete deployment to 40 percent of supported 
locations by December 31, 2017, to 60 percent of supported locations by 
December 31, 2018, to 80 percent of supported locations by December 31, 
2019, and to 100 percent of supported locations by December 31, 2020. 
Recipients of Connect America Phase II awarded through a competitive 
bidding process must complete deployment to 40 percent of supported 
locations by the end of the third year, to 60 percent of supported 
locations by the end of the fourth year, to 80 percent of supported 
locations by the end of the fifth year, and to 100 percent of supported 
locations by the end of the sixth year. Compliance shall be determined 
based on the total number of supported locations in a state.
    (1) For purposes of meeting the obligation to deploy to the 
requisite number of supported locations in a state, recipients of 
Connect America Phase II model-based support may serve unserved 
locations in census blocks with costs above the extremely high-cost 
threshold instead of locations in eligible census blocks, provided that 
they meet the public interest obligations set forth in Sec. 54.309(a) 
introductory text and (a)(1) for those locations and provided that the 
total number of locations covered is greater than or equal to the number 
of supported locations in the state.
    (2) Recipients of Connect America Phase II support may elect to 
deploy to 95 percent of the number of supported locations in a given 
state with a corresponding reduction in support computed based on the 
average support per location in the state times 1.89.
    (d) Disbursement of Phase II funding. An eligible telecommunications 
carrier will be advised by public notice when it is authorized to 
receive support. The public notice will detail how disbursements will be 
made.
    (e) Provider eligibility. Any eligible telecommunications carrier is 
eligible to receive Connect America Phase II support in eligible areas.
    (1) An entity may obtain eligible telecommunications carrier 
designation after public notice of winning bidders in a competitive 
bidding process for the offer of Phase II Connect America support. An 
applicant in the competitive bidding process shall certify that it is 
financially and technically qualified to provide the services supported 
by Connect America Phase II in order to receive such support.
    (2) To the extent an applicant in the competitive bidding process 
seeks eligible telecommunications carrier designation prior to public 
notice of winning bidders for Phase II Connect America support, its 
designation as an eligible telecommunications carrier may be conditional 
subject to the receipt of Phase II Connect America support.
    (f) Transition to model-based support. Eligible telecommunications 
carriers electing model-based support in states where that support is 
less than their Phase I frozen support will transition to model-based 
support as follows: In addition to model-based support, in the first 
year of Phase II, they will receive 75% of the difference between Phase 
I frozen support and model-based support; in the second year of Phase 
II, they will receive 50% of the difference between Phase I frozen 
support and model-based support; and in the third year of Phase II, they 
will receive 25% of the difference between Phase I frozen support and 
model-based support.

[79 FR 11335, Feb. 28, 2014, as amended at 79 FR 39188, July 9, 2014; 80 
FR 4477, Jan. 27, 2015; 81 FR 44449, July 7, 2016]

[[Page 150]]


    Effective Date Note: At 79 FR 39188, July 9, 2014, Sec. 54.310, 
paragraph (e)(1) was revised. This paragraph contains information 
collection and recordkeeping requirements and will not become effective 
until approval has been given by the Office of Management and Budget.



Sec. 54.311  Connect America Fund Alternative-Connect America Cost
Model Support.

    (a) Voluntary election of model-based support. A rate-of-return 
carrier (as that term is defined in Sec. 54.5) receiving support 
pursuant to subparts K or M of this part shall have the opportunity to 
voluntarily elect, on a state-level basis, to receive Connect America 
Fund-Alternative Connect America Cost Model (CAF-ACAM) support as 
calculated by the Alternative-Connect America Cost Model (A-CAM) adopted 
by the Commission in lieu of support calculated pursuant to subparts K 
or M of this part. Any rate-of-return carrier not electing support 
pursuant to this section shall continue to receive support calculated 
pursuant to those mechanisms as specified in Commission rules for high-
cost support.
    (b) Geographic areas eligible for support. CAF-ACAM model-based 
support will be made available for a specific number of locations in 
census blocks identified as eligible for each carrier by public notice. 
The eligible areas and number of locations for each state identified by 
the public notice shall not change during the term of support identified 
in paragraph (c) of this section.
    (c) Term of support. CAF-ACAM model-based support shall be provided 
to the carriers that elect to make a state-level commitment for a term 
that extends until December 31, 2026.
    (d) Interim deployment milestones. Recipients of CAF-ACAM model-
based support must complete deployment to 40 percent of fully funded 
locations by the end of 2020, to 50 percent of fully funded locations by 
the end of 2021, to 60 percent of fully funded locations by the end of 
2022, to 70 percent of fully funded locations by the end of 2023, to 80 
percent of fully funded locations by the end of 2024, to 90 percent of 
fully funded locations by the end of 2025, and to 100 percent of fully 
funded locations by the end of 2026. By the end of 2026, carriers must 
complete deployment of broadband meeting a standard of at least 25 Mbps 
downstream/3 Mbps upstream to the requisite number of locations 
specified in Sec. 54.308(a)(1)(i). Compliance shall be determined based 
on the total number of fully funded locations in a state. Carriers that 
complete deployment to at least 95 percent of the requisite number of 
locations will be deemed to be in compliance with their deployment 
obligations. The remaining locations that receive capped support are 
subject to the standard specified in Sec. 54.308(a)(1)(ii).
    (e) Transition to CAF-ACAM Support. Carriers electing CAF-ACAM 
model-based support whose final model-based support is less than the 
carrier's high-cost loop support and interstate common line support 
disbursements for 2015, will transition to model-based support as 
follows:
    (1) If the difference between a carrier's model-based support and 
its 2015 high-cost support, as determined in paragraph (e)(4) of this 
section, is 10 percent or less, it will receive, in addition to model-
based support, 50 percent of that difference in year one, and then will 
receive model support in years two through ten.
    (2) If the difference between a carrier's model-based support and 
its 2015 high-cost support, as determined in paragraph (e)(4) of this 
section, is 25 percent or less, but more than 10 percent, it will 
receive, in addition to model-based support, an additional transition 
payment for up to four years, and then will receive model support in 
years five through ten. The transition payments will be phased-down 20 
percent per year, provided that each phase-down amount is at least five 
percent of the total 2015 high-cost support amount. If 20 percent of the 
difference between a carrier's model-based support and its 2015 high-
cost support is less than five percent of the total 2015 high-cost 
support amount, the transition payments will be phased-down five percent 
of the total 2015 high-cost support amount each year.
    (3) If the difference between a carrier's model-based support and 
its 2015 high-cost support, as determined in paragraph (e)(4) of this 
section, is more

[[Page 151]]

than 25 percent, it will receive, in addition to model-based support, an 
additional transition payment for up to nine years, and then will 
receive model support in year ten. The transition payments will be 
phased-down ten percent per year, provided that each phase-down amount 
is at least five percent of the total 2015 high-cost support amount. If 
ten percent of the difference between a carrier's model-based support 
and its 2015 high-cost support is less than five percent of the total 
2015 high-cost support amount, the transition payments will be phased-
down five percent of the total 2015 high-cost support amount each year.
    (4) The carrier's 2015 support for purposes of the calculation of 
transition payments is the amount of high-cost loop support and 
interstate common line support disbursed to the carrier for 2015 without 
regard to prior period adjustments related to years other than 2015, as 
determined by the Administrator as of January 31, 2016 and publicly 
announced prior to the election period for the voluntary path to the 
model.

81 FR 24340, Apr. 25, 2016, as amended at 82 FR 14339, Mar. 20, 2017]



Sec. 54.312  Connect America Fund for Price Cap Territories--Phase I.

    (a) Frozen High-Cost Support. Beginning January 1, 2012, each price 
cap local exchange carrier and rate-of-return carrier affiliated with a 
price cap local exchange carrier will have a ``baseline support amount'' 
equal to its total 2011 support in a given study area, or an amount 
equal to $3,000 times the number of reported lines for 2011, whichever 
is lower. For purposes of this section, price cap carriers are defined 
pursuant to Sec. 61.3(aa) of this chapter and affiliated companies are 
determined by Sec. 32.9000 of this chapter. Each price cap local 
exchange carrier and rate-of-return carrier affiliated with a price cap 
local exchange carrier will have a ``monthly baseline support amount'' 
equal to its baseline support amount divided by twelve. Beginning 
January 1, 2012, on a monthly basis, eligible carriers will receive 
their monthly baseline support amount.
    (1) ``Total 2011 support'' is the amount of support disbursed to a 
price cap local exchange carrier or rate-of-return carrier affiliated 
with a price cap local exchange carrier for 2011, without regard to 
prior period adjustments related to years other than 2011 and as 
determined by USAC on January 31, 2012.
    (2) For the purpose of calculating the $3,000 per line limit, the 
average of lines reported by a price cap local exchange carrier or rate-
of-return carrier affiliated with a price cap local exchange carrier 
pursuant to line count filings required for December 31, 2010, and 
December 31, 2011 shall be used.
    (3) A carrier receiving frozen high cost support under this rule 
shall be deemed to be receiving Interstate Access Support and Interstate 
Common Line Support equal to the amount of support the carrier to which 
the carrier was eligible under those mechanisms in 2011.
    (b) Incremental Support in 2012. From January 1, 2012, to December 
31, 2012, support in addition to baseline support defined in paragraph 
(a) of this section will be available for certain price cap local 
exchange carriers and rate-of-return carriers affiliated with price cap 
local exchange carriers as follows.
    (1) For each carrier for which the Wireline Competition Bureau 
determines that it has appropriate data or for which it determines that 
it can make reasonable estimates, the Bureau will determine an average 
per-location cost for each wire center using a simplified cost-
estimation function derived from the Commission's cost model. 
Incremental support will be based on the wire centers for which the 
estimated per-location cost exceeds the funding threshold. The funding 
threshold will be determined by calculating which funding threshold 
would allocate all available incremental support, if each carrier that 
would be offered incremental support were to accept it.
    (2) An eligible telecommunications carrier accepting incremental 
support must deploy broadband to a number of unserved locations, as 
shown as unserved by fixed broadband on the then-current version of the 
National Broadband Map, equal to the amount of incremental support it 
accepts divided by $775.

[[Page 152]]

    (3) A carrier may elect to accept or decline incremental support. A 
holding company may do so on a holding-company basis on behalf of its 
operating companies that are eligible telecommunications carriers, whose 
eligibility for incremental support, for these purposes, shall be 
considered on an aggregated basis. A carrier must provide notice to the 
Commission, relevant state commissions, and any affected Tribal 
government, stating the amount of incremental support it wishes to 
accept and identifying the areas by wire center and census block in 
which the designated eligible telecommunications carrier will deploy 
broadband to meet its deployment obligation, or stating that it declines 
incremental support. Such notification must be made within 90 days of 
being notified of any incremental support for which it would be 
eligible. Along with its notification, a carrier accepting incremental 
support must also submit a certification that the locations to be served 
to satisfy the deployment obligation are not shown as served by fixed 
broadband provided by any entity other than the certifying entity or its 
affiliate on the then-current version of the National Broadband Map; 
that, to the best of the carrier's knowledge, the locations are, in 
fact, unserved by fixed broadband; that the carrier's current capital 
improvement plan did not already include plans to complete broadband 
deployment within the next three years to the locations to be counted to 
satisfy the deployment obligation; and that incremental support will not 
be used to satisfy any merger commitment or similar regulatory 
obligation. If a carrier intends to deploy to census blocks not 
initially identified at the time of election, it must inform the 
Commission, the Administrator, relevant state commissions, and any 
affected Tribal government of the change at least 90 days prior to 
commencing deployment in the new census blocks. No sooner than 46 days 
after the Wireline Competition Bureau issues a public notice announcing 
the updated deployment plans but prior to commencing deployment, the 
carrier must make the certifications described in this paragraph with 
respect to the new census blocks. If a carrier no longer intends to 
deploy to a previously identified census block, it must inform the 
Commission, the Administrator, relevant state commission, and any 
affected Tribal government prior to filing its certification pursuant to 
Sec. 54.313(b)(2).
    (c) Incremental Support in 2013. From January 1, 2013, to December 
31, 2013, support in addition to baseline support defined in paragraph 
(a) of this section will be available for certain price cap local 
exchange carriers and rate-of-return carriers affiliated with price cap 
local exchange carriers as follows:

    (1) For each carrier for which the Wireline Competition Bureau 
determines that it has appropriate data or for which it determines that 
it can make reasonable estimates, the Bureau will determine an average 
per-location cost for each wire center using a simplified cost-
estimation function derived from the Commission's high-cost proxy model. 
Incremental support will be based on the wire centers for which the 
estimated per-location cost exceeds the funding threshold. The funding 
threshold will be determined by calculating which funding threshold 
would allocate all available incremental support, if each carrier that 
would be offered incremental support were to accept it.
    (2) An eligible telecommunications carrier accepting incremental 
support must deploy broadband to a number of unserved locations, shown 
as unserved by fixed Internet access with speeds of at least 768 kbps 
downstream and 200 kbps upstream on the then-current version of the 
National Broadband Map, equal to the amount of incremental support it 
accepts divided by $775.
    (3) An eligible telecommunications carrier must accept funding 
pursuant to paragraph (c)(2) of this section before it may accept 
funding pursuant to paragraph (c)(3) of this section. If an eligible 
telecommunications carrier has committed to deploy to all locations 
eligible for support under paragraph (c)(2) of this section on routes or 
projects that can economically be built with $775 in Connect America 
funding for each location unserved by 768 kbps downstream and 200 kbps 
upstream plus an equal amount of non-Connect America carrier capital 
expenditure funding, but the carrier has not fully utilized its allotted 
funding, it may also count towards its deployment obligation locations 
shown as unserved by fixed Internet access with speeds of at least 3 
Mbps downstream and 768 kbps upstream equal to the amount of remaining 
incremental support divided by $550.
    (4) A carrier may elect to accept or decline incremental support. A 
holding company

[[Page 153]]

may do so on a holding-company basis on behalf of its operating 
companies that are eligible telecommunications carriers, whose 
eligibility for incremental support, for these purposes, shall be 
considered on an aggregated basis. A carrier must provide notice to the 
Commission, the Administrator, relevant state commissions, and any 
affected Tribal government, stating the amount of incremental support it 
wishes to accept, the number of locations at the $775 amount, and the 
number of locations at the $550 amount, and identifying the areas by 
wire center and census block in which the designated eligible 
telecommunications carrier will deploy broadband to meet its deployment 
obligation; or stating that it declines incremental support. Such 
notification must be made within 75 days of being notified of any 
incremental support for which it would be eligible. If a carrier intends 
to deploy to census blocks not initially identified at the time of 
election, it must inform the Commission, the Administrator, relevant 
state commissions, and any affected Tribal government of the change at 
least 90 days prior to commencing deployment in the new census blocks. 
No sooner than 46 days after the Wireline Competition Bureau issues a 
public notice announcing the updated deployment plans but prior to 
commencing deployment, the carrier must make the certifications 
described in paragraph (c)(5) of this section with respect to the new 
census blocks. If a carrier no longer intends to deploy to a previously 
identified census block, it must inform the Commission, the 
Administrator, relevant state commission, and any affected Tribal 
government prior to filing its certification pursuant to 
Sec. 54.313(b)(2).
    (5) Along with its notification, an eligible telecommunications 
carrier accepting incremental support must submit the following 
certifications:
    (i) The locations to be served to satisfy the deployment obligation 
are not shown as served by fixed broadband at the speeds specified in 
paragraph (c)(2) or (c)(3) of this section provided by any entity other 
than the certifying entity or its affiliate on the then-current version 
of the National Broadband Map or that it is challenging the National 
Broadband Map's designation of that census block under the challenge 
process in paragraph (c)(7) of this section;
    (ii) To the best of the carrier's knowledge, the locations are, in 
fact, unserved by fixed Internet access with speeds of at least 3 Mbps 
downstream and 768 kbps upstream, or 768 kbps downstream and 200 kbps 
upstream, as appropriate;
    (iii) The carrier's current capital improvement plan did not already 
include plans to complete broadband deployment within the next three 
years to the locations to be counted to satisfy the deployment 
obligation;
    (iv) Incremental support will not be used to satisfy any merger 
commitment or similar regulatory obligation; and
    (v) The carrier has undertaken due diligence to determine the 
locations in question are not within the service area of either 
Broadband Initiatives Program or the Broadband Technology Opportunities 
Program projects that will provide Internet access with speeds of at 
least 3 Mbps downstream and 768 upstream.
    (6) An eligible telecommunications carrier deploying to locations 
unserved by 3 Mbps downstream and 768 kbps upstream under paragraph 
(c)(3) of this section must also certify that it has prioritized its 
planned projects or routes so as to maximize the deployment of 
broadband-capable infrastructure to locations lacking Internet access 
with speeds of 768 kbps downstream and 200 kbps upstream.
    (7) A person may challenge the designation of a census block as 
served or unserved by a certain speed as shown on the National Broadband 
Map. When the Wireline Competition Bureau determines that the evidence 
presented makes it more likely than not that the census block should be 
designated as served by broadband with speeds of at least 3 Mbps 
downstream and 768 kbps upstream, that locations in that census block 
will be treated as served by broadband and therefore ineligible to be 
counted for the purposes of paragraph (c)(3) of this section. When the 
Wireline Competition Bureau determines that the evidence presented makes 
it more likely than not that the census block should be designated as 
served by Internet service with speeds of 768 kbps downstream and 200 
kbps upstream, but unserved by broadband with speeds of at least 3 Mbps 
downstream and 768 kbps upstream, locations in that census block will be 
treated as served by Internet access with speeds of 768 kbps downstream 
and 200 kbps upstream and therefore eligible to be counted for the 
purposes of paragraph (c)(3) of this section. When the Wireline 
Competition Bureau determines that the evidence presented makes it more 
likely than not that the census block should be designated as unserved 
by Internet service with speeds of 768 kbps downstream and 200 kbps 
upstream, locations in that census block will be treated as unserved by 
Internet access with speeds of 768 kbps downstream and 200 kbps upstream 
and therefore eligible to be counted for the purposes of paragraph 
(c)(2) of this section.
    (8) If no entity other than the carrier or its affiliate provides 
Internet service with speeds of 3 Mbps downstream and 768 kbps upstream 
or greater as shown on the National Broadband Map or as determined by 
the process described in paragraph (c)(7), the carrier may satisfy its 
deployment obligations at a location shown by the National

[[Page 154]]

Broadband Map as being served by that carrier or its affiliate with such 
service by certifying that it is the only entity providing such service, 
that the location does not actually receive speeds of 3 Mbps downstream 
and 768 kbps upstream, and the location is served through a copper-fed 
digital subscriber line access multiplexer. The carrier must 
specifically identify such locations in its election. Such locations 
will be treated the same as locations under paragraph (c)(3) of this 
section.
    (9) An eligible telecommunications carrier must complete deployment 
of broadband-capable infrastructure to two-thirds of the required number 
of locations within two years of providing notification of acceptance of 
funding, and must complete deployment to all required locations within 
three years. To satisfy its deployment obligation, the eligible 
telecommunications carrier must offer broadband service to such 
locations of at least 4 Mbps downstream and 1 Mbps upstream, with 
latency sufficiently low to enable the use of real-time communications, 
including Voice over Internet Protocol, and with usage allowances, if 
any, associated with a specified price for a service offering that are 
reasonably comparable to comparable offerings in urban areas.

[76 FR 73872, Nov. 29, 2011, as amended at 77 FR 31536, May 29, 2012; 78 
FR 38233, June 26, 2013; 78 FR 48624, Aug. 9, 2013]

    Effective Date Note: At 78 FR 48624, Aug. 9, 2013, Sec. 54.312(b)(3) 
and (c)(4) were revised. These paragraphs contain information collection 
and recordkeeping requirements and will not become effective until 
approval has been given by the Office of Management and Budget.



Sec. 54.313  Annual reporting requirements for high-cost recipients.

    (a) Any recipient of high-cost support shall provide the following:
    (1) Certification that the carrier is able to function in emergency 
situations as set forth in Sec. 54.202(a)(2);
    (2) A certification that the pricing of the company's voice services 
is no more than two standard deviations above the applicable national 
average urban rate for voice service, as specified in the most recent 
public notice issued by the Wireline Competition Bureau and Wireless 
Telecommunications Bureau;
    (3) A certification that the pricing of a service that meets the 
Commission's broadband public interest obligations is no more than the 
applicable benchmark to be announced annually in a public notice issued 
by the Wireline Competition Bureau, or is no more than the non-
promotional price charged for a comparable fixed wireline service in 
urban areas in the states or U.S. Territories where the eligible 
telecommunications carrier receives support;
    (4) The recipient's holding company, operating companies, 
affiliates, and any branding (a ``dba,'' or ``doing-business-as 
company'' or brand designation), as well as universal service 
identifiers for each such entity by Study Area Codes, as that term is 
used by the Administrator. For purposes of this paragraph, 
``affiliates'' has the meaning set forth in section 3(2) of the 
Communications Act of 1934, as amended;
    (5) To the extent the recipient serves Tribal lands, documents or 
information demonstrating that the ETC had discussions with Tribal 
governments that, at a minimum, included:
    (i) A needs assessment and deployment planning with a focus on 
Tribal community anchor institutions;
    (ii) Feasibility and sustainability planning;
    (iii) Marketing services in a culturally sensitive manner;
    (iv) Rights of way processes, land use permitting, facilities 
siting, environmental and cultural preservation review processes; and
    (v) Compliance with Tribal business and licensing requirements. 
Tribal business and licensing requirements include business practice 
licenses that Tribal and non-Tribal business entities, whether located 
on or off Tribal lands, must obtain upon application to the relevant 
Tribal government office or division to conduct any business or trade, 
or deliver any goods or services to the Tribes, Tribal members, or 
Tribal lands. These include certificates of public convenience and 
necessity, Tribal business licenses, master licenses, and other related 
forms of Tribal government licensure.
    (6) The results of network performance tests pursuant to the 
methodology and in the format determined by the Wireline Competition 
Bureau, Wireless Telecommunications Bureau, and Office of Engineering 
and Technology.

[[Page 155]]

    (b) In addition to the information and certifications in paragraph 
(a) of this section:

    (1) Any recipient of incremental Connect America Phase I support 
pursuant to Sec. 54.312(b) and (c) shall provide:
    (i) In its next annual report due after two years after filing a 
notice of acceptance of funding pursuant to Sec. 54.312(b) and (c), a 
certification that the company has deployed to no fewer than two-thirds 
of the required number of locations; and
    (ii) In its next annual report due after three years after filing a 
notice of acceptance of funding pursuant to Sec. 54.312(b) and (c), a 
certification that the company has deployed to all required locations 
and that it is offering broadband service of at least 4 Mbps downstream 
and 1 Mbps upstream, with latency sufficiently low to enable the use of 
real-time communications, including Voice over Internet Protocol, and 
with usage allowances, if any, associated with a specified price for a 
service offering that are reasonably comparable to comparable offerings 
in urban areas.
    (2) In addition to the information and certifications required in 
paragraph (b)(1) of this section, any recipient of incremental Connect 
America Phase I support pursuant to Sec. 54.312(c) shall provide:
    (i) In its annual reports due after one, two, and three years after 
filing a notice of acceptance of funding pursuant to Sec. 54.312(c), a 
certification that, to the best of the recipient's knowledge, the 
locations in question are not receiving support under the Broadband 
Initiatives Program or the Broadband Technology Opportunities Program 
for projects that will provide broadband with speeds of at least 4 Mbps/
1 Mbps; and
    (ii) In its annual reports due after one, two, and three years after 
filing a notice of acceptance of funding pursuant to Sec. 54.312(c), a 
statement of the total amount of capital funding expended in the 
previous year in meeting Connect America Phase I deployment obligations, 
accompanied by a list of census blocks indicating where funding was 
spent.
    (c) In addition to the information and certifications in paragraph 
(a) of this section, price cap carriers that receive frozen high-cost 
support pursuant to Sec. 54.312(a) shall provide:
    (1) By July 1, 2013. A certification that frozen high-cost support 
the company received in 2012 was used consistent with the goal of 
achieving universal availability of voice and broadband;
    (2) By July 1, 2014. A certification that at least one-third of the 
frozen-high cost support the company received in 2013 was used to build 
and operate broadband-capable networks used to offer the provider's own 
retail broadband service in areas substantially unserved by an 
unsubsidized competitor;
    (3) By July 1, 2015. A certification that at least two-thirds of the 
frozen-high cost support the company received in 2014 was used to build 
and operate broadband-capable networks used to offer the provider's own 
retail broadband service in areas substantially unserved by an 
unsubsidized competitor; and
    (4) By July 1, 2016 and in subsequent years. A certification that 
all frozen-high cost support the company received in the previous year 
was used to build and operate broadband-capable networks used to offer 
the provider's own retail broadband service in areas substantially 
unserved by an unsubsidized competitor.
    (d) In addition to the information and certifications in paragraph 
(a) of this section, beginning July 1, 2013, price cap carriers 
receiving high-cost support to offset reductions in access charges shall 
provide a certification that the support received pursuant to 
Sec. 54.304 in the prior calendar year was used to build and operate 
broadband-capable networks used to offer provider's own retail service 
in areas substantially unserved by an unsubsidized competitor.
    (e) In addition to the information and certifications in paragraph 
(a) of this section, the following requirements apply to Phase II and 
Remote Areas Fund recipients:
    (1) Any price cap carrier that elects to receive Connect America 
Phase II model-based support shall provide:
    (i) On July 1, 2016 a list of the geocoded locations already meeting 
the Sec. 54.309 public interest obligations at the end of calendar year 
2015, and the total amount of Phase II support, if any, the price cap 
carrier used for capital expenditures in 2015.
    (ii) On July 1, 2017 and every year thereafter ending July 1, 2021, 
the following information:
    (A) The number, names, and addresses of community anchor 
institutions to which the eligible telecommunications

[[Page 156]]

carrier newly began providing access to broadband service in the 
preceding calendar year;
    (B) The total amount of Phase II support, if any, the price cap 
carrier used for capital expenditures in the previous calendar year; and
    (C) A certification that it bid on category one telecommunications 
and Internet access services in response to all FCC Form 470 postings 
seeking broadband service that meets the connectivity targets for the 
schools and libraries universal service support program for eligible 
schools and libraries (as described in Sec. 54.501) located within any 
area in a census block where the carrier is receiving Phase II model-
based support, and that such bids were at rates reasonably comparable to 
rates charged to eligible schools and libraries in urban areas for 
comparable offerings.
    (2) Any recipient of Phase II or Remote Areas Fund support awarded 
through a competitive bidding process shall provide:
    (i) Starting the first July 1st after receiving support until the 
July 1st after the recipient's support term has ended:
    (A) The number, names, and addresses of community anchor 
institutions to which the eligible telecommunications carrier newly 
began providing access to broadband service in the preceding calendar 
year;
    (B) The total amount of support, if any, the recipient used for 
capital expenditures in the previous calendar year; and
    (C) A certification that it bid on category one telecommunications 
and Internet access services in response to all FCC Form 470 postings 
seeking broadband service that meets the connectivity targets for the 
schools and libraries universal service support program for eligible 
schools and libraries (as described in Sec. 54.501) located within any 
area in a census block where the carrier is receiving support awarded 
through auction, and that such bids were at rates reasonably comparable 
to rates charged to eligible schools and libraries in urban areas for 
comparable offerings.
    (ii) Starting the first July 1st after receiving support until the 
July 1st after the recipient's penultimate year of support, a 
certification that the recipient has available funds for all project 
costs that will exceed the amount of support that will be received for 
the next calendar year.
    (iii) Starting the first July 1st after meeting the final service 
milestone in Sec. 54.310(c) of this chapter until the July 1st after the 
Phase II recipient's support term has ended, a certification that the 
Phase II-funded network that the Phase II auction recipient operated in 
the prior year meets the relevant performance requirements in 
Sec. 54.309 of this chapter, or that the network that the Remote Areas 
Fund recipient operated in the prior year meets the relevant performance 
requirements for the Remote Areas Fund.
    (f) In addition to the information and certifications in paragraph 
(a) of this section, any rate-of-return carrier shall provide:
    (1) On July 1, 2016, a list of the geocoded locations already 
meeting the Sec. 54.309 public interest obligations at the end of 
calendar year 2015, and the total amount of Phase II support, if any, 
the price cap carrier used for capital expenditures in 2015.
    (i) A certification that it is taking reasonable steps to provide 
upon reasonable request broadband service at actual speeds of at least 
10 Mbps downstream/1 Mbps upstream, with latency suitable for real-time 
applications, including Voice over Internet Protocol, and usage capacity 
that is reasonably comparable to comparable offerings in urban areas as 
determined in an annual survey, and that requests for such service are 
met within a reasonable amount of time; or if the rate-of-return carrier 
is receiving Alaska Plan support pursuant to Sec. 54.306, a 
certification that it is offering broadband service with latency 
suitable for real-time applications, including Voice over Internet 
Protocol, and usage capacity that is reasonably comparable to comparable 
offerings in urban areas, and at speeds committed to in its approved 
performance plan to the locations it has reported pursuant to 
Sec. 54.316(a), subject to any limitations due to the availability of 
backhaul as specified in paragraph (g) of this section.
    (ii) The number, names, and addresses of community anchor 
institutions to

[[Page 157]]

which the ETC newly began providing access to broadband service in the 
preceding calendar year; and
    (iii) A certification that it bid on category one telecommunications 
and Internet access services in response to all reasonable requests in 
posted FCC Form 470s seeking broadband service that meets the 
connectivity targets for the schools and libraries universal service 
support program for eligible schools and libraries (as described in 
Sec. 54.501) within its service area, and that such bids were at rates 
reasonably comparable to rates charged to eligible schools and libraries 
in urban areas for comparable offerings.
    (2) Privately held rate-of-return carriers only. A full and complete 
annual report of the company's financial condition and operations as of 
the end of the preceding fiscal year.
    (i) Recipients of loans from the Rural Utility Service (RUS) shall 
provide copies of their RUS Operating Report for Telecommunications 
Borrowers as filed with the RUS. Such carriers must make their 
underlying audit and related workpapers and financial information 
available upon request by the Commission, USAC, or the relevant state 
commission, relevant authority in a U.S. Territory, or Tribal 
government, as appropriate.
    (ii) All privately held rate-of-return carriers that are not 
recipients of loans from the RUS and whose financial statements are 
audited in the ordinary course of business must provide either: A copy 
of their audited financial statement; or a financial report in a format 
comparable to RUS Operating Report for Telecommunications Borrowers, 
accompanied by a copy of a management letter issued by the independent 
certified public accountant that performed the company's financial 
audit. A carrier choosing the latter option must make its audit and 
related workpapers and financial information available upon request by 
the Commission, USAC, or the relevant state commission, relevant 
authority in a U.S. Territory, or Tribal government, as appropriate.
    (iii) All other privately held rate-of-return carriers must provide 
either: A copy of their financial statement which has been subject to 
review by an independent certified public accountant; or a financial 
report in a format comparable to RUS Operating Report for 
Telecommunications Borrowers, with the underlying information subjected 
to a review by an independent certified public accountant and 
accompanied by an officer certification that: The carrier was not 
audited in the ordinary course of business for the preceding fiscal 
year; and that the reported data are accurate. If the carrier elects the 
second option, it must make the review and related workpapers and 
financial information available upon request by the Commission, USAC, or 
the relevant state commission, relevant authority in a U.S. Territory, 
or Tribal government, as appropriate.
    (3) For rate-of-return carriers participating in the Alaska Plan, 
funding recipients must certify as to whether any terrestrial backhaul 
or other satellite backhaul became commercially available in the 
previous calendar year in areas that were previously served exclusively 
by performance-limiting satellite backhaul. To the extent that such new 
terrestrial backhaul facilities are constructed, or other satellite 
backhaul become commercially available, or existing facilities improve 
sufficiently to meet the relevant speed, latency and capacity 
requirements then in effect for broadband service supported by the 
Alaska Plan, the funding recipient must provide a description of the 
backhaul technology, the date at which that backhaul was made 
commercially available to the carrier, and the number of locations that 
are newly served by the new terrestrial backhaul or other satellite 
backhaul. Within twelve months of the new backhaul facilities becoming 
commercially available, funding recipients must certify that they are 
offering broadband service with latency suitable for real-time 
applications, including Voice over Internet Protocol, and usage capacity 
that is reasonably comparable to comparable offerings in urban areas. 
Funding recipients' minimum speed deployment obligations will be 
reassessed as specified by the Commission.
    (g) Areas with no terrestrial backhaul. Carriers without access to 
terrestrial

[[Page 158]]

backhaul that are compelled to rely exclusively on satellite backhaul in 
their study area must certify annually that no terrestrial backhaul 
options exist. Any such funding recipients must certify they offer 
broadband service at actual speeds of at least 1 Mbps downstream and 256 
kbps upstream within the supported area served by satellite middle-mile 
facilities. To the extent that new terrestrial backhaul facilities are 
constructed, or existing facilities improve sufficiently to meet the 
relevant speed, latency and capacity requirements then in effect for 
broadband service supported by the Connect America Fund, within twelve 
months of the new backhaul facilities becoming commercially available, 
funding recipients must provide the certifications required in 
paragraphs (e) or (f) of this section in full. Carriers subject to this 
paragraph must comply with all other requirements set forth in the 
remaining paragraphs of this section. These obligations may be modified 
for carriers participating in the Alaska Plan.
    (h) Additional voice rate data. (1) All incumbent local exchange 
carrier recipients of high-cost support must report all of their rates 
for residential local service for all portions of their service area, as 
well as state fees as defined pursuant to Sec. 54.318(e), to the extent 
the sum of those rates and fees are below the rate floor as defined in 
Sec. 54.318, and the number of lines for each rate specified. Carriers 
shall report lines and rates in effect as of June 1.
    (2) In addition to the annual filing, local exchange carriers may 
file updates of their rates for residential local service, as well as 
state fees as defined pursuant to Sec. 54.318(e), on January 2 of each 
year. If a local exchange carrier reduces its rates and the sum of the 
reduced rates and state fees are below the rate floor as defined in 
Sec. 54.318, the local exchange carrier shall file such an update. For 
the update, carriers shall report lines and rates in effect as of 
December 1.
    (i) All reports pursuant to this section shall be filed with the 
Office of the Secretary of the Commission clearly referencing WC Docket 
No. 14-58, with the Administrator, and with the relevant state 
commissions or relevant authority in a U.S. Territory, or Tribal 
governments, as appropriate.
    (j) Filing deadlines. (1) In order for a recipient of high-cost 
support to continue to receive support for the following calendar year, 
or retain its eligible telecommunications carrier designation, it must 
submit the annual reporting information required by this section 
annually by July 1 of each year. Eligible telecommunications carriers 
that file their reports after the July 1 deadline shall receive a 
reduction in support pursuant to the following schedule:
    (i) An eligible telecommunications carrier that files after the July 
1 deadline, but by July 8, will have its support reduced in an amount 
equivalent to seven days in support;
    (ii) An eligible telecommunications carrier that files on or after 
July 9 will have its support reduced on a pro-rata daily basis 
equivalent to the period of non-compliance, plus the minimum seven-day 
reduction.
    (2) Grace period. An eligible telecommunications carrier that 
submits the annual reporting information required by this section after 
July 1 but before July 5 will not receive a reduction in support if the 
eligible telecommunications carrier and its holding company, operating 
companies, and affiliates as reported pursuant to paragraph (a)(8) of 
this section have not missed the July 1 deadline in any prior year.
    (k) This section does not apply to recipients that solely receive 
support from Phase I and Phase II of the Mobility Fund.
    (l) In addition to the information and certifications in paragraph 
(a) of this section, any competitive eligible telecommunications carrier 
participating in the Alaska Plan must provide the following:
    (1) Funding recipients that have identified in their approved 
performance plans that they rely exclusively on satellite backhaul for a 
certain portion of the population in their service area must certify as 
to whether any terrestrial backhaul or other satellite backhaul became 
commercially available in the previous calendar year in

[[Page 159]]

areas that were previously served exclusively by satellite backhaul. To 
the extent that new terrestrial backhaul facilities are constructed or 
other satellite backhaul become commercially available, the funding 
recipient must:
    (i) Provide a description of the backhaul technology;
    (ii) Provide the date on which that backhaul was made commercially 
available to the carrier;
    (iii) Provide the number of the population within their service area 
that are served by the newly available backhaul option; and
    (iv) To the extent the funding recipient has not already committed 
to providing 4G LTE at 10/1 Mbps to the population served by the newly 
available backhaul by the end of the plan term, submit a revised 
performance commitment factoring in the availability of the new backhaul 
option no later than the due date of the Form 481 in which they have 
certified that such backhaul became commercially available.
    (2) [Reserved]

[76 FR 73873, Nov. 29, 2011, as amended at 77 FR 14302, Mar. 9, 2012; 77 
FR 30914, May 24, 2012; 78 FR 22201, Apr. 15, 2013; 78 FR 29656, May 21, 
2013; 78 FR 3843, Jan. 17, 2013; 78 FR 38233, June 26, 2013; 79 FR 
11336, Feb. 28, 2014; 79 FR 39189, July 9, 2014; 80 FR 4477, Jan. 27, 
2015; 81 FR 24341, Apr. 25, 2016; 81 FR 44449, July 7, 2016; 81 FR 
69713, Oct. 7, 2016; 82 FR 15450, Mar. 28, 2017, 82 FR 39969, Aug. 23, 
2017]

    Effective Date Notes: 1. At 77 FR 14302, Mar. 9, 2012, 
Sec. 54.313(a)(9) introductory text and (f)(2) were revised. These 
paragraphs contain information collection and recordkeeping requirements 
and will not become effective until approval has been given by the 
Office of Management and Budget.
    2. At 79 FR 11336, Feb. 28, 2014, Sec. 54.313(e)(1), (e)(2), and 
(e)(3) introductory text were revised. These paragraphs contain 
information collection and recordkeeping requirements and will not 
become effective until approval has been given by the Office of 
Management and Budget.
    3. At 80 FR 4476, Jan. 27, 2015, Sec. 54.313(a)(12) was added and 
(e) was revised. These paragraphs contain information collection and 
record keeping requirements and will not become effective until approval 
has been given by the Office of Management and Budget.
    4. At 80 FR 5987, Feb. 4, 2015, Sec. 54.313 was amended by revising 
paragraphs (e)(2)(iii) and (iv), adding (e)(2)(v), revising (f)(1)(i) 
and (ii), and revising (f)(1)(iii). These paragraphs contain information 
collection and recordkeeping requirements and will not become effective 
until approval have been given by the Office of Management and Budget.
    5. At 81 FR 44449, July 7, 2016, Sec. 54.313(e) was revised, 
Paragraph (e)(2) contains information collection and recordkeeping 
requirements and will not become effective until approval have been 
given by the Office of Management and Budget.
    6. At 81 FR 67913, Oct. 7, 2016, Sec. 54.313(f)(1)(i) was revised 
and (f)(3) and (l) were added. These paragraphs contain information 
collection and recordkeeping requirements and will not become effective 
until approval is given by the Office of Management and Budget.



Sec. 54.314  Certification of support for eligible telecommunications 
carriers.

    (a) Certification. States that desire eligible telecommunications 
carriers to receive support pursuant to the high-cost program must file 
an annual certification with the Administrator and the Commission 
stating that all federal high-cost support provided to such carriers 
within that State was used in the preceding calendar year and will be 
used in the coming calendar year only for the provision, maintenance, 
and upgrading of facilities and services for which the support is 
intended. High-cost support shall only be provided to the extent that 
the State has filed the requisite certification pursuant to this 
section.
    (b) Carriers not subject to State jurisdiction. An eligible 
telecommunications carrier not subject to the jurisdiction of a State 
that desires to receive support pursuant to the high-cost program must 
file an annual certification with the Administrator and the Commission 
stating that all federal high-cost support provided to such carrier was 
used in the preceding calendar year and will be used in the coming 
calendar year only for the provision, maintenance, and upgrading of 
facilities and services for which the support is intended. Support 
provided pursuant to the high-cost program shall only be provided to the 
extent that the carrier has filed the requisite certification pursuant 
to this section.
    (c) Certification format. (1) A certification pursuant to this 
section may be filed in the form of a letter from the appropriate 
regulatory authority for the State, and must be filed with both the 
Office of the Secretary of the Commission clearly referencing WC Docket

[[Page 160]]

No. 14-58, and with the Administrator of the high-cost support 
mechanism, on or before the deadlines set forth in paragraph (d) of this 
section. If provided by the appropriate regulatory authority for the 
State, the annual certification must identify which carriers in the 
State are eligible to receive federal support during the applicable 12-
month period, and must certify that those carriers only used support 
during the preceding calendar year and will only use support in the 
coming calendar year for the provision, maintenance, and upgrading of 
facilities and services for which support is intended. A State may file 
a supplemental certification for carriers not subject to the State's 
annual certification. All certificates filed by a State pursuant to this 
section shall become part of the public record maintained by the 
Commission.
    (2) An eligible telecommunications carrier not subject to the 
jurisdiction of a State shall file a sworn affidavit executed by a 
corporate officer attesting that the carrier only used support during 
the preceding calendar year and will only use support in the coming 
calendar year for the provision, maintenance, and upgrading of 
facilities and services for which support is intended. The affidavit 
must be filed with both the Office of the Secretary of the Commission 
clearly referencing WC Docket No. 14-58, and with the Administrator of 
the high-cost universal service support mechanism, on or before the 
deadlines set forth in paragraph (d) of this section. All affidavits 
filed pursuant to this section shall become part of the public record 
maintained by the Commission.
    (d) Filing deadlines. (1) In order for an eligible 
telecommunications carrier to receive federal high-cost support, the 
state or the eligible telecommunications carrier, if not subject to the 
jurisdiction of a state, must file an annual certification, as described 
in paragraph (c) of this section, with both the Administrator and the 
Commission by October 1 of each year. If a state or eligible 
telecommunications carrier files the annual certification after the 
October 1 deadline, the carrier subject to the certification shall 
receive a reduction in its support pursuant to the following schedule:
    (i) An eligible telecommunications carrier subject to certifications 
filed after the October 1 deadline, but by October 8, will have its 
support reduced in an amount equivalent to seven days in support;
    (ii) An eligible telecommunications carrier subject to 
certifications filed on or after October 9 will have its support reduced 
on a pro-rata daily basis equivalent to the period of non-compliance, 
plus the minimum seven-day reduction.
    (2) Grace period. If an eligible telecommunications carrier or state 
submits the annual certification required by this section after October 
1 but before October 5, the eligible telecommunications carrier subject 
to the certification will not receive a reduction in support if the 
eligible telecommunications carrier and its holding company, operating 
companies, and affiliates as reported pursuant to Sec. 54.313(a)(8) have 
not missed the October 1 deadline in any prior year.

[76 FR 73875, Nov. 29, 2011; 79 FR 39189, July 9, 2014; 80 FR 4477, Jan. 
27, 2015]



Sec. 54.315  Application process for phase II support distributed through
competitive bidding.

    (a) Application to participate in competitive bidding for Phase II 
support. In addition to providing information specified in 
Sec. 1.21001(b) of this chapter and any other information required by 
the Commission, an applicant to participate in competitive bidding for 
Phase II auction support shall:
    (1) Provide ownership information as set forth in Sec. 1.2112(a) of 
this chapter;
    (2) Certify that the applicant is financially and technically 
qualified to meet the public interest obligations of Sec. 54.309 for 
each relevant tier and in each area for which it seeks support;
    (3) Disclose its status as an eligible telecommunications carrier to 
the extent applicable and certify that it acknowledges that it must be 
designated as an eligible telecommunications carrier for the area in 
which it will receive support prior to being authorized to receive 
support;
    (4) Indicate the tier of bids that the applicant plans to make and 
describe

[[Page 161]]

the technology or technologies that will be used to provide service for 
each tier of bid;
    (5) Submit any information required to establish eligibility for any 
bidding weights adopted by the Commission in an order or public notice;
    (6) To the extent that an applicant plans to use spectrum to offer 
its voice and broadband services, demonstrate it has the proper 
authorizations, if applicable, and access to operate on the spectrum it 
intends to use, and that the spectrum resources will be sufficient to 
cover peak network usage and deliver the minimum performance 
requirements to serve all of the fixed locations in eligible areas, and 
certify that it will retain its access to the spectrum for at least 10 
years from the date of the funding authorization; and
    (7) Submit specified operational and financial information.
    (i) Submit a certification that the applicant has provided a voice, 
broadband, and/or electric transmission or distribution service for at 
least two years or that it is a wholly-owned subsidiary of such an 
entity, and specifying the number of years the applicant or its parent 
company has been operating, and submit the financial statements from the 
prior fiscal year that are audited by a certified public accountant. If 
the applicant is not audited in the ordinary course of business, in lieu 
of submitting audited financial statements it must certify that it will 
provide financial statements from the prior fiscal year that are audited 
by a certified independent public accountant by a specified deadline 
during the long-form application review process.
    (A) If the applicant has provided a voice and/or broadband service 
it must certify that it has filed FCC Form 477s as required during this 
time period.
    (B) If the applicant has operated only an electric transmission or 
distribution service, it must submit qualified operating or financial 
reports that it has filed with the relevant financial institution for 
the relevant time period along with a certification that the submission 
is a true and accurate copy of the reports that were provided to the 
relevant financial institution.
    (ii) If an applicant cannot meet the requirements in paragraph 
(a)(7)(i) of this section, in the alternative it must submit the audited 
financial statements from the three most recent fiscal years and a 
letter of interest from a bank meeting the qualifications set forth in 
paragraph (c)(2) of this section, that the bank would provide a letter 
of credit as described in paragraph (c) of this section to the bidder if 
the bidder were selected for bids of a certain dollar magnitude.
    (b) Application by winning bidders for Phase II auction support--(1) 
Deadline. As provided by public notice, winning bidders for Phase II 
auction support shall file an application for Phase II auction support 
no later than the number of business days specified after the public 
notice identifying them as winning bidders.
    (2) Application contents. An application for Phase II auction 
support must contain:
    (i) Identification of the party seeking the support, including 
ownership information as set forth in Sec. 1.2112(a) of this chapter;
    (ii) Certification that the applicant is financially and technically 
qualified to meet the public interest obligations of Sec. 54.309 for 
each tier in which it is a winning bidder and in each area for which it 
seeks support;
    (iii) Certification that the applicant will meet the relevant public 
interest obligations for each relevant tier, including the requirement 
that it will offer service at rates that are equal or lower to the 
Commission's reasonable comparability benchmarks for fixed wireline 
services offered in urban areas;
    (iv) A description of the technology and system design the applicant 
intends to use to deliver voice and broadband service, including a 
network diagram which must be certified by a professional engineer. The 
professional engineer must certify that the network is capable of 
delivering, to at least 95 percent of the required number of locations 
in each relevant state, voice and broadband service that meets the 
requisite performance requirements in Sec. 54.309;
    (v) Certification that the applicant will have available funds for 
all project

[[Page 162]]

costs that exceed the amount of support to be received from the Phase II 
auction for the first two years of its support term and that the 
applicant will comply with all program requirements, including service 
milestones;
    (vi) A description of how the required construction will be funded, 
including financial projections that demonstrate the applicant can cover 
the necessary debt service payments over the life of the loan, if any;
    (vii) Certification that the party submitting the application is 
authorized to do so on behalf of the applicant; and
    (viii) Such additional information as the Commission may require.
    (3) No later than the number of days provided by public notice, the 
applicant shall submit a letter from a bank meeting the eligibility 
requirements outlined in paragraph (c) of this section committing to 
issue an irrevocable stand-by letter of credit, in the required form, to 
the winning bidder. The letter shall at a minimum provide the dollar 
amount of the letter of credit and the issuing bank's agreement to 
follow the terms and conditions of the Commission's model letter of 
credit.
    (4) No later than 180 days after the public notice identifying them 
as a winning bidder, bidders that did not submit audited financial 
statements in their short-form application pursuant to paragraph 
(a)(7)(i) of this section must submit the financial statements from the 
prior fiscal year that are audited by a certified independent public 
accountant.
    (5) No later than 180 days after the public notice identifying it as 
a winning bidder, the applicant shall certify that it is an eligible 
telecommunications carrier in any area for which it seeks support and 
submit the relevant documentation supporting that certification.
    (6) Application processing. (i) No application will be considered 
unless it has been submitted in an acceptable form during the period 
specified by public notice. No applications submitted or demonstrations 
made at any other time shall be accepted or considered.
    (ii) Any application that, as of the submission deadline, either 
does not identify the applicant seeking support as specified in the 
public notice announcing application procedures or does not include 
required certifications shall be denied.
    (iii) An applicant may be afforded an opportunity to make minor 
modifications to amend its application or correct defects noted by the 
applicant, the Commission, the Administrator, or other parties. Minor 
modifications include correcting typographical errors in the application 
and supplying non-material information that was inadvertently omitted or 
was not available at the time the application was submitted.
    (iv) Applications to which major modifications are made after the 
deadline for submitting applications shall be denied. Major 
modifications include, but are not limited to, any changes in the 
ownership of the applicant that constitute an assignment or change of 
control, or the identity of the applicant, or the certifications 
required in the application.
    (v) After receipt and review of the applications, a public notice 
shall identify each winning bidder that may be authorized to receive 
Phase II auction support after the winning bidder submits a letter of 
credit and an accompanying opinion letter as described in paragraph (c) 
of this section, in a form acceptable to the Commission. Each such 
winning bidder shall submit a letter of credit and accompanying opinion 
letter as required by paragraph (c) of this section, in a form 
acceptable to the Commission no later than the number of business days 
provided by public notice.
    (vi) After receipt of all necessary information, a public notice 
will identify each winning bidder that is authorized to receive Phase II 
auction support.
    (c) Letter of credit. Before being authorized to receive Phase II 
auction support, a winning bidder shall obtain an irrevocable standby 
letter of credit which shall be acceptable in all respects to the 
Commission.
    (1) Value. Each recipient authorized to receive Phase II support 
shall maintain the standby letter of credit or multiple standby letters 
of credit in an amount equal to at a minimum the amount of Phase II 
auction support that has been disbursed and that will be disbursed in 
the coming year, until

[[Page 163]]

the Universal Service Administrative Company has verified that the 
recipient met the final service milestone as described in 
Sec. 54.310(c).
    (i) Once the recipient has met its 60 percent service milestone, it 
may obtain a new letter of credit or renew its existing letter of credit 
so that it is valued at a minimum at 90 percent of the total support 
amount already disbursed plus the amount that will be disbursed in the 
coming year.
    (ii) Once the recipient has met its 80 percent service milestone, it 
may obtain a new letter of credit or renew its existing letter of credit 
so that it is valued at a minimum at 80 percent of the total support 
that has been disbursed plus the amount that will be disbursed in the 
coming year.
    (2) The bank issuing the letter of credit shall be acceptable to the 
Commission. A bank that is acceptable to the Commission is:
    (i) Any United States bank
    (A) That is insured by the Federal Deposit Insurance Corporation, 
and
    (B) That has a bank safety rating issued by Weiss of B- or better; 
or
    (ii) CoBank, so long as it maintains assets that place it among the 
100 largest United States Banks, determined on basis of total assets as 
of the calendar year immediately preceding the issuance of the letter of 
credit and it has a long-term unsecured credit rating issued by Standard 
& Poor's of BBB- or better (or an equivalent rating from another 
nationally recognized credit rating agency); or
    (iii) The National Rural Utilities Cooperative Finance Corporation, 
so long as it maintains assets that place it among the 100 largest 
United States Banks, determined on basis of total assets as of the 
calendar year immediately preceding the issuance of the letter of credit 
and it has a long-term unsecured credit rating issued by Standard & 
Poor's of BBB- or better (or an equivalent rating from another 
nationally recognized credit rating agency); or
    (iv) Any non-United States bank
    (A) That is among the 50 largest non-U.S. banks in the world, 
determined on the basis of total assets as of the end of the calendar 
year immediately preceding the issuance of the letter of credit 
(determined on a U.S. dollar equivalent basis as of such date);
    (B) Has a branch office in the District of Columbia or such other 
branch office agreed to by the Commission;
    (C) Has a long-term unsecured credit rating issued by a widely-
recognized credit rating agency that is equivalent to a BBB- or better 
rating by Standard & Poor's; and
    (D) Issues the letter of credit payable in United States dollars
    (3) A winning bidder for Phase II auction support shall provide with 
its letter of credit an opinion letter from its legal counsel clearly 
stating, subject only to customary assumptions, limitations, and 
qualifications, that in a proceeding under Title 11 of the United States 
Code, 11 U.S.C. 101 et seq. (the ``Bankruptcy Code''), the bankruptcy 
court would not treat the letter of credit or proceeds of the letter of 
credit as property of the winning bidder's bankruptcy estate under 
section 541 of the Bankruptcy Code.
    (4) Authorization to receive Phase II auction support is conditioned 
upon full and timely performance of all of the requirements set forth in 
this section, and any additional terms and conditions upon which the 
support was granted.
    (i) Failure by a Phase II auction support recipient to meet its 
service milestones as required by Sec. 54.310 will trigger reporting 
obligations and the withholding of support as described in 
Sec. 54.320(c). Failure to come into full compliance within 12 months 
will trigger a recovery action by the Universal Service Administrative 
Company. If the Phase II recipient does not repay the requisite amount 
of support within six months, the Universal Service Administrative 
Company will be entitled to draw the entire amount of the letter of 
credit and may disqualify the Phase II auction support recipient from 
the receipt of Phase II auction support or additional universal service 
support.
    (ii) The default will be evidenced by a letter issued by the Chief 
of the Wireline Competition Bureau or the Wireless Telecommunications 
Bureau, or their respective designees, which letter, attached to a 
standby letter of credit draw certificate, shall be sufficient for a 
draw on the standby letter

[[Page 164]]

of credit for the entire amount of the standby letter of credit.

[81 FR 44449, July 7, 2016]



Sec. 54.316  Broadband deployment reporting and certification requirements
for high-cost recipients.

    (a) Broadband deployment reporting. Rate-of Return ETCs, ETCs that 
elect to receive Connect America Phase II model-based support, and ETCs 
awarded support to serve fixed locations through a competitive bidding 
process shall have the following broadband reporting obligations:
    (1) Recipients of high-cost support with defined broadband 
deployment obligations pursuant to Sec. 54.308(a), 54.308(c), or 
Sec. 54.310(c) shall provide to the Administrator on a recurring basis 
information regarding the locations to which the eligible 
telecommunications carrier is offering broadband service in satisfaction 
of its public interest obligations, as defined in either Sec. 54.308 or 
Sec. 54.309.
    (2) Recipients subject to the requirements of Sec. 54.308(a)(1) 
shall report the number of locations for each state and locational 
information, including geocodes, separately indicating whether they are 
offering service providing speeds of at least 4 Mbps downstream/1 Mbps 
upstream, 10 Mbps downstream/1 Mbps upstream, and 25 Mbps downstream/3 
Mbps upstream.
    (3) Recipients subject to the requirements of Sec. 54.308(a)(2) 
shall report the number of newly served locations for each study area 
and locational information, including geocodes, separately indicating 
whether they are offering service providing speeds of at least 4 Mbps 
downstream/1 Mbps upstream, 10 Mbps downstream/1 Mbps upstream, and 25 
Mbps downstream/3 Mbps upstream.
    (4) Recipients subject to the requirements of Sec. 54.310(c) shall 
report the number of locations for each state and locational 
information, including geocodes, where they are offering service at the 
requisite speeds. Recipients of Phase II Auction support and Remote 
Areas Fund support shall also report the technology they use to serve 
those locations.
    (5) Recipients subject to the requirements of Sec. 54.308(c) shall 
report the number of newly deployed and upgraded locations and 
locational information, including geocodes, where they are offering 
service providing speeds they committed to in their adopted performance 
plans pursuant to Sec. 54.306(b).
    (6) Recipients subject to the requirements of Sec. 54.308(c) or 
Sec. 54.317(e) shall submit fiber network maps or microwave network maps 
covering eligible areas. At the end of any calendar year for which 
middle-mile facilities were deployed, these recipients shall also submit 
updated maps showing middle-mile facilities that are or will be used to 
support their services in eligible areas.
    (b) Broadband deployment certifications. Rate-of Return ETCs, ETCs 
that elect to receive Connect America Phase II model-based support, and 
ETCs awarded support through a competitive bidding process shall have 
the following broadband deployment certification obligations:
    (1) Price cap carriers that elect to receive Connect America Phase 
II model-based support shall provide: No later than March 1, 2017, and 
every year thereafter ending on no later than March 1, 2021, a 
certification that by the end of the prior calendar year, it was 
offering broadband meeting the requisite public interest obligations 
specified in Sec. 54.309 to the required percentage of its supported 
locations in each state as set forth in Sec. 54.310(c).
    (2) Rate-of-return carriers electing CAF-ACAM support pursuant to 
Sec. 54.311 shall provide:
    (i) No later than March 1, 2021, and every year thereafter ending on 
no later than March 1, 2027, a certification that by the end of the 
prior calendar year, it was offering broadband meeting the requisite 
public interest obligations specified in Sec. 54.308 to the required 
percentage of its fully funded locations in the state, pursuant to the 
interim deployment milestones set forth in Sec. 54.311(d).
    (ii) No later than March 1, 2027, a certification that as of 
December 31, 2026, it was offering broadband meeting the requisite 
public interest obligations specified in Sec. 54.308 to all of its fully 
funded locations in the state and to the

[[Page 165]]

required percentage of its capped locations in the state.
    (3) Rate-of-return carriers receiving support pursuant to subparts K 
and M of this part shall provide:
    (i) No later than March 1, 2022, a certification that it fulfilled 
the deployment obligation meeting the requisite public interest 
obligations as specified in Sec. 54.308(a)(2) to the required number of 
locations as of December 31, 2021.
    (ii) Every subsequent five-year period thereafter, a certification 
that it fulfilled the deployment obligation meeting the requisite public 
interest obligations as specified in Sec. 54.308(a)(4).
    (4) Recipients of Connect America Phase II auction support shall 
provide: By the last business day of the second calendar month following 
each service milestone in Sec. 54.310(c), a certification that by the 
end of the prior support year, it was offering broadband meeting the 
requisite public interest obligations specific in Sec. 54.309 to the 
required percentage of its supported locations in each state as set 
forth in Sec. 54.310(c).
    (5) Recipients of Remote Areas Fund support shall provide: By the 
last business day of the second calendar month following each service 
milestone specified by the Commission, a certification that by the end 
of the prior support year, it was offering broadband meeting the 
requisite public interest obligations to the required percentage of its 
supported locations in each state.
    (6) A rate-of-return carrier authorized to receive Alaska Plan 
support pursuant to Sec. 54.306 shall provide:
    (i) No later than March 1, 2022 a certification that it fulfilled 
the deployment obligations and is offering service meeting the requisite 
public interest obligations as specified in Sec. 54.308(c) to the 
required number of locations as of December 31, 2021.
    (ii) No later than March 1, 2027 a certification that it fulfilled 
the deployment obligations and is offering service meeting the requisite 
public interest obligations as specified in Sec. 54.308(c) to the 
required number of locations as of December 31, 2026.
    (c) Filing deadlines. In order for a recipient of high-cost support 
to continue to receive support for the following calendar year, or 
retain its eligible telecommunications carrier designations, it must 
submit the annual reporting information as set forth below.
    (1) Price cap carriers that accepted Phase II model-based support 
and rate-of-return carriers must submit the annual reporting information 
required by March 1 as described in paragraphs (a) and (b) of this 
section. Eligible telecommunications carriers that file their reports 
after the March 1 deadline shall receive a reduction in support pursuant 
to the following schedule:
    (i) An eligible telecommunications carrier that files after the 
March 1 deadline, but by March 8, will have its support reduced in an 
amount equivalent to seven days in support;
    (ii) An eligible telecommunications carrier that files on or after 
March 9 will have its support reduced on a pro-rata daily basis 
equivalent to the period of non-compliance, plus the minimum seven-day 
reduction;
    (iii) Grace period. An eligible telecommunications carrier that 
submits the annual reporting information required by this section after 
March 1 but before March 5 will not receive a reduction in support if 
the eligible telecommunications carrier and its holding company, 
operating companies, and affiliates as reported pursuant to 
Sec. 54.313(a)(8) in their report due July 1 of the prior year have not 
missed the March 1 deadline in any prior year.
    (2) Recipients of support to serve fixed locations awarded through a 
competitive bidding process must submit the annual reporting information 
required by the last business day of the second calendar month following 
the relevant support years as described in paragraphs (a) and (b) of 
this section. Eligible telecommunications carriers that file their 
reports after the deadline shall receive a reduction in support pursuant 
to the following schedule:
    (i) An eligible telecommunications carrier that files after the 
deadline, but within seven days of the deadline, will have its support 
reduced in an amount equivalent to seven days in support;
    (ii) An eligible telecommunications carrier that filed on or after 
the eighth day following the deadline will have its support reduced on a 
pro-rata daily

[[Page 166]]

basis equivalent to the period of non-compliance, plus the minimum 
seven-day reduction;
    (iii) Grace period. An eligible telecommunications carrier that 
submits the annual reporting information required by this section within 
three days of the deadline will not receive a reduction in support if 
the eligible telecommunications carrier and its holding company, 
operating companies, and affiliates as reported pursuant to 
Sec. 54.313(a)(8) in their report due July 1 of the prior year have not 
missed the deadline in any prior year.

[81 FR 24341, Apr. 25, 2016, as amended at 81 FR 44451, July 7, 2016; 81 
FR 69713, Oct. 7, 2016; 82 FR 14340, Mar. 20, 2017]



Sec. 54.317  Alaska Plan for competitive eligible telecommunications
carriers serving remote Alaska.

    (a) Election of support. Subject to the requirements of this 
section, certain competitive eligible telecommunications carriers 
serving remote areas in Alaska, as defined in Sec. 54.307(e)(3)(i), 
shall have a one-time option to elect to participate in the Alaska Plan. 
Carriers exercising this option with approved performance plans shall 
have their support frozen for a period of ten years beginning on or 
after January 1, 2017, at a date set by the Wireless Telecommunications 
Bureau, notwithstanding Sec. 54.307.
    (b) Carriers eligible for support. A competitive eligible 
telecommunications carrier shall be eligible for frozen support pursuant 
to the Alaska Plan if that carrier serves remote areas in Alaska as 
defined by Sec. 54.307(e)(3)(i) and if that carrier certified that it 
served covered locations in Alaska in its September 30, 2011, filing of 
line counts with the Administrator and submitted a performance plan by 
August 23, 2016.
    (c) Interim support for remote areas in Alaska. From January 1, 
2012, until December 31, 2016, competitive eligible telecommunications 
carriers subject to the delayed phase down for remote areas in Alaska 
pursuant to Sec. 54.307(e)(3) shall receive support as calculated in 
Sec. 54.307(e)(3)(v).
    (d) Support amounts and support term. For a period of 10 years 
beginning on or after January 1, 2017, at a date set by the Wireless 
Telecommunications Bureau, notwithstanding Sec. 54.307, each Alaska Plan 
participant shall receive monthly Alaska Plan support in an amount equal 
to the annualized monthly support amount it received for December 2014. 
Alaska Plan participants shall no longer be required to file line 
counts.
    (e) Use of frozen support. Frozen support allocated through the 
Alaska Plan may only be used to provide mobile voice and mobile 
broadband service in those census blocks in remote areas of Alaska, as 
defined in Sec. 54.307(e)(3)(i), that did not, as of December 31, 2014, 
receive 4G LTE service directly from providers that were either 
unsubsidized or ineligible to claim the delayed phase down under 
Sec. 54.307(e)(3) and covering, in the aggregate, at least 85 percent of 
the population of the block. Nothing in this section shall be 
interpreted to limit the use of frozen support to build or upgrade 
middle-mile infrastructure outside such remote areas of Alaska if such 
middle mile infrastructure is necessary to the provision of mobile voice 
and mobile broadband service in such remote areas. Alaska Plan 
participants may use frozen support to provide mobile voice and mobile 
broadband service in remote areas of Alaska served by competitive 
eligible telecommunications carrier partners of ineligible carriers if 
those areas are served using the competitive eligible telecommunications 
carrier's infrastructure.
    (f) Performance plans. In order to receive support pursuant to this 
section, a competitive eligible telecommunications carrier must be 
subject to a performance plan approved by the Wireless 
Telecommunications Bureau. The performance plan must indicate specific 
deployment obligations and performance requirements sufficient to 
demonstrate that support is being used in the public interest and in 
accordance with paragraph (e) of this section and the requirements 
adopted by the Commission for the Alaska Plan. For each level of 
wireless service offered (2G/Voice, 3G, and 4G LTE) and each type of 
middle mile used in connection with that level of service, the 
performance plan must specify minimum speeds that will be offered to a 
specified population by the end of the fifth year of support and by the 
end of the

[[Page 167]]

tenth year of support. Alaska Plan participants shall, no later than the 
end of the fourth year of the ten-year term, review and modify their 
end-of-term commitments in light of any new developments, including 
newly available infrastructure. The Wireless Telecommunications Bureau 
may require the filing of revised commitments at other times if 
justified by developments that occur after the approval of the initial 
performance commitments. If the specific performance obligations are not 
achieved in the time period identified in the approved performance plans 
the carrier shall be subject to Sec. 54.320(c) and (d).
    (g) Phase down of non-participating competitive eligible 
telecommunications carrier high-cost support. Notwithstanding 
Sec. 54.307, and except as provided in paragraph (h) of this section, 
support distributed in Alaska on or after January 1, 2017 to competitive 
eligible telecommunications carriers that serve areas in Alaska other 
than remote areas of Alaska, that are ineligible for frozen support 
under paragraphs (b) or (e) of this section, or that do not elect to 
receive support under this section, shall be governed by this paragraph. 
Such support shall be subject to phase down in three years as provided 
in paragraph (g) of this section, except that carriers that are not 
signatories to the Alaska Plan will instead be subject to a three-year 
phase down commencing on September 1, 2017, and competitive eligible 
telecommunications carriers that are signatories to the Alaska Plan but 
did not submit a performance plan by August 23, 2016 shall not receive 
support in remote areas beginning January 1, 2017.
    (1) From January 1, 2017, to December 31, 2017, each such 
competitive eligible telecommunications carrier shall receive two-thirds 
of the monthly support amount the carrier received for December 2014 for 
the relevant study area.
    (2) From January 1, 2018, to December 31, 2018, each such 
competitive eligible telecommunications carrier shall receive one-third 
of the monthly support amount the carrier received for December 2014 for 
the relevant study area.
    (3) Beginning January 1, 2019, no such competitive eligible 
telecommunications carrier shall receive universal service support for 
the relevant study area pursuant to this section or Sec. 54.307.
    (h) Support for unserved remote areas of Alaska. Beginning January 
1, 2017, support that, but for paragraph (g) of this section, would be 
allocated to carriers subject to paragraph (g) of this section shall be 
allocated for a reverse auction, with performance obligations 
established at the time of such auction, for deployment of mobile 
service to remote areas of Alaska, as defined in Sec. 54.307(e)(3)(i), 
that are without commercial mobile radio service as of December 31, 
2014.

[81 FR 69714, Oct. 7, 2016]



Sec. 54.318  High-cost support; limitations on high-cost support.

    (a) Beginning July 1, 2012, each carrier receiving high-cost support 
in a study area under this subpart will receive the full amount of high-
cost support it otherwise would be entitled to receive if its rates for 
residential local service plus state regulated fees as defined in 
paragraph (e) of this section exceed a local urban rate floor 
representing the national average of local urban rates plus state 
regulated fees under the schedule specified in paragraph (f) of this 
section.
    (b) Carriers whose rates for residential local service plus state 
regulated fees offered for voice service are below the specified local 
urban rate floor under the schedule below plus state regulated fees 
shall have high-cost support reduced by an amount equal to the extent to 
which its rates for residential local service plus state regulated fees 
are below the local urban rate floor, multiplied by the number of lines 
for which it is receiving support.
    (c) This rule will apply only to rate-of-return carriers as defined 
in Sec. 54.5 and carriers subject to price cap regulation as that term 
is defined in Sec. 61.3 of this chapter.
    (d) For purposes of this section, high-cost support is defined as 
the support available pursuant to Sec. 54.1310 and frozen high-cost 
support provided to price cap carriers to the extent it is based on 
support previously provided pursuant

[[Page 168]]

to Sec. 54.1310 or former high-cost proxy model support.
    (e) State regulated fees. (1) Beginning on July 1, 2012, for 
purposes of calculating limitations on high-cost support under this 
section, state regulated fees shall be limited to state subscriber line 
charges, state universal service fees and mandatory extended area 
service charges, which shall be determined as part of a local rate 
survey, the results of which shall be published annually.
    (2) Federal subscriber line charges shall not be included in 
calculating limitations on high-cost support under this section.
    (f) Schedule. High-cost support will be limited where the rate for 
residential local service plus state regulated fees are below the local 
urban rate floor representing the national average of local urban rates 
plus state regulated fees under the schedule specified in this 
paragraph. To the extent end user rates plus state regulated fees are 
below local urban rate floors plus state regulated fees, appropriate 
reductions in high-cost support will be made by the Universal Service 
Administrative Company.
    (g) Any reductions in high-cost support under this section will not 
be redistributed to other carriers that receive support pursuant to 
Sec. 54.1310.
    (h) If, due to changes in local service rates, a local exchange 
carrier makes an updated rate filing pursuant to section 54.313(h)(2), 
the Universal Service Administrative Company will update the support 
reduction applied pursuant to paragraphs (b) and (f) of this section.
    (i) For the purposes of this section and the reporting of rates 
pursuant to paragraph 313(h), rates for residential local service 
provided pursuant to measured or message rate plans or as part of a 
bundle of services should be calculated as follows:
    (1) Rates for measured or message service shall be calculated by 
adding the basic rate for local service plus the additional charges 
incurred for measured service, using the mean number of minutes or 
message units for all customers subscribing to that rate plan multiplied 
by the applicable rate per minute or message unit. The local service 
rate includes additional charges for measured service only to the extent 
that the average number of units used by subscribers to that rate plan 
exceeds the number of units that are included in the plan. Where 
measured service plans have multiple rates for additional units, such as 
peak and off-peak rates, the calculation should reflect the average 
number of units that subscribers to the rate plan pay at each rate.
    (2) For bundled service, the residential local service rate is the 
local service rate as tariffed, if applicable, or as itemized on end-
user bills. If a carrier neither tariffs nor itemizes the local voice 
service rate on bills for bundled services, the local service rate is 
the rate of a similar stand-alone local voice service that it offers to 
consumers in that study area.

[76 FR 73876, Nov. 29, 2011, as amended at 77 FR 14302, Mar. 9, 2012; 77 
FR 30914, May 24, 2012; 79 FR 39190, July 9, 2014]



Sec. 54.319  Elimination of high-cost support in areas with 100 percent
coverage by an unsubsidized competitor.

    (a) High-cost universal service support provided pursuant to 
subparts K and M of this part shall be eliminated in an incumbent rate-
of-return local exchange carrier study area where an unsubsidized 
competitor, or combination of unsubsidized competitors, as defined in 
Sec. 54.5, offer(s) to 100 percent of the residential and business 
locations in the study area voice and broadband service at speeds of at 
least 10 Mbps downstream/1 Mbps upstream, with latency suitable for 
real-time applications, including Voice over Internet Protocol, and 
usage capacity that is reasonably comparable to comparable offerings in 
urban areas, at rates that are reasonably comparable to rates for 
comparable offerings in urban areas.
    (b) After a determination there is a 100 percent overlap, the 
incumbent local exchange carrier shall receive the following amount of 
high-cost support:
    (1) In the first year, two-thirds of the lesser of the incumbent's 
total high-cost support in the immediately preceding calendar year or 
$3000 times the number of reported lines as of year-end for the 
immediately preceding calendar year;

[[Page 169]]

    (2) In the second year, one-third of the lesser of the incumbent's 
total high-cost support in the immediately preceding calendar year or 
$3000 times the number of reported lines as of year-end for the 
immediately preceding calendar year;
    (3) In the third year and thereafter, no support shall be paid.
    (c) The Wireline Competition Bureau shall update its analysis of 
where there is a 100 percent overlap on a biennial basis.
    (d) High-cost universal service support pursuant to subpart K of 
this part shall be eliminated for those census blocks of an incumbent 
rate-of-return local exchange carrier study area where an unsubsidized 
competitor, or combination of unsubsidized competitors, as defined in 
Sec. 54.5, offer(s) voice and broadband service meeting the public 
interest obligations in Sec. 54.308(a)(2) to at least 85 percent of 
residential locations in the census block. Qualifying competitors must 
be able to port telephone numbers from consumers.
    (e) After a determination that a particular census block is served 
by a competitor as defined in paragraph (d) of this section, support 
provided pursuant to subpart K of this part shall be disaggregated 
pursuant to a method elected by the incumbent local exchange carrier. 
The sum of support that is disaggregated for competitive and non-
competitive areas shall equal the total support available to the study 
area without disaggregation.
    (f) For any incumbent local exchange carrier for which the 
disaggregated support for competitive census blocks represents less than 
25 percent of the support the carrier would have received in the study 
area in the absence of this rule, support provided pursuant to subpart K 
of this part shall be reduced according to the following schedule:
    (1) In the first year, 66 percent of the incumbent's disaggregated 
support for the competitive census block will be provided;
    (2) In the second year, 33 percent of the incumbent's disaggregated 
support for the competitive census blocks will be provided;
    (3) In the third year and thereafter, no support shall be provided 
pursuant to subpart K of this part for any competitive census block.
    (g) For any incumbent local exchange carrier for which the 
disaggregated support for competitive census blocks represents more than 
25 percent of the support the carrier would have received in the study 
area in the absence of this rule, support shall be reduced for each 
competitive census block according to the following schedule:
    (1) In the first year, 83 percent of the incumbent's disaggregated 
support for the competitive census blocks will be provided;
    (2) In the second year, 66 percent of the incumbent's disaggregated 
support for the competitive census blocks will be provided;
    (3) In the third year, 49 percent of the incumbent's disaggregated 
support for the competitive census blocks will be provided;
    (4) In the fourth year, 32 percent of the incumbent's disaggregated 
support the competitive census block will be provided;
    (5) In the fifth year, 15 percent of the incumbent's disaggregated 
support the competitive census blocks will be provided;
    (6) In the sixth year and thereafter, no support shall be paid 
provided pursuant to subpart K of this part for any competitive census 
block.
    (h) The Wireline Competition Bureau shall update its analysis of 
competitive overlap in census blocks every seven years, utilizing the 
current public interest obligations in Sec. 54.308(a)(2) as the standard 
that must be met by an unsubsidized competitor.

[80 FR 4478, Jan. 27, 2015, as amended at 81 FR 24342, Apr. 25, 2016; 82 
FR 14340, Mar. 20, 2017]



Sec. 54.320  Compliance and recordkeeping for the high-cost program.

    (a) Eligible telecommunications carriers authorized to receive 
universal service high-cost support are subject to random compliance 
audits and other investigations to ensure compliance with program rules 
and orders.
    (b) All eligible telecommunications carriers shall retain all 
records required to demonstrate to auditors that the support received 
was consistent with the universal service high-cost

[[Page 170]]

program rules. This documentation must be maintained for at least ten 
years from the receipt of funding. All such documents shall be made 
available upon request to the Commission and any of its Bureaus or 
Offices, the Administrator, and their respective auditors.
    (c) Eligible telecommunications carriers authorized to receive high-
cost support that fail to comply with public interest obligations or any 
other terms and conditions may be subject to further action, including 
the Commission's existing enforcement procedures and penalties, 
reductions in support amounts, potential revocation of ETC designation, 
and suspension or debarment pursuant to Sec. 54.8.
    (d) Eligible telecommunications carriers subject to defined build-
out milestones must notify the Commission and USAC, and the relevant 
state, U.S. Territory, or Tribal government, if applicable, within 10 
business days after the applicable deadline if they have failed to meet 
a build-out milestone.
    (1) Interim build-out milestones. Upon notification that an eligible 
telecommunications carrier has defaulted on an interim build-out 
milestone after it has begun receiving high-cost support, the Wireline 
Competition Bureau--or Wireless Telecommunications Bureau in the case of 
mobile carrier participants--will issue a letter evidencing the default. 
For purposes of determining whether a default has occurred, a carrier 
must be offering service meeting the requisite performance obligations. 
The issuance of this letter shall initiate reporting obligations and 
withholding of a percentage of the eligible telecommunication carrier's 
total monthly high-cost support, if applicable, starting the month 
following the issuance of the letter:
    (i) Tier 1. If an eligible telecommunications carrier has a 
compliance gap of at least five percent but less than 15 percent of the 
number of locations that the eligible telecommunications carrier is 
required to have built out to or, in the case of Alaska Plan mobile-
carrier participants, population covered by the specified technology, 
middle mile, and speed of service in the carrier's approved performance 
plan, by the interim milestone, the Wireline Competition Bureau or 
Wireless Telecommunications Bureau, will issue a letter to that effect. 
Starting three months after the issuance of this letter, the eligible 
telecommunications carrier will be required to file a report every three 
months identifying the geocoded locations to which the eligible 
telecommunications carrier has newly deployed facilities capable of 
delivering broadband meeting the requisite requirements with Connect 
America support in the previous quarter, or, in the case of Alaska Plan 
mobile-carrier participants, the populations to which the competitive 
eligible telecommunications carrier has extended or upgraded service 
meeting their approved performance plan and obligations. Eligible 
telecommunications carriers that do not file these quarterly reports on 
time will be subject to support reductions as specified in 
Sec. 54.313(j). The eligible telecommunications carrier must continue to 
file quarterly reports until the eligible telecommunications carrier 
reports that it has reduced the compliance gap to less than five percent 
of the required number of locations (or population, if applicable) for 
that interim milestone and the Wireline Competition Bureau or Wireless 
Telecommunications Bureau issues a letter to that effect.
    (ii) Tier 2. If an eligible telecommunications carrier has a 
compliance gap of at least 15 percent but less than 25 percent of the 
number of locations that the eligible telecommunications carrier is 
required to have built out to or, in the case of Alaska Plan mobile-
carrier participants, population covered by the specified technology, 
middle mile, and speed of service in the carrier's approved performance 
plan, by the interim milestone, USAC will withhold 15 percent of the 
eligible telecommunications carrier's monthly support for that state and 
the eligible telecommunications carrier will be required to file 
quarterly reports. Once the eligible telecommunications carrier has 
reported that it has reduced the compliance gap to less than 15 percent 
of the required number of locations (or population, if applicable) for 
that interim milestone for that state, the Wireline Competition Bureau 
or Wireless Telecommunications Bureau

[[Page 171]]

will issue a letter to that effect, USAC will stop withholding support, 
and the eligible telecommunications carrier will receive all of the 
support that had been withheld. The eligible telecommunications carrier 
will then move to Tier 1 status.
    (iii) Tier 3. If an eligible telecommunications carrier has a 
compliance gap of at least 25 percent but less than 50 percent of the 
number of locations that the eligible telecommunications carrier is 
required to have built out to by the interim milestone, or, in the case 
of Alaska Plan mobile-carrier participants, population covered by the 
specified technology, middle mile, and speed of service in the carrier's 
approved performance plan, USAC will withhold 25 percent of the eligible 
telecommunications carrier's monthly support for that state and the 
eligible telecommunications carrier will be required to file quarterly 
reports. Once the eligible telecommunications carrier has reported that 
it has reduced the compliance gap to less than 25 percent of the 
required number of locations (or population, if applicable) for that 
interim milestone for that state, the Wireline Competition Bureau or 
Wireless Telecommunications Bureau will issue a letter to that effect, 
the eligible telecommunications carrier will move to Tier 2 status.
    (iv) Tier 4. If an eligible telecommunications carrier has a 
compliance gap of 50 percent or more of the number of locations that the 
eligible telecommunications carrier is required to have built out to or, 
in the case of Alaska Plan mobile-carrier participants, population 
covered by the specified technology, middle mile, and speed of service 
in the carrier's approved performance plan, by the interim milestone:
    (A) USAC will withhold 50 percent of the eligible telecommunications 
carrier's monthly support for that state, and the eligible 
telecommunications carrier will be required to file quarterly reports. 
As with the other tiers, as the eligible telecommunications carrier 
reports that it has lessened the extent of its non-compliance, and the 
Wireline Competition Bureau or Wireless Telecommunications Bureau issues 
a letter to that effect, it will move down the tiers until it reaches 
Tier 1 (or no longer is out of compliance with the relevant interim 
milestone).
    (B) If after having 50 percent of its support withheld for six 
months the eligible telecommunications carrier has not reported that it 
is eligible for Tier 3 status (or one of the other lower tiers), USAC 
will withhold 100 percent of the eligible telecommunications carrier's 
monthly support and will commence a recovery action for a percentage of 
support that is equal to the eligible telecommunications carrier's 
compliance gap plus 10 percent of the ETC's support that has been 
disbursed to that date.
    (v) If at any point during the support term, the eligible 
telecommunications carrier reports that it is eligible for Tier 1 
status, it will have its support fully restored, USAC will repay any 
funds that were recovered or withheld, and it will move to Tier 1 
status.
    (2) Final milestone. Upon notification that the eligible 
telecommunications carrier has not met a final milestone, the eligible 
telecommunications carrier will have twelve months from the date of the 
final milestone deadline to come into full compliance with this 
milestone. If the eligible telecommunications carrier does not report 
that it has come into full compliance with this milestone within twelve 
months, the Wireline Competition Bureau--or Wireless Telecommunications 
Bureau in the case of mobile carrier participants--will issue a letter 
to this effect. In the case of Alaska Plan mobile carrier participants, 
USAC will then recover the percentage of support that is equal to 1.89 
times the average amount of support per location received by that 
carrier over the 10-year term for the relevant percentage of population. 
For other recipients of high-cost support, USAC will then recover the 
percentage of support that is equal to 1.89 times the average amount of 
support per location received in the state for that carrier over the 
term of support for the relevant number of locations plus 10 percent of 
the eligible telecommunications carrier's total relevant high-cost 
support over the support term for that state.

[[Page 172]]

    (3) Compliance reviews. If subsequent to the eligible 
telecommunications carrier's support term, USAC determines in the course 
of a compliance review that the eligible telecommunications carrier does 
not have sufficient evidence to demonstrate that it is offering service 
to all of the locations required by the final milestone or, in the case 
of Alaska Plan participants, did not provide service consistent with the 
carrier's approved performance plan, USAC shall recover a percentage of 
support from the eligible telecommunications carrier as specified in 
paragraph (d)(2) of this section.

[76 FR 73876, Nov. 29, 2011, as amended at 80 FR 4478, Jan. 27, 2015; 81 
FR 69714, Oct. 7, 2016]



Sec. 54.321  Reporting and certification requirements for Alaska Plan
participants.

    Any competitive eligible telecommunications carrier authorized to 
receive Alaska Plan support pursuant to Sec. 54.317 shall provide:
    (a) No later than 60 days after the end of each participating 
carrier's first five-year term of support, a certification that it has 
met the obligations contained in the performance plan approved by the 
Wireless Telecommunications Bureau, including any obligations pursuant 
to a revised approved performance plan and that it has met the requisite 
public interest obligations contained in the Alaska Plan Order. For 
Alaska Plan participants receiving more than $5 million annually in 
support, this certification shall be accompanied by data received or 
used from drive tests analyzing network coverage for mobile service 
covering the population for which support was received and showing 
mobile transmissions to and from the carrier's network meeting or 
exceeding the minimum expected download and upload speeds delineated in 
the approved performance plan.
    (b) No later than 60 days after the end of each participating 
carrier's second five-year term of support, a certification that it has 
met the obligations contained in the performance plan approved by the 
Wireless Telecommunications Bureau, including any obligations pursuant 
to a revised approved performance plan, and that it has met the 
requisite public interest obligations contained in the Alaska Plan 
Order. For Alaska Plan participants receiving more than $5 million 
annually in support, this certification shall be accompanied by data 
received or used from drive tests analyzing network coverage for mobile 
service covering the population for which support was received and 
showing mobile transmissions to and from the carrier's network meeting 
or exceeding the minimum expected download and upload speeds delineated 
in the approved performance plan.

[81 FR 69716, Oct. 7, 2016]



      Subpart E_Universal Service Support for Low-Income Consumers



54.400  Terms and definitions.

    As used in this subpart, the following terms shall be defined as 
follows:
    (a) Qualifying low-income consumer. A ``qualifying low-income 
consumer'' is a consumer who meets the qualifications for Lifeline, as 
specified in Sec. 54.409.
    (b) Toll blocking service. ``Toll blocking service'' is a service 
provided by an eligible telecommunications carrier that lets subscribers 
elect not to allow the completion of outgoing toll calls from their 
telecommunications channel.
    (c) Toll control service. ``Toll control service'' is a service 
provided by an eligible telecommunications carrier that allows 
subscribers to specify a certain amount of toll usage that may be 
incurred on their telecommunications channel per month or per billing 
cycle.
    (d) Toll limitation service. ``Toll limitation service'' denotes 
either toll blocking service or toll control service for eligible 
telecommunications carriers that are incapable of providing both 
services. For eligible telecommunications carriers that are capable of 
providing both services, ``toll limitation service'' denotes both toll 
blocking service and toll control service.
    (e) Eligible resident of Tribal lands. An ``eligible resident of 
Tribal lands'' is a ``qualifying low-income consumer,'' as defined in 
paragraph (a) of this section, living on Tribal lands. For purposes of

[[Page 173]]

this subpart, ``Tribal lands'' include any federally recognized Indian 
tribe's reservation, pueblo, or colony, including former reservations in 
Oklahoma; Alaska Native regions established pursuant to the Alaska 
Native Claims Settlement Act (85 Stat. 688); Indian allotments; Hawaiian 
Home Lands--areas held in trust for Native Hawaiians by the state of 
Hawaii, pursuant to the Hawaiian Homes Commission Act, 1920 July 9, 
1921, 42 Stat. 108, et. seq., as amended; and any land designated as 
such by the Commission for purposes of this subpart pursuant to the 
designation process in Sec. 54.412.
    (f) Income. ``Income'' means gross income as defined under section 
61 of the Internal Revenue Code, 26 U.S.C. 61, for all members of the 
household. This means all income actually received by all members of the 
household from whatever source derived, unless specifically excluded by 
the Internal Revenue Code, Part III of Title 26, 26 U.S.C. 101 et seq.
    (g) Duplicative support. ``Duplicative support'' exists when a 
Lifeline subscriber is receiving two or more Lifeline services 
concurrently or two or more subscribers in a household are receiving 
Lifeline services or Tribal Link Up support concurrently.
    (h) Household. A ``household'' is any individual or group of 
individuals who are living together at the same address as one economic 
unit. A household may include related and unrelated persons. An 
``economic unit'' consists of all adult individuals contributing to and 
sharing in the income and expenses of a household. An adult is any 
person eighteen years or older. If an adult has no or minimal income, 
and lives with someone who provides financial support to him/her, both 
people shall be considered part of the same household. Children under 
the age of eighteen living with their parents or guardians are 
considered to be part of the same household as their parents or 
guardians.
    (i) National Lifeline Accountability Database or Database. The 
``National Lifeline Accountability Database'' or ``Database'' is an 
electronic system, with associated functions, processes, policies and 
procedures, to facilitate the detection and elimination of duplicative 
support, as directed by the Commission.
    (j) Qualifying assistance program. A ``qualifying assistance 
program'' means any of the federal or Tribal assistance programs the 
participation in which, pursuant to Sec. 54.409(a) or (b), qualifies a 
consumer for Lifeline service, including Medicaid; Supplemental 
Nutrition Assistance Program; Supplemental Security Income; Federal 
Public Housing Assistance; Veterans and Survivors Pension Benefit; 
Bureau of Indian Affairs general assistance; Tribally administered 
Temporary Assistance for Needy Families (Tribal TANF); Head Start (only 
those households meeting its income qualifying standard); or the Food 
Distribution Program on Indian Reservations (FDPIR).
    (k) Direct service. As used in this subpart, direct service means 
the provision of service directly to the qualifying low-income consumer.
    (l) Broadband Internet access service. ``Broadband Internet access 
service'' is defined as a mass-market retail service by wire or radio 
that provides the capability to transmit data to and receive data from 
all or substantially all Internet endpoints, including any capabilities 
that are incidental to and enable the operation of the communications 
service, but excluding dial-up service.
    (m) Voice telephony service. ``Voice telephony service'' is defined 
as 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 services to qualifying low-income consumers as provided 
in subpart E of this part.
    (n) Supported services. Voice Telephony services and broadband 
Internet access services are supported services for the Lifeline 
program.
    (o) National Lifeline Eligibility Verifier. The ``National Lifeline 
Eligibility Verifier'' or ``National Verifier'' is an electronic and 
manual system with associated functions, processes, policies

[[Page 174]]

and procedures, to facilitate the determination of consumer eligibility 
for the Lifeline program, as directed by the Commission.

[77 FR 12966, Mar. 2, 2012, as amended at 80 FR 40935, July 14, 2015; 81 
FR 33089, May 24, 2016]



Sec. 54.401  Lifeline defined.

    (a) As used in this subpart, Lifeline means a non-transferable 
retail service offering provided directly to qualifying low-income 
consumers:
    (1) For which qualifying low-income consumers pay reduced charges as 
a result of application of the Lifeline support amount described in 
Sec. 54.403; and
    (2) That provides qualifying low-income consumers with voice 
telephony service or broadband Internet access service as defined in 
Sec. 54.400. Toll limitation service does not need to be offered for any 
Lifeline service that does not distinguish between toll and non-toll 
calls in the pricing of the service. If an eligible telecommunications 
carrier charges Lifeline subscribers a fee for toll calls that is in 
addition to the per month or per billing cycle price of the subscribers' 
Lifeline service, the carrier must offer toll limitation service at no 
charge to its subscribers as part of its Lifeline service offering.
    (b) Eligible telecommunications carriers may allow qualifying low-
income consumers to apply Lifeline discounts to any residential service 
plan with the minimum service levels set forth in Sec. 54.408 that 
includes fixed or mobile voice telephony service, broadband Internet 
access service, or a bundle of broadband Internet access service and 
fixed or mobile voice telephony service; and plans that include optional 
calling features such as, but not limited to, caller identification, 
call waiting, voicemail, and three-way calling.
    (1) Eligible telecommunications carriers may permit qualifying low-
income consumers to apply their Lifeline discount to family shared data 
plans.
    (2) Eligible telecommunications carriers may allow qualifying low-
income consumers to apply Lifeline discounts to any residential service 
plan that includes voice telephony service without qualifying broadband 
Internet access service prior to December 1, 2021.
    (3) Beginning December 1, 2016, eligible telecommunications carriers 
must provide the minimum service levels for each offering of mobile 
voice service as defined in Sec. 54.408.
    (4) Beginning December 1, 2021, eligible telecommunications carriers 
must provide the minimum service levels for broadband Internet access 
service in every Lifeline offering.
    (c) Eligible telecommunications carriers may not collect a service 
deposit in order to initiate Lifeline for voice-only service plans that:
    (1) Do not charge subscribers additional fees for toll calls; or
    (2) That charge additional fees for toll calls, but the subscriber 
voluntarily elects toll limitation service.
    (d) When an eligible telecommunications carrier is designated by a 
state commission, the state commission shall file or require the 
eligible telecommunications carrier to file information with the 
Administrator demonstrating that the carrier's Lifeline plan meets the 
criteria set forth in this subpart and describing the terms and 
conditions of any voice telephony service plans offered to Lifeline 
subscribers, including details on the number of minutes provided as part 
of the plan, additional charges, if any, for toll calls, and rates for 
each such plan. To the extent the eligible telecommunications carrier 
offers plans to Lifeline subscribers that are generally available to the 
public, it may provide summary information regarding such plans, such as 
a link to a public Web site outlining the terms and conditions of such 
plans. Lifeline assistance shall be made available to qualifying low-
income consumers as soon as the Administrator certifies that the 
carrier's Lifeline plan satisfies the criteria set out in this subpart.
    (e) Consistent with Sec. 52.33(a)(1)(i)(C) of this chapter, eligible 
telecommunications carriers may not charge Lifeline customers a monthly 
number-portability charge.
    (f) Eligible telecommunications carriers may aggregate eligible 
subscribers' benefits to provide a collective service to a group of 
subscribers, provided that each qualifying low-income consumer 
subscribed to the collective service receives residential

[[Page 175]]

service that meets the requirements of paragraph (a) of this section and 
Sec. 54.408.

[77 FR 12967, Mar. 2, 2012, as amended at 80 FR 40935, July 14, 2015; 81 
FR 33090, May 24, 2016]



Sec. 54.403  Lifeline support amount.

    (a) The federal Lifeline support amount for all eligible 
telecommunications carriers shall equal:
    (1) Basic support amount. Federal Lifeline support in the amount of 
$9.25 per month will be made available to an eligible telecommunications 
carrier providing Lifeline service to a qualifying low-income consumer, 
except as provided in paragraph (a)(2) of this section, if that carrier 
certifies to the Administrator that it will pass through the full amount 
of support to the qualifying low-income consumer and that it has 
received any non-federal regulatory approvals necessary to implement the 
rate reduction.
    (2) For a Lifeline provider offering either standalone voice 
service, subject to the minimum service standards set forth in 
Sec. 54.408, or voice service with broadband below the minimum standards 
set forth in Sec. 54.408, the support levels will be as follows:
    (i) Until December 1, 2019, the support amount will be $9.25 per 
month.
    (ii) From December 1, 2019 until November 30, 2020, the support 
amount will be $7.25 per month.
    (iii) From December 1, 2020 until November 30, 2021, the support 
amount will be $5.25 per month.
    (iv) On December 1, 2021, standalone voice service, or voice service 
not bundled with broadband which meets the minimum standards set forth 
in Sec. 54.408, will not be eligible for Lifeline support unless the 
Commission has previously determined otherwise.
    (v) Notwithstanding paragraph (a)(2)(iv) of this section, on 
December 1, 2021, the support amount for standalone voice service, or 
voice service not bundled with broadband which meets the minimum 
standards set forth in Sec. 54.408, provided by a provider that is the 
only Lifeline provider in a Census block will be the support amount 
specified in paragraph (a)(2)(iii) of this section.
    (3) Tribal lands support amount. Additional federal Lifeline support 
of up to $25 per month will be made available to an eligible 
telecommunications carrier providing Lifeline service to an eligible 
resident of Tribal lands, as defined in Sec. 54.400 (e), to the extent 
that the eligible telecommunications carrier certifies to the 
Administrator that it will pass through the full Tribal lands support 
amount to the qualifying eligible resident of Tribal lands and that it 
has received any non-federal regulatory approvals necessary to implement 
the required rate reduction.
    (b) Application of Lifeline discount amount. (1) Eligible 
telecommunications carriers that charge federal End User Common Line 
charges or equivalent federal charges must apply federal Lifeline 
support to waive the federal End User Common Line charges for Lifeline 
subscribers. Such carriers must apply any additional federal support 
amount to a qualifying low-income consumer's intrastate rate, if the 
carrier has received the non-federal regulatory approvals necessary to 
implement the required rate reduction. Other eligible telecommunications 
carriers must apply the federal Lifeline support amount, plus any 
additional support amount, to reduce the cost of any generally available 
residential service plan or package offered by such carriers that 
provides voice telephony service as described in Sec. 54.101, and charge 
Lifeline subscribers the resulting amount.
    (2) [Reserved]

[77 FR 12967, Mar. 2, 2012, as amended at 81 FR 33090, May 24, 2016]



Sec. 54.404  The National Lifeline Accountability Database.

    (a) State certification. An eligible telecommunications carrier 
operating in a state that provides an approved valid certification to 
the Commission in accordance with this section is not required to comply 
with the requirements set forth in paragraphs (b) and (c) of this 
section with respect to the eligible telecommunications carriers' 
subscribers in that state. A valid certification must include a 
statement that the state has a comprehensive system in place to prevent 
duplicative federal Lifeline support that is at least as

[[Page 176]]

robust as the system adopted by the Commission and that incorporates 
information from all eligible telecommunications carriers receiving low-
income support in the state and their subscribers. A valid certification 
must also describe in detail how the state system functions and for each 
requirement adopted by the Commission to prevent duplicative support, 
how the state system performs the equivalent functions. The 
certification must be submitted to the Commission no later than six 
months from the effective date of this section of the Commission's rules 
to be valid. Such certification will be considered approved unless the 
Wireline Competition Bureau rejects the certification within 90 days of 
filing.
    (b) The National Lifeline Accountability Database. In order to 
receive Lifeline support, eligible telecommunications carriers operating 
in states that have not provided the Commission with approved valid 
certification pursuant to paragraph (a) of this section must comply with 
the following requirements:
    (1) All eligible telecommunications carriers must query the National 
Lifeline Accountability Database to determine whether a prospective 
subscriber who has executed a certification pursuant to Sec. 54.410(d) 
is currently receiving a Lifeline service from another eligible 
telecommunications carrier; and whether anyone else living at the 
prospective subscriber's residential address is currently receiving a 
Lifeline service.
    (2) If the Database indicates that a prospective subscriber, who is 
not seeking to port his or her telephone number, is currently receiving 
a Lifeline service, the eligible telecommunications carrier must not 
provide and shall not seek or receive Lifeline reimbursement for that 
subscriber.
    (3) If the Database indicates that another individual at the 
prospective subscriber's residential address is currently receiving a 
Lifeline service, the eligible telecommunications carrier must not seek 
and will not receive Lifeline reimbursement for providing service to 
that prospective subscriber, unless the prospective subscriber has 
certified, pursuant to Sec. 54.410(d) that to the best of his or her 
knowledge, no one in his or her household is already receiving a 
Lifeline service.
    (4) An eligible telecommunications carrier is not required to comply 
with paragraphs (b)(1) through (3) of this section if it receives notice 
from a state Lifeline administrator or other state agency that the 
administrator or other agency has queried the Database about a 
prospective subscriber and that providing the prospective subscriber 
with a Lifeline benefit would not result in duplicative support.
    (5) Eligible telecommunications carriers may query the Database only 
for the purposes provided in paragraphs (b)(1) through (b)(3) of this 
section, and to determine whether information with respect to its 
subscribers already in the Database is correct and complete.
    (6) Eligible telecommunications carriers must transmit to the 
Database in a format prescribed by the Administrator each new and 
existing Lifeline subscriber's full name; full residential address; date 
of birth and the last four digits of the subscriber's Social Security 
number or Tribal Identification number, if the subscriber is a member of 
a Tribal nation and does not have a Social Security number; the 
telephone number associated with the Lifeline service; the date on which 
the Lifeline service was initiated; the date on which the Lifeline 
service was terminated, if it has been terminated; the amount of support 
being sought for that subscriber; and the means through which the 
subscriber qualified for Lifeline.
    (7) In the event that two or more eligible telecommunications 
carriers transmit the information required by this paragraph to the 
Database for the same subscriber, only the eligible telecommunications 
carrier whose information was received and processed by the Database 
first, as determined by the Administrator, will be entitled to 
reimbursement from the Fund for that subscriber.
    (8) All eligible telecommunications carriers must update an existing 
Lifeline subscriber's information in the Database within ten business 
days of receiving any change to that information, except as described in 
paragraph (b)(10) of this section.

[[Page 177]]

    (9) All eligible telecommunications carriers must obtain, from each 
new and existing subscriber, consent to transmit the subscriber's 
information. Prior to obtaining consent, the eligible telecommunications 
carrier must describe to the subscriber, using clear, easily understood 
language, the specific information being transmitted, that the 
information is being transmitted to the Administrator to ensure the 
proper administration of the Lifeline program, and that failure to 
provide consent will result in subscriber being denied the Lifeline 
service.
    (10) When an eligible telecommunications carrier de-enrolls a 
subscriber, it must transmit to the Database the date of Lifeline 
service de-enrollment within one business day of de-enrollment.
    (11) All eligible telecommunications carriers must securely retain 
subscriber documentation that the ETC reviewed to verify subscriber 
eligibility, for the purposes of production during audits or 
investigations or to the extent required by NLAD processes, which 
require, inter alia, verification of eligibility, identity, address, and 
age.
    (c) Tribal Link Up and the National Lifeline Accountability 
Database. In order to receive universal service support reimbursement 
for Tribal Link Up, eligible telecommunications carriers operating in 
states that have not provided the Commission with a valid certification 
pursuant to paragraph (a) of this section, must comply with the 
following requirements:
    (1) Such eligible telecommunications carriers must query the 
Database to determine whether a prospective Link Up recipient who has 
executed a certification pursuant to Sec. 54.410(d) has previously 
received a Link Up benefit at the residential address provided by the 
prospective subscriber.
    (2) If the Database indicates that a prospective subscriber has 
received a Link Up benefit at the residential address provided by the 
subscriber, the eligible telecommunications provider must not seek Link 
Up reimbursement for that subscriber.
    (3) An eligible telecommunications carrier is not required to comply 
with paragraphs (c)(1) through (c)(2) of this section, if it receives 
notice from a state Lifeline administrator or other state agency that 
the administrator or other agency has queried the Database about a 
prospective subscriber and that providing the prospective subscriber 
with a Link Up benefit would not result in duplicative support or 
support to a subscriber who had already received Link Up support at that 
residential address.
    (4) All eligible telecommunications carriers must transmit to the 
Database in a format prescribed by the Administrator each new and 
existing Link Up recipient's full name; residential address; date of 
birth; and the last four digits of the subscriber's Social Security 
number, or Tribal identification number if the subscriber is a member of 
a Tribal nation and does not have a Social Security number; the 
telephone number associated with the Link Up support; and the date of 
service activation. Where two or more eligible telecommunications 
carriers transmit the information required by this paragraph to the 
Database for the same subscriber, only the eligible telecommunications 
carrier whose information was received and processed by the Database 
first, as determined by the Administrator, will be entitled to 
reimbursement from the Fund for that subscriber.
    (5) All eligible telecommunications carriers must obtain, from each 
new and existing subscriber, consent to transmit the information 
required in paragraph (c) of this section. Prior to obtaining consent, 
the eligible telecommunications carrier must describe to the subscriber, 
using clear, easily understood language, the specific information being 
transmitted, that the information is being transmitted to the 
Administrator to ensure the proper administration of the Link Up 
program, and that failure to provide consent will result in the 
subscriber being denied the Link Up benefit.

[77 FR 12968, Mar. 2, 2012, as amended at 80 FR 40935, July 14, 2015]



Sec. 54.405  Carrier obligation to offer Lifeline.

    All eligible telecommunications carriers must:

[[Page 178]]

    (a) Make available Lifeline service, as defined in Sec. 54.401, to 
qualifying low-income consumers.
    (b) Publicize the availability of Lifeline service in a manner 
reasonably designed to reach those likely to qualify for the service.
    (c) Indicate on all materials describing the service, using easily 
understood language, that it is a Lifeline service, that Lifeline is a 
government assistance program, the service is non-transferable, only 
eligible consumers may enroll in the program, and the program is limited 
to one discount per household. For the purposes of this section, the 
term ``materials describing the service'' includes all print, audio, 
video, and web materials used to describe or enroll in the Lifeline 
service offering, including application and certification forms.
    (d) Disclose the name of the eligible telecommunications carrier on 
all materials describing the service.
    (e) De-enrollment--(1) De-enrollment generally. If an eligible 
telecommunications carrier has a reasonable basis to believe that a 
Lifeline subscriber no longer meets the criteria to be considered a 
qualifying low-income consumer under Sec. 54.409, the carrier must 
notify the subscriber of impending termination of his or her Lifeline 
service. Notification of impending termination must be sent in writing 
separate from the subscriber's monthly bill, if one is provided, and 
must be written in clear, easily understood language. A carrier 
providing Lifeline service in a state that has dispute resolution 
procedures applicable to Lifeline termination that requires, at a 
minimum, written notification of impending termination, must comply with 
the applicable state requirements. The carrier must allow a subscriber 
30 days following the date of the impending termination letter required 
to demonstrate continued eligibility. A subscriber making such a 
demonstration must present proof of continued eligibility to the carrier 
consistent with applicable annual re-certification requirements, as 
described in Sec. 54.410(f). An eligible telecommunications carrier must 
de-enroll any subscriber who fails to demonstrate eligibility within 
five business days after the expiration of the subscriber's time to 
respond. A carrier providing Lifeline service in a state that has 
dispute resolution procedures applicable to Lifeline termination must 
comply with the applicable state requirements.
    (2) De-enrollment for duplicative support. Notwithstanding paragraph 
(e)(1) of this section, upon notification by the Administrator to any 
eligible telecommunications carrier that a subscriber is receiving 
Lifeline service from another eligible telecommunications carrier or 
that more than one member of a subscriber's household is receiving 
Lifeline service and therefore that the subscriber should be de-enrolled 
from participation in that carrier's Lifeline program, the eligible 
telecommunications carrier must de-enroll the subscriber from 
participation in that carrier's Lifeline program within five business 
days. An eligible telecommunications carrier shall not be eligible for 
Lifeline reimbursement for any de-enrolled subscriber following the date 
of that subscriber's de-enrollment.
    (3) De-enrollment for non-usage. Notwithstanding paragraph (e)(1) of 
this section, if a Lifeline subscriber fails to use, as ``usage'' is 
defined in Sec. 54.407(c)(2), for 30 consecutive days a Lifeline service 
that does not require the eligible telecommunications carrier to assess 
and collect a monthly fee from its subscribers, an eligible 
telecommunications carrier must provide the subscriber 15 days' notice, 
using clear, easily understood language, that the subscriber's failure 
to use the Lifeline service within the 15-day notice period will result 
in service termination for non-usage under this paragraph. Eligible 
telecommunications carriers shall report to the Commission annually the 
number of subscribers de-enrolled for non-usage under this paragraph. 
This de-enrollment information must be reported by month and must be 
submitted to the Commission at the time an eligible telecommunications 
carrier submits its annual certification report pursuant to Sec. 54.416.
    (4) De-enrollment for failure to re-certify. Notwithstanding 
paragraph (e)(1) of this section, an eligible telecommunications carrier 
must de-enroll

[[Page 179]]

a Lifeline subscriber who does not respond to the carrier's attempts to 
obtain re-certification of the subscriber's continued eligibility as 
required by Sec. 54.410(f); or who fails to provide the annual one-per-
household re-certifications as required by Sec. 54.410(f). Prior to de-
enrolling a subscriber under this paragraph, the eligible 
telecommunications carrier must notify the subscriber in writing 
separate from the subscriber's monthly bill, if one is provided, using 
clear, easily understood language, that failure to respond to the re-
certification request will trigger de-enrollment. A subscriber must be 
given 60 days to respond to recertification efforts. If a subscriber 
does not respond to the carrier's notice of impending de-enrollment, the 
carrier must de-enroll the subscriber from Lifeline within five business 
days after the expiration of the subscriber's time to respond to the re-
certification efforts.
    (5) De-enrollment requested by subscriber. If an eligible 
telecommunications carrier receives a request from a subscriber to de-
enroll, it must de-enroll the subscriber within two business days after 
the request.

[77 FR 12969, Mar. 2, 2012, as amended at 80 FR 35577, June 22, 2015; 81 
FR 33090, May 24, 2016; 81 FR 45974, July 15, 2016; 81 FR 33090, May 24, 
2016]



Sec. 54.407  Reimbursement for offering Lifeline.

    (a) Universal service support for providing Lifeline shall be 
provided directly to an eligible telecommunications carrier based on the 
number of actual qualifying low-income customers it serves directly as 
of the first day of the month. After the National Verifier is deployed 
in a state, reimbursement shall be provided to an eligible 
telecommunications carrier based on the number of actual qualifying low-
income customers it serves directly as of the first day of the month 
found in the National Verifier.
    (b) For each qualifying low-income consumer receiving Lifeline 
service, the reimbursement amount shall equal the federal support 
amount, including the support amounts described in Sec. 54.403(a) and 
(c). The eligible telecommunications carrier's universal service support 
reimbursement shall not exceed the carrier's rate for that offering, or 
similar offerings, subscribed to by consumers who do not qualify for 
Lifeline.
    (c) An eligible telecommunications carrier offering a Lifeline 
service that does not require the eligible telecommunications carrier to 
assess and collect a monthly fee from its subscribers:
    (1) Shall not receive universal service support for a subscriber to 
such Lifeline service until the subscriber activates the service by 
whatever means specified by the carrier, such as completing an outbound 
call; and
    (2) After service activation, an eligible telecommunications carrier 
shall only continue to receive universal service support reimbursement 
for such Lifeline service provided to subscribers who have used the 
service within the last 30 days, or who have cured their non-usage as 
provided for in Sec. 54.405(e)(3). Any of these activities, if 
undertaken by the subscriber, will establish ``usage'' of the Lifeline 
service:
    (i) Completion of an outbound call or usage of data;
    (ii) Purchase of minutes or data from the eligible 
telecommunications carrier to add to the subscriber's service plan;
    (iii) Answering an incoming call from a party other than the 
eligible telecommunications carrier or the eligible telecommunications 
carrier's agent or representative;
    (iv) Responding to direct contact from the eligible communications 
carrier and confirming that he or she wants to continue receiving 
Lifeline service; or
    (v) Sending a text message.
    (d) In order to receive universal service support reimbursement, an 
officer of each eligible telecommunications carrier must certify, as 
part of each request for reimbursement, that:
    (1) The eligible telecommunications carrier is in compliance with 
all of the rules in this subpart; and
    (2) The eligible telecommunications carrier has obtained valid 
certification and recertification forms to the extent required under 
this subpart for each of the subscribers for whom it is seeking 
reimbursement.

[[Page 180]]

    (e) In order to receive universal service support reimbursement, an 
eligible telecommunications carrier must keep accurate records of the 
revenues it forgoes in providing Lifeline services. Such records shall 
be kept in the form directed by the Administrator and provided to the 
Administrator at intervals as directed by the Administrator or as 
provided in this subpart.

[77 FR 12970, Mar. 2, 2012, as amended at 77 FR 38534, June 28, 2012; 80 
FR 35577, June 22, 2015; 80 FR 40935, July 14, 2015; 81 FR 33091, May 
24, 2016]



Sec. 54.408  Minimum service standards.

    (a) As used in this subpart, with the following exception of 
paragraph (a)(2) of this section, a minimum service standard is:
    (1) The level of service which an eligible telecommunications 
carrier must provide to an end user in order to receive the Lifeline 
support amount.
    (2) The minimum service standard for mobile broadband speed, as 
described in paragraph (b)(2)(i) of this section, is the level of 
service which an eligible telecommunications carrier must both advertise 
and provide to an end user.
    (b) Minimum service standards for Lifeline supported services will 
take effect on December 1, 2016. The minimum service standards set forth 
below are subject to the conditions in Sec. 54.401. The initial minimum 
service standards, as set forth in paragraphs (b)(1) through (3) of this 
section, will be subject to the updating mechanisms described in 
paragraph (c) of this section.
    (1) Fixed broadband will have minimum service standards for speed 
and data usage allowance, subject to the exceptions in paragraph (d) of 
this section.
    (i) The minimum service standard for fixed broadband speed will be 
10 Megabits per second downstream/1 Megabit per second upstream.
    (ii) The minimum service standard for fixed broadband data usage 
allowance will be 150 gigabytes per month.
    (2) Mobile broadband will have minimum service standards for speed 
and data usage allowance.
    (i) The minimum service standard for mobile broadband speed will be 
3G.
    (ii) The minimum service standard for mobile broadband data usage 
allowance will be:
    (A) From December 1, 2016 until November 30, 2017, 500 megabytes per 
month;
    (B) From December 1, 2017, until November 30, 2018, 1 gigabyte per 
month;
    (C) From December 1, 2018 until November 30, 2019, 2 gigabytes per 
month; and
    (D) On and after December 1, 2019, the minimum standard will be 
calculated using the mechanism set forth in paragraphs (c)(2)(ii)(A) 
through (D) of this section. If the data listed in paragraphs 
(c)(2)(ii)(A) through (D) do not meet the criteria set forth in 
paragraph (c)(2)(iii) of this section, then the updating mechanism in 
paragraph (c)(2)(iii) will be used instead.
    (3) The minimum service standard for mobile voice service will be:
    (i) From December 1, 2016, until November 30, 2017, 500 minutes;
    (ii) From December 1, 2017, until November 30, 2018, 750 minutes; 
and
    (iii) On and after December 1, 2018, the minimum standard will be 
1000 minutes.
    (c) Minimum service standards will be updated using the following 
mechanisms:
    (1) Fixed broadband will have minimum service standards for speed 
and data usage allowance. The standards will updated as follows:
    (i) The standard for fixed broadband speed will be updated on an 
annual basis. The standard will be set at the 30th percentile, rounded 
up to the nearest Megabit-per-second integer, of subscribed fixed 
broadband downstream and upstream speeds. The 30th percentile will be 
determined by analyzing FCC Form 477 Data. The new standard will be 
published in a Public Notice issued by the Wireline Competition Bureau 
on or before July 31, which will give the new minimum standard for the 
upcoming year. In the event that the Bureau does not release a Public 
Notice, or the data are older than 18 months, the minimum standard will 
be the greater of:
    (A) The current minimum standard; or
    (B) The Connect America Fund minimum speed standard for rate-of-
return

[[Page 181]]

fixed broadband providers, as set forth in 47 CFR 54.308(a).
    (ii) The standard for fixed broadband data usage allowance will be 
updated on an annual basis. The new standard will be published in a 
Public Notice issued by the Wireline Competition Bureau on or before 
July 31, which will give the new minimum standard for the upcoming year. 
The updated standard will be the greater of:
    (A) An amount the Wireline Competition Bureau deems appropriate, 
based on what a substantial majority of American consumers already 
subscribe to, after analyzing Urban Rate Survey data and other relevant 
data; or
    (B) The minimum standard for data usage allowance for rate-of-return 
fixed broadband providers set in the Connect America Fund.
    (2) Mobile broadband will have minimum service standards for speed 
and capacity. The standards will be updated as follows:
    (i) The standard for mobile broadband speed will be updated when, 
after analyzing relevant data, including the FCC Form 477 data, the 
Wireline Competition Bureau determines such an adjustment is necessary. 
If the standard for mobile broadband speed is updated, the new standard 
will be published in a Public Notice issued by the Wireline Competition 
Bureau.
    (ii) The standard for mobile broadband capacity will be updated on 
an annual basis. The standard will be determined by:
    (A) Dividing the total number of mobile-cellular subscriptions in 
the United States, as reported in the Mobile Competition Report by the 
total number of American households, as determined by the U.S. Census 
Bureau, in order to determine the number of mobile-cellular 
subscriptions per American household. This number will be rounded to the 
hundredths place and then multiplied by;
    (B) The percentage of Americans who own a smartphone, according to 
the Commission's annual Mobile Competition Report. This number will be 
rounded to the hundredths place and then multiplied by;
    (C) The average data used per mobile smartphone subscriber, as 
reported by the Commission in its annual Mobile Competition Report. This 
number will be rounded to the hundredths place and then multiplied by;
    (D) Seventy (70) percent. The result will then be rounded up to the 
nearest 250 MB interval to provide the new monthly minimum service 
standard for the mobile broadband data usage allowance.
    (iii) If the Wireline Competition Bureau does not release a Public 
Notice giving new minimum standards for mobile broadband capacity on or 
before July 31, or if the necessary data needed to calculate the new 
minimum standard are older than 18 months, the data usage allowance will 
be updated by multiplying the current data usage allowance by the 
percentage of the year-over-year change in average mobile data usage per 
smartphone user, as reported in the Mobile Competition Report. That 
amount will be rounded up to the nearest 250 MB.
    (d) Exception for certain fixed broadband providers. Subject to the 
limitations in paragraphs (d)(1) through (4) of this section, the 
Lifeline discount may be applied for fixed broadband service that does 
not meet the minimum standards set forth in paragraph (b)(1) of this 
section. If the provider, in a given area:
    (1) Does not offer any fixed broadband service that meets our 
minimum service standards set forth in paragraph (b)(1) of this section; 
but
    (2) Offers a fixed broadband service of at least 4 Mbps downstream/1 
Mbps upstream in that given area; then,
    (3) In that given area, a fixed broadband provider may receive 
Lifeline funds for the purchase of its highest performing generally 
available residential offering, lexicographically ranked by:
    (i) Download bandwidth;
    (ii) Upload bandwidth; and
    (iii) Usage allowance.
    (4) A fixed broadband provider claiming Lifeline support under this 
section will certify its compliance with this section's requirements and 
will be subject to the Commission's audit authority.
    (e) Except as provided in paragraph (d) of this section, eligible 
telecommunications carriers shall not apply the Lifeline discount to 
offerings

[[Page 182]]

that do not meet the minimum service standards.
    (f) Equipment requirement. (1) Any fixed or mobile broadband 
Lifeline provider, which provides devices to its consumers, must ensure 
that all such devices provided to a consumer are Wi-Fi enabled.
    (2) A Lifeline provider may not institute an additional or separate 
tethering charge for any mobile data usage that is below the minimum 
service standard set forth in paragraph (b)(2) of this section.
    (3) Any mobile broadband Lifeline provider which provides devices to 
its consumers must offer at least one device that is capable of being 
used as a hotspot. This requirement will change as follows:
    (i) From December 1, 2017 to November 30, 2018, a provider that 
offers devices must ensure that at least 15 percent of such devices are 
capable of being used as a hotspot.
    (ii) From December 1, 2018 to November 30, 2019, a provider that 
offers devices must ensure that at least 20 percent of such devices are 
capable of being used as a hotspot.
    (iii) From December 1, 2019 to November 30, 2020, a provider that 
offers devices must ensure that at least 25 percent of such devices are 
capable of being used as a hotspot.
    (iv) From December 1, 2020 to November 30, 2021, a provider that 
offers devices must ensure that at least 35 percent of such devices are 
capable of being used as a hotspot.
    (v) From December 1, 2021 to November 30, 2022, a provider that 
offers devices must ensure that at least 45 percent of such devices are 
capable of being used as a hotspot.
    (vi) From December 1, 2022 to November 30, 2023, a provider that 
offers devices must ensure that at least 55 percent of such devices are 
capable of being used as a hotspot.
    (vii) From December 1, 2023 to November 30, 2024, a provider that 
offers devices must ensure that at least 65 percent of such devices are 
capable of being used as a hotspot.
    (viii) On December 1, 2024, a provider that offers devices must 
ensure that at least 75 percent of such devices are capable of being 
used as a hotspot.

[81 FR 33091, May 24, 2016]



Sec. 54.409  Consumer qualification for Lifeline.

    (a) To constitute a qualifying low-income consumer:
    (1) A consumer's household income as defined in Sec. 54.400(f) must 
be at or below 135% of the Federal Poverty Guidelines for a household of 
that size; or
    (2) The consumer, one or more of the consumer's dependents, or the 
consumer's household must receive benefits from one of the following 
federal assistance programs: Medicaid; Supplemental Nutrition Assistance 
Program; Supplemental Security Income; Federal Public Housing 
Assistance; or Veterans and Survivors Pension Benefit.
    (b) A consumer who lives on Tribal lands is eligible for Lifeline 
service as a ``qualifying low-income consumer'' as defined by 
Sec. 54.400(a) and as an ``eligible resident of Tribal lands'' as 
defined by Sec. 54.400(e) if that consumer meets the qualifications for 
Lifeline specified in paragraph (a) of this section or if the consumer, 
one or more of the consumer's dependents, or the consumer's household 
participates in one of the following Tribal-specific federal assistance 
programs: Bureau of Indian Affairs general assistance; Tribally 
administered Temporary Assistance for Needy Families; Head Start (only 
those households meeting its income qualifying standard); or the Food 
Distribution Program on Indian Reservations.
    (c) In addition to meeting the qualifications provided in paragraph 
(a) or (b) of this section, in order to constitute a qualifying low-
income consumer, a consumer must not already be receiving a Lifeline 
service, and there must not be anyone else in the subscriber's household 
subscribed to a Lifeline service.

[77 FR 12970, Mar. 2, 2012, as amended at 77 FR 38534, June 28, 2012; 81 
FR 33093, May 24, 2016]



Sec. 54.410  Subscriber eligibility determination and certification.

    (a) All eligible telecommunications carriers must implement policies 
and procedures for ensuring that their Lifeline subscribers are eligible 
to receive

[[Page 183]]

Lifeline services. An eligible telecommunications carrier may not 
provide a consumer with an activated device that it represents enables 
use of Lifeline-supported service, nor may it activate service that it 
represents to be Lifeline service, unless and until it has:
    (1) Confirmed that the consumer is a qualifying low-income consumer 
pursuant to Sec. 54.409, and;
    (2) Completed the eligibility determination and certification 
required by this section and Secs. 54.404 through 54.405, and completed 
any other necessary enrollment steps.
    (b) Initial income-based eligibility determination. (1) Except where 
the National Verifier, state Lifeline administrator or other state 
agency is responsible for the initial determination of a subscriber's 
eligibility, when a prospective subscriber seeks to qualify for Lifeline 
using the income-based eligibility criteria provided for in 
Sec. 54.409(a)(1) an eligible telecommunications carrier:
    (i) Must not seek reimbursement for providing Lifeline to a 
subscriber, unless the carrier has received a certification of 
eligibility from the prospective subscriber that complies with the 
requirements set forth in paragraph (d) of this section and has 
confirmed the subscriber's income-based eligibility using the following 
procedures:
    (A) If an eligible telecommunications carrier can determine a 
prospective subscriber's income-based eligibility by accessing one or 
more databases containing information regarding the subscriber's income 
(``income databases''), the eligible telecommunications carrier must 
access such income databases and determine whether the prospective 
subscriber qualifies for Lifeline.
    (B) If an eligible telecommunications carrier cannot determine a 
prospective subscriber's income-based eligibility by accessing income 
databases, the eligible telecommunications carrier must review 
documentation that establishes that the prospective subscriber meets the 
income-eligibility criteria set forth in Sec. 54.409(a)(1). Acceptable 
documentation of income eligibility includes the prior year's state, 
federal, or Tribal tax return; current income statement from an employer 
or paycheck stub; a Social Security statement of benefits; a Veterans 
Administration statement of benefits; a retirement/pension statement of 
benefits; an Unemployment/Workers' Compensation statement of benefit; 
federal or Tribal notice letter of participation in General Assistance; 
or a divorce decree, child support award, or other official document 
containing income information. If the prospective subscriber presents 
documentation of income that does not cover a full year, such as current 
pay stubs, the prospective subscriber must present the same type of 
documentation covering three consecutive months within the previous 
twelve months.
    (ii) Must securely retain copies of documentation demonstrating a 
prospective subscriber's income-based eligibility for Lifeline 
consistent with Sec. 54.417, except to the extent such documentation is 
retained by the National Verifier.
    (2) Where the National Verifier, state Lifeline administrator, or 
other state agency is responsible for the initial determination of a 
subscriber's eligibility, an eligible telecommunications carrier must 
not seek reimbursement for providing Lifeline service to a subscriber, 
based on that subscriber's income eligibility, unless the carrier has 
received from the National Verifier, state Lifeline administrator, or 
other state agency:
    (i) Notice that the prospective subscriber meets the income-
eligibility criteria set forth in Sec. 54.409(a)(1); and
    (ii) A copy of the subscriber's certification that complies with the 
requirements set forth in paragraph (d) of this section.
    (iii) An eligible telecommunications carrier must securely retain 
all information and documentation provided by the state Lifeline 
administrator or other state agency consistent with Sec. 54.417.
    (c) Initial program-based eligibility determination. (1) Except in 
states where the National Verifier, state Lifeline administrator, or 
other state agency is responsible for the initial determination of a 
subscriber's program-based eligibility, when a prospective subscriber 
seeks to qualify for Lifeline service using the program-based criteria 
set forth in Sec. 54.409(a)(2) or (b), an eligible telecommunications 
carrier:

[[Page 184]]

    (i) Must not seek reimbursement for providing Lifeline to a 
subscriber unless the carrier has received a certification of 
eligibility from the subscriber that complies with the requirements set 
forth in paragraph (d) of this section and has confirmed the 
subscriber's program-based eligibility using the following procedures:
    (A) If the eligible telecommunications carrier can determine a 
prospective subscriber's program-based eligibility for Lifeline by 
accessing one or more databases containing information regarding 
enrollment in qualifying assistance programs (``eligibility 
databases''), the eligible telecommunications carrier must access such 
eligibility databases to determine whether the prospective subscriber 
qualifies for Lifeline based on participation in a qualifying assistance 
program; or
    (B) If an eligible telecommunications carrier cannot determine a 
prospective subscriber's program-based eligibility for Lifeline by 
accessing eligibility databases, the eligible telecommunications carrier 
must review documentation demonstrating that a prospective subscriber 
qualifies for Lifeline under the program-based eligibility requirements. 
Acceptable documentation of program eligibility includes the current or 
prior year's statement of benefits from a qualifying assistance program, 
a notice or letter of participation in a qualifying assistance program, 
program participation documents, or another official document 
demonstrating that the prospective subscriber, one or more of the 
prospective subscriber's dependents or the prospective subscriber's 
household receives benefits from a qualifying assistance program.
    (ii) Must securely retain copies of the documentation demonstrating 
a subscriber's program-based eligibility for Lifeline, consistent with 
Sec. 54.417, except to the extent such documentation is retained by the 
National Verifier.
    (2) Where the National Verifier, state Lifeline administrator, or 
other state agency is responsible for the initial determination of a 
subscriber's eligibility, when a prospective subscriber seeks to qualify 
for Lifeline service using the program-based eligibility criteria 
provided in Sec. 54.409(a)(2) or (b), an eligible telecommunications 
carrier must not seek reimbursement for providing Lifeline to a 
subscriber unless the carrier has received from the National Verifier, 
state Lifeline administrator or other state agency:
    (i) Notice that the subscriber meets the program-based eligibility 
criteria set forth in Sec. 54.409(a)(2) or (b); and
    (ii) a copy of the subscriber's certification that complies with the 
requirements set forth in paragraph (d) of this section.
    (iii) An eligible telecommunications carrier must securely retain 
all information and documentation provided by the state Lifeline 
administrator or other state agency consistent with Sec. 54.417.
    (d) Eligibility certification form. Eligible telecommunications 
carriers and state Lifeline administrators or other state agencies that 
are responsible for the initial determination of a subscriber's 
eligibility for Lifeline must provide prospective subscribers Lifeline 
certification forms that provide the information in paragraphs (d)(1) 
through (3) of this section in clear, easily understood language. If a 
Federal eligibility certification form is available, entities enrolling 
subscribers must use such form to enroll a qualifying low-income 
consumer into the Lifeline program.
    (1) The form provided by the entity enrolling subscribers must 
provide the information in paragraphs (d)(1)(i) through (vi) of this 
section:
    (i) Lifeline is a federal benefit and that willfully making false 
statements to obtain the benefit can result in fines, imprisonment, de-
enrollment or being barred from the program;
    (ii) Only one Lifeline service is available per household;
    (iii) A household is defined, for purposes of the Lifeline program, 
as any individual or group of individuals who live together at the same 
address and share income and expenses;
    (iv) A household is not permitted to receive Lifeline benefits from 
multiple providers;
    (v) Violation of the one-per-household limitation constitutes a 
violation of the Commission's rules and will result in the subscriber's 
de-enrollment from the program; and

[[Page 185]]

    (vi) Lifeline is a non-transferable benefit and the subscriber may 
not transfer his or her benefit to any other person.
    (2) The form provided by the entity enrolling subscribers must 
require each prospective subscriber to provide the information in 
paragraphs (d)(2)(i) through (viii) of this section:
    (i) The subscriber's full name;
    (ii) The subscriber's full residential address;
    (iii) Whether the subscriber's residential address is permanent or 
temporary;
    (iv) The subscriber's billing address, if different from the 
subscriber's residential address;
    (v) The subscriber's date of birth;
    (vi) The last four digits of the subscriber's social security 
number, or the subscriber's Tribal identification number, if the 
subscriber is a member of a Tribal nation and does not have a social 
security number;
    (vii) If the subscriber is seeking to qualify for Lifeline under the 
program-based criteria, as set forth in Sec. 54.409, the name of the 
qualifying assistance program from which the subscriber, his or her 
dependents, or his or her household receives benefits; and
    (viii) If the subscriber is seeking to qualify for Lifeline under 
the income-based criterion, as set forth in Sec. 54.409, the number of 
individuals in his or her household.
    (3) The form provided by the entity enrolling subscribers shall 
require each prospective subscriber to initial his or her 
acknowledgement of each of the certifications in paragraphs (d)(3)(i) 
through (viii) of this section individually and under penalty of 
perjury:
    (i) The subscriber meets the income-based or program-based 
eligibility criteria for receiving Lifeline, provided in Sec. 54.409;
    (ii) The subscriber will notify the carrier within 30 days if for 
any reason he or she no longer satisfies the criteria for receiving 
Lifeline including, as relevant, if the subscriber no longer meets the 
income-based or program-based criteria for receiving Lifeline support, 
the subscriber is receiving more than one Lifeline benefit, or another 
member of the subscriber's household is receiving a Lifeline benefit.
    (iii) If the subscriber is seeking to qualify for Lifeline as an 
eligible resident of Tribal lands, he or she lives on Tribal lands, as 
defined in 54.400(e);
    (iv) If the subscriber moves to a new address, he or she will 
provide that new address to the eligible telecommunications carrier 
within 30 days;
    (v) The subscriber's household will receive only one Lifeline 
service and, to the best of his or her knowledge, the subscriber's 
household is not already receiving a Lifeline service;
    (vi) The information contained in the subscriber's certification 
form is true and correct to the best of his or her knowledge,
    (vii) The subscriber acknowledges that providing false or fraudulent 
information to receive Lifeline benefits is punishable by law; and
    (viii) The subscriber acknowledges that the subscriber may be 
required to re-certify his or her continued eligibility for Lifeline at 
any time, and the subscriber's failure to re-certify as to his or her 
continued eligibility will result in de-enrollment and the termination 
of the subscriber's Lifeline benefits pursuant to Sec. 54.405(e)(4).
    (e) The National Verifier, state Lifeline administrators or other 
state agencies that are responsible for the initial determination of a 
subscriber's eligibility for Lifeline must provide each eligible 
telecommunications carrier with a copy of each of the certification 
forms collected by the National Verifier, state Lifeline administrator 
or other state agency for that carrier's subscribers.
    (f) Annual eligibility re-certification process.
    (1) All eligible telecommunications carriers must re-certify all 
subscribers 12 months after the subscriber's service initiation date and 
every 12 months thereafter, except for subscribers in states where the 
National Verifier, state Lifeline administrator, or other state agency 
is responsible for the annual re-certification of subscribers' Lifeline 
eligibility.
    (2) In order to re-certify a subscriber's eligibility, an eligible 
telecommunications carrier must confirm

[[Page 186]]

a subscriber's current eligibility to receive Lifeline by:
    (i) Querying the appropriate eligibility databases, confirming that 
the subscriber still meets the program-based eligibility requirements 
for Lifeline, and documenting the results of that review; or
    (ii) Querying the appropriate income databases, confirming that the 
subscriber continues to meet the income-based eligibility requirements 
for Lifeline, and documenting the results of that review.
    (iii) If the subscriber's program-based or income-based eligibility 
for Lifeline cannot be determined by accessing one or more state 
databases containing information regarding enrollment in qualifying 
assistance programs, then the National Verifier, state Lifeline 
administrator, or state agency may obtain a signed certification from 
the subscriber on a form that meets the certification requirements in 
paragraph (d) of this section. If a Federal eligibility recertification 
form is available, entities enrolling subscribers must use such form to 
re-certify a qualifying low-income consumer.
    (iv) In states in which the National Verifier has been implemented, 
the eligible telecommunications carrier cannot re-certify subscribers 
not found in the National Verifier by obtaining a certification form 
from the subscriber.
    (3) Where the National Verifier, state Lifeline administrator, or 
other state agency is responsible for re-certification of a subscriber's 
Lifeline eligibility, the National Verifier, state Lifeline 
administrator, or state agency must confirm a subscriber's current 
eligibility to receive a Lifeline service by:
    (i) Querying the appropriate eligibility databases, confirming that 
the subscriber still meets the program-based eligibility requirements 
for Lifeline, and documenting the results of that review; or
    (ii) Querying the appropriate income databases, confirming that the 
subscriber continues to meet the income-based eligibility requirements 
for Lifeline, and documenting the results of that review.
    (iii) If the subscriber's eligibility for Lifeline cannot be 
determined by accessing one or more databases containing information 
regarding enrollment in qualifying assistance programs, then the 
National Verifier, state Lifeline administrator, or state agency may 
obtain a signed certification from the subscriber on a form that meets 
the certification requirements in paragraph (d) of this section. If a 
Federal eligibility recertification form is available, entities 
enrolling subscribers must use such form to recertify a qualifying low-
income consumer.
    (4) Where the National Verifier, state Lifeline administrator, or 
other state agency is responsible for re-certification or subscribers' 
Lifeline eligibility, the National Verifier, state Lifeline 
administrator, or other state agency must provide to each eligible 
telecommunications carrier the results of its annual re-certification 
efforts with respect to that eligible telecommunications carrier's 
subscribers.
    (5) If an eligible telecommunications carrier is unable to re-
certify a subscriber or has been notified by the National Verifier, a 
state Lifeline administrator, or other state agency's inability to re-
certify a subscriber, the eligible telecommunications carrier must 
comply with the de-enrollment requirements provided for in 
Sec. 54.405(e)(4).
    (g) One-Per-Household Worksheet. The prospective subscriber will 
complete a form certifying compliance with the one-per-household rule 
upon initial enrollment. Such form will provide an explanation of the 
one-per-household rule; include a check box that the applicant can mark 
to indicate that he or she lives at an address occupied by multiple 
households; a space for the applicant to certify that he or she shares 
an address with other adults who do not contribute income to the 
applicant's household and share in the household's expenses or benefit 
from the applicant's income; and the penalty for consumer's failure to 
make the required one-per-household certification, i.e. de-enrollment. 
At re-certification, if there are changes to the subscriber's household 
that would prevent the subscriber from accurately certifying to 
Sec. 54.410(d)(3)(vi), then the subscriber must complete a new One-Per-
Household Worksheet. If a Federal One Per

[[Page 187]]

Household Form is available, entities enrolling subscribers must use 
such form.
    (h) National Verifier transition. As the National Verifier is 
implemented in a state, the obligations in paragraphs (b) through (g) of 
this section with respect to the National Verifier and eligible 
telecommunications carriers will also take effect.

[77 FR 12970, Mar. 2, 2012, as amended at 77 FR 38534, June 28, 2012; 78 
FR 40970, July 9, 2013; 80 FR 40935, July 14, 2015; 81 FR 33093, May 24, 
2016]

    Effective Date Note: At 81 FR 45974, July 15, 2016, Sec. 54.410 was 
amended in paragraphs (b)(1)(ii), (f)(2)(iii), and (f)(4), and (f)(5). 
These amendments contain information collection and recordkeeping 
requirements and will not become effective until approval has been given 
by the Office of Management and Budget.



Sec. 54.411  Lifeline benefit portability.

    (a) A provider shall not seek or receive reimbursement through the 
Lifeline program for service provided to a subscriber who has used the 
Lifeline benefit to enroll in a qualifying Lifeline-supported broadband 
Internet access service offering with another Lifeline provider within 
the previous 12 months.
    (b) A provider shall not seek or receive reimbursement through the 
Lifeline program for service provided to a subscriber who has used the 
Lifeline benefit to enroll in a qualifying Lifeline-supported voice 
telephony service offering with another Lifeline provider within the 
previous 60 days.
    (c) Notwithstanding paragraphs (a) and (b) of this section, a 
provider may seek and receive reimbursement through the Lifeline program 
for service provided to a subscriber prior to the completion of the 12-
month period described in paragraph (a) of this section or the 60-day 
period described in paragraph (b) of this section if:
    (1) The subscriber moves their residential address;
    (2) The subscriber's current provider ceases operations or otherwise 
fails to provide service;
    (3) The provider has imposed late fees for non-payment greater than 
or equal to the monthly end-user charge for the supported service; or
    (4) The subscriber's current provider is found to be in violation of 
the Commission's rules during the 12-month period and the subscriber is 
impacted by such violation.
    (d) If a subscriber transfers his or her Lifeline benefit pursuant 
to paragraph (c) of this section, the subscriber's Lifeline benefit will 
apply to the newly selected service until the end of the original 12-
month period. In these circumstances, the subscriber is not required to 
re-certify eligibility until the end of the original 12-month period. 
The subscriber's original provider must provide the subscriber's 
eligibility records to either the subscriber's new provider or the 
subscriber to comply with the 12-month service period.

[81 FR 33094, May 24, 2016]



Sec. 54.412  Off reservation Tribal lands designation process.

    (a) The Commission's Wireline Competition Bureau and the Office of 
Native Affairs and Policy may, upon receipt of a request made in 
accordance with the requirements of this section, designate as Tribal 
lands, for the purposes of the Lifeline and Tribal Link Up program, 
areas or communities that fall outside the boundaries of existing Tribal 
lands but which maintain the same characteristics as lands identified as 
Tribal lands defined as in Sec. 54.400(e).
    (b) A request for designation must be made to the Commission by a 
duly authorized official of a federally recognized American Indian Tribe 
or Alaska Native Village.
    (c) A request for designation must clearly describe a defined 
geographical area for which the requesting party seeks designation as 
Tribal lands.
    (d) A request for designation must demonstrate the Tribal character 
of the area or community.
    (e) A request for designation must provide sufficient evidence of a 
nexus between the area or community and the Tribe, and describe in 
detail how program support to the area or community would aid the Tribe 
in serving the needs and interests of its citizens and further the 
Commission's goal of increasing telecommunications access on Tribal 
lands.
    (f) Upon designation by the Wireline Competition Bureau and the 
Office of

[[Page 188]]

Native Affairs and Policy, the area or community described in the 
designation shall be considered Tribal lands for the purposes of this 
subpart.

[77 FR 12972, Mar. 2, 2012, as amended at 77 FR 38534, June 28, 2012]



Sec. 54.413  Link Up for Tribal lands.

    (a) Definition. For purposes of this subpart, the term ``Tribal Link 
Up'' means an assistance program for eligible residents of Tribal lands 
seeking telecommunications service from a telecommunications carrier 
that is receiving high-cost support on Tribal lands, pursuant to subpart 
D of this part, that provides:
    (1) A 100 percent reduction, up to $100, of the customary charge for 
commencing telecommunications service for a single telecommunications 
connection at a subscriber's principal place of residence imposed by an 
eligible telecommunications carrier that is also receiving high-cost 
support on Tribal lands, pursuant to subpart D of this part. For 
purposes of this subpart, a ``customary charge for commencing 
telecommunications service'' is the ordinary charge an eligible 
telecommunications carrier imposes and collects from all subscribers to 
initiate service with that eligible telecommunications carrier. A charge 
imposed only on qualifying low-income consumers to initiate service is 
not a customary charge for commencing telecommunications service. 
Activation charges routinely waived, reduced, or eliminated with the 
purchase of additional products, services, or minutes are not customary 
charges eligible for universal service support; and
    (2) A deferred schedule of payments of the customary charge for 
commencing telecommunications service for a single telecommunications 
connection at a subscriber's principal place of residence imposed by an 
eligible telecommunications carrier that is also receiving high-cost 
support on Tribal lands, pursuant to subpart D of this part, for which 
the eligible resident of Tribal lands does not pay interest. The 
interest charges not assessed to the eligible resident of tribal lands 
shall be for a customary charge for connecting telecommunications 
service of up to $200 and such interest charges shall be deferred for a 
period not to exceed one year.
    (b) An eligible resident of Tribal lands may receive the benefit of 
the Tribal Link Up program for a second or subsequent time only for 
otherwise qualifying commencement of telecommunications service at a 
principal place of residence with an address different from the address 
for which Tribal Link Up assistance was provided previously.

[77 FR 12973, Mar. 2, 2012]



Sec. 54.414  Reimbursement for Tribal Link Up.

    (a) Eligible telecommunications carriers that are receiving high-
cost support, pursuant to subpart D of this part, may receive universal 
service support reimbursement for the reduction in their customary 
charge for commencing telecommunications service and for providing a 
deferred schedule for payment of the customary charge for commencing 
telecommunications services for which the subscriber does not pay 
interest, in conformity with Sec. 54.413.
    (b) In order to receive universal support reimbursement for 
providing Tribal Link Up, eligible telecommunications carriers must 
follow the procedures set forth in Sec. 54.410 to determine an eligible 
resident of Tribal lands' initial eligibility for Tribal Link Up. 
Eligible telecommunications carriers must obtain a certification form 
from each eligible resident of Tribal lands that complies with 
Sec. 54.410 prior to enrolling him or her in Tribal Link Up.
    (c) In order to receive universal service support reimbursement for 
providing Tribal Link Up, eligible telecommunications carriers must keep 
accurate records of the reductions in their customary charge for 
commencing telecommunications service and for providing a deferred 
schedule for payment of the charges assessed for commencing service for 
which the subscriber does not pay interest, in conformity with 
Sec. 54.413. Such records shall be kept in the form directed by the 
Administrator and provided to the Administrator at intervals as directed 
by the Administrator or as provided in this subpart. The reductions in 
the customary charge for which the eligible

[[Page 189]]

telecommunications carrier may receive reimbursement shall include only 
the difference between the carrier's customary connection or interest 
charges and the charges actually assessed to the subscriber receiving 
Lifeline services.

[77 FR 12973, Mar. 2, 2012]



Sec. 54.416  Annual certifications by eligible telecommunications carriers.

    (a) Eligible telecommunications carrier certifications. Eligible 
telecommunications carriers are required to make and submit to the 
Administrator the following annual certifications, under penalty of 
perjury, relating to the Lifeline program:
    (1) An officer of each eligible telecommunications carrier must 
certify that the carrier has policies and procedures in place to ensure 
that its Lifeline subscribers are eligible to receive Lifeline services. 
Each eligible telecommunications carrier must make this certification 
annually to the Administrator as part of the carrier's submission of 
annual re-certification data pursuant to this section. In instances 
where an eligible telecommunications carrier confirms consumer 
eligibility by relying on income or eligibility databases, as defined in 
Sec. 54.410(b)(1)(i)(A) or (c)(1)(i)(A), the representative must attest 
annually as to what specific data sources the eligible 
telecommunications carrier used to confirm eligibility.
    (2) An officer of the eligible telecommunications carrier must 
certify that the carrier is in compliance with all federal Lifeline 
certification procedures. Eligible telecommunications carriers must make 
this certification annually to the Administrator as part of the 
carrier's submission of re-certification data pursuant to this section.
    (3) An officer of the eligible telecommunications carrier must 
certify that the carrier is in compliance with the minimum service 
levels set forth in Sec. 54.408. Eligible telecommunications carriers 
must make this certification annually to the Administrator as part of 
the carrier's submission of re-certification data pursuant to this 
section.
    (b) All eligible telecommunications carriers must annually provide 
the results of their re-certification efforts, performed pursuant to 
Sec. 54.410(f), to the Commission and the Administrator. Eligible 
telecommunications carriers designated as such by one or more states 
pursuant to Sec. 54.201 must also provide, on an annual basis, the 
results of their re-certification efforts to state commissions for 
subscribers residing in those states where the state designated the 
eligible telecommunications carrier. Eligible telecommunications 
carriers must also provide their annual re-certification results for 
subscribers residing on Tribal lands to the relevant Tribal governments.
    (c) States that mandate Lifeline support may impose additional 
standards on eligible telecommunications carriers operating in their 
states to ensure compliance with state Lifeline programs.

[77 FR 12973, Mar. 2, 2012, as amended at 77 FR 38534, June 28, 2012; 81 
FR 33094, May 24, 2016]



Sec. 54.417  Recordkeeping requirements.

    (a) Eligible telecommunications carriers must maintain records to 
document compliance with all Commission and state requirements governing 
the Lifeline and Tribal Link Up program for the three full preceding 
calendar years and provide that documentation to the Commission or 
Administrator upon request. Eligible telecommunications carriers must 
maintain the documentation required in Secs. 54.404 (b)(11), 54.410(b), 
54.410 (c), 54.410(d), and 54.410(f) for as long as the subscriber 
receives Lifeline service from that eligible telecommunications carrier, 
but for no less than the three full preceding calendar years.
    (b) Prior to the effective date of the rules, if an eligible 
telecommunications carrier provides Lifeline discounted wholesale 
services to a reseller, it must obtain a certification from that 
reseller that it is complying with all Commission requirements governing 
the Lifeline and Tribal Link Up program. Beginning on the effective date 
of the rules, the eligible telecommunications carrier must retain the 
reseller certification for the three full preceding calendar years and 
provide that documentation to the Commission or Administrator upon 
request.

[[Page 190]]

    (c) Non-eligible telecommunications carrier resellers that purchased 
Lifeline discounted wholesale services to offer discounted services to 
low-income consumers prior to the effective date of the rules, must 
maintain records to document compliance with all Commission requirements 
governing the Lifeline and Tribal Link Up program for the three full 
preceding calendar years and provide that documentation to the 
Commission or Administrator upon request.

[80 FR 40935, July 14, 2015]



Sec. 54.418  Digital Television Transition Notices by Eligible
Telecommunications Carriers.

    (a) Eligible telecommunications carriers (ETCs) that receive federal 
universal service funds shall provide their Lifeline or Link-Up 
customers with notices about the transition for over-the-air full power 
broadcasting from analog to digital service (the ``DTV Transition'') in 
the monthly bills or bill notices received by such customers, or as a 
monthly stand-alone mailer (e.g., postcard, brochure), beginning April 
1, 2009, and concluding on June 30, 2009.
    (b) The notice must be provided as part of an information section on 
the bill or bill notice itself or on a secondary document mailed with 
the bill or bill notice, or as part of a monthly stand-alone mailer 
(e.g., postcard, brochure) in the same language or languages as the 
customer's bill or bill notice. These notices must:
    (1) Be in clear and conspicuous print;
    (2) Convey at least the following information about the DTV 
transition:
    (i) The nationwide switch to digital television broadcasting will be 
complete on June 12, 2009, but your local television stations may switch 
sooner. After the switch, analog-only television sets that receive TV 
programming through an antenna will need a converter box to continue to 
receive over-the-air TV. Watch your local stations to find out when they 
will turn off their analog signal and switch to digital-only 
broadcasting. Analog-only TVs should continue to work as before to 
receive low power, Class A or translator television stations and with 
cable and satellite TV services, gaming consoles, VCRs, DVD players, and 
similar products.
    (ii) Information about the DTV transition is available from your 
local television stations, http://www.DTV.gov, or 1-888-CALL-FCC (TTY 1-
888-TELL-FCC), and from http://www.dtv2009.gov or 1-888-DTV-2009 (TTY 1-
877-530-2634) for information about subsidized coupons for digital-to-
analog converter boxes;
    (c) If an ETC's Lifeline or Link-Up customer does not receive paper 
versions of either a bill or a notice of billing, then that customer 
must be provided with equivalent monthly notices in whatever medium they 
receive information about their monthly bill or as a monthly stand-alone 
mailer (e.g., postcard, brochure).
    (d) ETCs that receive federal universal service funds shall provide 
information on the DTV Transition that is equivalent to the information 
provided pursuant to paragraph (b)(2) of this section as part of any 
Lifeline or Link-Up publicity campaigns conducted by the ETC between 
March 27, 2008, and June 30, 2009.

[73 FR 28732, May 19, 2008, as amended at 74 FR 8878, Feb. 27, 2009]



Sec. 54.419  Validity of electronic signatures.

    (a) For the purposes of this subpart, an electronic signature, 
defined by the Electronic Signatures in Global and National Commerce 
Act, as an electronic sound, symbol, or process, attached to or 
logically associated with a contract or other record and executed or 
adopted by a person with the intent to sign the record, has the same 
legal effect as a written signature.
    (b) For the purposes of this subpart, an electronic record, defined 
by the Electronic Signatures in Global and National Commerce Act as a 
contract or other record created, generated, sent, communicated, 
received, or stored by electronic means, constitutes a record.

[77 FR 12974, Mar. 2, 2012]



Sec. 54.420  Low income program audits.

    (a) Independent audit requirements for eligible telecommunications 
carriers. Companies that receive $5 million or more

[[Page 191]]

annually in the aggregate, on a holding company basis, in Lifeline 
reimbursements must obtain a third party biennial audit of their 
compliance with the rules in this subpart. Such engagements shall be 
agreed upon performance attestations to assess the company's overall 
compliance with rules and the company's internal controls regarding 
these regulatory requirements.
    (1) For purposes of the $5 million threshold, a holding company 
consists of operating companies and affiliates, as that term is defined 
in section 3(2) of the Communications Act of 1934, as amended, that are 
eligible telecommunications carriers.
    (2) The initial audit must be completed one year after the 
Commission issues a standardized audit plan outlining the scope of the 
engagement and the extent of compliance testing to be performed by 
third-party auditors and shall be conducted every two years thereafter, 
unless directed otherwise by the Commission. The following minimum 
requirements shall apply:
    (i) The audit must be conducted by a licensed certified public 
accounting firm that is independent of the carrier.
    (ii) The engagement shall be conducted consistent with government 
accounting standards (GAGAS).
    (3) The certified public accounting firm shall submit to the 
Commission any rule interpretations necessary to complete the biennial 
audit, and the Administrator shall notify all firms subject to the 
biennial audit requirement of such requests. The audit issue will be 
noted, but not held as a negative finding, in future audit reports for 
all carriers subject to this requirement unless and until guidance has 
been provided by the Commission.
    (4) Within 60 days after completion of the audit work, but prior to 
finalization of the report, the third party auditor shall submit a draft 
of the audit report to the Commission and the Administrator, who shall 
be deemed authorized users of such reports. Finalized audit reports must 
be provided to the Commission, the Administrator, and relevant states 
and Tribal governments within 30 days of the issuance of the final audit 
report. The reports will not be considered or deemed confidential.
    (5) Delegated authority. The Wireline Competition Bureau and the 
Office of Managing Director have delegated authority to perform the 
functions specified in paragraphs (a)(2) and (a)(3) of this section.
    (b) Audit requirements for new eligible telecommunications carriers. 
After a company is designated for the first time in any state or 
territory, the Administrator will audit that new eligible 
telecommunications carrier to assess its overall compliance with the 
rules in this subpart and the company's internal controls regarding 
these regulatory requirements. This audit should be conducted within the 
carrier's first twelve months of seeking federal low-income Universal 
Service Fund support, unless otherwise determined by the Office of 
Managing Director.

[77 FR 12974, Mar. 2, 2012, as amended at 77 FR 38534, June 28, 2012; 81 
FR 33094, May 24, 2016]



Sec. 54.422  Annual reporting for eligible telecommunications carriers
that receive low-income support.

    (a) In order to receive support under this subpart, an eligible 
telecommunications carrier must annually report:
    (1) The company name, names of the company's holding company, 
operating companies and affiliates, and any branding (a ``dba,'' or 
``doing-business-as company'' or brand designation) as well as relevant 
universal service identifiers for each such entity by Study Area Code. 
For purposes of this paragraph, ``affiliates'' has the meaning set forth 
in section 3(2) of the Communications Act of 1934, as amended; and
    (2) Information describing the terms and conditions of any voice 
telephony service plans offered to Lifeline subscribers, including 
details on the number of minutes provided as part of the plan, 
additional charges, if any, for toll calls, and rates for each such 
plan. To the extent the eligible telecommunications carrier offers plans 
to Lifeline subscribers that are generally available to the public, it 
may provide summary information regarding such plans, such as a link to 
a public Web site outlining the terms and conditions of such plans.
    (b) In order to receive support under this subpart, a common carrier 
that is

[[Page 192]]

designated as an eligible telecommunications carrier under section 
214(e)(6) of the Act and does not receive support under subpart D of 
this part must annually provide:
    (1) Detailed information on any outage in the prior calendar year, 
as that term is defined in 47 CFR 4.5, of at least 30 minutes in 
duration for each service area in which the eligible telecommunications 
carrier is designated for any facilities it owns, operates, leases, or 
otherwise utilizes that potentially affect
    (i) At least ten percent of the end users served in a designated 
service area; or
    (ii) A 911 special facility, as defined in 47 CFR 4.5(e).
    (iii) Specifically, the eligible telecommunications carrier's annual 
report must include information detailing:
    (A) The date and time of onset of the outage;
    (B) A brief description of the outage and its resolution;
    (C) The particular services affected;
    (D) The geographic areas affected by the outage;
    (E) Steps taken to prevent a similar situation in the future; and
    (F) The number of customers affected.
    (2) The number of complaints per 1,000 connections (fixed or mobile) 
in the prior calendar year;
    (3) Certification of compliance with applicable minimum service 
standards, as set forth in Sec. 54.408, service quality standards, and 
consumer protection rules;
    (4) Certification that the carrier is able to function in emergency 
situations as set forth in Sec. 54.202(a)(2).
    (c) All reports required by this section must be filed with the 
Office of the Secretary of the Commission, and with the Administrator. 
Such reports must also be filed with the relevant state commissions and 
the relevant authority in a U.S. territory or Tribal governments, as 
appropriate.

[77 FR 38534, June 28, 2012, as amended at 81 FR 33095, May 24, 2016]



Sec. 54.423  Budget.

    (a) Amount of the annual budget. The initial annual budget on 
federal universal support for the Lifeline program shall be $2.25 
billion.
    (1) Inflation increase. In funding year 2016 and subsequent funding 
years, the $2.25 billion funding cap on federal universal service 
support for Lifeline shall be automatically increased annually to take 
into account increases in the rate of inflation as calculated in 
paragraph (a)(2) of this section.
    (2) Increase calculation. To measure increases in the rate of 
inflation for the purposes of paragraph (a) of this section, the 
Commission shall use the Consumer Price Index for all items from the 
Department of Labor, Bureau of Labor Statistics. To compute the annual 
increase as required by this paragraph (a), the percentage increase in 
the Consumer Price Index from the previous year will be used. For 
instance, the annual increase in the Consumer Price Index from 2015 to 
2016 would be used for the 2017 funding year. The increase shall be 
rounded to the nearest 0.1 percent by rounding 0.05 percent and above to 
the next higher 0.1 percent and otherwise rounding to the next lower 0.1 
percent. This percentage increase shall be added to the amount of the 
annual funding cap from the previous funding year. If the yearly average 
Consumer Price Index decreases or stays the same, the annual funding cap 
shall remain the same as the previous year.
    (3) The Wireline Competition Bureau shall issue a public notice on 
or before July 31 containing the results of the calculations described 
in Sec. 54.403(a)(2) and setting the budget for the upcoming year 
beginning on January 1.
    (b) If spending in the Lifeline program meets or exceeds 90 percent 
of the Lifeline budget in a calendar year, the Wireline Competition 
Bureau shall prepare a report evaluating program disbursements and 
describing the reasons for the program's growth along with any other 
information relevant to the operation of the Lifeline program. The 
Bureau shall submit the report to the Commission by July 31st of the 
following year.

[81 FR 33095, May 24, 2016]

    Effective Date Note: At 81 FR 33095, May 24, 2016, Sec. 54.423 was 
added. This section contains information collection and recordkeeping 
requirements and will not become

[[Page 193]]

effective until approval has been given by the Office of Management and 
Budget.



      Subpart F_Universal Service Support for Schools and Libraries



Sec. 54.500  Terms and definitions.

    Basic maintenance. A service is eligible for support as a ``basic 
maintenance'' service if, but for the maintenance at issue, the internal 
connection would not function and serve its intended purpose with the 
degree of reliability ordinarily provided in the marketplace to entities 
receiving such services. Basic maintenance services do not include 
services that maintain equipment that is not supported by E-rate or that 
enhance the utility of equipment beyond the transport of information, or 
diagnostic services in excess of those necessary to maintain the 
equipment's ability to transport information.
    Billed entity. A ``billed entity'' is the entity that remits payment 
to service providers for services rendered to eligible schools and 
libraries.
    Consortium. A ``consortium'' is any local, statewide, regional, or 
interstate cooperative association of schools and/or libraries eligible 
for E-rate support that seeks competitive bids for eligible services or 
funding for eligible services on behalf of some or all of its members. A 
consortium may also include health care providers eligible under subpart 
G of this part, and public sector (governmental) entities, including, 
but not limited to, state colleges and state universities, state 
educational broadcasters, counties, and municipalities, although such 
entities are not eligible for support. Eligible schools and libraries 
may not join consortia with ineligible private sector members unless the 
pre-discount prices of any services that such consortium receives are 
generally tariffed rates.
    Educational purposes. For purposes of this subpart, activities that 
are integral, immediate, and proximate to the education of students, or 
in the case of libraries, integral, immediate and proximate to the 
provision of library services to library patrons, qualify as 
``educational purposes.'' Activities that occur on library or school 
property are presumed to be integral, immediate, and proximate to the 
education of students or the provision of library services to library 
patrons.
    Elementary school. An ``elementary school'' means an elementary 
school as defined in 20 U.S.C. 7801(18), a non-profit institutional day 
or residential school, including a public elementary charter school, 
that provides elementary education, as determined under state law.
    Internal connections. A service is eligible for support as a 
component of an institution's ``internal connections'' if such service 
is necessary to transport or distribute broadband within one or more 
instructional buildings of a single school campus or within one or more 
non-administrative buildings that comprise a single library branch.
    Library. A ``library'' includes:
    (1) A public library;
    (2) A public elementary school or secondary school library;
    (3) An academic library;
    (4) A research library, which for the purpose of this section means 
a library that:
    (i) Makes publicly available library services and materials suitable 
for scholarly research and not otherwise available to the public; and
    (ii) Is not an integral part of an institution of higher education; 
and
    (5) A private library, but only if the state in which such private 
library is located determines that the library should be considered a 
library for the purposes of this definition.
    Library consortium. A ``library consortium'' is any local, 
statewide, regional, or interstate cooperative association of libraries 
that provides for the systematic and effective coordination of the 
resources of schools, public, academic, and special libraries and 
information centers, for improving services to the clientele of such 
libraries. For the purposes of these rules, references to library will 
also refer to library consortium.
    Lowest corresponding price. ``Lowest corresponding price'' is the 
lowest price that a service provider charges to non-residential 
customers who are similarly situated to a particular school, library, or 
library consortium for similar services.

[[Page 194]]

    Managed internal broadband services. A service is eligible for 
support as ``managed internal broadband services'' if provided by a 
third party for the operation, management, and monitoring of the 
eligible components of a school or library local area network (LAN) and/
or wireless LAN.
    Master contract. A ``master contract'' is a contract negotiated with 
a service provider by a third party, the terms and conditions of which 
are then made available to an eligible school, library, rural health 
care provider, or consortium that purchases directly from the service 
provider.
    Minor contract modification. A ``minor contract modification'' is a 
change to a universal service contract that is within the scope of the 
original contract and has no effect or merely a negligible effect on 
price, quantity, quality, or delivery under the original contract.
    National school lunch program. The ``national school lunch program'' 
is a program administered by the U.S. Department of Agriculture and 
state agencies that provides free or reduced price lunches to 
economically disadvantaged children. A child whose family income is 
between 130 percent and 185 percent of applicable family size income 
levels contained in the nonfarm poverty guidelines prescribed by the 
Office of Management and Budget is eligible for a reduced price lunch. A 
child whose family income is 130 percent or less of applicable family 
size income levels contained in the nonfarm income poverty guidelines 
prescribed by the Office of Management and Budget is eligible for a free 
lunch.
    Pre-discount price. The ``pre-discount price'' means, in this 
subpart, the price the service provider agrees to accept as total 
payment for its telecommunications or information services. This amount 
is the sum of the amount the service provider expects to receive from 
the eligible school or library and the amount it expects to receive as 
reimbursement from the universal service support mechanisms for the 
discounts provided under this subpart.
    Secondary school. A ``secondary school'' means a secondary school as 
defined in 20 U.S.C. 7801(38), a non-profit institutional day or 
residential school, including a public secondary charter school, that 
provides secondary education, as determined under state law except that 
the term does not include any education beyond grade 12.
    State telecommunications network. A ``state telecommunications 
network'' is a state government entity that procures, among other 
things, telecommunications offerings from multiple service providers and 
bundles such offerings into packages available to schools, libraries, or 
rural health care providers that are eligible for universal service 
support, or a state government entity that provides, using its own 
facilities, such telecommunications offerings to such schools, 
libraries, and rural health care providers.
    Voice services. ``Voice services'' include local phone service, long 
distance service, plain old telephone service (POTS), radio loop, 800 
service, satellite telephone, shared telephone service, Centrex, 
wireless telephone service such as cellular, interconnected voice over 
Internet protocol (VoIP), and the circuit capacity dedicated to 
providing voice services.
    Wide area network. For purposes of this subpart, a ``wide area 
network'' is a voice or data network that provides connections from one 
or more computers within an eligible school or library to one or more 
computers or networks that are external to such eligible school or 
library. Excluded from this definition is a voice or data network that 
provides connections between or among instructional buildings of a 
single school campus or between or among non-administrative buildings of 
a single library branch.

[63 FR 2128, Jan. 13, 1998, as amended at 68 FR 36942, June 20, 2003; 76 
FR 56302, Sept. 13, 2011; 79 FR 49197, Aug. 19, 2014; 79 FR 68634, Nov. 
18, 2014]



Sec. 54.501  Eligible recipients.

    (a) Schools. (1) Only schools meeting the statutory definition of 
``elementary school'' or ``secondary school'' as defined in Sec. 54.500 
of this subpart, and not excluded under paragraphs (a)(2) or (3) of this 
section shall be eligible for discounts on telecommunications and other 
supported services under this subpart.

[[Page 195]]

    (2) Schools operating as for-profit businesses shall not be eligible 
for discounts under this subpart.
    (3) Schools with endowments exceeding $50,000,000 shall not be 
eligible for discounts under this subpart.
    (b) Libraries. (1) Only libraries eligible for assistance from a 
State library administrative agency under the Library Services and 
Technology Act (Pub. L. 104-208) and not excluded under paragraphs 
(b)(2) or (3) of this section shall be eligible for discounts under this 
subpart.
    (2) A library's eligibility for universal service funding shall 
depend on its funding as an independent entity. Only libraries whose 
budgets are completely separate from any schools (including, but not 
limited to, elementary and secondary schools, colleges, and 
universities) shall be eligible for discounts as libraries under this 
subpart.
    (3) Libraries operating as for-profit businesses shall not be 
eligible for discounts under this subpart.
    (c) Consortia.
    (1) For consortia, discounts under this subpart shall apply only to 
the portion of eligible telecommunications and other supported services 
used by eligible schools and libraries.
    (2) Service providers shall keep and retain records of rates charged 
to and discounts allowed for eligible schools and libraries--on their 
own or as part of a consortium. Such records shall be available for 
public inspection.

[62 FR 32948, June 17, 1997, as amended at 63 FR 2129, Jan. 13, 1998; 68 
FR 36942, June 20, 2003; 75 FR 75411, Dec. 3, 2010; 76 FR 56302, Sept. 
13, 2011; 79 FR 49198, Aug. 19, 2014; 79 FR 68634, Nov. 18, 2014]



Sec. 54.502  Eligible services.

    (a) Supported services. All supported services are listed in the 
Eligible Services List as updated annually in accordance with paragraph 
(d) of this section. The services in this subpart will be supported in 
addition to all reasonable charges that are incurred by taking such 
services, such as state and federal taxes. Charges for termination 
liability, penalty surcharges, and other charges not included in the 
cost of taking such service shall not be covered by the universal 
service support mechanisms. The supported services fall within the 
following general categories:
    (1) Category one. Telecommunications services, telecommunications, 
and Internet access, as defined in Sec. 54.5 and described in the 
Eligible Services List are category one supported services.
    (2) Category two. Internal connections, basic maintenance and 
managed internal broadband services as defined in Sec. 54.500 and 
described in the Eligible Services List are category two supported 
services.
    (b) Funding years 2015-2019. Libraries, schools, or school districts 
with schools that receive funding for category two services in any of 
the funding years between 2015 and 2019 shall be eligible for support 
for category two services pursuant to paragraphs (b)(1) through (6) of 
this section.
    (1) Five-year budget. Each eligible school or library shall be 
eligible for a budgeted amount of support for category two services over 
a five-year funding cycle beginning the first funding year support is 
received. Excluding support for internal connections received prior to 
funding year 2015, each school or library shall be eligible for the 
total available budget less any support received for category two 
services in the prior funding years of that school's or library's five-
year funding cycle. The budgeted amounts and the funding floor shall be 
adjusted for inflation annually in accordance with Sec. 54.507(a)(2).
    (2) School budget. Each eligible school shall be eligible for 
support for category two services up to a pre-discount price of $150 per 
student over a five-year funding cycle. Applicants shall provide the 
student count per school, calculated at the time that the discount is 
calculated each funding year. New schools may estimate the number of 
students, but shall repay any support provided in excess of the maximum 
budget based on student enrollment the following funding year.
    (3) Library budget. Each eligible library shall be eligible for 
support for category two services, up to a pre-discount price of $2.30 
per square foot over a five-year funding cycle. Libraries shall provide 
the total area for all floors, in square feet, of each library outlet 
separately, including all areas

[[Page 196]]

enclosed by the outer walls of the library outlet and occupied by the 
library, including those areas off-limits to the public.
    (4) Funding floor. Each eligible school and library will be eligible 
for support for category two services up to at least a pre-discount 
price of $9,200 over five funding years.
    (5) Requests. Applicants shall request support for category two 
services for each school or library based on the number of students per 
school building or square footage per library building. Category two 
funding for a school or library may not be used for another school or 
library. If an applicant requests less than the maximum budget available 
for a school or library, the applicant may request the remaining balance 
in a school's or library's category two budget in subsequent funding 
years of a five year cycle. The costs for category two services shared 
by multiple eligible entities shall be divided reasonably between each 
of the entities for which support is sought in that funding year.
    (6) Non-instructional buildings. Support is not available for 
category two services provided to or within non-instructional school 
buildings or separate library administrative buildings unless those 
category two services are essential for the effective transport of 
information to or within one or more instructional buildings of a school 
or non-administrative library buildings, or the Commission has found 
that the use of those services meets the definition of educational 
purpose, as defined in Sec. 54.500. When applying for category two 
support for eligible services to a non-instructional school building or 
library administrative building, the applicant shall allocate the cost 
of providing services to one or more of the eligible school or library 
buildings that benefit from those services being provided.
    (c) Funding year 2020 and beyond. Absent further action from the 
Commission, each eligible library or school in a school district that 
either did not receive funding for category two services in funding 
years 2015 through 2019 or has completed its five-year funding cycle, 
shall be eligible for support for category two services, except basic 
maintenance services, no more than twice every five funding years. For 
the purpose of determining eligibility, the five-year period begins in 
any funding year in which the school or library receives discounted 
category two services other than basic maintenance services. If a school 
or library receives category two services other than basic maintenance 
services that are shared with other schools or libraries (for example, 
as part of a consortium), the shared services will be attributed to the 
school or library in determining whether it is eligible for support. 
Support is not available for category two services provided to or within 
non-instructional school buildings or separate library administrative 
buildings unless those category two services are essential for the 
effective transport of information to or within one or more 
instructional buildings of a school or non-administrative library 
buildings, or the Commission has found that the use of those services 
meets the definition of educational purpose, as defined in Sec. 54.500.
    (d) Eligible services list process. The Administrator shall submit 
by March 30 of each year a draft list of services eligible for support, 
based on the Commission's rules for the following funding year. The 
Wireline Competition Bureau will issue a Public Notice seeking comment 
on the Administrator's proposed eligible services list. The final list 
of services eligible for support will be released at least 60 days prior 
to the opening of the application filing window for the following 
funding year.

[62 FR 32948, June 17, 1997, as amended at 79 FR 49198, Aug. 19, 2014; 
79 FR 68634, Nov. 18, 2014;80 FR 5988, Feb. 4, 2015]



Sec. 54.503  Competitive bidding requirements.

    (a) All entities participating in the schools and libraries 
universal service support program must conduct a fair and open 
competitive bidding process, consistent with all requirements set forth 
in this subpart.

    Note to paragraph (a): The following is an illustrative list of 
activities or behaviors that would not result in a fair and open 
competitive bidding process: the applicant for supported services has a 
relationship with a

[[Page 197]]

service provider that would unfairly influence the outcome of a 
competition or would furnish the service provider with inside 
information; someone other than the applicant or an authorized 
representative of the applicant prepares, signs, and submits the FCC 
Form 470 and certification; a service provider representative is listed 
as the FCC Form 470 contact person and allows that service provider to 
participate in the competitive bidding process; the service provider 
prepares the applicant's FCC Form 470 or participates in the bid 
evaluation or vendor selection process in any way; the applicant turns 
over to a service provider the responsibility for ensuring a fair and 
open competitive bidding process; an applicant employee with a role in 
the service provider selection process also has an ownership interest in 
the service provider seeking to participate in the competitive bidding 
process; and the applicant's FCC Form 470 does not describe the 
supported services with sufficient specificity to enable interested 
service providers to submit responsive bids.

    (b) Competitive bid requirements. Except as provided in 
Sec. 54.511(c), an eligible school, library, or consortium that includes 
an eligible school or library shall seek competitive bids, pursuant to 
the requirements established in this subpart, for all services eligible 
for support under Sec. 54.502. These competitive bid requirements apply 
in addition to state and local competitive bid requirements and are not 
intended to preempt such state or local requirements.
    (c) Posting of FCC Form 470. (1) An eligible school, library, or 
consortium that includes an eligible school or library seeking bids for 
eligible services under this subpart shall submit a completed FCC Form 
470 to the Administrator to initiate the competitive bidding process. 
The FCC Form 470 and any request for proposal cited in the FCC Form 470 
shall include, at a minimum, the following information:
    (i) A list of specified services for which the school, library, or 
consortium requests bids;
    (ii) Sufficient information to enable bidders to reasonably 
determine the needs of the applicant;
    (iii) To the extent an applicant seeks the following services or 
arrangements, an indication of the applicant's intent to seek:
    (A) Construction of network facilities that the applicant will own;
    (B) A dark-fiber lease, indefeasible right of use, or other dark-
fiber service agreement or the modulating electronics necessary to light 
dark fiber; or
    (C) A multi-year installment payment agreement with the service 
provider for the non-discounted share of special construction costs;
    (iv) To the extent an applicant seeks construction of a network that 
the applicant will own, the applicant must also solicit bids for both 
the services provided over third-party networks and construction of 
applicant-owned network facilities, in the same request for proposals;
    (v) To the extent an applicant seeks bids for special construction 
associated with dark fiber or bids to lease and light dark fiber, the 
applicant must also solicit bids to provide the needed services over lit 
fiber; and
    (vi) To the extent an applicant seeks bids for equipment and 
maintenance costs associated with lighting dark fiber, the applicant 
must include these elements in the same FCC Form 470 as the dark fiber.
    (2) The FCC Form 470 shall be signed by a person authorized to 
request bids for eligible services for the eligible school, library, or 
consortium, including such entities.
    (i) A person authorized to request bids on behalf of the entities 
listed on an FCC Form 470 shall certify under oath that:
    (A) The schools meet the statutory definition of ``elementary 
school'' or ``secondary school'' as defined in Sec. 54.500 of these 
rules, do not operate as for-profit businesses, and do not have 
endowments exceeding $50 million.
    (B) The libraries or library consortia eligible for assistance from 
a State library administrative agency under the Library Services and 
Technology Act of 1996 do not operate as for-profit businesses and have 
budgets that are completely separate from any school (including, but not 
limited to, elementary and secondary schools, colleges, and 
universities).
    (C) Support under this support mechanism is conditional upon the 
school(s) and library(ies) securing access to all of the resources, 
including computers,

[[Page 198]]

training, software, maintenance, internal connections, and electrical 
connections necessary to use the services purchased effectively.
    (ii) A person authorized to both request bids and order services on 
behalf of the entities listed on an FCC Form 470 shall, in addition to 
making the certifications listed in paragraph (c)(2)(i) of this section, 
certify under oath that:
    (A) The services the school, library, or consortium purchases at 
discounts will be used primarily for educational purposes and will not 
be sold, resold, or transferred in consideration for money or any other 
thing of value, except as allowed by Sec. 54.513.
    (B) All bids submitted for eligible products and services will be 
carefully considered, with price being the primary factor, and the bid 
selected will be for the most cost-effective service offering consistent 
with Sec. 54.511.
    (3) The Administrator shall post each FCC Form 470 that it receives 
from an eligible school, library, or consortium that includes an 
eligible school or library on its Web site designated for this purpose.
    (4) After posting on the Administrator's Web site an eligible 
school, library, or consortium FCC Form 470, the Administrator shall 
send confirmation of the posting to the entity requesting service. That 
entity shall then wait at least four weeks from the date on which its 
description of services is posted on the Administrator's Web site before 
making commitments with the selected providers of services. The 
confirmation from the Administrator shall include the date after which 
the requestor may sign a contract with its chosen provider(s).
    (d) Gift restrictions. (1) Subject to paragraphs (d)(3) and (4) of 
this section, an eligible school, library, or consortium that includes 
an eligible school or library may not directly or indirectly solicit or 
accept any gift, gratuity, favor, entertainment, loan, or any other 
thing of value from a service provider participating in or seeking to 
participate in the schools and libraries universal service program. No 
such service provider shall offer or provide any such gift, gratuity, 
favor, entertainment, loan, or other thing of value except as otherwise 
provided herein. Modest refreshments not offered as part of a meal, 
items with little intrinsic value intended solely for presentation, and 
items worth $20 or less, including meals, may be offered or provided, 
and accepted by any individuals or entities subject to this rule, if the 
value of these items received by any individual does not exceed $50 from 
any one service provider per funding year. The $50 amount for any 
service provider shall be calculated as the aggregate value of all gifts 
provided during a funding year by the individuals specified in paragraph 
(d)(2)(ii) of this section.
    (2) For purposes of this paragraph:
    (i) The terms ``school, library, or consortium'' include all 
individuals who are on the governing boards of such entities (such as 
members of a school committee), and all employees, officers, 
representatives, agents, consultants or independent contractors of such 
entities involved on behalf of such school, library, or consortium with 
the Schools and Libraries Program of the Universal Service Fund (E-rate 
Program), including individuals who prepare, approve, sign or submit E-
rate applications, or other forms related to the E-rate Program, or who 
prepare bids, communicate or work with E-rate service providers, E-rate 
consultants, or with USAC, as well as any staff of such entities 
responsible for monitoring compliance with the E-rate Program; and
    (ii) The term ``service provider'' includes all individuals who are 
on the governing boards of such an entity (such as members of the board 
of directors), and all employees, officers, representatives, agents, or 
independent contractors of such entities.
    (3) The restrictions set forth in this paragraph shall not be 
applicable to the provision of any gift, gratuity, favor, entertainment, 
loan, or any other thing of value, to the extent given to a family 
member or a friend working for an eligible school, library, or 
consortium that includes an eligible school or library, provided that 
such transactions:
    (i) Are motivated solely by a personal relationship,

[[Page 199]]

    (ii) Are not rooted in any service provider business activities or 
any other business relationship with any such eligible school, library, 
or consortium, and
    (iii) Are provided using only the donor's personal funds that will 
not be reimbursed through any employment or business relationship.
    (4) Any service provider may make charitable donations to an 
eligible school, library, or consortium that includes an eligible school 
or library in the support of its programs as long as such contributions 
are not directly or indirectly related to E-rate procurement activities 
or decisions and are not given by service providers to circumvent 
competitive bidding and other E-rate program rules, including those in 
paragraph (c)(2)(i)(C) of this section, requiring schools and libraries 
to pay their own non-discount share for the services they are 
purchasing.
    (e) Exemption to competitive bidding requirements. An applicant that 
seeks support for commercially available high-speed Internet access 
services for a pre-discount price of $3,600 or less per school or 
library annually is exempt from the competitive bidding requirements in 
paragraphs (a) through (c) of this section.
    (1) Internet access, as defined in Sec. 54.5, is eligible for this 
exemption only if the purchased service offers at least 100 Mbps 
downstream and 10 Mbps upstream.
    (2) The Chief, Wireline Competition Bureau, is delegated authority 
to lower the annual cost of high-speed Internet access services or raise 
the speed threshold of broadband services eligible for this competitive 
bidding exemption, based on a determination of what rates and speeds are 
commercially available prior to the start of the funding year.

[75 FR 75412, Dec. 3, 2010, as amended at 76 FR 56302, Sept. 13, 2011; 
79 FR 49199, Aug. 19, 2014; 80 FR 5989, Feb. 4, 2015]



Sec. 54.504  Requests for services.

    (a) Filing of the FCC Form 471. An eligible school, library, or 
consortium that includes an eligible school or library seeking to 
receive discounts for eligible services under this subpart shall, upon 
entering into a signed contract or other legally binding agreement for 
eligible services, submit a completed FCC Form 471 to the Administrator.
    (1) The FCC Form 471 shall be signed by the person authorized to 
order eligible services for the eligible school, library, or consortium 
and shall include that person's certification under oath that:
    (i) The schools meet the statutory definition of ``elementary 
school'' or ``secondary school'' as defined in Sec. 54.500 of this 
subpart, do not operate as for-profit businesses, and do not have 
endowments exceeding $50 million.
    (ii) The libraries or library consortia eligible for assistance from 
a State library administrative agency under the Library Services and 
Technology Act of 1996 do not operate as for-profit businesses and whose 
budgets are completely separate from any school (including, but not 
limited to, elementary and secondary schools, colleges, and 
universities).
    (iii) The entities listed on the FCC Form 471 application have 
secured access to all of the resources, including computers, training, 
software, maintenance, internal connections, and electrical connections, 
necessary to make effective use of the services purchased. The entities 
listed on the FCC Form 471 will pay the discounted charges for eligible 
services from funds to which access has been secured in the current 
funding year or, for entities that will make installment payments, they 
will ensure that they are able to make all required installment 
payments. The billed entity will pay the non-discount portion of the 
cost of the goods and services to the service provider(s).
    (iv) The entities listed on the FCC Form 471 application have 
complied with all applicable state and local laws regarding procurement 
of services for which support is being sought.
    (v) The services the school, library, or consortium purchases at 
discounts will be used primarily for educational purposes and will not 
be sold, resold, or transferred in consideration for money or any other 
thing of value, except as allowed by Sec. 54.513.
    (vi) The entities listed in the application have complied with all 
program

[[Page 200]]

rules and acknowledge that failure to do so may result in denial of 
discount funding and/or recovery of funding.
    (vii) The applicant understands that the discount level used for 
shared services is conditional, for future years, upon ensuring that the 
most disadvantaged schools and libraries that are treated as sharing in 
the service, receive an appropriate share of benefits from those 
services.
    (viii) The applicant recognizes that it may be audited pursuant to 
its application, that it will retain for ten years any and all 
worksheets and other records relied upon to fill out its application, 
and that, if audited, it will make such records available to the 
Administrator.
    (ix) Except as exempted by Sec. 54.503(e), all bids submitted to a 
school, library, or consortium seeking eligible services were carefully 
considered and the most cost-effective bid was selected in accordance 
with Sec. 54.503 of this subpart, with price being the primary factor 
considered, and it is the most cost-effective means of meeting 
educational needs and technology goals.
    (2) All pricing and technology infrastructure information submitted 
as part of an FCC Form 471 shall be treated as public and non-
confidential by the Administrator unless the applicant specifies a 
statute, rule, or other restriction, such as a court order or an 
existing contract limitation barring public release of the information.
    (i) Contracts and other agreements executed after adoption of this 
rule may not prohibit disclosure of pricing or technology infrastructure 
information.
    (ii) The exemption for existing contract limitations shall not apply 
to voluntary extensions or renewals of existing contracts.
    (b) Mixed eligibility requests. If 30 percent or more of a request 
for discounts made in an FCC Form 471 is for ineligible services, the 
request shall be denied in its entirety.
    (c) Rate disputes. Schools, libraries, and consortia including those 
entities, and service providers may have recourse to the Commission, 
regarding interstate rates, and to state commissions, regarding 
intrastate rates, if they reasonably believe that the lowest 
corresponding price is unfairly high or low.
    (1) Schools, libraries, and consortia including those entities may 
request lower rates if the rate offered by the carrier does not 
represent the lowest corresponding price.
    (2) Service providers may request higher rates if they can show that 
the lowest corresponding price is not compensatory, because the relevant 
school, library, or consortium including those entities is not similarly 
situated to and subscribing to a similar set of services to the customer 
paying the lowest corresponding price.
    (d) Service substitution. (1) The Administrator shall grant a 
request by an applicant to substitute a service or product for one 
identified on its FCC Form 471 where:
    (i) The service or product has the same functionality;
    (ii) The substitution does not violate any contract provisions or 
state or local procurement laws;
    (iii) The substitution does not result in an increase in the 
percentage of ineligible services or functions; and
    (iv) The applicant certifies that the requested change is within the 
scope of the controlling FCC Form 470, including any associated Requests 
for Proposal, for the original services.
    (2) In the event that a service substitution results in a change in 
the pre-discount price for the supported service, support shall be based 
on the lower of either the pre-discount price of the service for which 
support was originally requested or the pre-discount price of the new, 
substituted service.
    (3) For purposes of this rule, the two categories of eligible 
services are not deemed to have the same functionality as one another.
    (e) Mixed eligibility services. A request for discounts for a 
product or service that includes both eligible and ineligible components 
must allocate the cost of the contract to eligible and ineligible 
components.
    (1) Ineligible components. If a product or service contains 
ineligible components, costs must be allocated to the extent that a 
clear delineation can be made between the eligible and ineligible 
components. The delineation must have a tangible basis, and the

[[Page 201]]

price for the eligible portion must be the most cost-effective means of 
receiving the eligible service.
    (2) Ancillary ineligible components. If a product or service 
contains ineligible components that are ancillary to the eligible 
components, and the product or service is the most cost-effective means 
of receiving the eligible component functionality, without regard to the 
value of the ineligible component, costs need not be allocated between 
the eligible and ineligible components. Discounts shall be provided on 
the full cost of the product or service. An ineligible component is 
``ancillary'' if a price for the ineligible component cannot be 
determined separately and independently from the price of the eligible 
components, and the specific package remains the most cost-effective 
means of receiving the eligible services, without regard to the value of 
the ineligible functionality.
    (3) The Administrator shall utilize the cost allocation requirements 
of this paragraph in evaluating mixed eligibility requests under 
paragraph (e)(1) of this section.
    (f) Filing of FCC Form 473. All service providers eligible to 
provide telecommunications and other supported services under this 
subpart shall submit annually a completed FCC Form 473 to the 
Administrator. The FCC Form 473 shall be signed by an authorized person 
and shall include that person's certification under oath that:
    (1) The prices in any offer that this service provider makes 
pursuant to the schools and libraries universal service support program 
have been arrived at independently, without, for the purpose of 
restricting competition, any consultation, communication, or agreement 
with any other offeror or competitor relating to those prices, the 
intention to submit an offer, or the methods or factors used to 
calculate the prices offered;
    (2) The prices in any offer that this service provider makes 
pursuant to the schools and libraries universal service support program 
will not be knowingly disclosed by this service provider, directly or 
indirectly, to any other offeror or competitor before bid opening (in 
the case of a sealed bid solicitation) or contract award (in the case of 
a negotiated solicitation) unless otherwise required by law; and
    (3) No attempt will be made by this service provider to induce any 
other concern to submit or not to submit an offer for the purpose of 
restricting competition.
    (4) The service provider listed on the FCC Form 473 certifies that 
the invoices that are submitted by this Service Provider to the Billed 
Entity for reimbursement pursuant to Billed Entity Applicant 
Reimbursement Forms (FCC Form 472) are accurate and represent payments 
from the Billed Entity to the Service Provider for equipment and 
services provided pursuant to E-rate program rules.
    (5) The service provider listed on the FCC Form 473 certifies that 
the bills or invoices issued by this service provider to the billed 
entity are for equipment and services eligible for universal service 
support by the Administrator, and exclude any charges previously 
invoiced to the Administrator by the service provider.

[79 FR 49199, Aug. 19, 2014, as amended at 79 FR 68634, Nov. 18, 2014; 
80 FR 5989, Feb. 4, 2015]

    Effective Date Notes: At 79 FR 49199, Aug. 19, 2014, Sec. 54.504 was 
revised. However, paragraphs (f)(4) and (f)(5) will become effective 
July 1, 2016.



Sec. 54.505  Discounts.

    (a) Discount mechanism. Discounts for eligible schools and libraries 
shall be set as a percentage discount from the pre-discount price.
    (b) Discount percentages. Except as provided in paragraph (f), the 
discounts available to eligible schools and libraries shall range from 
20 percent to 90 percent of the pre-discount price for all eligible 
services provided by eligible providers, as defined in this subpart. The 
discounts available to a particular school, library, or consortium of 
only such entities shall be determined by indicators of poverty and high 
cost.
    (1) For schools and school districts, the level of poverty shall be 
based on the percentage of the student enrollment that is eligible for a 
free or reduced price lunch under the national school lunch program or a 
federally-approved alternative mechanism. School districts shall divide 
the total number

[[Page 202]]

of students eligible for the National School Lunch Program within the 
school district by the total number of students within the school 
district to arrive at a percentage of students eligible. This percentage 
rate shall then be applied to the discount matrix to set a discount rate 
for the supported services purchased by all schools within the school 
district. Independent charter schools, private schools, and other 
eligible educational facilities should calculate a single discount 
percentage rate based on the total number of students under the control 
of the central administrative agency.
    (2) For libraries and library consortia, the level of poverty shall 
be based on the percentage of the student enrollment that is eligible 
for a free or reduced price lunch under the national school lunch 
program or a federally-approved alternative mechanism in the public 
school district in which they are located and should use that school 
district's level of poverty to determine their discount rate when 
applying as a library system or as an individual library outlet within 
that system. When a library system has branches or outlets in more than 
one public school district, that library system and all library outlets 
within that system should use the address of the central outlet or main 
administrative office to determine which school district the library 
system is in, and should use that school district's level of poverty to 
determine its discount rate when applying as a library system or as one 
or more library outlets. If the library is not in a school district, 
then its level of poverty shall be based on an average of the percentage 
of students eligible for the national school lunch program in each of 
the school districts that children living in the library's location 
attend.
    (3) The Administrator shall classify schools and libraries as 
``urban'' or ``rural'' according to the following designations.
    (i) The Administrator shall designate a school or library as 
``urban'' if the school or library is located in an urbanized area or 
urban cluster area with a population equal to or greater than 25,000, as 
determined by the most recent rural-urban classification by the Bureau 
of the Census. The Administrator shall designate all other schools and 
libraries as ``rural.''
    (4) School districts, library systems, or other billed entities 
shall calculate discounts on supported services described in 
Sec. 54.502(a) that are shared by two or more of their schools, 
libraries, or consortia members by calculating an average discount based 
on the applicable district-wide discounts of all member schools and 
libraries. School districts, library systems, or other billed entities 
shall ensure that, for each year in which an eligible school or library 
is included for purposes of calculating the aggregate discount rate, 
that eligible school or library shall receive a proportionate share of 
the shared services for which support is sought. For schools, the 
discount shall be a simple average of the applicable district-wide 
percentage for all schools sharing a portion of the shared services. For 
libraries, the average discount shall be a simple average of the 
applicable discounts to which the libraries sharing a portion of the 
shared services are entitled.
    (c) Matrices. Except as provided in paragraphs (d) and (f) of this 
section, the Administrator shall use the following matrices to set 
discount rates to be applied to eligible category one and category two 
services purchased by eligible schools, school districts, libraries, or 
consortia based on the institution's level of poverty and location in an 
``urban'' or ``rural'' area.

----------------------------------------------------------------------------------------------------------------
                                                              Category one schools and  Category two schools and
-------------------------------------------------------------    libraries discount        libraries discount
                                                                       matrix                    matrix
----------------------------------------------------------------------------------------------------------------
                                                                   Discount level            Discount level
                                                             ---------------------------------------------------
  % of students eligible for national school lunch program       Urban        Rural        Urban        Rural
                                                                discount     discount     discount     discount
----------------------------------------------------------------------------------------------------------------
<1..........................................................           20           25           20           25
1-19........................................................           40           50           40           50
20-34.......................................................           50           60           50           60
35-49.......................................................           60           70           60           70

[[Page 203]]

 
50-74.......................................................           80           80           80           80
75-100......................................................           90           90           85           85
----------------------------------------------------------------------------------------------------------------

    (d) Voice Services. Discounts for category one voice services shall 
be reduced by 20 percentage points off applicant discount percentage 
rates for each funding year starting in funding year 2015, and reduced 
by an additional 20 percentage points off applicant discount percentage 
rates each subsequent funding year.
    (e) Interstate and intrastate services. Federal universal service 
support for schools and libraries shall be provided for both interstate 
and intrastate services.
    (1) Federal universal service support under this subpart for 
eligible schools and libraries in a state is contingent upon the 
establishment of intrastate discounts no less than the discounts 
applicable for interstate services.
    (2) A state may, however, secure a temporary waiver of this latter 
requirement based on unusually compelling conditions.
    (f) Additional discounts for State matching funds for special 
construction. Federal universal service discounts shall be based on the 
price of a service prior to the application of any state-provided 
support for schools or libraries. When a governmental entity described 
below provides funding for special construction charges for networks 
that meet the long-term connectivity targets for the schools and 
libraries universal service support program, the Administrator shall 
match the governmental entity's contribution as provided for below:
    (1) All E-rate applicants. When a State government provides funding 
for special construction charges for a broadband connection to a school 
or library the Administrator shall match the State's contribution on a 
one-dollar-to-one-dollar basis up to an additional 10 percent discount, 
provided however that the total support from federal universal service 
and the State may not exceed 100 percent.
    (2) Tribal schools. When a State government, Tribal government, or 
federal agency provides funding for special construction charges for a 
broadband connection to a school operated by the Bureau of Indian 
Education or by a Tribal government, the Administrator shall match the 
governmental entity's contribution on a one-dollar-to-one-dollar basis 
up to an additional 10 percent discount, provided however that the total 
support from federal universal service and the governmental entity may 
not exceed 100 percent.
    (3) Tribal libraries. When a State government, Tribal government, or 
federal agency provides funding for special construction charges for a 
broadband connection to a library operated by Tribal governments, the 
Administrator shall match the governmental entity's contribution on a 
one-dollar-to-one-dollar basis up to an additional 10 percent discount, 
provided however that the total support from federal universal service 
and the governmental entity may not exceed 100 percent.

[62 FR 32948, June 17, 1997, as amended at 62 FR 41304, Aug. 1, 1997; 63 
FR 2130, Jan. 13, 1998; 63 FR 70572, Dec. 21, 1998; 75 FR 75414, Dec. 3, 
2010; 79 FR 49201, Aug. 19, 2014; 79 FR 68634, Nov. 18, 2014; 80 FR 
5989, Feb. 4, 2015]



Sec. 54.506  [Reserved]



Sec. 54.507  Cap.

    (a) Amount of the annual cap. The aggregate annual cap on federal 
universal service support for schools and libraries shall be $3.9 
billion per funding year, of which $1 billion per funding year will be 
available for category two services, as described in Sec. 54.502(a)(2), 
unless demand for category one services is higher than available 
funding.
    (1) Inflation increase. In funding year 2016 and subsequent funding 
years, the

[[Page 204]]

$3.9 billion funding cap on federal universal service support for 
schools and libraries shall be automatically increased annually to take 
into account increases in the rate of inflation as calculated in 
paragraph (a)(2) of this section.
    (2) Increase calculation. To measure increases in the rate of 
inflation for the purposes of this paragraph (a), the Commission shall 
use the Gross Domestic Product Chain-type Price Index (GDP-CPI). To 
compute the annual increase as required by this paragraph (a), the 
percentage increase in the GDP-CPI from the previous year will be used. 
For instance, the annual increase in the GDP-CPI from 2008 to 2009 would 
be used for the 2010 funding year. The increase shall be rounded to the 
nearest 0.1 percent by rounding 0.05 percent and above to the next 
higher 0.1 percent and otherwise rounding to the next lower 0.1 percent. 
This percentage increase shall be added to the amount of the annual 
funding cap from the previous funding year. If the yearly average GDP-
CPI decreases or stays the same, the annual funding cap shall remain the 
same as the previous year.
    (3) Public notice. When the calculation of the yearly average GDP-
CPI is determined, the Wireline Competition Bureau shall publish a 
public notice in the Federal Register within 60 days announcing any 
increase of the annual funding cap including any increase to the $1 
billion funding level available for category two services based on the 
rate of inflation.
    (4) Filing window requests. At the close of the filing window, if 
requests for category one services are greater than the available 
funding, the Administrator shall shift category two funds to provide 
support for category one services. If available funds are sufficient to 
meet demand for category one services, the Administrator, at the 
direction of the Wireline Competition Bureau, shall direct the remaining 
additional funds to provide support for category two requests.
    (5) Amount of unused funds. All funds collected that are unused 
shall be carried forward into subsequent funding years for use in the 
schools and libraries support mechanism in accordance with the public 
interest and notwithstanding the annual cap. The Chief, Wireline 
Competition Bureau, is delegated authority to determine the proportion 
of unused funds, if any, needed to meet category one demand, and to 
direct the Administrator to use any remaining funds to provide support 
for category two requests. The Administrator shall report to the 
Commission, on a quarterly basis, funding that is unused from prior 
years of the schools and libraries support mechanism.
    (6) Application of unused funds. On an annual basis, in the second 
quarter of each calendar year, all funds that are collected and that are 
unused from prior years shall be available for use in the next full 
funding year of the schools and libraries mechanism in accordance with 
the public interest and notwithstanding the annual cap as described in 
this paragraph (a).
    (b) Funding year. A funding year for purposes of the schools and 
libraries cap shall be the period July 1 through June 30.
    (c) Requests. The Administrator shall implement an initial filing 
period that treats all schools and libraries filing an application 
within that period as if their applications were simultaneously 
received. The initial filing period shall begin and conclude on dates to 
be determined by the Administrator with the approval of the Chief of the 
Wireline Competition Bureau. The Administrator shall maintain on the 
Administrator's Web site a running tally of the funds already committed 
for the existing funding year. The Administrator may implement such 
additional filing periods as it deems necessary.
    (d) Annual filing requirement. (1) Schools and libraries, and 
consortia of such eligible entities shall file new funding requests for 
each funding year no sooner than the July 1 prior to the start of that 
funding year. Schools, libraries, and eligible consortia must use 
recurring services for which discounts have been committed by the 
Administrator within the funding year for which the discounts were 
sought.
    (2) Installation of category one non-recurring services may begin on 
January 1 prior to the July 1 start of the funding year, provided the 
following conditions are met:

[[Page 205]]

    (i) Construction begins after selection of the service provider 
pursuant to a posted FCC Form 470,
    (ii) A category one recurring service must depend on the 
installation of the infrastructure, and
    (iii) The actual service start date for that recurring service is on 
or after the start of the funding year (July 1).
    (3) Installation of category two non-recurring services may begin on 
April 1 prior to the July 1 start of the funding year.
    (4) The deadline for implementation of all non-recurring services 
will be September 30 following the close of the funding year. An 
applicant may request and receive from the Administrator an extension of 
the implementation deadline for non-recurring services if it satisfies 
one of the following criteria:
    (i) The applicant's funding commitment decision letter is issued by 
the Administrator on or after March 1 of the funding year for which 
discounts are authorized;
    (ii) The applicant receives a service provider change authorization 
or service substitution authorization from the Administrator on or after 
March 1 of the funding year for which discounts are authorized;
    (iii) The applicant's service provider is unable to complete 
implementation for reasons beyond the service provider's control; or
    (iv) The applicant's service provider is unwilling to complete 
installation because funding disbursements are delayed while the 
Administrator investigates the application for program compliance.
    (e) Long term contracts. If schools and libraries enter into long 
term contracts for eligible services, the Administrator shall only 
commit funds to cover the pro rata portion of such a long term contract 
scheduled to be delivered during the funding year for which universal 
service support is sought.
    (f) Rules of distribution. When the filing period described in 
paragraph (c) of this section closes, the Administrator shall calculate 
the total demand for both category one and category two support 
submitted by applicants during the filing period. If total demand for 
the funding year exceeds the total support available for category one or 
both categories, the Administrator shall take the following steps:
    (1) Category one. The Administrator shall first calculate the demand 
for category one services for all discount levels. The Administrator 
shall allocate the category one funds to these requests for support, 
beginning with the most economically disadvantaged schools and 
libraries, as determined by the schools and libraries discount matrix in 
Sec. 54.505(c). Schools and libraries eligible for a 90 percent discount 
shall receive first priority for the category one funds. The 
Administrator shall next allocate funds toward the requests submitted by 
schools and libraries eligible for an 80 percent discount, then for a 70 
percent discount, and shall continue committing funds for category one 
services in the same manner to the applicants at each descending 
discount level until there are no funds remaining.
    (2) Category two. The Administrator shall next calculate the demand 
for category two services for all discount categories as determined by 
the schools and libraries discount matrix in Sec. 54.505(c). If that 
demand exceeds the category two budget for that funding year, the 
Administrator shall allocate the category two funds beginning with the 
most economically disadvantaged schools and libraries, as determined by 
the schools and libraries discount matrix in Sec. 54.505(c). The 
Administrator shall allocate funds toward the category two requests 
submitted by schools and libraries eligible for an 85 percent discount 
first, then for a 80 percent discount, and shall continue committing 
funds in the same manner to the applicants at each descending discount 
level until there are no category two funds remaining.
    (3) To the extent that there are single discount percentage levels 
associated with ``shared services'' under Sec. 54.505(b)(4), the 
Administrator shall allocate funds to the applicants at each descending 
discount level (e.g., 90 percent, 89 percent, then 88 percent) until 
there are no funds remaining.
    (4) For both paragraphs (f)(1) and (2) of this section, if the 
remaining funds are not sufficient to support all of the funding 
requests within a particular

[[Page 206]]

discount level, the Administrator shall allocate funds at that discount 
level using the percentage of students eligible for the National School 
Lunch Program. Thus, if there is not enough support to fund all requests 
at the 40 percent discount level, the Administrator shall allocate funds 
beginning with those applicants with the highest percentage of NSLP 
eligibility for that discount level by funding those applicants with 19 
percent NSLP eligibility, then 18 percent NSLP eligibility, and shall 
continue committing funds in the same manner to applicants at each 
descending percentage of NSLP until there are no funds remaining.
    (f) Rules of distribution. When the filing period described in 
paragraph (c) of this section closes, the Administrator shall calculate 
the total demand for both category one and category two support 
submitted by applicants during the filing period. If total demand for 
the funding year exceeds the total support available for category one or 
both categories, the Administrator shall take the following steps:
    (1) Category one. The Administrator shall first calculate the demand 
for category one services for all discount levels. The Administrator 
shall allocate the category one funds to these requests for support, 
beginning with the most economically disadvantaged schools and 
libraries, as determined by the schools and libraries discount matrix in 
Sec. 54.505(c). Schools and libraries eligible for a 90 percent discount 
shall receive first priority for the category one funds. The 
Administrator shall next allocate funds toward the requests submitted by 
schools and libraries eligible for an 80 percent discount, then for a 70 
percent discount, and shall continue committing funds for category one 
services in the same manner to the applicants at each descending 
discount level until there are no funds remaining.
    (2) Category two. The Administrator shall next calculate the demand 
for category two services for all discount categories as determined by 
the schools and libraries discount matrix in Sec. 54.505(c). If that 
demand exceeds the category two budget for that funding year, the 
Administrator shall allocate the category two funds beginning with the 
most economically disadvantaged schools and libraries, as determined by 
the schools and libraries discount matrix in Sec. 54.505(c). The 
Administrator shall allocate funds toward the category two requests 
submitted by schools and libraries eligible for an 85 percent discount 
first, then for a 80 percent discount, and shall continue committing 
funds in the same manner to the applicants at each descending discount 
level until there are no category two funds remaining.
    (3) To the extent that there are single discount percentage levels 
associated with ``shared services'' under Sec. 54.505(b)(4), the 
Administrator shall allocate funds to the applicants at each descending 
discount level (e.g., 90 percent, 89 percent, then 88 percent) until 
there are no funds remaining.
    (4) For both paragraphs (f)(1) and (2) of this section, if the 
remaining funds are not sufficient to support all of the funding 
requests within a particular discount level, the Administrator shall 
allocate funds at that discount level using the percentage of students 
eligible for the National School Lunch Program. Thus, if there is not 
enough support to fund all requests at the 40 percent discount level, 
the Administrator shall allocate funds beginning with those applicants 
with the highest percentage of NSLP eligibility for that discount level 
by funding those applicants with 19 percent NSLP eligibility, then 18 
percent NSLP eligibility, and shall continue committing funds in the 
same manner to applicants at each descending percentage of NSLP until 
there are no funds remaining.

[79 FR 49201, Aug. 19, 2014, as amended at 80 FR 5990, Feb. 4, 2015]



Secs. 54.508-54.509  [Reserved]



Sec. 54.511  Ordering services.

    (a) Selecting a provider of eligible services. Except as exempted in 
Sec. 54.503(e), in selecting a provider of eligible services, schools, 
libraries, library consortia, and consortia including any of those 
entities shall carefully consider all bids submitted and must select the 
most cost-effective service offering. In determining which service 
offering is the most cost-effective, entities may consider relevant 
factors other than

[[Page 207]]

the pre-discount prices submitted by providers, but price should be the 
primary factor considered.
    (b) Lowest corresponding price. Providers of eligible services shall 
not submit bids for or charge schools, school districts, libraries, 
library consortia, or consortia including any of these entities a price 
above the lowest corresponding price for supported services, unless the 
Commission, with respect to interstate services or the state commission 
with respect to intrastate services, finds that the lowest corresponding 
price is not compensatory. Promotional rates offered by a service 
provider for a period of more than 90 days must be included among the 
comparable rates upon which the lowest corresponding price is 
determined.

[79 FR 59203, Aug. 19, 2014]



Sec. 54.513  Resale and transfer of services.

    (a) Prohibition on resale. Eligible supported services provided at a 
discount under this subpart shall not be sold, resold, or transferred in 
consideration of money or any other thing of value, except as provided 
in paragraph (b) of this section.
    (b) Disposal of obsolete equipment components of eligible services. 
Eligible equipment components of eligible services purchased at a 
discount under this subpart shall be considered obsolete if the 
equipment components have has been installed for at least five years. 
Obsolete equipment components of eligible services may be resold or 
transferred in consideration of money or any other thing of value, 
disposed of, donated, or traded.
    (c) Permissible fees. This prohibition on resale shall not bar 
schools, school districts, libraries, and library consortia from 
charging either computer lab fees or fees for classes in how to navigate 
over the Internet. There is no prohibition on the resale of services 
that are not purchased pursuant to the discounts provided in this 
subpart.
    (d) Eligible services and equipment components of eligible services 
purchased at a discount under this subpart shall not be transferred, 
with or without consideration of money or any other thing of value, for 
a period of three years after purchase, except that eligible services 
and equipment components of eligible services may be transferred to 
another eligible school or library in the event that the particular 
location where the service originally was received is permanently or 
temporarily closed. If an eligible service or equipment component of a 
service is transferred due to the permanent or temporary closure of a 
school or library, the transferor must notify the Administrator of the 
transfer, and both the transferor and recipient must maintain detailed 
records documenting the transfer and the reason for the transfer for a 
period of five years.

[62 FR 32948, June 17, 1997, as amended at 69 FR 6191, Feb. 10, 2004; 75 
FR 75415, Dec. 3, 2010]



Sec. 54.514  Payment for discounted services.

    (a) Invoice filing deadline. Invoices must be submitted to the 
Administrator:
    (1) 120 days after the last day to receive service, or
    (2) 120 days after the date of the FCC Form 486 Notification Letter, 
whichever is later.
    (b) Invoice deadline extension. In advance of the deadline 
calculated pursuant to paragraph (a) of this section, service providers 
or billed entities may request a one-time extension of the invoicing 
deadline. The Administrator shall grant a 120 day extension of the 
invoice filing deadline, if it is timely requested.
    (c) Choice of payment method. Service providers providing discounted 
services under this subpart in any funding year shall, prior to the 
submission of the FCC Form 471, permit the billed entity to choose the 
method of payment for the discounted services from those methods 
approved by the Administrator, including by making a full, undiscounted 
payment and receiving subsequent reimbursement of the discount amount 
from the Administrator.

[79 FR 49203, Aug. 19, 2014]

    Effective Date Note: At 79 FR 49203, Aug. 19, 2014, Sec. 54.514 was 
revised. Paragraphs (a) and (c) will not become effective until July 1, 
2016.

[[Page 208]]



Sec. 54.515  Distributing support.

    (a) A telecommunications carrier providing services eligible for 
support under this subpart to eligible schools and libraries may, at the 
election of the carrier, treat the amount eligible for support under 
this subpart as an offset against the carrier's universal service 
contribution obligation for the year in which the costs for providing 
eligible services were incurred or receive a direct reimbursement from 
the Administrator for that amount. Carriers shall elect in January of 
each year the method by which they will be reimbursed and shall remain 
subject to that method for the duration of the calendar year. Any 
support amount that is owed a carrier that fails to remit its monthly 
universal service contribution obligation, however, shall first be 
applied as an offset to that carrier's contribution obligation. Such a 
carrier shall remain subject to the offsetting method for the remainder 
of the calendar year in which it failed to remit their monthly universal 
service obligation. A carrier that continues to be in arrears on its 
universal service contribution obligations at the end of a calendar year 
shall remain subject to the offsetting method for the next calendar 
year.
    (b) If a telecommunications carrier elects to treat the amount 
eligible for support under this subpart as an offset against the 
carrier's universal service contribution obligation and the total amount 
of support owed to the carrier exceeds its universal service obligation, 
calculated on an annual basis, the carrier shall receive a direct 
reimbursement in the amount of the difference. Any such reimbursement 
due a carrier shall be submitted to that carrier no later than the end 
of the first quarter of the calendar year following the year in which 
the costs were incurred and the offset against the carrier's universal 
service obligation was applied.

[63 FR 67009, Dec. 4, 1998]



Sec. 54.516  Auditing and inspections.

    (a) Recordkeeping requirements--(1) Schools, libraries, and 
consortia. Schools, libraries, and any consortium that includes schools 
or libraries shall retain all documents related to the application for, 
receipt, and delivery of supported services for at least 10 years after 
the latter of the last day of the applicable funding year or the service 
delivery deadline for the funding request. Any other document that 
demonstrates compliance with the statutory or regulatory requirements 
for the schools and libraries mechanism shall be retained as well. 
Schools, libraries, and consortia shall maintain asset and inventory 
records of equipment purchased as components of supported category two 
services sufficient to verify the actual location of such equipment for 
a period of 10 years after purchase.
    (2) Service providers. Service providers shall retain documents 
related to the delivery of supported services for at least 10 years 
after the latter of the last day of the applicable funding year or the 
service delivery deadline for the funding request. Any other document 
that demonstrates compliance with the statutory or regulatory 
requirements for the schools and libraries mechanism shall be retained 
as well.
    (b) Production of records. Schools, libraries, consortia, and 
service providers shall produce such records at the request of any 
representative (including any auditor) appointed by a state education 
department, the Administrator, the FCC, or any local, state or federal 
agency with jurisdiction over the entity.
    (c) Audits. Schools, libraries, consortia, and service providers 
shall be subject to audits and other investigations to evaluate their 
compliance with the statutory and regulatory requirements for the 
schools and libraries universal service support mechanism, including 
those requirements pertaining to what services and products are 
purchased, what services and products are delivered, and how services 
and products are being used. Schools, libraries, and consortia receiving 
discounted services must provide consent before a service provider 
releases confidential information to the auditor, reviewer, or other 
representative.
    (d) Inspections. Schools, libraries, consortia and service providers 
shall permit any representative (including any auditor) appointed by a 
state education department, the Administrator,

[[Page 209]]

the Commission or any local, state or federal agency with jurisdiction 
over the entity to enter their premises to conduct E-rate compliance 
inspections.

[79 FR 49203, Aug. 19, 2014]



Secs. 54.517-54.518  [Reserved]



Sec. 54.519  State telecommunications networks.

    (a) Telecommunications services. State telecommunications networks 
may secure discounts under the universal service support mechanisms on 
supported telecommunications services (as described in Sec. 54.502(a)) 
on behalf of eligible schools and libraries (as described in 
Sec. 54.501) or consortia that include an eligible school or library. 
Such state telecommunications networks shall pass on such discounts to 
eligible schools and libraries and shall:
    (1) Maintain records listing each eligible school and library and 
showing the basis for each eligibility determination;
    (2) Maintain records demonstrating the discount amount to which each 
eligible school and library is entitled and the basis for such 
determination;
    (3) Take reasonable steps to ensure that each eligible school or 
library receives a proportionate share of the shared services;
    (4) Request that service providers apply the appropriate discount 
amounts on the portion of the supported services used by each school or 
library;
    (5) Direct eligible schools and libraries to pay the discounted 
price; and
    (6) Comply with the competitive bid requirements set forth in 
Sec. 54.503.
    (b) Internet access and installation and maintenance of internal 
connections. State telecommunications networks either may secure 
discounts on Internet access and installation and maintenance of 
internal connections in the manner described in paragraph (a) of this 
section with regard to telecommunications, or shall be eligible, 
consistent with Sec. 54.502(a), to receive universal service support for 
providing such services to eligible schools, libraries, and consortia 
including those entities.

[63 FR 2131, Jan. 13, 1998; 63 FR 33586, June 19, 1998, as amended at75 
FR 75415, Dec. 3, 2010]



Sec. 54.520  Children's Internet Protection Act certifications required
from recipients of discounts under the federal universal service support
mechanism for schools and libraries.

    (a) Definitions.
    (1) School. For the purposes of the certification requirements of 
this rule, school means school, school board, school district, local 
education agency or other authority responsible for administration of a 
school.
    (2) Library. For the purposes of the certification requirements of 
this rule, library means library, library board or authority responsible 
for administration of a library.
    (3) Billed entity. Billed entity is defined in Sec. 54.500. In the 
case of a consortium, the billed entity is the lead member of the 
consortium.
    (4) Statutory definitions.
    (i) The term ``minor'' means any individual who has not attained the 
age of 17 years.
    (ii) The term ``obscene'' has the meaning given such term in 18 
U.S.C. 1460.
    (iii) The term ``child pornography'' has the meaning given such term 
in 18 U.S.C. 2256.
    (iv) The term ``harmful to minors'' means any picture, image, 
graphic image file, or other visual depiction that--
    (A) Taken as a whole and with respect to minors, appeals to a 
prurient interest in nudity, sex, or excretion;
    (B) Depicts, describes, or represents, in a patently offensive way 
with respect to what is suitable for minors, an actual or simulated 
sexual act or sexual contact, actual or simulated normal or perverted 
sexual acts, or a lewd exhibition of the genitals; and
    (C) Taken as a whole, lacks serious literary, artistic, political, 
or scientific value as to minors.
    (v) The terms ``sexual act'' and ``sexual contact'' have the 
meanings given such terms in 18 U.S.C. 2246.
    (vi) The term ``technology protection measure'' means a specific 
technology that blocks or filters Internet access to the material 
covered by a certification under paragraph (c) of this section.

[[Page 210]]

    (b) Who is required to make certifications? (1) A school or library 
that receives discounts for Internet access and internal connections 
services under the federal universal service support mechanism for 
schools and libraries, must make such certifications as described in 
paragraph (c) of this section. The certifications required and described 
in paragraph (c) of this section must be made in each funding year.
    (2) Schools and libraries that only receive discounts for 
telecommunications services under the federal universal service support 
mechanism for schools and libraries are not subject to the requirements 
47 U.S.C. 254(h) and (l), but must indicate, pursuant to the 
certification requirements in paragraph (c) of this section, that they 
only receive discounts for telecommunications services.
    (c) Certifications required under 47 U.S.C. 254(h) and (l)--(1) 
Schools. The billed entity for a school that receives discounts for 
Internet access or internal connections must certify on FCC Form 486 
that an Internet safety policy is being enforced. If the school is an 
eligible member of a consortium but is not the billed entity for the 
consortium, the school must certify instead on FCC Form 479 
(``Certification to Consortium Leader of Compliance with the Children's 
Internet Protection Act'') that an Internet safety policy is being 
enforced.
    (i) The Internet safety policy adopted and enforced pursuant to 47 
U.S.C. 254(h) must include a technology protection measure that protects 
against Internet access by both adults and minors to visual depictions 
that are obscene, child pornography, or, with respect to use of the 
computers by minors, harmful to minors. The school must enforce the 
operation of the technology protection measure during use of its 
computers with Internet access, although an administrator, supervisor, 
or other person authorized by the certifying authority under paragraph 
(a)(1) of this section may disable the technology protection measure 
concerned, during use by an adult, to enable access for bona fide 
research or other lawful purpose. This Internet safety policy must also 
include monitoring the online activities of minors. Beginning July 1, 
2012, schools' Internet safety policies must provide for educating 
minors about appropriate online behavior, including interacting with 
other individuals on social networking Web sites and in chat rooms and 
cyberbullying awareness and response.
    (ii) The Internet safety policy adopted and enforced pursuant to 47 
U.S.C. 254(l) must address all of the following issues:
    (A) Access by minors to inappropriate matter on the Internet and 
World Wide Web,
    (B) The safety and security of minors when using electronic mail, 
chat rooms, and other forms of direct electronic communications,
    (C) Unauthorized access, including so-called ``hacking,'' and other 
unlawful activities by minors online;
    (D) Unauthorized disclosure, use, and dissemination of personal 
information regarding minors; and
    (E) Measures designed to restrict minors' access to materials 
harmful to minors.
    (iii) A school must satisfy its obligations to make certifications 
by making one of the following certifications required by paragraph 
(c)(1) of this section on FCC Form 486:
    (A) The recipient(s) of service represented in the Funding Request 
Number(s) on this Form 486 has (have) complied with the requirements of 
the Children's Internet Protection Act, as codified at 47 U.S.C. 254(h) 
and (l).
    (B) Pursuant to the Children's Internet Protection Act, as codified 
at 47 U.S.C. 254(h) and (l), the recipient(s) of service represented in 
the Funding Request Number(s) on this Form 486, for whom this is the 
first funding year in the federal universal service support mechanism 
for schools and libraries, is (are) undertaking such actions, including 
any necessary procurement procedures, to comply with the requirements of 
CIPA for the next funding year, but has (have) not completed all 
requirements of CIPA for this funding year.
    (C) The Children's Internet Protection Act, as codified at 47 U.S.C. 
254(h) and (l), does not apply because the recipient(s) of service 
represented in the Funding Request Number(s) on this Form 486 is (are) 
receiving discount

[[Page 211]]

services only for telecommunications services.
    (2) Libraries. The billed entity for a library that receives 
discounts for Internet access and internal connections must certify, on 
FCC Form 486, that an Internet safety policy is being enforced. If the 
library is an eligible member of a consortium but is not the billed 
entity for the consortium, the library must instead certify on FCC Form 
479 (``Certification to Consortium Leader of Compliance with the 
Children's Internet Protection Act'') that an Internet safety policy is 
being enforced.
    (i) The Internet safety policy adopted and enforced pursuant to 47 
U.S.C. 254(h) must include a technology protection measure that protects 
against Internet access by both adults and minors to visual depictions 
that are obscene, child pornography, or, with respect to use of the 
computers by minors, harmful to minors. The library must enforce the 
operation of the technology protection measure during use of its 
computers with Internet access, although an administrator, supervisor, 
or other person authorized by the certifying authority under paragraph 
(a)(2) of this section may disable the technology protection measure 
concerned, during use by an adult, to enable access for bona fide 
research or other lawful purpose.
    (ii) The Internet safety policy adopted and enforced pursuant to 47 
U.S.C. 254(l) must address all of the following issues:
    (A) Access by minors to inappropriate matter on the Internet and 
World Wide Web;
    (B) The safety and security of minors when using electronic mail, 
chat rooms, and other forms of direct electronic communications;
    (C) Unauthorized access, including so-called ``hacking,'' and other 
unlawful activities by minors online;
    (D) Unauthorized disclosure, use, and dissemination of personal 
information regarding minors; and
    (E) Measures designed to restrict minors' access to materials 
harmful to minors.
    (iii) A library must satisfy its obligations to make certifications 
by making one of the following certifications required by paragraph 
(c)(2) of this section on FCC Form 486:
    (A) The recipient(s) of service represented in the Funding Request 
Number(s) on this Form 486 has (have) complied with the requirements of 
the Children's Internet Protection Act, as codified at 47 U.S.C. 254(h) 
and (l).
    (B) Pursuant to the Children's Internet Protection Act, as codified 
at 47 U.S.C. 254(h) and (l), the recipient(s) of service represented in 
the Funding Request Number(s) on this Form 486, for whom this is the 
first funding year in the federal universal service support mechanism 
for schools and libraries, is (are) undertaking such actions, including 
any necessary procurement procedures, to comply with the requirements of 
CIPA for the next funding year, but has (have) not completed all 
requirements of CIPA for this funding year.
    (C) The Children's Internet Protection Act, as codified at 47 U.S.C. 
254(h) and (l), does not apply because the recipient(s) of service 
represented in the Funding Request Number(s) on this Form 486 is (are) 
receiving discount services only for telecommunications services.
    (3) Certifications required from consortia members and billed 
entities for consortia. (i) The billed entity of a consortium, as 
defined in paragraph (a)(3) of this section, other than one requesting 
only discounts on telecommunications services for consortium members, 
must collect from the authority for each of its school and library 
members, one of the following signed certifications on FCC Form 479 
(``Certification to Consortium Leader of Compliance with the Children's 
Internet Protection Act''), which must be submitted to the billed entity 
consistent with paragraph (c)(1) or paragraph (c)(2) of this section:
    (A) The recipient(s) of service under my administrative authority 
and represented in the Funding Request Number(s) for which you have 
requested or received Funding Commitments has (have) complied with the 
requirements of the Children's Internet Protection Act, as codified at 
47 U.S.C. 254(h) and (l).
    (B) Pursuant to the Children's Internet Protection Act, as codified 
at 47 U.S.C. 254(h) and (l), the recipient(s) of

[[Page 212]]

service under my administrative authority and represented in the Funding 
Request Number(s) for which you have requested or received Funding 
Commitments, and for whom this is the first funding year in the federal 
universal service support mechanism for schools and libraries, is (are) 
undertaking such actions, including any necessary procurement 
procedures, to comply with the requirements of CIPA for the next funding 
year, but has (have) not completed all requirements of CIPA for this 
funding year.
    (C) The Children's Internet Protection Act, as codified at 47 U.S.C. 
254(h) and (l), does not apply because the recipient(s) of service under 
my administrative authority and represented in the Funding Request 
Number(s) for which you have requested or received Funding Commitments 
is (are) receiving discount services only for telecommunications 
services; and
    (ii) The billed entity for a consortium, as defined in paragraph 
(a)(3) of this section, must make one of the following two 
certifications on FCC Form 486: ``I certify as the Billed Entity for the 
consortium that I have collected duly completed and signed Forms 479 
from all eligible members of the consortium.''; or I certify ``as the 
Billed Entity for the consortium that the only services that I have been 
approved for discounts under the universal service support on behalf of 
eligible members of the consortium are telecommunications services, and 
therefore the requirements of the Children's Internet Protection Act, as 
codified at 47 U.S.C. 254(h) and (l), do not apply.''; and
    (iii) The billed entity for a consortium, as defined in paragraph 
(a)(3) of this section, who filed an FCC Form 471 as a ``consortium 
application'' and who is also a recipient of services as a member of 
that consortium must select one of the certifications under paragraph 
(c)(3)(i) of this section on FCC Form 486.
    (4) Local determination of content. A determination regarding matter 
inappropriate for minors shall be made by the school board, local 
educational agency, library, or other authority responsible for making 
the determination. No agency or instrumentality of the United States 
Government may establish criteria for making such determination; review 
the determination made by the certifying school, school board, school 
district, local educational agency, library, or other authority; or 
consider the criteria employed by the certifying school, school board, 
school district, local educational agency, library, or other authority 
in the administration of the schools and libraries universal service 
support mechanism.
    (5) Availability for review. Each Internet safety policy adopted 
pursuant to 47 U.S.C. 254(l) shall be made available to the Commission, 
upon request from the Commission, by the school, school board, school 
district, local educational agency, library, or other authority 
responsible for adopting such Internet safety policy for purposes of the 
review of such Internet safety policy by the Commission.
    (d) Failure to provide certifications--(1) Schools and libraries. A 
school or library that knowingly fails to submit certifications as 
required by this section, shall not be eligible for discount services 
under the federal universal service support mechanism for schools and 
libraries until such certifications are submitted.
    (2) Consortia. A billed entity's knowing failure to collect the 
required certifications from its eligible school and library members or 
knowing failure to certify that it collected the required certifications 
shall render the entire consortium ineligible for discounts under the 
federal universal service support mechanism for school and libraries.
    (3) Reestablishing eligibility. At any time, a school or library 
deemed ineligible for discount services under the federal universal 
service support mechanism for schools and libraries because of failure 
to submit certifications required by this section, may reestablish 
eligibility for discounts by providing the required certifications to 
the Administrator and the Commission.
    (e) Failure to comply with the certifications--(1) Schools and 
libraries. A school or library that knowingly fails to ensure the use of 
computers in accordance with the certifications required by this 
section, must reimburse

[[Page 213]]

any funds and discounts received under the federal universal service 
support mechanism for schools and libraries for the period in which 
there was noncompliance.
    (2) Consortia. In the case of consortium applications, the 
eligibility for discounts of consortium members who ensure the use of 
computers in accordance with the certification requirements of this 
section shall not be affected by the failure of other school or library 
consortium members to ensure the use of computers in accordance with 
such requirements.
    (3) Reestablishing compliance. At any time, a school or library 
deemed ineligible for discounts under the federal universal service 
support mechanism for schools and libraries for failure to ensure the 
use of computers in accordance with the certification requirements of 
this section and that has been directed to reimburse the program for 
discounts received during the period of noncompliance, may reestablish 
compliance by ensuring the use of its computers in accordance with the 
certification requirements under this section. Upon submittal to the 
Commission of a certification or other appropriate evidence of such 
remedy, the school or library shall be eligible for discounts under the 
universal service mechanism.
    (f) Waivers based on state or local procurement rules and 
regulations and competitive bidding requirements. Waivers shall be 
granted to schools and libraries when the authority responsible for 
making the certifications required by this section, cannot make the 
required certifications because its state or local procurement rules or 
regulations or competitive bidding requirements, prevent the making of 
the certification otherwise required. The waiver shall be granted upon 
the provision, by the authority responsible for making the 
certifications on behalf of schools or libraries, that the schools or 
libraries will be brought into compliance with the requirements of this 
section, for schools, before the start of the third program year after 
April 20, 2001 in which the school is applying for funds under this 
title, and, for libraries, before the start of Funding Year 2005 or the 
third program year after April 20, 2001, whichever is later.
    (g) Funding year certification deadlines. For Funding Year 2003 and 
for subsequent funding years, billed entities shall provide one of the 
certifications required under paragraph (c)(1), (c)(2) or (c)(3) of this 
section on an FCC Form 486 in accordance with the existing program 
guidelines established by the Administrator.
    (h) Public notice; hearing or meeting. A school or library shall 
provide reasonable public notice and hold at least one public hearing or 
meeting to address the proposed Internet safety policy.

[66 FR 19396, Apr. 16, 2001; 66 FR 22133, May 3, 2001, as amended at 67 
FR 50603, Aug. 5, 2002; 68 FR 47255, Aug. 8, 2003; 76 FR 56303, Sept. 
13, 2011]



Sec. 54.522  [Reserved]



Sec. 54.523  Payment for the non-discount portion of supported services.

    An eligible school, library, or consortium must pay the non-discount 
portion of services or products purchased with universal service 
discounts. An eligible school, library, or consortium may not receive 
rebates for services or products purchased with universal service 
discounts. For the purpose of this rule, the provision, by the provider 
of a supported service, of free services or products unrelated to the 
supported service or product constitutes a rebate of the non-discount 
portion of the supported services.

[69 FR 6192, Feb. 10, 2004]



      Subpart G_Universal Service Support for Health Care Providers

                      Defined Terms and Eligibility



Sec. 54.600  Terms and definitions.

    As used in this subpart, the following terms shall be defined as 
follows:
    (a) Health care provider. A ``health care provider'' is any:
    (1) Post-secondary educational institution offering health care 
instruction, including a teaching hospital or medical school;
    (2) Community health center or health center providing health care 
to migrants;
    (3) Local health department or agency;
    (4) Community mental health center;

[[Page 214]]

    (5) Not-for-profit hospital;
    (6) Rural health clinic;
    (7) Skilled nursing facility; or
    (8) Consortium of health care providers consisting of one or more 
entities described in paragraphs (a)(1) through (7) of this section.
    (b) Rural area. (1) A ``rural area'' is an area that is entirely 
outside of a Core Based Statistical Area; is within a Core Based 
Statistical Area that does not have any Urban Area with a population of 
25,000 or greater; or is in a Core Based Statistical Area that contains 
an Urban Area with a population of 25,000 or greater, but is within a 
specific census tract that itself does not contain any part of a Place 
or Urban Area with a population of greater than 25,000. For purposes of 
this rule, ``Core Based Statistical Area,'' ``Urban Area,'' and 
``Place'' are as identified by the Census Bureau.
    (2) Notwithstanding the definition of ``rural area,'' any health 
care provider that is located in a ``rural area'' under the definition 
used by the Commission prior to July 1, 2005, and received a funding 
commitment from the rural health care program prior to July 1, 2005, is 
eligible for support under this subpart.
    (c) Rural health care provider. A ``rural health care provider'' is 
an eligible health care provider site located in a rural area.

[78 FR 13982, Mar. 1, 2013, as amended at 82 FR 28245, June 21, 2017]



Sec. 54.601  Health care provider eligibility.

    (a) Eligible health care providers. (1) Only an entity that is 
either a public or non-profit health care provider, as defined in this 
subpart, shall be eligible to receive support under this subpart.
    (2) Each separate site or location of a health care provider shall 
be considered an individual health care provider for purposes of 
calculating and limiting support under this subpart.
    (b) Determination of health care provider eligibility for the 
Healthcare Connect Fund. Health care providers in the Healthcare Connect 
Fund may certify to the eligibility of particular sites at any time 
prior to, or concurrently with, filing a request for services to 
initiate competitive bidding for the site. Applicants who utilize a 
competitive bidding exemption must provide eligibility information for 
the site to the Administrator prior to, or concurrently with, filing a 
request for funding for the site. Health care providers must also notify 
the Administrator within 30 days of a change in the health care 
provider's name, site location, contact information, or eligible entity 
type.

[78 FR 13982, Mar. 1, 2013]



Sec. 54.602  Health care support mechanism.

    (a) Telecommunications Program. Rural health care providers may 
request support for the difference, if any, between the urban and rural 
rates for telecommunications services, subject to the provisions and 
limitations set forth in Secs. 54.600 through 54.625 and Secs. 54.671 
through 54.680. This support is referred to as the ``Telecommunications 
Program.''
    (b) Healthcare Connect Fund. Eligible health care providers may 
request support for eligible services, equipment, and infrastructure, 
subject to the provisions and limitations set forth in Secs. 54.600 
through 54.602 and Secs. 54.630 through 54.680. This support is referred 
to as the ``Healthcare Connect Fund.''
    (c) Allocation of discounts. An eligible health care provider that 
engages in both eligible and ineligible activities or that collocates 
with an ineligible entity shall allocate eligible and ineligible 
activities in order to receive prorated support for the eligible 
activities only. Health care providers shall choose a method of cost 
allocation that is based on objective criteria and reasonably reflects 
the eligible usage of the facilities.
    (d) Health care purposes. Services for which eligible health care 
providers receive support from the Telecommunications Program or the 
Healthcare Connect Fund must be reasonably related to the provision of 
health care services or instruction that the health care provider is 
legally authorized to provide under the law in the state in which such 
health care services or instruction are provided.

[78 FR 13982, Mar. 1, 2013]

[[Page 215]]

                       Telecommunications Program



Sec. 54.603  Competitive bidding and certification requirements.

    (a) Competitive bidding requirement. To select the 
telecommunications carriers that will provide services eligible for 
universal service support to it under the Telecommunications Program, 
each eligible health care provider shall participate in a competitive 
bidding process pursuant to the requirements established in this section 
and any additional and applicable state, Tribal, local, or other 
procurement requirements.
    (b) Posting of FCC Form 465. (1) An eligible health care provider 
seeking to receive telecommunications services eligible for universal 
service support under the Telecommunications Program shall submit a 
completed FCC Form 465 to the Administrator. FCC Form 465 shall be 
signed by the person authorized to order telecommunications services for 
the health care provider and shall include, at a minimum, that person's 
certification under oath that:
    (i) The requester is a public or non-profit entity that falls within 
one of the seven categories set forth in the definition of health care 
provider, listed in Sec. 54.600(a);
    (ii) The requester is physically located in a rural area;
    (iii) [Reserved]
    (iv) The requested service or services will be used solely for 
purposes reasonably related to the provision of health care services or 
instruction that the health care provider is legally authorized to 
provide under the law in the state in which such health care services or 
instruction are provided;
    (v) The requested service or services will not be sold, resold or 
transferred in consideration of money or any other thing of value; and
    (vi) If the service or services are being purchased as part of an 
aggregated purchase with other entities or individuals, the full details 
of any such arrangement, including the identities of all co-purchasers 
and the portion of the service or services being purchased by the health 
care provider.
    (2) The Rural Health Care Division shall post each FCC Form 465 that 
it receives from an eligible health care provider on its website 
designated for this purpose.
    (3) After posting an eligible health care providers FCC Form 465 on 
the Rural Health Care Corporation website, the Rural Health Care 
Division shall send confirmation of the posting to the entity requesting 
services. The health care provider shall wait at least 28 days from the 
date on which its FCC Form 465 is posted on the website before making 
commitments with the selected telecommunications carrier(s).
    (4) After selecting a telecommunications carrier, the health care 
provider shall certify to the Rural Health Care Division that the 
provider is selecting the most cost-effective method of providing the 
requested service or services, where the most cost-effective method of 
providing a service is defined as the method that costs the least after 
consideration of the features, quality of transmission, reliability, and 
other factors that the health care provider deems relevant to choosing a 
method of providing the required health care services. The health care 
provider shall submit to the Administrator paper copies of the responses 
or bids received in response to the requested services.
    (5) The confirmation from the Rural Health Care Division shall 
include the date after which the requester may sign a contract with its 
chosen telecommunications carrier(s).

[62 FR 32948, June 17, 1997, as amended at 62 FR 41304, Aug. 1, 1997; 63 
FR 2131, Jan. 13, 1998; 68 FR 74502, Dec. 24, 2003; 78 FR 13983, Mar. 1, 
2013]



Sec. 54.604  Consortia, telecommunications services, and existing contracts.

    (a) Consortia. (1) Under the Telecommunications Program, an eligible 
health care provider may join a consortium with other eligible health 
care providers; with schools, libraries, and library consortia eligible 
under subpart F of this part; and with public sector (governmental) 
entities to order telecommunications services. With one exception, 
eligible health care providers participating in consortia with 
ineligible private sector members shall not be eligible for supported 
services under

[[Page 216]]

this subpart. A consortium may include ineligible private sector 
entities if such consortium is only receiving services at tariffed rates 
or at market rates from those providers who do not file tariffs.
    (2) For consortia, universal service support under the 
Telecommunications Program shall apply only to the portion of eligible 
services used by an eligible health care provider.
    (b) Telecommunications Services. Any telecommunications service that 
is the subject of a properly completed bona fide request by a rural 
health care provider shall be eligible for universal service support, 
subject to the limitations described in this paragraph. The length of a 
supported telecommunications service may not exceed the distance between 
the health care provider and the point farthest from that provider on 
the jurisdictional boundary of the largest city in a state as defined in 
Sec. 54.625(a).
    (c) Existing contracts. A signed contract for services eligible for 
Telecommunications Program support pursuant to this subpart between an 
eligible health care provider as defined under Sec. 54.600 and a 
telecommunications carrier shall be exempt from the competitive bid 
requirements set forth in Sec. 54.603(a) as follows:
    (1) A contract signed on or before July 10, 1997 is exempt from the 
competitive bid requirement for the life of the contract.
    (2) [Reserved]
    (d) For rural health care providers that take service under or 
pursuant to a master contract, as defined in Sec. 54.500(f), the date of 
execution of that master contract represents the applicable date for 
purposes of determining whether and to what extent the rural health care 
provider is exempt from the competitive bid requirements.
    (e) The competitive bid system will be deemed to be operational when 
the Administrator is ready to accept and post FCC Form 465 from rural 
health care providers on a website and that website is available for use 
by telecommunications carriers.

[63 FR 2131, Jan. 13, 1998; 63 FR 33586, June 19, 1998, as amended at 63 
FR 70572, Dec. 21, 1998; 64 FR 22810, Apr. 28, 1999; 71 FR 65750, Nov. 
9, 2006; 78 FR 13983, Mar. 1, 2013]



Sec. 54.605  Determining the urban rate.

    (a) If a rural health care provider requests support for an eligible 
service to be funded from the Telecommunications Program that is to be 
provided over a distance that is less than or equal to the ``standard 
urban distance,'' as defined in paragraph (c) of this section, for the 
state in which it is located, the ``urban rate'' for that service shall 
be a rate no higher than the highest tariffed or publicly-available rate 
charged to a commercial customer for a functionally similar service in 
any city with a population of 50,000 or more in that state, calculated 
as if it were provided between two points within the city.
    (b) If a rural health care provider requests an eligible service to 
be provided over a distance that is greater than the ``standard urban 
distance,'' as defined in paragraph (c) of this section, for the state 
in which it is located, the urban rate for that service shall be a rate 
no higher than the highest tariffed or publicly-available rate charged 
to a commercial customer for a functionally similar service provided 
over the standard urban distance in any city with a population of 50,000 
or more in that state, calculated as if the service were provided 
between two points within the city.
    (c) The ``standard urban distance'' for a state is the average of 
the longest diameters of all cities with a population of 50,000 or more 
within the state.
    (d) The Administrator shall calculate the ``standard urban 
distance'' and shall post the ``standard urban distance'' and the 
maximum supported distance for each state on its website.

[62 FR 32948, June 17, 1997, as amended at 63 FR 2131, Jan. 13, 1998; 63 
FR 70572, Dec. 21, 1998; 68 FR 74502, Dec. 24, 2003; 78 FR 13983, Mar. 
1, 2013]



Sec. 54.607  Determining the rural rate.

    (a) The rural rate shall be the average of the rates actually being 
charged to commercial customers, other than health care providers, for 
identical or similar services provided by the telecommunications carrier 
providing the service in the rural area in which the health care 
provider is located. The rates included in this average shall be

[[Page 217]]

for services provided over the same distance as the eligible service. 
The rates averaged to calculate the rural rate must not include any 
rates reduced by universal service support mechanisms. The ``rural 
rate'' shall be used as described in this subpart to determine the 
credit or reimbursement due to a telecommunications carrier that 
provides eligible telecommunications services to eligible health care 
providers.
    (b) If the telecommunications carrier serving the health care 
provider is not providing any identical or similar services in the rural 
area, then the rural rate shall be the average of the tariffed and other 
publicly available rates, not including any rates reduced by universal 
service programs, charged for the same or similar services in that rural 
area over the same distance as the eligible service by other carriers. 
If there are no tariffed or publicly available rates for such services 
in that rural area, or if the carrier reasonably determines that this 
method for calculating the rural rate is unfair, then the carrier shall 
submit for the state commission's approval, for intrastate rates, or the 
Commission's approval, for interstate rates, a cost-based rate for the 
provision of the service in the most economically efficient, reasonably 
available manner.
    (1) The carrier must provide, to the state commission, or intrastate 
rates, or to the Commission, for interstate rates, a justification of 
the proposed rural rate, including an itemization of the costs of 
providing the requested service.
    (2) The carrier must provide such information periodically 
thereafter as required, by the state commission for intrastate rates or 
the Commission for interstate rates. In doing so, the carrier must take 
into account anticipated and actual demand for telecommunications 
services by all customers who will use the facilities over which 
services are being provided to eligible health care providers.



Sec. 54.609  Calculating support.

    (a) The amount of universal service support provided for an eligible 
service to be funded from the Telecommunications Program shall be the 
difference, if any, between the urban rate and the rural rate charged 
for the service, as defined herein. In addition, all reasonable charges 
that are incurred by taking such services, such as state and federal 
taxes shall be eligible for universal service support. Charges for 
termination liability, penalty surcharges, and other charges not 
included in the cost of taking such service shall not be covered by the 
universal service support mechanisms. Under the Telecommunications 
Program, rural health care providers may choose one of the following two 
support options.
    (1) Distance based support. The Administrator shall consider the 
base rates for telecommunications services in rural areas to be 
reasonably comparable to the base rates charged for functionally similar 
telecommunications service in urban areas in that state, and, therefore, 
the Administrator shall not include these charges in calculating the 
support. The Administrator shall include, in the support calculation, 
all other charges specified, and all actual distance-based charges as 
follows:
    (i) If the requested service distance is less than or equal to the 
SUD for the state, the distance-based charges for the rural health care 
provider are reasonably comparable to those in urban areas, so the 
health care provider will not receive distance-based support.
    (ii) If the requested service distance is greater than the SUD for 
the state, but less than the maximum allowable distance, the distance-
based charge actually incurred for that service can be no higher than 
the distance-based charges for a functionally similar service in any 
city in that state with a population of 50,000 or more over the SUD.
    (iii) ``Distance-based charges'' are charges based on a unit of 
distance, such as mileage-based charges.
    (iv) A telecommunications carrier that provides telecommunications 
service to a rural health care provider participating in an eligible 
health care consortium, and the consortium must establish the actual 
distance-based charges for the health care provider's portion of the 
shared telecommunications services.
    (2) Base rate support. If a telecommunications carrier, health care

[[Page 218]]

provider, and/or consortium of health care providers reasonably 
determines that the base rates for telecommunications services in rural 
areas are not reasonably comparable to the base rates charged for 
functionally similar telecommunications service in urban areas in that 
state, the telecommunications carrier, health care provider, and/or 
consortium of health care providers may request that the Administrator 
perform a more comprehensive support calculation. The requester shall 
provide to the Administrator the information to establish both the urban 
and rural rates consistent with Sec. 54.605 and Sec. 54.607, and submit 
to the Administrator with Form 466 all of the documentation necessary to 
substantiate the request.
    (3) Base rate support-consortium. A telecommunications carrier that 
provides telecommunications service to a rural health care provider 
participating in an eligible health care consortium, and the consortium 
must establish the applicable rural base rates for telecommunications 
service for the health care provider's portion of the shared 
telecommunications services, as well as the applicable urban base rates 
for the telecommunications service.
    (b) Absent documentation justifying the amount of universal service 
support requested for health care providers participating in a 
consortium, the Administrator shall not allow telecommunications 
carriers to offset, or receive reimbursement for, the amount eligible 
for universal service support.
    (c) The universal service support mechanisms shall provide support 
for intrastate telecommunications services, as set forth in 
Sec. 54.101(a), provided to rural health care providers as well as 
interstate telecommunications services.
    (d) Satellite services. (1) Rural public and non-profit health care 
providers may receive support for rural satellite services under the 
Telecommunications Program, even when another functionally similar 
terrestrial-based service is available in that rural area. Support for 
satellite services shall be capped at the amount the rural health care 
provider would have received if they purchased a functionally similar 
terrestrial-based alternative.
    (2) Rural health care providers seeking support from the 
Telecommunications Program for satellite services shall provide to the 
Administrator with the Form 466, documentation of the urban and rural 
rates for the terrestrial-based alternatives.
    (3) Where a rural health care provider seeks a more expensive 
satellite-based service when a less expensive terrestrial-based 
alternative is available, the rural health care provider shall be 
responsible for the additional cost.
    (e) Mobile rural health care providers-- (1) Calculation of support. 
The support amount allowed under the Telecommunications Program for 
satellite services provided to mobile rural health care providers is 
calculated by comparing the rate for the satellite service to the rate 
for an urban wireline service with a similar bandwidth. Support for 
satellite services shall not be capped at an amount of a functionally 
similar wireline alternative. Where the mobile rural health care 
provider provides service in more than one state, the calculation shall 
be based on the urban areas in each state, proportional to the number of 
locations served in each state.
    (2) Documentation of support. (i) Mobile rural health care providers 
shall provide to the Administrator documentation of the price of 
bandwidth equivalent wireline services in the urban area in the state or 
states where the service is provided. Mobile rural health care providers 
shall provide to the Administrator the number of sites the mobile health 
care provider will serve during the funding year.
    (ii) Where a mobile rural health care provider serves less than 
eight different sites per year, the mobile rural health care provider 
shall provide to the Administrator documentation of the price of 
bandwidth equivalent wireline services. In such case, the Administrator 
shall determine on a case-by-case basis whether the telecommunications 
service selected by the mobile rural health care provider is the most 
cost-effective option. Where a mobile rural health care provider seeks a 
more expensive satellite-based service when a less expensive wireline 
alternative is most cost-effective, the

[[Page 219]]

mobile rural health care provider shall be responsible for the 
additional cost.

[68 FR 74502, Dec. 24, 2003, as amended at 70 FR 6373, Feb. 7, 2005; 78 
FR 13983, Mar. 1, 2013]



Sec. 54.613  Limitations on supported services for rural health care
providers.

    (a) Upon submitting a bona fide request to a telecommunications 
carrier, each eligible rural health care provider is entitled to receive 
the most cost-effective, commercially-available telecommunications 
service at a rate no higher than the highest urban rate, as defined in 
Sec. 54.605, at a distance not to exceed the distance between the 
eligible health care provider's site and the farthest point on the 
jurisdictional boundary of the city in that state with the largest 
population.
    (b) [Reserved]

[64 FR 66787, Nov. 30, 1999, as amended at 68 FR 74503, Dec. 24, 2003; 
78 FR 13984, Mar. 1, 2013]



Sec. 54.615  Obtaining services.

    (a) Selecting a provider. In selecting a telecommunications carrier, 
a health care provider shall consider all bids submitted and select the 
most cost-effective alternative.
    (b) Receiving supported rate. Upon receiving a bona fide request, as 
defined in paragraph (c) of this section, from a rural health care 
provider for a telecommunications service that is eligible for support 
under the Telecommunications Program, a telecommunications carrier shall 
provide the service at a rate no higher than the urban rate, as defined 
in Sec. 54.605, subject to the limitations applicable to the 
Telecommunications Program.
    (c) Bona fide request. In order to receive services eligible for 
support under the Telecommunications Program, an eligible health care 
provider must submit a request for services to the telecommunications 
carrier, signed by an authorized officer of the health care provider, 
and shall include that person's certification under oath that:
    (1) The requester is a public or non-profit entity that falls within 
one of the seven categories set forth in the definition of health care 
provider, listed in Sec. 54.601(a);
    (2) The requester is physically located in a rural area, or if the 
requester is a mobile rural health care provider requesting services 
under Sec. 54.609(e), that the requester has certified that it is 
serving eligible rural areas;
    (3) [Reserved]
    (4) The requested service or services will be used solely for 
purposes reasonably related to the provision of health care services or 
instruction that the health care provider is legally authorized to 
provide under the law in the state in which such health care services or 
instruction are provided;
    (5) The requested service or services will not be sold, resold or 
transferred in consideration of money or any other thing of value;
    (6) If the service or services are being purchased as part of an 
aggregated purchase with other entities or individuals, the full details 
of any such arrangement, including the identities of all co-purchasers 
and the portion of the service or services being purchased by the health 
care provider; and
    (7) The requester is selecting the most cost-effective method of 
providing the requested service or services, where the most cost-
effective method of providing a service is defined as the method that 
costs the least after consideration of the features, quality of 
transmission, reliability, and other factors that the health care 
provider deems relevant to choosing a method of providing the required 
health care services.
    (d) Annual renewal. The certification set forth in paragraph (c) of 
this section shall be renewed annually.

[62 FR 32948, June 17, 1997, as amended at 70 FR 6373, Feb. 7, 2005; 78 
FR 13984, Mar. 1, 2013]



Sec. 54.619  Audits and recordkeeping.

    (a) Health care providers. (1) Health care providers shall maintain 
for their purchases of services supported under the Telecommunications 
Program documentation for five years from the end of the funding year 
sufficient to establish compliance with all rules in this subpart. 
Documentation must include, among other things, records of allocations 
for consortia and entities that engage in eligible and ineligible 
activities, if applicable. Mobile rural health

[[Page 220]]

care providers shall maintain annual logs indicating: The date and 
locations of each clinic stop; and the number of patients served at each 
such clinic stop.
    (2) Mobile rural health care providers shall maintain its annual 
logs for a period of five years. Mobile rural health care providers 
shall make its logs available to the Administrator and the Commission 
upon request.
    (b) Production of records. Health care providers shall produce such 
records at the request of any auditor appointed by the Administrator or 
any other state or federal agency with jurisdiction.
    (c) Random audits. Health care providers shall be subject to random 
compliance audits to ensure that requesters are complying with the 
certification requirements set forth in Sec. 54.615(c) and are otherwise 
eligible to receive universal service support and that rates charged 
comply with the statute and regulations.
    (d) Service providers. Service providers shall retain documents 
related to the delivery of discounted services under the 
Telecommunications Program for at least 5 years after the last day of 
the delivery of discounted services. Any other document that 
demonstrates compliance with the statutory or regulatory requirements 
for the rural health care mechanism shall be retained as well.

[68 FR 74503, Dec. 24, 2003, as amended at 69 FR 12087, Mar. 15, 2004; 
70 FR 6373, Feb. 7, 2005; 71 FR 13281, Mar. 15, 2006; 72 FR 54218, Sept. 
24, 2007; 78 FR 13984, Mar. 1, 2013]



Sec. 54.623  Annual filing and funding commitment requirement.

    (a) Annual filing requirement. Health care providers seeking support 
under the Telecommunications Program shall file new funding requests for 
each funding year.
    (b) Long term contracts. Under the Telecommunications Program, if 
health care providers enter into long term contracts for eligible 
services, the Administrator shall only commit funds to cover the portion 
of such a long term contract scheduled to be delivered during the 
funding year for which universal service support is sought.

[78 FR 13984, Mar. 1, 2013]



Sec. 54.625  Support for telecommunications services beyond the maximum
supported distance for rural health care providers.

    (a) The maximum support distance for the Telecommunications Program 
is the distance from the health care provider to the farthest point on 
the jurisdictional boundary of the city in that state with the largest 
population, as calculated by the Administrator.
    (b) An eligible rural health care provider may purchase an eligible 
telecommunications service supported under the Telecommunications 
Program that is provided over a distance that exceeds the maximum 
supported distance.
    (c) If an eligible rural health care provider purchases an eligible 
telecommunications service supported under the Telecommunications 
Program that exceeds the maximum supported distance, the health care 
provider must pay the applicable rural rate for the distance that such 
service is carried beyond the maximum supported distance.

[78 FR 13984, Mar. 1, 2013]

                         Healthcare Connect Fund



Sec. 54.630  Eligible recipients.

    (a) Rural health care provider site--individual and consortium. 
Under the Healthcare Connect Fund, an eligible rural health care 
provider may receive universal service support by applying individually 
or through a consortium. For purposes of the Healthcare Connect Fund, a 
``consortium'' is a group of two or more health care provider sites that 
request support through a single application. Consortia may include 
health care providers who are not eligible for support under the 
Healthcare Connect Fund, but such health care providers cannot receive 
support for their expenses and must participate pursuant to the cost 
allocation guidelines in Sec. 54.639(d).
    (b) Limitation on participation of non-rural health care provider 
sites in a consortium. An eligible non-rural health care provider site 
may receive universal service support only as part of a consortium that 
includes more than 50 percent eligible rural health care provider sites.

[[Page 221]]

    (c) Limitation on large non-rural hospitals. Each eligible non-rural 
public or non-profit hospital site with 400 or more licensed patient 
beds may receive no more than $30,000 per year in Healthcare Connect 
Fund support for eligible recurring charges and no more than $70,000 in 
Healthcare Connect Fund support every 5 years for eligible nonrecurring 
charges, exclusive in both cases of costs shared by the network.

[78 FR 13984, Mar. 1, 2013]



Sec. 54.631  Designation of Consortium Leader.

    (a) Identifying a Consortium Leader. Each consortium seeking support 
from the Healthcare Connect Fund must identify an entity or organization 
that will be the lead entity (the ``Consortium Leader'').
    (b) Consortium Leader eligibility. The Consortium Leader may be the 
consortium itself (if it is a distinct legal entity); an eligible health 
care provider participating in the consortium; or a state organization, 
public sector (governmental) entity (including a Tribal government 
entity), or non-profit entity that is ineligible for Healthcare Connect 
Fund support. Ineligible state organizations, public sector entities, or 
non-profit entities may serve as Consortium Leaders or provide 
consulting assistance to consortia only if they do not participate as 
potential vendors during the competitive bidding process. An ineligible 
entity that serves as the Consortium Leader must pass on the full value 
of any discounts, funding, or other program benefits secured to the 
consortium members that are eligible health care providers.
    (c) Consortium Leader responsibilities. The Consortium Leader's 
responsibilities include the following:
    (1) Legal and financial responsibility for supported activities. The 
Consortium Leader is the legally and financially responsible entity for 
the activities supported by the Healthcare Connect Fund. By default, the 
Consortium Leader is the responsible entity if audits or other 
investigations by Administrator or the Commission reveal violations of 
the Act or Commission rules, with individual consortium members being 
jointly and severally liable if the Consortium Leader dissolves, files 
for bankruptcy, or otherwise fails to meet its obligations. Except for 
the responsibilities specifically described in paragraphs (c)(2) through 
(c)(6) of this section, consortia may allocate legal and financial 
responsibility as they see fit, provided that this allocation is 
memorialized in a formal written agreement between the affected parties 
(i.e., the Consortium Leader, and the consortium as a whole and/or its 
individual members), and the written agreement is submitted to the 
Administrator for approval with or prior to the Request for Services. 
Any such agreement must clearly identify the party(ies) responsible for 
repayment if the Administrator is required, at a later date, to recover 
disbursements to the consortium due to violations of program rules.
    (2) Point of contact for the FCC and Administrator. The Consortium 
Leader is responsible for designating an individual who will be the 
``Project Coordinator'' and serve as the point of contact with the 
Commission and the Administrator for all matters related to the 
consortium. The Consortium Leader is responsible for responding to 
Commission and Administrator inquiries on behalf of the consortium 
members throughout the application, funding, invoicing, and post-
invoicing period.
    (3) Typical applicant functions, including forms and certifications. 
The Consortium Leader is responsible for submitting program forms and 
required documentation and ensuring that all information and 
certifications submitted are true and correct. The Consortium Leader 
must also collect and retain a Letter of Agency (LOA) from each member, 
pursuant to Sec. 54.632.
    (4) Competitive bidding and cost allocation. The Consortium Leader 
is responsible for ensuring that the competitive bidding process is fair 
and open and otherwise complies with Commission requirements. If costs 
are shared by both eligible and ineligible entities, the Consortium 
Leader must ensure that costs are allocated in a manner that ensures 
that only eligible entities receive the benefit of program discounts.
    (5) Invoicing. The Consortium Leader is responsible for notifying 
the Administrator when supported services have

[[Page 222]]

commenced and for submitting invoices to the Administrator.
    (6) Recordkeeping, site visits, and audits. The Consortium Leader is 
also responsible for compliance with the Commission's recordkeeping 
requirements and for coordinating site visits and audits for all 
consortium members.

[78 FR 13985, Mar. 1, 2013]



Sec. 54.632  Letters of agency (LOA).

    (a) Authorizations. Under the Healthcare Connect Fund, the 
Consortium Leader must obtain the following authorizations.
    (1) Prior to the submission of the request for services, the 
Consortium Leader must obtain authorization, the necessary 
certifications, and any supporting documentation from each consortium 
member to permit the Consortium Leader to submit the request for 
services and prepare and post the request for proposal on behalf of the 
member.
    (2) Prior to the submission of the funding request, the Consortium 
Leader must secure authorization, the necessary certifications, and any 
supporting documentation from each consortium member to permit the 
Consortium Leader to submit the funding request and manage invoicing and 
payments on behalf of the member.
    (b) Optional two-step process. The Consortium Leader may secure both 
required authorizations from each consortium member in either a single 
LOA or in two separate LOAs.
    (c) Required Information in LOA. (1) An LOA must include, at a 
minimum, the name of the entity filing the application (i.e., lead 
applicant or Consortium Leader); name of the entity authorizing the 
filing of the application (i.e., the participating health care provider/
consortium member); the physical location of the health care provider/
consortium member site(s); the relationship of each site seeking support 
to the lead entity filing the application; the specific timeframe the 
LOA covers; the signature, title and contact information (including 
phone number, mailing address, and email address) of an official who is 
authorized to act on behalf of the health care provider/consortium 
member; signature date; and the type of services covered by the LOA.
    (2) For HCPs located on Tribal lands, if the health care facility is 
a contract facility that is run solely by the tribe, the appropriate 
tribal leader, such as the tribal chairperson, president, or governor, 
shall also sign the LOA, unless the health care responsibilities have 
been duly delegated to another tribal government representative.

[78 FR 13985, Mar. 1, 2013]



Sec. 54.633  Health care provider contribution.

    (a) Health care provider contribution. All health care providers 
receiving support under the Healthcare Connect Fund shall receive a 65 
percent discount on the cost of eligible expenses and shall be required 
to contribute 35 percent of the total cost of all eligible expenses.
    (b) Limits on eligible sources of health care provider contribution. 
Only funds from eligible sources may be applied toward the health care 
provider's required contribution.
    (1) Eligible sources include the applicant or eligible health care 
provider participants; state grants, funding, or appropriations; federal 
funding, grants, loans, or appropriations except for other federal 
universal service funding; Tribal government funding; and other grant 
funding, including private grants.
    (2) Ineligible sources include (but are not limited to) in-kind or 
implied contributions from health care providers; direct payments from 
vendors or other service providers, including contractors and 
consultants to such entities; and for-profit entities.
    (c) Disclosure of health care provider contribution source. Prior to 
receiving support, applicants are required to identify with specificity 
their sources of funding for their contribution of eligible expenses.
    (d) Future revenues from excess capacity as source of health care 
provider contribution. A consortium applicant that receives support for 
participant-owned network facilities under Sec. 54.636 may use future 
revenues from excess capacity as a source for the required health care 
provider contribution, subject to the following limitations.

[[Page 223]]

    (1) The consortium's selection criteria and evaluation for ``cost-
effectiveness'' pursuant to Sec. 54.642 cannot provide a preference to 
bidders that offer to construct excess capacity.
    (2) The applicant must pay the full amount of the additional costs 
for excess capacity facilities that will not be part of the supported 
health care network.
    (3) The additional cost of constructing excess capacity facilities 
may not count toward a health care provider's required contribution.
    (4) The inclusion of excess capacity facilities cannot increase the 
funded cost of the dedicated health care network in any way.
    (5) An eligible health care provider (typically the consortium, 
although it may be an individual health care provider participating in 
the consortium) must retain ownership of the excess capacity facilities. 
It may make the facilities available to third parties only under an 
indefeasible right of use (IRU) or lease arrangement. The lease or IRU 
between the participant and the third party must be an arm's length 
transaction. To ensure that this is an arm's length transaction, neither 
the vendor that installs the excess capacity facilities nor its 
affiliate is eligible to enter into an IRU or lease with the 
participant.
    (6) Any amount prepaid for use of the excess capacity facilities 
(IRU or lease) must be placed in an escrow account. The participant can 
then use the escrow account as an eligible source of funds for the 
participant's 35 percent contribution to the project.
    (7) All revenues from use of the excess capacity facilities by the 
third party must be used for the health care provider contribution or 
for sustainability of the health care network supported by the 
Healthcare Connect Fund. Network costs that may be funded with any 
additional revenues that remain include administration, equipment, 
software, legal fees, or other costs not covered by the Healthcare 
Connect Fund, as long as they are relevant to sustaining the network.

[78 FR 13985, Mar. 1, 2013]



Sec. 54.634  Eligible services.

    (a) Eligible services. Subject to the provisions of Secs. 54.600 
through 54.602 and Secs. 54.630 through 54.680, eligible health care 
providers may request support from the Healthcare Connect Fund for any 
advanced telecommunications or information service that enables health 
care providers to post their own data, interact with stored data, 
generate new data, or communicate, by providing connectivity over 
private dedicated networks or the public Internet for the provision of 
health information technology.
    (b) Eligibility of dark fiber. A consortium of eligible health care 
providers may receive support for ``dark'' fiber where the customer, not 
the vendor, provides the modulating electronics, subject to the 
following limitations:
    (1) Support for recurring charges associated with dark fiber is only 
available once the dark fiber is ``lit'' and actually being used by the 
health care provider. Support for non-recurring charges for dark fiber 
is only available for fiber lit within the same funding year, but 
applicants may receive up to a one-year extension to light fiber if they 
provide documentation to the Administrator that construction was 
unavoidably delayed due to weather or other reasons.
    (2) Requests for proposals (RFPs) that solicit dark fiber solutions 
must also solicit proposals to provide the needed services over lit 
fiber over a time period comparable to the duration of the dark fiber 
lease or indefeasible right of use.
    (3) If an applicant intends to request support for equipment and 
maintenance costs associated with lighting and operating dark fiber, it 
must include such elements in the same RFP as the dark fiber so that the 
Administrator can review all costs associated with the fiber when 
determining whether the applicant chose the most cost-effective bid.
    (c) Dark and lit fiber maintenance costs. (1) Both individual and 
consortium applicants may receive support for recurring maintenance 
costs associated with leases of dark or lit fiber.
    (2) Consortium applicants may receive support for upfront payments 
for maintenance costs associated with

[[Page 224]]

leases of dark or lit fiber, subject to the limitations in Sec. 54.638.
    (d) Reasonable and customary installation charges. Eligible health 
care providers may obtain support for reasonable and customary 
installation charges for eligible services, up to an undiscounted cost 
of $5,000 per eligible site.
    (e) Upfront charges for vendor deployment of new or upgraded 
facilities. (1) Participants may obtain support for upfront charges for 
vendor deployment of new or upgraded facilities to serve eligible sites.
    (2) Support is available to extend vendor deployment of facilities 
up to the ``demarcation point,'' which is the boundary between 
facilities owned or controlled by the vendor, and facilities owned or 
controlled by the customer.

[78 FR 13986, Mar. 1, 2013]



Sec. 54.635  Eligible equipment.

    (a) Both individual and consortium applicants may receive support 
for network equipment necessary to make functional an eligible service 
that is supported under the Healthcare Connect Fund.
    (b) Consortium applicants may also receive support for network 
equipment necessary to manage, control, or maintain an eligible service 
or a dedicated health care broadband network. Support for network 
equipment is not available for networks that are not dedicated to health 
care.
    (c) Network equipment eligible for support includes the following:
    (1) Equipment that terminates a carrier's or other provider's 
transmission facility and any router/switch that is directly connected 
to either the facility or the terminating equipment. This includes 
equipment required to light dark fiber, or equipment necessary to 
connect dedicated health care broadband networks or individual health 
care providers to middle mile or backbone networks;
    (2) Computers, including servers, and related hardware (e.g. 
printers, scanners, laptops) that are used exclusively for network 
management;
    (3) Software used for network management, maintenance, or other 
network operations, and development of software that supports network 
management, maintenance, and other network operations;
    (4) Costs of engineering, furnishing (i.e. as delivered from the 
manufacturer), and installing network equipment; and
    (5) Equipment that is a necessary part of health care provider-owned 
network facilities.
    (d) Additional limitations: Support for network equipment is limited 
to equipment:
    (1) Purchased or leased by a Consortium Leader or eligible health 
care provider; and
    (2) Used for health care purposes.

[78 FR 13986, Mar. 1, 2013]



Sec. 54.636  Eligible participant-constructed and owned network facilities
for consortium applicants.

    (a) Subject to the funding limitations under Secs. 54.675 and 54.638 
and the following restrictions, consortium applicants may receive 
support for network facilities that will be constructed and owned by the 
consortium (if the consortium is an eligible health care provider) or 
eligible health care providers within the consortium.
    (1) Consortia seeking support to construct and own network 
facilities are required to solicit bids for both:
    (i) Services provided over third-party networks; and
    (ii) Construction of participant-owned network facilities, in the 
same request for proposals. Requests for proposals must provide 
sufficient detail so that cost-effectiveness can be evaluated over the 
useful life of the proposed network facility to be constructed.
    (2) Support for participant-constructed and owned network facilities 
is only available where the consortium demonstrates that constructing 
its own network facilities is the most cost-effective option after 
competitive bidding, pursuant to Sec. 54.642.
    (b) [Reserved]

[78 FR 13987, Mar. 1, 2013]



Sec. 54.637  Off-site data centers and off-site administrative offices.

    (a) The connections and network equipment associated with off-site 
data centers and off-site administrative offices used by eligible health 
care providers for their health care purposes

[[Page 225]]

are eligible for support under the Healthcare Connect Fund, subject to 
the conditions and restrictions set forth in paragraph (b) of this 
section.
    (1) An ``off-site administrative office'' is a facility that does 
not provide hands-on delivery of patient care, but performs 
administrative support functions that are critical to the provision of 
clinical care by eligible health care providers.
    (2) An ``off-site data center'' is a facility that serves as a 
centralized repository for the storage, management, and dissemination of 
an eligible health care provider's computer systems, associated 
components, and data, including (but not limited to) electronic health 
records.
    (b) Conditions and Restrictions. The following conditions and 
restrictions apply to support provided under this sections.
    (1) Connections eligible for support are only those that are 
between:
    (i) Eligible health care provider sites and off-site data centers or 
off-site administrative offices,
    (ii) Two off-site data centers,
    (iii) Two off-site administrative offices,
    (iv) An off-site data center and the public Internet or another 
network,
    (v) An off-site administrative office and the public Internet or 
another network, or
    (vi) An off-site administrative office and an off-site data center.
    (2) The supported connections and network equipment must be used 
solely for health care purposes.
    (3) The supported connections and network equipment must be 
purchased by an eligible health care provider or a public or non-profit 
health care system that owns and operates eligible health care provider 
sites.
    (4) If traffic associated with one or more ineligible health care 
provider sites is carried by the supported connection and/or network 
equipment, the ineligible health care provider sites must allocate the 
cost of that connection and/or equipment between eligible and ineligible 
sites, consistent with the ``fair share'' principles set forth in 
Sec. 54.639(d).

[78 FR 13987, Mar. 1, 2013]



Sec. 54.638  Upfront payments.

    (a) Upfront payments include all non-recurring costs for services, 
equipment, or facilities, other than reasonable and customary 
installation charges of up to $5,000.
    (b) The following limitations apply to all upfront payments:
    (1) Upfront payments associated with services providing a bandwidth 
of less than 1.5 Mbps (symmetrical) are not eligible for support.
    (2) Only consortium applicants are eligible for support for upfront 
payments.
    (c) The following limitations apply if a consortium makes a request 
for support for upfront payments that exceeds, on average, $50,000 per 
eligible site in the consortium:
    (1) The support for the upfront payments must be prorated over at 
least three years.
    (2) The upfront payments must be part of a multi-year contract.

[78 FR 13987, Mar. 1, 2013]



Sec. 54.639  Ineligible expenses.

    (a) Equipment or services not directly associated with eligible 
services. Expenses associated with equipment or services that are not 
necessary to make an eligible service functional, or to manage, control, 
or maintain an eligible service or a dedicated health care broadband 
network are ineligible for support.

    Note to paragraph (a): The following are examples of ineligible 
expenses:
    1. Costs associated with general computing, software, applications, 
and Internet content development are not supported, including the 
following:
    i. Computers, including servers, and related hardware (e.g., 
printers, scanners, laptops), unless used exclusively for network 
management, maintenance, or other network operations;
    ii. End user wireless devices, such as smartphones and tablets;
    iii. Software, unless used for network management, maintenance, or 
other network operations;
    iv. Software development (excluding development of software that 
supports network management, maintenance, and other network operations);
    v. Helpdesk equipment and related software, or services, unless used 
exclusively in support of eligible services or equipment;
    vi. Web server hosting;
    vii. Web site portal development;

[[Page 226]]

    viii. Video/audio/web conferencing equipment or services; and
    ix. Continuous power source.
    2. Costs associated with medical equipment (hardware and software), 
and other general health care provider expenses are not supported, 
including the following:
    i. Clinical or medical equipment;
    ii. Telemedicine equipment, applications, and software;
    iii. Training for use of telemedicine equipment;
    iv. Electronic medical records systems; and
    v. Electronic records management and expenses.

    (b) Inside wiring/internal connections. Expenses associated with 
inside wiring or internal connections are ineligible for support under 
the Healthcare Connect Fund.
    (c) Administrative expenses. Administrative expenses are not 
eligible for support under the Healthcare Connect Fund.

    Note to paragraph (c): Ineligible administrative expenses include, 
but not limited to, the following expenses:
    1. Personnel costs (including salaries and fringe benefits), except 
for personnel expenses in a consortium application that directly relate 
to designing, engineering, installing, constructing, and managing a 
dedicated broadband network. Ineligible costs of this category include, 
for example, personnel to perform program management and coordination, 
program administration, and marketing;
    2. Travel costs, except for travel costs that are reasonable and 
necessary for network design or deployment and that are specifically 
identified and justified as part of a competitive bid for a construction 
project;
    3. Legal costs;
    4. Training, except for basic training or instruction directly 
related to and required for broadband network installation and 
associated network operations;
    5. Program administration or technical coordination (e.g., preparing 
application materials, obtaining letters of agency, preparing request 
for proposals, negotiating with vendors, reviewing bids, and working 
with the Administrator) that involves anything other than the design, 
engineering, operations, installation, or construction of the network;
    6. Administration and marketing costs (e.g., administrative costs; 
supplies and materials, except as part of network installation/
construction; marketing studies, marketing activities, or outreach to 
potential network members; evaluation and feedback studies);
    7. Billing expenses (e.g., expense that vendors may charge for 
allocating costs to each health care provider in a network);
    8. Helpdesk expenses (e.g., equipment and related software, or 
services); and
    9. Technical support services that provide more than basic 
maintenance.

    (d) Cost allocation for ineligible sites, services, or equipment--
(1) Ineligible sites. Eligible health care provider sites may share 
expenses with ineligible sites, as long as the ineligible sites pay 
their fair share of the expenses. An applicant may seek support for only 
the portion of a shared eligible expense attributable to eligible health 
care provider sites. To receive support, the applicant must ensure that 
ineligible sites pay their fair share of the expense. The fair share is 
determined as follows:
    (i) If the vendor charges a separate and independent price for each 
site, an ineligible site must pay the full undiscounted price.
    (ii) If there is no separate and independent price for each site, 
the applicant must prorate the undiscounted price for the ``shared'' 
service, equipment, or facility between eligible and ineligible sites on 
a proportional fully-distributed basis. Applicants must make this cost 
allocation using a method that is based on objective criteria and 
reasonably reflects the eligible usage of the shared service, equipment, 
or facility. The applicant bears the burden of demonstrating the 
reasonableness of the allocation method chosen.
    (2) Ineligible components of a single service or piece of equipment. 
Applicants seeking support for a service or piece of equipment that 
includes an ineligible component must explicitly request in their 
requests for proposals that vendors include pricing for a comparable 
service or piece of equipment that is comprised of only eligible 
components. If the selected provider also submits a price for the 
eligible component on a stand-alone basis, the support amount is 
calculated based on the stand-alone price of the eligible component on a 
stand-alone basis. If the vendor does not offer the eligible component 
on a stand-alone basis, the full price of the entire service or piece of 
equipment must be taken into account,

[[Page 227]]

without regard to the value of the ineligible components, when 
determining the most cost-effective bid.
    (3) Written description. Applicants must submit a written 
description of their allocation method(s) to the Administrator with 
their funding requests.
    (4) Written agreement. If ineligible entities participate in a 
network, the allocation method must be memorialized in writing, such as 
a formal agreement among network members, a master services contract, or 
for smaller consortia, a letter signed and dated by all (or each) 
ineligible entity and the Consortium Leader.

[78 FR 13987, Mar. 1, 2013]



Sec. 54.640  Eligible vendors.

    (a) Eligibility. For purposes of the Healthcare Connect Fund, 
eligible vendors shall include any provider of equipment, facilities, or 
services that are eligible for support under Healthcare Connect Fund.
    (b) Obligation to assist health care providers. Vendors in the 
Healthcare Connect Fund must certify, as a condition of receiving 
support, that they will provide to health care providers, on a timely 
basis, all information and documents regarding supported equipment, 
facilities, or services that are necessary for the health care provider 
to submit required forms or respond to Commission or Administrator 
inquiries. The Administrator may withhold disbursements for the vendor 
if the vendor, after written notice from the Administrator, fails to 
comply with this requirement.

[78 FR 13988, Mar. 1, 2013]



Sec. 54.642  Competitive bidding requirement and exemptions.

    (a) Competitive bidding requirement. All applicants are required to 
engage in a competitive bidding process for supported services, 
facilities, or equipment consistent with the requirements set forth in 
this subpart, unless they qualify for one or more of the exemptions in 
paragraph (h) of this section. In addition, applicants may engage in 
competitive bidding even if they qualify for an exemption. Applicants 
who utilize a competitive bidding exemption may proceed directly to 
filing a funding request as described in Sec. 54.643.
    (b) Fair and open process. (1) All entities participating in the 
Healthcare Connect Fund must conduct a fair and open competitive bidding 
process, consistent with all applicable requirements.
    (2) Vendors who intend to bid to provide supported services, 
equipment, or facilities to a health care provider may not 
simultaneously help the health care provider choose a winning bid. Any 
vendor who submits a bid, and any individual or entity that has a 
financial interest in such a vendor, is prohibited from:
    (i) Preparing, signing or submitting an applicant's request for 
services;
    (ii) Serving as the Consortium Leader or other point of contact on 
behalf of applicant(s);
    (iii) Being involved in setting bid evaluation criteria; or
    (iv) Participating in the bid evaluation or vendor selection process 
(except in their role as potential vendors).
    (3) All potential bidders must have access to the same information 
and must be treated in the same manner.
    (4) All applicants and vendors must comply with any applicable 
state, Tribal, or local competitive bidding requirements. The 
competitive bidding requirements in this section apply in addition to 
state, Tribal, and local competitive bidding requirements and are not 
intended to preempt such state, Tribal, or local requirements.
    (c) Cost-effective. For purposes of the Healthcare Connect Fund, 
``cost-effective'' is defined as the method that costs the least after 
consideration of the features, quality of transmission, reliability, and 
other factors that the health care provider deems relevant to choosing a 
method of providing the required health care services.
    (d) Bid evaluation criteria. Applicants must develop weighted 
evaluation criteria (e.g., scoring matrix) that demonstrate how the 
applicant will choose the most ``cost-effective'' bid before submitting 
a Request for Services. Price must be a primary factor, but need not be 
the only primary factor. A non-price factor can receive an equal weight 
to price, but may not receive a greater weight than price.

[[Page 228]]

    (e) Request for services. Applicants must submit the following 
documents to the Administrator in order to initiate competitive bidding.
    (1) Form 461, including certifications. The applicant must provide 
the following certifications as part of the request for services.
    (i) The person signing the application is authorized to submit the 
application on behalf of the applicant and has examined the form and all 
attachments, and to the best of his or her knowledge, information, and 
belief, all statements of fact contained therein are true.
    (ii) The applicant has followed any applicable state, Tribal, or 
local procurement rules.
    (iii) All Healthcare Connect Fund support will be used solely for 
purposes reasonably related to the provision of health care service or 
instruction that the HCP is legally authorized to provide under the law 
of the state in which the services are provided and will not be sold, 
resold, or transferred in consideration for money or any other thing of 
value.
    (iv) The applicant satisfies all of the requirements under section 
254 of the Act and applicable Commission rules.
    (v) The applicant has reviewed all applicable requirements for the 
program and will comply with those requirements.
    (2) Bid evaluation criteria. Requirements for bid evaluation 
criteria are described in paragraph (d) of this section.
    (3) Declaration of assistance. All applicants must submit a 
``Declaration of Assistance'' with their Request for Services. In the 
Declaration of Assistance, applicants must identify each and every 
consultant, vendor, and other outside expert, whether paid or unpaid, 
who aided in the preparation of their applications.
    (4) Request for proposal (if applicable). (i) Any applicant may use 
a request for proposals (RFP). Applicants who use an RFP must submit the 
RFP and any additional relevant bidding information to the Administrator 
with Form 461.
    (ii) An applicant must submit an RFP:
    (A) If it is required to issue an RFP under applicable State, 
Tribal, or local procurement rules or regulations;
    (B) If the applicant is a consortium seeking more than $100,000 in 
program support during the funding year, including applications that 
seek more than $100,000 in program support for a multi-year commitment; 
or
    (C) If the applicant is a consortium seeking support for 
participant-constructed and owned network facilities.
    (iii) RFP requirements. (A) An RFP must provide sufficient 
information to enable an effective competitive bidding process, 
including describing the health care provider's service needs and 
defining the scope of the project and network costs (if applicable).
    (B) An RFP must specify the period during which bids will be 
accepted.
    (C) An RFP must include the bid evaluation criteria described in 
paragraph (d) of this section, and solicit sufficient information so 
that the criteria can be applied effectively.
    (D) Consortium applicants seeking support for long-term capital 
investments whose useful life extends beyond the period of the funding 
commitment (e.g., facilities constructed and owned by the applicant, 
fiber indefeasible rights of use) must seek bids in the same RFP from 
vendors who propose to meet those needs via services provided over 
vendor-owned facilities, for a time period comparable to the life of the 
proposed capital investment.
    (E) Applicants may prepare RFPs in any manner that complies with the 
rules in this subpart and any applicable state, Tribal, or local 
procurement rules or regulations.
    (5) Additional requirements for consortium applicants. (i) Network 
plan. Consortium applicants must submit a narrative describing specific 
elements of their network plan with their Request for Services. 
Consortia applicants are required to use program support for the 
purposes described in their narrative. The required elements of the 
narrative include:
    (A) Goals and objectives of the network;
    (B) Strategy for aggregating the specific needs of health care 
providers (including providers that serve rural areas) within a state or 
region;
    (C) Strategy for leveraging existing technology to adopt the most 
efficient

[[Page 229]]

and cost effective means of connecting those providers;
    (D) How the supported network will be used to improve or provide 
health care delivery;
    (E) Any previous experience in developing and managing health 
information technology (including telemedicine) programs; and
    (F) A project management plan outlining the project's leadership and 
management structure, and a work plan, schedule, and budget.
    (ii) Letters of agency. Consortium applicants must submit letters of 
agency pursuant to Sec. 54.632.
    (f) Public posting by the Administrator. The Administrator shall 
post on its web site the following competitive bidding documents, as 
applicable:
    (1) Form 461,
    (2) Bid evaluation criteria,
    (3) Request for proposal, and
    (4) Network plan.
    (g) 28-day waiting period. After posting the documents described in 
paragraph (f) of this section on its Web site, the Administrator shall 
send confirmation of the posting to the applicant. The applicant shall 
wait at least 28 days from the date on which its competitive bidding 
documents are posted on the Web site before selecting and committing to 
a vendor.
    (1) Selection of the most ``cost-effective'' bid and contract 
negotiation. Each applicant subject to competitive bidding is required 
to certify to the Administrator that the selected bid is, to the best of 
the applicant's knowledge, the most cost-effective option available. 
Applicants are required to submit the documentation listed in 
Sec. 54.643 to support their certifications.
    (2) Applicants who plan to request evergreen status under 
Sec. 54.642(h)(4)(ii) must enter into a contract that identifies both 
parties, is signed and dated by the health care provider or Consortium 
Leader after the 28-day waiting period expires, and specifies the type, 
term, and cost of service.
    (h) Exemptions to competitive bidding requirements. (1) Annual 
undiscounted cost of $10,000 or less. An applicant that seeks support 
for $10,000 or less of total undiscounted eligible expenses for a single 
year is exempt from the competitive bidding requirements under this 
section, if the term of the contract is one year or less.
    (2) Government Master Service Agreement (MSA). Eligible health care 
providers that seek support for services and equipment purchased from 
MSAs negotiated by federal, state, Tribal, or local government entities 
on behalf of such health care providers and others, if such MSAs were 
awarded pursuant to applicable federal, state, Tribal, or local 
competitive bidding requirements, are exempt from the competitive 
bidding requirements under this section.
    (3) Master Service Agreements approved under the Pilot Program or 
Healthcare Connect Fund. A eligible health care provider site may opt 
into an existing MSA approved under the Pilot Program or Healthcare 
Connect Fund and seek support for services and equipment purchased from 
the MSA without triggering the competitive bidding requirements under 
this section, if the MSA was developed and negotiated in response to an 
RFP that specifically solicited proposals that included a mechanism for 
adding additional sites to the MSA.
    (4) Evergreen contracts. (i) Subject to the provisions in 
Sec. 54.644, the Administrator may designate a multi-year contract as 
``evergreen,'' which means that the service(s) covered by the contract 
need not be re-bid during the contract term.
    (ii) A contract entered into by a health care provider or consortium 
as a result of competitive bidding may be designated as evergreen if it 
meets all of the following requirements:
    (A) Is signed by the individual health care provider or consortium 
lead entity;
    (B) Specifies the service type, bandwidth and quantity;
    (C) Specifies the term of the contract;
    (D) Specifies the cost of services to be provided; and
    (E) Includes the physical location or other identifying information 
of the health care provider sites purchasing from the contract.
    (iii) Participants may exercise voluntary options to extend an 
evergreen contract without undergoing additional competitive bidding, 
if:

[[Page 230]]

    (A) The voluntary extension(s) is memorialized in the evergreen 
contract;
    (B) The decision to extend the contract occurs before the 
participant files its funding request for the funding year when the 
contract would otherwise expire; and
    (C) The voluntary extension(s) do not exceed five years in the 
aggregate.
    (5) Schools and libraries program master contracts. Subject to the 
provisions in Secs. 54.500, 54.501(c)(1), and 54.503, an eligible health 
care provider in a consortium with participants in the schools and 
libraries universal service support program and a party to the 
consortium's existing contract is exempt from the Healthcare Connect 
Fund competitive bidding requirements if the contract was approved in 
the schools and libraries universal service support program as a master 
contract. The health care provider must comply with all Healthcare 
Connect Fund rules and procedures except for those applicable to 
competitive bidding.

[78 FR 13988, Mar. 1, 2013, as amended at 79 FR 49203, Aug. 19, 2014]



Sec. 54.643  Funding commitments.

    (a) Once a vendor is selected, applicants must submit a ``Funding 
Request'' (and supporting documentation) to provide information about 
the services, equipment, or facilities selected and certify that the 
services selected were the most cost-effective option of the offers 
received. The following information should be submitted to the 
Administrator with the Funding Request.
    (1) Request for funding. The applicant shall submit a request for 
funding (Form 462) to identify the service(s), equipment, or facilities; 
rates; vendor(s); and date(s) of vendor selection.
    (2) Certifications. The applicant must provide the following 
certifications as part of the request for funding:
    (i) The person signing the application is authorized to submit the 
application on behalf of the applicant and has examined the form and all 
attachments, and to the best of his or her knowledge, information, and 
belief, all statements of fact contained therein are true.
    (ii) Each vendor selected is, to the best of the applicant's 
knowledge, information and belief, the most cost-effective vendor 
available, as defined in Sec. 54.642(c).
    (iii) All Healthcare Connect Fund support will be used only for 
eligible health care purposes.
    (iv) The applicant is not requesting support for the same service 
from both the Telecommunications Program and the Healthcare Connect 
Fund.
    (v) The applicant satisfies all of the requirements under section 
254 of the Act and applicable Commission rules, and understands that any 
letter from the Administrator that erroneously commits funds for the 
benefit of the applicant may be subject to rescission.
    (vi) The applicant has reviewed all applicable requirements for the 
program and will comply with those requirements.
    (vii) The applicant will maintain complete billing records for the 
service for five years.
    (3) Contracts or other documentation. All applicants must submit a 
contract or other documentation that clearly identifies the vendor(s) 
selected and the health care provider(s) who will receive the services, 
equipment, or facilities; the service, bandwidth, and costs for which 
support is being requested; and the term of the service agreement(s) if 
applicable (i.e., if services are not being provided on a month-to-month 
basis). For services, equipment, or facilities provided under contract, 
the applicant must submit a copy of the contract signed and dated (after 
the Allowable Contract Selection Date) by the individual health care 
provider or Consortium Leader. If the service, equipment, or facilities 
are not being provided under contract, the applicant must submit a bill, 
service offer, letter, or similar document from the vendor that provides 
the required information.
    (4) Competitive bidding documents. Applicants must submit 
documentation to support their certifications that they have selected 
the most cost-effective option, including a copy of each bid received 
(winning, losing, and disqualified), the bid evaluation criteria, and 
the following documents (as applicable): bid evaluation sheets; a list 
of people who evaluated bids (along with their title/role/relationship 
to the applicant organization); memos, board minutes, or similar 
documents related

[[Page 231]]

to the vendor selection/award; copies of notices to winners; and any 
correspondence with vendors during the bidding/evaluation/award phase of 
the process. Applicants who claim a competitive bidding exemption must 
submit relevant documentation to allow the Administrator to verify that 
the applicant is eligible for the claimed exemption.
    (5) Cost allocation for ineligible entities or components. Pursuant 
to Sec. 54.639(d)(3) through (d)(4), where applicable, applicants must 
submit a description of how costs will be allocated for ineligible 
entities or components, as well as any agreements that memorialize such 
arrangements with ineligible entities.
    (6) Additional documentation for consortium applicants. A consortium 
applicant must also submit the following:
    (i) Any revisions to the network plan submitted with the Request for 
Services pursuant to Sec. 54.642(e)(5)(i), as necessary. If not 
previously submitted, the consortium should provide a narrative 
description of how the network will be managed, including all 
administrative aspects of the network, including but not limited to 
invoicing, contractual matters, and network operations. If the 
consortium is required to provide a sustainability plan as set forth in 
Sec. 54.643(a)(6)(iv), the revised budget should include the budgetary 
factors discussed in the sustainability plan requirements.
    (ii) A list of participating health care providers and all of their 
relevant information, including eligible (and ineligible, if applicable) 
cost information for each participating health care provider.
    (iii) Evidence of a viable source for the undiscounted portion of 
supported costs.
    (iv) Sustainability plans for applicants requesting support for 
long-term capital expenses: Consortia that seek funding to construct and 
own their own facilities or obtain indefeasible right of use or capital 
lease interests are required to submit a sustainability plan with their 
funding requests demonstrating how they intend to maintain and operate 
the facilities that are supported over the relevant time period. 
Applicants may incorporate by reference other portions of their 
applications (e.g., project management plan, budget). The sustainability 
plan must, at a minimum, address the following points:
    (A) Projected sustainability period. Indicate the sustainability 
period, which at a minimum is equal to the useful life of the funded 
facility. The consortium's budget must show projected income and 
expenses (i.e., for maintenance) for the project at the aggregate level, 
for the sustainability period.
    (B) Principal factors. Discuss each of the principal factors that 
were considered by the participant to demonstrate sustainability. This 
discussion must include all factors that show that the proposed network 
will be sustainable for the entire sustainability period. Any factor 
that will have a monetary impact on the network must be reflected in the 
applicant's budget.
    (C) Terms of membership in the network. Describe generally any 
agreements made (or to be entered into) by network members (e.g., 
participation agreements, memoranda of understanding, usage agreements, 
or other similar agreements). The sustainability plan must also 
describe, as applicable:
    (1) Financial and time commitments made by proposed members of the 
network;
    (2) If the project includes excess bandwidth for growth of the 
network, describe how such excess bandwidth will be financed; and
    (3) If the network will include ineligible health care providers and 
other network members, describe how fees for joining and using the 
network will be assessed.
    (D) Ownership structure. Explain who will own each material element 
of the network (e.g., fiber constructed, network equipment, end user 
equipment). For purposes of this subsection, ``ownership'' includes an 
indefeasible right of use interest. Applicants must clearly identify the 
legal entity that will own each material element. Applicants must also 
describe any arrangements made to ensure continued use of such elements 
by the network members for the duration of the sustainability period.

[[Page 232]]

    (E) Sources of future support. Describe other sources of future 
funding, including fees to be paid by eligible health care providers 
and/or non-eligible entities.
    (F) Management. Describe the management structure of the network for 
the duration of the sustainability period. The applicant's budget must 
describe how management costs will be funded.
    (v) Material change to sustainability plan. A consortium that is 
required to file a sustainability plan must maintain its accuracy. If 
there is a material change to a required sustainability plan that would 
impact projected income or expenses by more than 20 percent or $100,000 
from the previous submission, or if the applicant submits a funding 
request based on a new Form 462 (i.e., a new competitively bid 
contract), the consortium is required to re-file its sustainability 
plan. In the event of a material change, the applicant must provide the 
Administrator with the revised sustainability plan no later than the end 
of the relevant quarter, clearly showing (i.e., by redlining or 
highlighting) what has changed.
    (b) [Reserved]

[78 FR 13990, Mar. 1, 2013]



Sec. 54.644  Multi-year commitments.

    (a) Participants in the Healthcare Connect Fund are permitted to 
enter into multi-year contracts for eligible expenses and may receive 
funding commitments from the Administrator for a period that covers up 
to three funding years.
    (b) If a long-term contract covers a period of more than three 
years, the applicant may also have the contract designated as 
``evergreen'' under Sec. 54.642(h)(4) which will allow the applicant to 
re-apply for a funding commitment under the contract after three years 
without having to undergo additional competitive bidding.

[78 FR 13991, Mar. 1, 2013]



Sec. 54.645  Payment process.

    (a) The Consortium Leader (or health care provider, if participating 
individually) must certify to the Administrator that it has paid its 
contribution to the vendor before the invoice can be sent to 
Administrator and the vendor can be paid.
    (b) Before the Administrator may process and pay an invoice, both 
the Consortium Leader (or health care provider, if participating 
individually) and the vendor must certify that they have reviewed the 
document and that it is accurate. All invoices must be received by the 
Administrator within six months of the end date of the funding 
commitment.

[78 FR 13991, Mar. 1, 2013]



Sec. 54.646  Site and service substitutions.

    (a) A Consortium Leader (or health care provider, if participating 
individually) may request a site or service substitution if:
    (1) The substitution is provided for in the contract, within the 
change clause, or constitutes a minor modification;
    (2) The site is an eligible health care provider and the service is 
an eligible service under the Healthcare Connect Fund;
    (3) The substitution does not violate any contract provision or 
state, Tribal, or local procurement laws; and
    (4) The requested change is within the scope of the controlling 
request for services, including any applicable request for proposal used 
in the competitive bidding process.
    (b) Support for a qualifying site and service substitution will be 
provided to the extent the substitution does not cause the total amount 
of support under the applicable funding commitment to increase.

[78 FR 13991, Mar. 1, 2013]



Sec. 54.647  Data collection and reporting.

    (a) Each consortium lead entity must file an annual report with the 
Administrator on or before September 30 for the preceding funding year, 
with the information and in the form specified by the Wireline 
Competition Bureau.
    (b) Each consortium is required to file an annual report for each 
funding year in which it receives support from the Healthcare Connect 
Fund.
    (c) For consortia that receive large upfront payments, the reporting 
requirement extends for the life of the supported facility.

[78 FR 13991, Mar. 1, 2013]

[[Page 233]]



Sec. 54.648  Audits and recordkeeping.

    (a) Random audits. Participants shall be subject to random 
compliance audits and other investigations to ensure compliance with 
program rules and orders.
    (b) Recordkeeping. (1) Participants, including Consortium Leaders 
and health care providers, shall maintain records to document compliance 
with program rules and orders for at least 5 years after the last day of 
service delivered in a particular funding year. Participants who receive 
support for long-term capital investments in facilities whose useful 
life extends beyond the period of the funding commitment shall maintain 
records for at least 5 years after the end of the useful life of the 
facility. Participants shall maintain asset and inventory records of 
supported network equipment to verify the actual location of such 
equipment for a period of 5 years after purchase.
    (2) Vendors shall retain records related to the delivery of 
supported services, facilities, or equipment to document compliance with 
program rules and orders for at least 5 years after the last day of the 
delivery of supported services, equipment, or facilities in a particular 
funding year.
    (3) Both participants and vendors shall produce such records at the 
request of the Commission, any auditor appointed by the Administrator or 
the Commission, or of any other state or federal agency with 
jurisdiction.

[78 FR 13991, Mar. 1, 2013]



Sec. 54.649  Certifications.

    For individual health care provider applicants, required 
certifications must be provided and signed by an officer or director of 
the health care provider, or other authorized employee of the health 
care provider. For consortium applicants, an officer, director, or other 
authorized employee of the Consortium Leader must sign the required 
certifications. Pursuant to Sec. 54.680, electronic signatures are 
permitted for all required certifications.

[78 FR 13992, Mar. 1, 2013]

                           General Provisions



Sec. 54.671  Resale.

    (a) Prohibition on resale. Services purchased pursuant to universal 
service support mechanisms under this subpart shall not be sold, resold, 
or transferred in consideration for money or any other thing of value.
    (b) Permissible fees. The prohibition on resale set forth in 
paragraph (a) of this section shall not prohibit a health care provider 
from charging normal fees for health care services, including 
instruction related to services purchased with support provided under 
this subpart.

[78 FR 13992, Mar. 1, 2013]



Sec. 54.672  Duplicate support.

    (a) Eligible health care providers that seek support under the 
Healthcare Connect Fund for telecommunications services may not also 
request support from the Telecommunications Program for the same 
services.
    (b) Eligible health care providers that seek support under the 
Telecommunications Program or the Healthcare Connect Fund may not also 
request support from any other universal service program for the same 
expenses.

[78 FR 13992, Mar. 1, 2013]



Sec. 54.675  Cap.

    (a) Amount of the annual cap. The aggregate annual cap on federal 
universal service support for health care providers shall be $400 
million per funding year, of which up to $150 million per funding year 
will be available to support upfront payments and multi-year commitments 
under the Healthcare Connect Fund.
    (b) Funding year. A funding year for purposes of the health care 
providers cap shall be the period July 1 through June 30.
    (c) Requests. Funds shall be available as follows:
    (1) Generally, funds shall be available to eligible health care 
providers on a first-come-first-served basis, with requests accepted 
beginning on the first of January prior to each funding year.
    (2) For the Telecommunications Program and the Healthcare Connect

[[Page 234]]

Fund, the Administrator shall implement a filing window period that 
treats all eligible health care providers filing within the window 
period as if their applications were simultaneously received.
    (3) [Reserved]
    (4) The deadline to submit a funding commitment request under the 
Telecommunications Program and the Healthcare Connect Fund is June 30 
for the funding year that begins on the previous July 1.
    (d) Annual filing requirement. Health care providers shall file new 
funding requests for each funding year, except for health care providers 
who have received a multi-year funding commitment under Sec. 54.644.
    (e) Long-term contracts. If health care providers enter into long-
term contracts for eligible services, the Administrator shall only 
commit funds to cover the portion of such a long-term contract scheduled 
to be delivered during the funding year for which universal service 
support is sought, except for multi-year funding commitments as 
described in Sec. 54.644.
    (f) Pro-rata reductions for Telecommunications Program support. The 
Administrator shall act in accordance with this section when a filing 
window period for the Telecommunications Program and the Healthcare 
Connect Fund, as described in paragraph (c)(2) of this section, is in 
effect. When a filing window period described in paragraph (c)(2) of 
this section closes, the Administrator shall calculate the total demand 
for Telecommunications Program and Healthcare Connect Fund support 
submitted by all applicants during the filing window period. If the 
total demand during a filing window period exceeds the total remaining 
support available for the funding year, the Administrator shall take the 
following steps:
    (1) The Administrator shall divide the total remaining funds 
available for the funding year by the total amount of Telecommunications 
Program and Healthcare Connect Fund support requested by each applicant 
that has filed during the window period, to produce a pro-rata factor.
    (2) The Administrator shall calculate the amount of 
Telecommunications Program and Healthcare Connect Fund support requested 
by each applicant that has filed during the filing window.
    (3) The Administrator shall multiply the pro-rata factor by the 
total dollar amount requested by each applicant filing during the window 
period. Administrator shall then commit funds to each applicant for 
Telecommunications Program and Healthcare Connect Fund support 
consistent with this calculation.

[78 FR 13992, Mar. 1, 2013]



Sec. 54.679  Election to offset support against annual universal service
fund contribution.

    (a) A service provider that contributes to the universal service 
support mechanisms under subpart H of this part and also provides 
services eligible for support under this subpart to eligible health care 
providers may, at the election of the contributor:
    (1) Treat the amount eligible for support under this subpart as an 
offset against the contributor's universal service support obligation 
for the year in which the costs for providing eligible services were 
incurred; or
    (2) Receive direct reimbursement from the Administrator for that 
amount.
    (b) Service providers that are contributors shall elect in January 
of each year the method by which they will be reimbursed and shall 
remain subject to that method for the duration of the calendar year. Any 
support amount that is owed a service provider that fails to remit its 
monthly universal service contribution obligation, however, shall first 
be applied as an offset to that contributor's contribution obligation. 
Such a service provider shall remain subject to the offsetting method 
for the remainder of the calendar year in which it failed to remit its 
monthly universal service obligation. A service provider that continues 
to be in arrears on its universal service contribution obligations at 
the end of a calendar year shall remain subject to the offsetting method 
for the next calendar year.
    (c) If a service provider providing services eligible for support 
under this subpart elects to treat that support

[[Page 235]]

amount as an offset against its universal service contribution 
obligation and the total amount of support owed exceeds its universal 
service obligation, calculated on an annual basis, the service provider 
shall receive a direct reimbursement in the amount of the difference. 
Any such reimbursement due a service provider shall be provided by the 
Administrator no later than the end of the first quarter of the calendar 
year following the year in which the costs were incurred and the offset 
against the contributor's universal service obligation was applied.

[78 FR 13992, Mar. 1, 2013]



Sec. 54.680  Validity of electronic signatures.

    (a) For the purposes of this subpart, an electronic signature 
(defined by the Electronic Signatures in Global and National Commerce 
Act, as an electronic sound, symbol, or process, attached to or 
logically associated with a contract or other record and executed or 
adopted by a person with the intent to sign the record) has the same 
legal effect as a written signature.
    (b) For the purposes of this subpart, an electronic record (defined 
by the Electronic Signatures in Global and National Commerce Act, as a 
contract or other record created, generated, sent, communicated, 
received, or stored by electronic means) constitutes a record.

[78 FR 13993, Mar. 1, 2013]



                        Subpart H_Administration



Sec. 54.701  Administrator of universal service support mechanisms.

    (a) The Universal Service Administrative Company is appointed the 
permanent Administrator of the federal universal service support 
mechanisms, subject to a review after one year by the Federal 
Communications Commission to determine that the Administrator is 
administering the universal service support mechanisms in an efficient, 
effective, and competitively neutral manner.
    (b) The Administrator shall establish a nineteen (19) member Board 
of Directors, as set forth in Sec. 54.703. The Administrator's Board of 
Directors shall establish three Committees of the Board of Directors, as 
set forth in Sec. 54.705: (1) the Schools and Libraries Committee, which 
shall oversee the schools and libraries support mechanism; (2) the Rural 
Health Care Committee, which shall oversee the rural health care support 
mechanism; and (3) the High Cost and Low Income Committee, which shall 
oversee the high cost and low income support mechanism. The Board of 
Directors shall not modify substantially the power or authority of the 
Committees of the Board without prior approval from the Federal 
Communications Commission.
    (c)(1) The Administrator shall establish three divisions:
    (i) The Schools and Libraries Division, which shall perform duties 
and functions in connection with the schools and libraries support 
mechanism under the direction of the Schools and Libraries Committee of 
the Board, as set forth in Sec. 54.705(a);
    (ii) The Rural Health Care Division, which shall perform duties and 
functions in connection with the rural health care support mechanism 
under the direction of the Rural Health Care Committee of the Board, as 
set forth in Sec. 54.705(b); and
    (iii) The High Cost and Low Income Division, which shall perform 
duties and functions in connection with the high cost and low income 
support mechanism, the interstate access universal service support 
mechanism for price cap carriers described in subpart J of this part, 
and the interstate common line support mechanism for rate-of-return 
carriers described in subpart K of this part, under the direction of the 
High Cost and Low Income Committee of the Board, as set forth in 
Sec. 54.705(c).
    (2) As directed by the Committees of the Board set forth in 
Sec. 54.705, these divisions shall perform the duties and functions 
unique to their respective support mechanisms.
    (d) The Administrator shall be managed by a Chief Executive Officer, 
as

[[Page 236]]

set forth in Sec. 54.704. The Chief Executive Officer shall serve on the 
Committees of the Board established in Sec. 54.705.

[63 FR 70572, Dec. 21, 1998, as amended at 65 FR 38689, June 21, 2000; 
65 FR 57739, Sept. 26, 2000; 66 FR 59727, Nov. 30, 2001; 68 FR 36943, 
June 20, 2003]



Sec. 54.702  Administrator's functions and responsibilities.

    (a) The Administrator, and the divisions therein, shall be 
responsible for administering the schools and libraries support 
mechanism, the rural health care support mechanism, the high-cost 
support mechanism, and the low income support mechanism.
    (b) The Administrator shall be responsible for billing contributors, 
collecting contributions to the universal service support mechanisms, 
and disbursing universal service support funds.
    (c) The Administrator may not make policy, interpret unclear 
provisions of the statute or rules, or interpret the intent of Congress. 
Where the Act or the Commission's rules are unclear, or do not address a 
particular situation, the Administrator shall seek guidance from the 
Commission.
    (d) The Administrator may advocate positions before the Commission 
and its staff only on administrative matters relating to the universal 
service support mechanisms.
    (e) The Administrator shall maintain books of account separate from 
those of the National Exchange Carrier Association, of which the 
Administrator is an independent subsidiary. The Administrator's books of 
account shall be maintained in accordance with generally accepted 
accounting principles. The Administrator may borrow start up funds from 
the National Exchange Carrier Association. Such funds may not be drawn 
from the Telecommunications Relay Services (TRS) fund or TRS 
administrative expense accounts.
    (f) The Administrator shall create and maintain a website, as 
defined in Sec. 54.5, on which applications for services will be posted 
on behalf of schools, libraries and rural health care providers.
    (g) The Administrator shall file with the Commission and Congress an 
annual report by March 31 of each year. The report shall detail the 
Administrator's operations, activities, and accomplishments for the 
prior year, including information about participation in each of the 
universal service support mechanisms and administrative action intended 
to prevent waste, fraud, and abuse. The report also shall include an 
assessment of subcontractors' performance, and an itemization of monthly 
administrative costs that shall include all expenses, receipts, and 
payments associated with the administration of the universal service 
support programs. The Administrator shall consult each year with 
Commission staff to determine the scope and content of the annual 
report.
    (h) The Administrator shall report quarterly to the Commission on 
the disbursement of universal service support program funds. The 
Administrator shall keep separate accounts for the amounts of money 
collected and disbursed for eligible schools and libraries, rural health 
care providers, low-income consumers, and high-cost and insular areas.
    (i) Information based on the Administrator's reports will be made 
public by the Commission at least once a year as part of a Monitoring 
Report.
    (j) The Administrator shall provide the Commission full access to 
the data collected pursuant to the administration of the universal 
service support programs.
    (k) Pursuant to Sec. 64.903 of this chapter, the Administrator shall 
file with the Commission a cost allocation manual (CAM) that describes 
the accounts and procedures the Administrator will use to allocate the 
shared costs of administering the universal service support mechanisms 
and its other operations.
    (l) The Administrator shall make available to whomever the 
Commission directs, free of charge, any and all intellectual property, 
including, but not limited to, all records and information generated by 
or resulting from its role in administering the support mechanisms, if 
its participation in administering the universal service support 
mechanisms ends.
    (m) If its participation in administering the universal service 
support mechanisms ends, the Administrator

[[Page 237]]

shall be subject to close-out audits at the end of its term.
    (n) The Administrator shall account for the financial transactions 
of the Universal Service Fund in accordance with generally accepted 
accounting principles for federal agencies and maintain the accounts of 
the Universal Service Fund in accordance with the United States 
Government Standard General Ledger. When the Administrator, or any 
independent auditor hired by the Administrator, conducts audits of the 
beneficiaries of the Universal Service Fund, contributors to the 
Universal Service Fund, or any other providers of services under the 
universal service support mechanisms, such audits shall be conducted in 
accordance with generally accepted government auditing standards. In 
administering the Universal Service Fund, the Administrator shall also 
comply with all relevant and applicable federal financial management and 
reporting statutes.
    (o) The Administrator shall provide performance measurements 
pertaining to the universal service support mechanisms as requested by 
the Commission by order or otherwise.

[63 FR 70573, Dec. 21, 1998, as amended at 65 FR 38690, June 21, 2000; 
65 FR 57739, Sept. 26, 2000; 66 FR 59727, Nov. 30, 2001; 67 FR 11259, 
Mar. 13, 2002; 69 FR 5719, Feb. 6, 2004; 72 FR 54218, Sept. 24, 2007; 76 
FR 73876, Nov. 29, 2011]



Sec. 54.703  The Administrator's Board of Directors.

    (a) The Administrator shall have a Board of Directors separate from 
the Board of Directors of the National Exchange Carrier Association. The 
National Exchange Carrier Association's Board of Directors shall be 
prohibited from participating in the functions of the Administrator.
    (b) Board composition. The independent subsidiary's Board of 
Directors shall consist of nineteen (19) directors:
    (1) Three directors shall represent incumbent local exchange 
carriers, with one director representing the Bell Operating Companies 
and GTE, one director representing ILECs (other than the Bell Operating 
Companies) with annual operating revenues in excess of $40 million, and 
one director representing ILECs (other than the Bell Operating 
Companies) with annual operating revenues of $40 million or less;
    (2) Two directors shall represent interexchange carriers, with one 
director representing interexchange carriers with more than $3 billion 
in annual operating revenues and one director representing interexchange 
carriers with annual operating revenues of $3 billion or less;
    (3) One director shall represent commercial mobile radio service 
(CMRS) providers;
    (4) One director shall represent competitive local exchange 
carriers;
    (5) One director shall represent cable operators;
    (6) One director shall represent information service providers;
    (7) Three directors shall represent schools that are eligible to 
receive discounts pursuant to Sec. 54.501;
    (8) One director shall represent libraries that are eligible to 
receive discounts pursuant to Sec. 54.501;
    (9) Two directors shall represent rural health care providers that 
are eligible to receive supported services pursuant to Sec. 54.601;
    (10) One director shall represent low-income consumers;
    (11) One director shall represent state telecommunications 
regulators;
    (12) One director shall represent state consumer advocates; and
    (13) The Chief Executive Officer of the Administrator.
    (c) Selection process for board of directors. (1) Sixty (60) days 
prior to the expiration of a director's term, the industry or non-
industry group that is represented by such director on the 
Administrator's Board of Directors, as specified in paragraph (b) of 
this section, shall nominate by consensus a new director. The industry 
or non-industry group shall submit the name of its nominee for a seat on 
the Administrator's Board of Directors, along with relevant professional 
and biographical information about the nominee, to the Chairman of the 
Federal Communications Commission. Only members of the industry or non-
industry group that a Board member will represent may submit a 
nomination for that position.
    (2) The name of an industry or non-industry group's nominee shall be 
filed

[[Page 238]]

with the Office of the Secretary of the Federal Communications 
Commission in accordance with part 1 of this chapter. The document 
nominating a candidate shall be captioned ``In the matter of: Nomination 
for Universal Service Administrator's Board of Directors'' and shall 
reference FCC Docket Nos. 97-21 and 96-45. Each nomination shall specify 
the position on the Board of Directors for which such nomination is 
submitted. Two copies of the document nominating a candidate shall be 
submitted to the Wireline Competition Bureau's Telecommunications Access 
Policy Division.
    (3) The Chairman of the Federal Communications Commission shall 
review the nominations submitted by industry and non-industry groups and 
select each director of the Administrator's Board of Directors, as each 
director's term expires pursuant to paragraph (d) of this section. If an 
industry or non-industry group does not reach consensus on a nominee or 
fails to submit a nomination for a position on the Administrator's Board 
of Directors, the Chairman of the Federal Communications Commission 
shall select an individual to represent such group on the 
Administrator's Board of Directors.
    (d) Board member terms. The directors of the Administrator's Board 
shall be appointed for three-year terms, except that the Chief Executive 
Officer shall be a permanent member of the Board. Board member terms 
shall run from January 1 of the first year of the term to December 31 of 
the third year of the term, except that, for purposes of the term 
beginning on January 1, 1999, the terms of the six directors shall 
expire on December 31, 2000, the terms of another six directors on 
December 31, 2001, and the terms of the remaining six directors on 
December 31, 2002. Directors may be reappointed for subsequent terms 
pursuant to the initial nomination and appointment process described in 
paragraph (c) of this section. If a Board member vacates his or her seat 
prior to the completion of his or her term, the Administrator will 
notify the Wireline Competition Bureau of such vacancy, and a successor 
will be chosen pursuant to the nomination and appointment process 
described in paragraph (c) of this section.
    (e) All meetings of the Administrator's Board of Directors shall be 
open to the public and held in Washington, D.C.
    (f) Each member of the Administrator's Board of Directors shall be 
entitled to receive reimbursement for expenses directly incurred as a 
result of his or her participation on the Administrator's Board of 
Directors.

[63 FR 70573, Dec. 21, 1998, as amended at 67 FR 13226, Mar. 21, 2002]



Sec. 54.704  The Administrator's Chief Executive Officer.

    (a) Chief Executive Officer's functions. (1) The Chief Executive 
Officer shall have management responsibility for the administration of 
the federal universal service support mechanisms.
    (2) The Chief Executive Officer shall have management responsibility 
for all employees of the Universal Service Administrative Company. The 
Chief Executive Officer may delegate such responsibility to heads of the 
divisions established in Sec. 54.701(g).
    (3) The Chief Executive Officer shall serve on the Administrator's 
Board of Directors as set forth in Sec. 54.703(b) and on the Committees 
of the Board established under Sec. 54.705.
    (b) Selection process for the Chief Executive Officer. (1) The 
members of the Board of Directors of the Administrator shall nominate by 
consensus a Chief Executive Officer. The Board of Directors shall submit 
the name of its nominee for Chief Executive Officer, along with relevant 
professional and biographical information about the nominee, to the 
Chairman of the Federal Communications Commission.
    (2) The Chairman of the Federal Communications Commission shall 
review the nomination submitted by the Administrator's Board of 
Directors. Subject to the Chairman's approval, the nominee shall be 
appointed as the Administrator's Chief Executive Officer.
    (3) If the Board of Directors does not reach consensus on a nominee 
or fails to submit a nomination for the Chief Executive Officer, the 
Chairman of the Federal Communications Commission shall select a Chief 
Executive Officer.

[63 FR 70574, Dec. 21, 1998]

[[Page 239]]



Sec. 54.705  Committees of the Administrator's Board of Directors.

    (a) Schools and Libraries Committee--(1) Committee functions. The 
Schools and Libraries Committee shall oversee the administration of the 
schools and libraries support mechanism by the Schools and Libraries 
Division. The Schools and Libraries Committee shall have the authority 
to make decisions concerning:
    (i) How the Administrator projects demand for the schools and 
libraries support mechanism;
    (ii) Development of applications and associated instructions as 
needed for the schools and libraries support mechanism;
    (iii) Administration of the application process, including 
activities to ensure compliance with Federal Communications Commission 
rules and regulations;
    (iv) Performance of outreach and education functions;
    (v) Review of bills for services that are submitted by schools and 
libraries;
    (vi)-(viii) [Reserved]
    (ix) The classification of schools and libraries as urban or rural 
and the use of the discount matrix established in Sec. 54.505(c) of this 
chapter to set the discount rate to be applied to services purchased by 
eligible schools and libraries;
    (x) Performance of audits of beneficiaries under the schools and 
libraries support mechanism; and
    (xi) Development and implementation of other functions unique to the 
schools and libraries support mechanism.
    (2) Committee composition. The Schools and Libraries Committee shall 
consist of the following members of the Administrator's Board of 
Directors:
    (i) Three school representatives;
    (ii) One library representative;
    (iii) One service provider representative;
    (iv) One at-large representative elected by the Administrator's 
Board of Directors; and
    (v) The Administrator's Chief Executive Officer.
    (b) Rural Health Care Committee--(1) Committee functions. The Rural 
Health Care Committee shall oversee the administration of the rural 
health care support mechanism by the Rural Health Care Division. The 
Rural Health Care Committee shall have authority to make decisions 
concerning:
    (i) How the Administrator projects demand for the rural health care 
support mechanism;
    (ii) Development of applications and associated instructions as 
needed for the rural health care support mechanism;
    (iii) Administration of the application process, including 
activities to ensure compliance with Federal Communications Commission 
rules and regulations;
    (iv) Calculation of support levels under Sec. 54.609;
    (v) Performance of outreach and education functions;
    (vi) Review of bills for services that are submitted by rural health 
care providers;
    (vii) Monitoring demand for the purpose of determining when the $400 
million cap has been reached;
    (viii) Performance of audits of beneficiaries under the rural health 
care support mechanism; and
    (ix) Development and implementation of other functions unique to the 
rural health care support mechanism.
    (2) Committee composition. The Rural Health Care Committee shall 
consist of the following members of the Administrator's Board of 
Directors:
    (i) Two rural health care representatives;
    (ii) One service provider representative;
    (iii) Two at-large representatives elected by the Administrator's 
Board of Directors;
    (iv) One State telecommunications regulator, one state consumer 
advocate; and
    (v) The Administrator's Chief Executive Officer.
    (c) High Cost and Low Income Committee--(1) Committee functions. The 
High Cost and Low Income Committee shall oversee the administration of 
the high cost and low income support mechanisms, the interstate access 
universal service support mechanism for price cap carriers described in 
subpart J of this part, and the interstate common line support mechanism 
for rate-of-return carriers described in subpart

[[Page 240]]

K of this part by the High Cost and Low Income Division. The High Cost 
and Low Income Committee shall have the authority to make decisions 
concerning:
    (i) How the Administrator projects demand for the high cost, low 
income, interstate access universal service, and interstate common line 
support mechanisms;
    (ii) Development of applications and associated instructions as 
needed for the high cost, low income, interstate access universal 
service, and interstate common line support mechanisms;
    (iii) Administration of the application process, including 
activities to ensure compliance with Federal Communications Commission 
rules and regulations;
    (iv) Performance of audits of beneficiaries under the high cost, low 
income, interstate access universal service and interstate common line 
support mechanisms; and
    (v) Development and implementation of other functions unique to the 
high cost, low income, interstate access universal service and 
interstate common line support mechanisms.
    (d) Binding Authority of Committees of the Board. (1) Any action 
taken by the Committees of the Board established in paragraphs (a) 
through (c) of this section shall be binding on the Board of Directors 
of the Administrator, unless such action is presented for review to the 
Board by the Administrator's Chief Executive Officer and the Board 
disapproves of such action by a two-thirds vote of a quorum of 
directors, as defined in the Administrator's by-laws.
    (2) The budgets prepared by each Committee shall be subject to Board 
review as part of the Administrator's combined budget. The Board shall 
not modify the budgets prepared by the Committees of the Board unless 
such modification is approved by a two-thirds vote of a quorum of the 
Board, as defined in the Administrator's by-laws.

[63 FR 70574, Dec. 21, 1998, as amended at 65 FR 38690, June 21, 2000; 
65 FR 57739, Sept. 26, 2000; 66 FR 59728, Nov. 30, 2001; 79 FR 49204, 
Aug. 19, 2014]



Sec. 54.706  Contributions.

    (a) Entities that provide interstate telecommunications to the 
public, or to such classes of users as to be effectively available to 
the public, for a fee will be considered telecommunications carriers 
providing interstate telecommunications services and must contribute to 
the universal service support mechanisms. Certain other providers of 
interstate telecommunications, such as payphone providers that are 
aggregators, providers of interstate telecommunications for a fee on a 
non-common carrier basis, and interconnected VoIP providers, also must 
contribute to the universal service support mechanisms. Interstate 
telecommunications include, but are not limited to:
    (1) Cellular telephone and paging services;
    (2) Mobile radio services;
    (3) Operator services;
    (4) Personal communications services (PCS);
    (5) Access to interexchange service;
    (6) Special access service;
    (7) WATS;
    (8) Toll-free service;
    (9) 900 service;
    (10) Message telephone service (MTS);
    (11) Private line service;
    (12) Telex;
    (13) Telegraph;
    (14) Video services;
    (15) Satellite service;
    (16) Resale of interstate services;
    (17) Payphone services; and
    (18) Interconnected VoIP services.
    (19) Prepaid calling card providers.
    (b) Except as provided in paragraph (c) of this section, every 
entity required to contribute to the federal universal service support 
mechanisms under paragraph (a) of this section shall contribute on the 
basis of its projected collected interstate and international end-user 
telecommunications revenues, net of projected contributions.
    (c) Any entity required to contribute to the federal universal 
service support mechanisms whose projected collected interstate end-user 
telecommunications revenues comprise less than 12 percent of its 
combined projected collected interstate and international end-user 
telecommunications revenues

[[Page 241]]

shall contribute based only on such entity's projected collected 
interstate end-user telecommunications revenues, net of projected 
contributions. For purposes of this paragraph, an ``entity'' shall refer 
to the entity that is subject to the universal service reporting 
requirements in Sec. 54.711 and shall include all of that entity's 
affiliated providers of interstate and international telecommunications 
and telecommunications services.
    (d) Entities providing open video systems (OVS), cable leased 
access, or direct broadcast satellite (DBS) services are not required to 
contribute on the basis of revenues derived from those services. The 
following entities will not be required to contribute to universal 
service: non-profit health care providers; broadcasters; systems 
integrators that derive less than five percent of their systems 
integration revenues from the resale of telecommunications. Prepaid 
calling card providers are not required to contribute on the basis of 
revenues derived from prepaid calling cards sold by, to, or pursuant to 
contract with the Department of Defense (DoD) or a DoD entity.
    (e) Any entity required to contribute to the federal universal 
service support mechanisms shall retain, for at least five years from 
the date of the contribution, all records that may be required to 
demonstrate to auditors that the contributions made were in compliance 
with the Commission's universal service rules. These records shall 
include without limitation the following: Financial statements and 
supporting documentation; accounting records; historical customer 
records; general ledgers; and any other relevant documentation. This 
document retention requirement also applies to any contractor or 
consultant working on behalf of the contributor.

[63 FR 70575, Dec. 21, 1998, as amended at 64 FR 60358, Nov. 5, 1999; 67 
FR 11260, Mar. 13, 2002; 67 FR 79532, Dec. 30, 2002; 71 FR 38796, July 
10, 2006; 71 FR 43673, Aug. 2, 2006; 72 FR 54218, Sept. 24, 2007]



Sec. 54.707  Audit controls.

    (a) The Administrator shall have the authority to audit contributors 
and carriers reporting data to the Administrator. The Administrator 
shall establish procedures to verify discounts, offsets and support 
amounts provided by the universal service support programs, and may 
suspend or delay discounts, offsets, and support amounts provided to a 
carrier if the carrier fails to provide adequate verification of 
discounts, offsets, or support amounts provided upon reasonable request, 
or if directed by the Commission to do so. The Administrator shall not 
provide reimbursements, offsets or support amounts pursuant to subparts 
D, K, L and M of this part to a carrier until the carrier has provided 
to the Administrator a true and correct copy of the decision of a state 
commission designating that carrier as an eligible telecommunications 
carrier in accordance with Sec. 54.202.
    (b) The Administrator has the right to obtain all cost and revenue 
submissions and related information, at any time and in unaltered 
format, that carriers submit to NECA that are used to calculate support 
payments pursuant to subparts D, K, and M of this part.
    (c) The Administrator (and NECA, to the extent the Administrator 
does not directly receive information from carriers) shall provide to 
the Commission upon request all underlying data collected from eligible 
telecommunications carriers to calculate payments pursuant to subparts 
D, K, L and M of this part.

[81 FR 24342, Apr. 25, 2016]



Sec. 54.708  De minimis exemption.

    If a contributor's contribution to universal service in any given 
year is less than $10,000 that contributor will not be required to 
submit a contribution or Telecommunications Reporting Worksheet for that 
year unless it is required to do so to by our rules governing 
Telecommunications Relay Service (47 CFR 64.601 et seq. of this 
chapter), numbering administration (47 CFR 52.1 et seq. of this 
chapter), or shared costs of local number portability (47 CFR 52.21 et 
seq. of this chapter). The foregoing notwithstanding, all interconnected 
VoIP providers, including those whose contributions would be de minimis, 
must file the Telecommunications Reporting Worksheet.

[[Page 242]]

If a contributor improperly claims exemption from the contribution 
requirement, it will subject to the criminal provisions of sections 
220(d) and (e) of the Act regarding willful false submissions and will 
be required to pay the amounts withheld plus interest.

[64 FR 41331, July 30, 1999, as amended at 71 FR 38797, July 10, 2006]



Sec. 54.709  Computations of required contributions to universal service 
support mechanisms.

    (a) Prior to April 1, 2003, contributions to the universal service 
support mechanisms shall be based on contributors' end-user 
telecommunications revenues and on a contribution factor determined 
quarterly by the Commission. Contributions to the mechanisms beginning 
April 1, 2003 shall be based on contributors' projected collected end-
user telecommunications revenues, and on a contribution factor 
determined quarterly by the Commission.
    (1) For funding the federal universal service support mechanisms 
prior to April 1, 2003, the subject revenues will be contributors' 
interstate and international revenues derived from domestic end users 
for telecommunications or telecommunications services, net of prior 
period actual contributions. Beginning April 1, 2003, the subject 
revenues will be contributors' projected collected interstate and 
international revenues derived from domestic end users for 
telecommunications or telecommunications services, net of projected 
contributions.
    (2) Prior to April 1, 2003, the quarterly universal service 
contribution factor shall be determined by the Commission based on the 
ratio of total projected quarterly expenses of the universal service 
support mechanisms to the total end-user interstate and international 
telecommunications revenues, net of prior period actual contributions. 
Beginning April 1, 2003, the quarterly universal service contribution 
factor shall be determined by the Commission based on the ratio of total 
projected quarterly expenses of the universal service support mechanisms 
to the total projected collected end-user interstate and international 
telecommunications revenues, net of projected contributions. The 
Commission shall approve the Administrator's quarterly projected costs 
of the universal service support mechanisms, taking into account demand 
for support and administrative expenses. The total subject revenues 
shall be compiled by the Administrator based on information contained in 
the Telecommunications Reporting Worksheets described in Sec. 54.711(a).
    (3) Total projected expenses for the federal universal service 
support mechanisms for each quarter must be approved by the Commission 
before they are used to calculate the quarterly contribution factor and 
individual contributions. For each quarter, the Administrator must 
submit its projections of demand for the federal universal service 
support mechanisms for high-cost areas, low-income consumers, schools 
and libraries, and rural health care providers, respectively, and the 
basis for those projections, to the Commission and the Office of the 
Managing Director at least sixty (60) calendar days prior to the start 
of that quarter. For each quarter, the Administrator must submit its 
projections of administrative expenses for the high-cost mechanism, the 
low-income mechanism, the schools and libraries mechanism and the rural 
health care mechanism and the basis for those projections to the 
Commission and the Office of the Managing Director at least sixty (60) 
calendar days prior to the start of that quarter. Based on data 
submitted to the Administrator on the Telecommunications Reporting 
Worksheets, the Administrator must submit the total contribution base to 
the Office of the Managing Director at least thirty (30) days before the 
start of each quarter. The projections of demand and administrative 
expenses and the contribution factor shall be announced by the 
Commission in a public notice and shall be made available on the 
Commission's website. The Commission reserves the right to set 
projections of demand and administrative expenses at amounts that the 
Commission determines will serve the public interest at any time within 
the fourteen-day period following release of the Commission's public 
notice. If the Commission take no action within fourteen (14) days of 
the date of release of the public

[[Page 243]]

notice announcing the projections of demand and administrative expenses, 
the projections of demand and administrative expenses, and the 
contribution factor shall be deemed approved by the Commission. Except 
as provided in Sec. 54.706(c), the Administrator shall apply the 
quarterly contribution factor, once approved by the Commission, to 
contributor's interstate and international end-user telecommunications 
revenues to calculate the amount of individual contributions.
    (b) If the contributions received by the Administrator in a quarter 
exceed the amount of universal service support program contributions and 
administrative costs for that quarter, the excess payments will be 
carried forward to the following quarter. The contribution factors for 
the following quarter will take into consideration the projected costs 
of the support mechanisms for that quarter and the excess contributions 
carried over from the previous quarter. The Commission may instruct the 
Administrator to treat excess contributions in a manner other than as 
prescribed in this paragraph (b). Such instructions may be made in the 
form of a Commission Order or a public notice released by the Wireline 
Competition Bureau. Any such public notice will become effective 
fourteen days after release of the public notice, absent further 
Commission action.
    (c) If the contributions received by the Administrator in a quarter 
are inadequate to meet the amount of universal service support program 
payments and administrative costs for that quarter, the Administrator 
shall request authority from the Commission to borrow funds 
commercially, with such debt secured by future contributions. Subsequent 
contribution factors will take into consideration the projected costs of 
the support mechanisms and the additional costs associated with 
borrowing funds.
    (d) If a contributor fails to file a Telecommunications Reporting 
Worksheet by the date on which it is due, the Administrator shall bill 
that contributor based on whatever relevant data the Administrator has 
available, including, but not limited to, the number of lines 
presubscribed to the contributor and data from previous years, taking 
into consideration any estimated changes in such data.

[62 FR 41305, Aug. 1, 1997, as amended at 62 FR 65038, Dec. 10, 1997; 63 
FR 2132, Jan. 13, 1998; 63 FR 43098, Aug. 12, 1998; 63 FR 70576, Dec. 
21, 1998; 64 FR 41331, July 30, 1999; 64 FR 60358, Nov. 5, 1999; 66 FR 
16151, Mar. 23, 2001; 67 FR 11260, Mar. 13, 2002; 67 FR 13227, Mar. 21, 
2002; 67 FR 79533, Dec. 30, 2002; 68 FR 38642, June 30, 2003; 71 FR 
38267, July 6, 2006; 76 FR 73876, Nov. 29, 2011]



Sec. 54.711  Contributor reporting requirements.

    (a) Contributions shall be calculated and filed in accordance with 
the Telecommunications Reporting Worksheet which shall be published in 
the Federal Register. The Telecommunications Reporting Worksheet sets 
forth information that the contributor must submit to the Administrator 
on a quarterly and annual basis. The Commission shall announce by Public 
Notice published in the Federal Register and on its website the manner 
of payment and dates by which payments must be made. An executive 
officer of the contributor must certify to the truth and accuracy of 
historical data included in the Telecommunications Reporting Worksheet, 
and that any projections in the Telecommunications Reporting Worksheet 
represent a good-faith estimate based on the contributor's policies and 
procedures. The Commission or the Administrator may verify any 
information contained in the Telecommunications Reporting Worksheet. 
Contributors shall maintain records and documentation to justify 
information reported in the Telecommunications Reporting Worksheet, 
including the methodology used to determine projections, for three years 
and shall provide such records and documentation to the Commission or 
the Administrator upon request. Inaccurate or untruthful information 
contained in the Telecommunications Reporting Worksheet may lead to 
prosecution under the criminal provisions of Title 18 of the United 
States Code. The Administrator shall advise the Commission of any 
enforcement issues that arise and provide any suggested response.

[[Page 244]]

    (b) The Commission shall have access to all data reported to the 
Administrator. Contributors may make requests for Commission 
nondisclosure of company-specific revenue information under Sec. 0.459 
of this chapter by so indicating on the Telecommunications Reporting 
Worksheet at the time that the subject data are submitted. The 
Commission shall make all decisions regarding nondisclosure of company-
specific information. The Administrator shall keep confidential all data 
obtained from contributors, shall not use such data except for purposes 
of administering the universal service support programs, and shall not 
disclose such data in company-specific form unless directed to do so by 
the Commission. Subject to any restrictions imposed by the Chief of the 
Wireline Competition Bureau, the Universal Service Administrator may 
share data obtained from contributors with the administrators of the 
North American Numbering Plan administration cost recovery (See 47 CFR 
52.16 of this chapter), the local number portability cost recovery (See 
47 CFR 52.32 of this chapter), and the TRS Fund (See 47 CFR 
64.604(c)(4)(iii)(H) of this chapter). The Administrator shall keep 
confidential all data obtained from other administrators and shall not 
use such data except for purposes of administering the universal service 
support mechanisms.
    (c) The Bureau may waive, reduce, modify, or eliminate contributor 
reporting requirements that prove unnecessary and require additional 
reporting requirements that the Bureau deems necessary to the sound and 
efficient administration of the universal service support mechanisms.

[64 FR 41332, July 30, 1999, as amended at 66 FR 16151, Mar. 23, 2001; 
67 FR 13227, Mar. 21, 2002; 67 FR 79533, Dec. 30, 2002]



Sec. 54.712  Contributor recovery of universal service costs from end
users.

    (a) Federal universal service contribution costs may be recovered 
through interstate telecommunications-related charges to end users. If a 
contributor chooses to recover its federal universal service 
contribution costs through a line item on a customer's bill the amount 
of the federal universal service line-item charge may not exceed the 
interstate telecommunications portion of that customer's bill times the 
relevant contribution factor.
    (b) [Reserved]

[67 FR 79533, Dec. 30, 2002, as amended at 68 FR 15672, Apr. 1, 2003; 71 
FR 38797, July 10, 2006]



Sec. 54.713  Contributors' failure to report or to contribute.

    (a) A contributor that fails to file a Telecommunications Reporting 
Worksheet and subsequently is billed by the Administrator shall pay the 
amount for which it is billed. The Administrator may bill a contributor 
a separate assessment for reasonable costs incurred because of that 
contributor's filing of an untruthful or inaccurate Telecommunications 
Reporting Worksheet, failure to file the Telecommunications Reporting 
Worksheet, or late payment of contributions. Failure to file the 
Telecommunications Reporting Worksheet or to submit required quarterly 
contributions may subject the contributor to the enforcement provisions 
of the Act and any other applicable law. The Administrator shall advise 
the Commission of any enforcement issues that arise and provide any 
suggested response. Once a contributor complies with the 
Telecommunications Reporting Worksheet filing requirements, the 
Administrator may refund any overpayments made by the contributor, less 
any fees, interest, or costs.
    (b) If a universal service fund contributor fails to make full 
payment on or before the date due of the monthly amount established by 
the contributor's applicable Form 499-A or Form 499-Q, or the monthly 
invoice provided by the Administrator, the payment is delinquent. All 
such delinquent amounts shall incur from the date of delinquency, and 
until all charges and costs are paid in full, interest at the rate equal 
to the U.S. prime rate (in effect on the date of the delinquency) plus 
3.5 percent, as well as administrative charges of collection and/or 
penalties and charges permitted by the applicable law (e.g., 31 U.S.C. 
3717 and implementing regulations).
    (c) If a universal service fund contributor is more than 30 days 
delinquent in filing a Telecommunications

[[Page 245]]

Reporting Worksheet Form 499-A or 499-Q, the Administrator shall assess 
an administrative remedial collection charge equal to the greater of 
$100 or an amount computed using the rate of the U.S. prime rate (in 
effect on the date the applicable Worksheet is due) plus 3.5 percent, of 
the amount due per the Administrator's calculations. In addition, the 
contributor is responsible for administrative charges of collection and/
or penalties and charges permitted by the applicable law (e.g., 31 
U.S.C. 3717 and implementing regulations). The Commission may also 
pursue enforcement action against delinquent contributors and late 
filers, and assess costs for collection activities in addition to those 
imposed by the Administrator.
    (d) In the event a contributor fails both to file the Worksheet and 
to pay its contribution, interest will accrue on the greater of the 
amounts due, beginning with the earlier of the date of the failure to 
file or pay.
    (e) If a universal service fund contributor pays the Administrator a 
sum that is less than the amount due for the contributor's universal 
service contribution, the Administrator shall adhere to the ``American 
Rule'' whereby payment is applied first to outstanding penalty and 
administrative cost charges, next to accrued interest, and third to 
outstanding principal. In applying the payment to outstanding principal, 
the Administrator shall apply such payment to the contributor's oldest 
past due amounts first.

[72 FR 54219, Sept. 24, 2007]



Sec. 54.715  Administrative expenses of the Administrator.

    (a) The annual administrative expenses of the Administrator should 
be commensurate with the administrative expenses of programs of similar 
size, with the exception of the salary levels for officers and employees 
of the Administrator described in paragraph (b) of this section. The 
annual administrative expenses may include, but are not limited to, 
salaries of officers and operations personnel, the costs of borrowing 
funds, equipment costs, operating expenses, directors' expenses, and 
costs associated with auditing contributors of support recipients.
    (b) All officers and employees of the Administrator may be 
compensated at an annual rate of pay, including any non-regular 
payments, bonuses, or other compensation, in an amount not to exceed the 
rate of basic pay in effect for Level I of the Executive Schedule under 
5 U.S.C. 5312.

    Note to paragraph (b): The compensation to be included when 
calculating whether an employee's rate of pay exceeds Level I of the 
Executive Schedule does not include life insurance benefits, retirement 
benefits (including payments to 401(k) plans), health insurance 
benefits, or other similar benefits, provided that any such benefits are 
reasonably comparable to benefits that are provided to employees of the 
federal government.

    (c) The Administrator shall submit to the Commission projected 
quarterly budgets at least sixty (60) days prior to the start of every 
quarter. The Commission must approve the projected quarterly budgets 
before the Administrator disburses funds under the federal universal 
service support mechanisms. The administrative expenses incurred by the 
Administrator in connection with the schools and libraries support 
mechanism, the rural health care support mechanism, the high-cost 
support mechanism, and the low income support mechanism shall be 
deducted from the annual funding of each respective support mechanism. 
The expenses deducted from the annual funding for each support mechanism 
also shall include the Administrator's joint