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Comment Sought on Additional Connect America Fund Phase II Issues

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Released: December 3, 2013

PUBLIC NOTICE

Federal Communications Commission

News Media Information 202 / 418-0500

445 12th St., S.W.

Internet: http://www.fcc.gov

TTY: 1-888-835-53

22

Washington, D.C. 20554

DA 13-2317

Released: December 3, 2013

WIRELINE COMPETITION BUREAU SEEKS COMMENT ON ADDITIONAL CONNECT

AMERICA FUND PHASE II ISSUES

WC Docket No. 10-90

Comments Due: January 7, 2014

In this Public Notice, the Wireline Competition Bureau seeks to further develop the record on
several implementation issues regarding the transition from Connect America Phase I to Phase II.

Timing of Phase II Support Disbursements. In the USF/ICC Transformation Order, the
Commission specified that price cap carriers electing to make a state-level commitment would receive
five years of model-based support,1 and it established a process for transitioning support from Connect
America Fund Phase I to Phase II in states where model-based support is greater than frozen support.
Specifically, for a carrier accepting the state-wide commitment pursuant to Connect America Fund Phase
II, “in the first year, the carrier will receive one-half the full amount the carrier will receive under CAF
Phase II and one-half the amount the carrier received under CAF Phase I for the previous year (which
would be the frozen amount if the carrier declines Phase I or the frozen amount plus the incremental
amount if the carrier accepts Phase I); in the second year, each carrier accepting the state-wide
commitment will receive the full CAF Phase II amount.”2
Several price cap carriers have raised questions regarding how to calculate the five-year funding
period in light of the language in paragraph 180 of the USF/ICC Transformation Order.3 We now seek to
more fully develop the record on this issue. We seek comment on several alternatives. First, the price
cap carrier could receive the remaining half of one year of annual support as a lump sum on the date that
is five years after the date of the initial election. Second, the remaining half could be distributed pro-rata
on a monthly basis over the third through fifth years. Third, the remaining half year could be provided as
a lump sum as soon as the carrier certifies that it has fully met its deployment obligations, which


1 Connect America Fund; A National Broadband Plan for Our Future; Establishing Just and Reasonable Rates
for Local Exchange Carriers; High-Cost Universal Service Support; Developing a Unified Intercarrier
Compensation Regime; Federal-State Joint Board on Universal Service; Lifeline and Link-Up; Universal Service
Reform—Mobility Fund
; WC Docket Nos. 10-90, 07-135, 05-337, 03-109, CC Docket Nos. 01-92, 96-45, GN
Docket No. 09-51, WT Docket No. 10-208, Report and Order and Further Notice of Proposed Rulemaking, 26 FCC
17663, 17729, para. 171 (2011) (USF/ICC Transformation Order and/or FNPRM) (“the total model-derived annual
support associated with those census blocks, for a period of five years”).
2 Id. at 17733, para. 180.
3 Letter from Jonathan Banks, US Telecom, to Marlene Dortch, Secretary, Federal Communications Commission,
WC Docket No. 10-90 (filed Sept. 30, 2013).

potentially could occur separately from the section 54.313(e)(2) annual report certification that the
company is providing the required service to 100 percent of its locations.4 Fourth, the remaining half year
of annual support could be provided as a lump sum after the carrier files its annual report pursuant to
section 54.313(e)(2) regarding completion of its deployment obligations for Phase II-funded locations.5
We seek comment on the relative advantages and disadvantages of each alternative. Are there any other
alternatives?
Phase-Down in States with Support Reductions. In the USF/ICC Transformation Order, the
Commission concluded that it would be “premature to specify the length of the transition” for carriers that
would receive less money from Connect America Phase II than frozen high-cost support, but “there will
be an appropriate multi-year transition to the lower amount” which would be addressed in conjunction
with the finalization of the cost model.6
We now seek to further develop the record regarding the length of the “appropriate multi-year
transition.” Consistent with the approach adopted by the Commission for the phase down in support for
competitive eligible telecommunications carriers, should the transition for carriers in states where they
will receive less funding under Phase II than frozen support occur over a five-year period, with the carrier
receiving a 20 percent reduction in frozen support the first year, a 40 percent reduction in the second year,
a 60 percent reduction in the third year, an 80 percent reduction in the fourth year, and the full reduction
in the fifth year? 7 Alternatively, should the transition period be shorter, such as two or three years?8 The
funding necessary to cover this transition could be drawn from the Connect America broadband reserve,
which is designed to ensure that average annual expenditures remain within the $4.5 billion budget over
time. We seek comment on these proposals. To the extent commenters suggest alternative approaches,
they should provide a detailed description of their proposal.

Procedural Matters

A.

Initial Regulatory Flexibility Act Analysis

The USF/ICC Transformation Order and FNPRM included an Initial Regulatory Flexibility
Analysis (IRFA) pursuant to 5 U.S.C. § 603, exploring the potential impact on small entities of the


4 For example, if a carrier made its initial election on December 31, 2014, and completed 100 percent of its
deployment obligations in three years, by December 31, 2017, it would receive the remaining half year of support as
a lump sum as soon as administratively feasible after confirmation that deployment was completed. It also would
continue to receive its regular monthly support amounts in calendar years 2018 and 2019.
5 Under this alternative, if a carrier made its initial election on December 31, 2014, it would receive its remaining
half year of support as a lump sum after it filed its July 2020 annual report, which would report completion of
deployment by December 31, 2019.
6 USF/ICC Transformation Order, 26 FCC Rcd at 17733, para. 180 n.294.
7 For example, under this alternative, a carrier that received $10 million in frozen high-cost support but only $5
million in Phase II support in a particular state would receive $9 million in the first year after the election, $8 million
in the second year, $7 million in the third year, $6 million in fourth year, and $5 million in the final year of the five-
year term of support.
8 If the transition period were three years, a carrier transitioning from $10 million in frozen high-cost support to $5
million in Phase II support would receive $8.33 million in the first year after the election, $6.67 million in the
second year after the election, and $5 million in the third year after the election. It also would receive $5 million in
the fourth and the fifth year of the five-year term of support.
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Commission’s proposals.9 We invite parties to file comments on the IRFA in light of this additional
notice.

B.

Initial Paperwork Reduction Act of 1995 Analysis

This document contains proposed new information collection requirements. The Commission, as
part of its continuing effort to reduce paperwork burdens, invites the general public and the Office of
Management and Budget (OMB) to comment on the information collection requirements contained in this
document, as required by the Paperwork Reduction Act of 1995, Public Law 104-13. In addition,
pursuant to the Small Business Paperwork Relief Act of 2002,10 we seek specific comment on how we
might further reduce the information collection burden for small business concerns with fewer than 25
employees.

C.

Filing Requirements

Interested parties may file comments on or before the date indicated on the first page of this
document. Comments are to reference

WC Docket No. 10-90

and may be filed using the Commission’s
Electronic Comment Filing System (ECFS), or by filing paper copies.11
·
Electronic Filers: Comments may be filed electronically using the Internet by accessing
the ECFS: http://fjallfoss.fcc.gov/ecfs2/.
·
Paper Filers: Parties who choose to file by paper must file an original and one copy of
each filing. Filings can be sent by hand or messenger delivery, by commercial overnight courier,
or by first-class or overnight U.S. Postal Service mail. All filings must be addressed to the
Commission’s Secretary, Office of the Secretary, Federal Communications Commission.
o All hand-delivered or messenger-delivered paper filings for the Commission’s Secretary
must be delivered to FCC Headquarters at 445 12th St., SW, Room TW-A325,
Washington, DC 20554. The filing hours are 8:00 a.m. to 7:00 p.m. All hand deliveries
must be held together with rubber bands or fasteners. Any envelopes and boxes must be
disposed of before entering the building.
o Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority
Mail) must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743.
o U.S. Postal Service first-class, Express, and Priority mail must be addressed to 445 12th
Street, SW, Washington, DC 20554.

In addition, we request that one copy of each pleading be sent to each of the following:

(1) Ted Burmeister, Telecommunications Access Policy Division, Wireline Competition Bureau, 445
12th Street, S.W., Room 5-A445, Washington, D.C. 20554; e-mail: Theodore.Burmeister@fcc.gov; and
(2) Charles Tyler, Telecommunications Access Policy Division, Wireline Competition Bureau, 445 12th
Street, S.W., Room 5-A452, Washington, D.C. 20554; e-mail: Charles.Tyler@fcc.gov.


9 USF/ICC Transformation Order and FNPRM, 26 FCC Rcd at 18364-95, App. P; see 76 Fed. Reg. 78384, 78430-
42 (2011).
10 Public Law 107-198, see 44 U.S.C. 3506(c)(4).
11 See Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (1998).
3

People with Disabilities: To request materials in accessible formats for people with disabilities
(braille, large print, electronic files, audio format), send an e-mail to fcc504@fcc.gov or call the
Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-418-0432 (tty).
This matter shall be treated as a “permit-but-disclose” proceeding in accordance with the
Commission’s ex parte rules.12 Persons making ex parte presentations must file a copy of any written
presentation or a memorandum summarizing any oral presentation within two business days after the
presentation (unless a different deadline applicable to the Sunshine period applies). Persons making oral
ex parte presentations are reminded that memoranda summarizing the presentation must (1) list all
persons attending or otherwise participating in the meeting at which the ex parte presentation was made,
and (2) summarize all data presented and arguments made during the presentation. If the presentation
consisted in whole or in part of the presentation of data or arguments already reflected in the presenter’s
written comments, memoranda or other filings in the proceeding, the presenter may provide citations to
such data or arguments in his or her prior comments, memoranda, or other filings (specifying the relevant
page and/or paragraph numbers where such data or arguments can be found) in lieu of summarizing them
in the memorandum. Documents shown or given to Commission staff during ex parte meetings are
deemed to be written ex parte presentations and must be filed consistent with rule 1.1206(b). In
proceedings governed by rule 1.49(f) or for which the Commission has made available a method of
electronic filing, written ex parte presentations and memoranda summarizing oral ex parte presentations,
and all attachments thereto, must be filed through the electronic comment filing system available for that
proceeding, and must be filed in their native format (e.g., .doc, .xml, .ppt, searchable .pdf). Participants in
this proceeding should familiarize themselves with the Commission’s ex parte rules.
For further information, please contact Ted Burmeister, Telecommunications Access Policy
Division, Wireline Competition Bureau at 202-418-7389, or at TTY (202) 418-0484.
- FCC -


12 47 C.F.R. §§ 1.1200 et seq.
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