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Sua Sponte Reconsideration of Connect America Phase I Order

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Released: July 16, 2013

Federal Communications Commission

FCC 13-97

Before the

Federal Communications Commission

Washington, D.C. 20554

In the Matter of
)
)

Connect America Fund
)
WC Docket No. 10-90
)

ORDER ON RECONSIDERATION

Adopted: July 15, 2013

Released: July 16, 2013

By the Commission:

I.

INTRODUCTION

1.
In this Order on Reconsideration, the Commission sua sponte reconsiders one aspect of
the recent Phase I Order and provides a limited waiver of the Phase I election deadline.1 First, the
Commission now requires carriers to report updates to planned Phase I deployments to the Commission,
relevant state commissions, and relevant Tribal governments. If the intended new deployment will occur
in census blocks not previously identified, the updates must be submitted at least 90 days prior to
commencing construction. Making this reporting mandatory will further transparency regarding the use
of this funding, for the benefit of regulators and the general public. This will strengthen monitoring and
oversight over Phase I recipients and will better ensure that Phase I support is not spent in areas that
already receive service through another provider. Second, we provide a 15-day waiver of the deadline for
carriers to accept second round Phase I support. This extension makes the second round election period
90 days, which is the same amount of time as was provided for first round Phase I elections.

II.

BACKGROUND

2.
In the Phase I Order, the Commission set forth the framework for a second round of
Phase I support.2 In particular, carriers were given 75 days from the release of the Phase I Order to elect
support for the second round.3 In addition, under the modified rules, a carrier is required to certify that
the locations it seeks to count toward its deployment obligation are unserved by Internet service with the
requisite speeds (either based on the National Broadband Map or the Phase I challenge process), and to


1 Connect America Fund, WC Docket No. 10-90, Report and Order, 28 FCC Rcd 7766 (2013) (Phase I Order).
2 Throughout this document, the phrase "Phase I support" means Phase I incremental support. In the first round of
Phase I, carriers could satisfy their deployment obligations by building out broadband-capable networks to locations
lacking Internet service with speeds of 768 kbps downstream and 200 kbps upstream (768 kbps/200 kbps). See
Connect America Fund et al.
, WC Docket No. 10-90 et al., Report and Order and Further Notice of Proposed
Rulemaking, 26 FCC Rcd 17663, 17717, 17720, paras. 138, 146 (2011) (USF/ICC Transformation Order), pets. for
review pending sub nom
. In re: FCC 11-161, No. 11-9900 (10th Cir. filed Dec. 18, 2011). In the second round,
eligibility was expanded in certain circumstances, permitting recipients to deploy to locations served by 768
kbps/200 kbps Internet service but unserved by Internet service with speeds of 3 Mbps downstream and 768 kbps
upstream (3 Mbps/768 kbps). Phase I Order, 28 FCC Rcd at 7771-74, paras. 14-21.
3 Phase I Order, 28 FCC Rcd at 7770, para. 10.

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certify that, to the best of the carrier's knowledge, the locations are actually unserved by Internet service
with those speeds.4
3.
In the Phase I Order, the Commission also adopted new reporting rules that apply to both
the first round and second round of Phase I support. In both rounds, funding recipients are required to
identify at the time of acceptance what census blocks they intend to deploy to in order to satisfy their
buildout obligations.5 Recognizing that there may be unforeseen circumstances that would result in
revised plans, however, the Commission permitted recipients of funding to deviate from those initial
plans, both by not deploying to all the census blocks initially identified and by deploying to census blocks
that were not initially identified.6 The Commission adopted an optional interim reporting requirement,
permitting carriers to submit updated census block lists at any time if their plans change.7

III.

DISCUSSION

A.

Reconsideration of Reporting Requirements

4.
Under section 1.108 of our rules, the Commission may, on its own motion, reconsider
any action made or taken within 30 days from the date of public notice of such action.8 In doing so, the
Commission may take any action it could take in acting on a petition for reconsideration, including
reversing or modifying the original order.9
5.
We now reconsider the Commission's decision in the Phase I Order regarding optional
reporting of changes to planned Phase I deployments. On further reflection, we conclude that it is
appropriate to require Phase I recipients to report changes in deployment plans when those decisions are
made, rather than at the completion of the Phase I deployment period as required under the current rules.10
If, in satisfying its Phase I buildout obligations, a recipient plans to deploy to locations in a census block
not identified when it initially accepted Phase I support, the recipient must report that new census block to
the Commission, relevant state commission, and relevant Tribal governments, at least 90 days prior to
commencing construction in that new census block.11 Likewise, a recipient of Phase I support must
submit updates indicating that it no longer plans to deploy to one or more census blocks it initially
identified when accepting support, prior to making the certification required under section 54.313(b)(2) of


4 Id. at 7775, 7776-79, paras. 23, 28-33.
5 USF/ICC Transformation Order, 26 FCC Rcd at 17720, para. 146; Phase I Order, 28 FCC Rcd at 7777, para. 31.
6 See Phase I Order, 28 FCC Rcd at 7777, para. 31 n.60.
7 Id. at 7780, para. 36. In the original implementation of Phase I incremental support, no provision was made for
carriers to report changes in their plans to the Commission.
8 47 C.F.R. 1.108.
9 47 C.F.R. 1.106(k)(1), 1.108.
10 Carriers are currently required to certify and report on buildout completion in their annual reports three years after
accepting support. 47 C.F.R. 54.313(b)(2).
11 A 90 day time period should provide sufficient time for Commission staff to consider the proposed changes, and
for potential unsubsidized providers in the area to notify the price cap carrier that they serve the area, without
disruption to construction plans.
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our rules.12 This reconsideration of reporting requirements applies to changes in deployment plans for
either the first or second round of Phase I that occur after the effective date of this new rule.13
6.
This minor change strengthens our ongoing ability to oversee use of this public funding
and is consistent with our commitment to accountability and oversight, ensuring that universal service
funding is used as efficiently as possible.14 When a recipient alters its Phase I deployment plans, the
Commission, the relevant state commissions, relevant Tribal governments, if applicable, and the general
public should be informed of that decision.15 By requiring Phase I recipients to identify new census
blocks, Commission staff will be able to verify that the locations in those census blocks are, in fact,
shown as unserved on the National Broadband Map. Additionally, as Phase I election and buildout
information is publicly disclosed,16 the reporting of new census blocks will inform the public, including
existing providers, of where the recipient now intends to meet its Phase I buildout obligations. To further
ensure that the public is aware of changes in deployment plans, the Wireline Competition Bureau
(Bureau) will issue a public notice announcing the updated deployment plans.17 This will give any
existing provider the opportunity to notify the recipient that the provider already serves the census block
in question, thereby furthering the Commission's objective of not supporting areas where there are
unsubsidized competitors.18
7.
We conclude that it is reasonable to provide potential existing providers 45 days from the
Bureau giving public notice of the new planned census blocks to notify the Phase I recipient that they are


12 47 C.F.R. 54.313(b)(2). Parties should ensure that a copy of their changed deployment plans is posted to the
Commission's Electronic Comment Filing System (ECFS) under the Connect America Fund docket (Docket No.
WC 10-90), and should provide a courtesy copy of their filing to the Wireline Competition Bureau.
13 We recognize that some carriers may have already made modifications in their planned deployments for first
round Phase I. This new requirement to report changed deployment plans does not apply to census blocks where
new construction has already commenced as of the effective date of these rules. The effective date is contingent
upon approval of the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (PRA).
44 U.S.C. 3501-3521. An updated version of the Commission's Phase I rules is included as the Appendix to this
Order on Reconsideration.
14 See Letter from Ross J. Lieberman, Vice President of Government Affairs, American Cable Association, and
Steven F. Morris, Vice President and Associate General Counsel, National Cable and Telecommunications
Association, to Julie Veach et al., Chief, Wireline Competition Bureau, Federal Communications Commission, WC
Docket No. 10-90 (filed June 17, 2013) (noting that a lack of a requirement for reporting of changed deployments
could hinder accountability of Phase I funding).
15 The Commission has yet to rule on pending applications for confidentiality of deployment plans for the first round
of Phase I. However, the Commission's recent decision and reasoning rejected confidentiality for second round
deployment plans. See Phase I Order, 28 FCC Rcd at 7776, para. 27. Disclosure of how public funds will be used
serves the public interest. Furthermore, any uncertainty regarding confidentiality that may have existed in first
round initial filings is absent for reports on deployment changes, as we clearly decide now that all deployment
changes, related to either first or second round deployment, occurring after the effective date of these rules will be
publicly disclosed.
16 See id.
17 To expedite the issuing of the public notice, parties should provide a courtesy copy of their changed deployment
plans to the Bureau in addition to posting those plans to ECFS. See supra n.12.
18 If a Phase I recipient receives such a notification from a purported existing provider, in order to make the requisite
certification, the recipient would need to undertake some due diligence regarding that provider before making the
certification. While a provider's notification is not dispositive, it would raise a question of fact regarding whether
the location was in fact unserved, and thus whether the indicated location is eligible for Phase I support.
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currently providing service to the locations in question.19 No sooner than 46 days after the Bureau issues
a public notice announcing the change and in any event no later than the commencement of construction
in the new census blocks, we require the Phase I recipient to make all appropriate certifications that would
have been required had the recipient initially identified the new census blocks at the time it accepted
Phase I support.20 A Phase I recipient may disregard any notice from a potential existing provider
received after the recipient makes its certifications.21 All certifications must be based on information
available at the time the certifications are made.22

B.

Waiver of Election Deadline

8.
Carriers were initially provided 75 days from the release of the Phase I Order to elect to
accept or decline Phase I support.23 One price cap carrier has requested a 15-day extension of time,
noting that additional time is needed to analyze new deployment opportunities and to consult with the
Commission on planned deployments.24 On our own motion, we grant a limited waiver of the Phase I
election deadline, allowing all price cap carriers to submit their elections up to 15 days after the original
deadline. We conclude that good cause exists to grant a limited waiver in this circumstance.25 While the
Commission had originally predicted that 75 days would be a sufficient period of time for carriers to
make second round elections, based on the record, we now determine that additional time is warranted.
Because the Commission expanded the eligible areas in the second round of Phase I, carriers now must
complete additional analyses that were not previously undertaken for the first round. We find that a brief
extension of time will facilitate the ability of Phase I recipients to provide advance notice of Phase I
elections to Commission staff before the election deadline.26 We note that the Commission provided 90
days to make an election in the first round of Phase I, and this action will harmonize the time provided for
elections in the first and second rounds of Phase I. We conclude that providing a limited extension to all
price cap carriers would be appropriate, and we now extend this deadline to 90 days from the release of
the Phase I Order. Therefore, Phase I elections are due August 20, 2013.


19 The Commission provided 30 days for existing providers to challenge a proposed deployment in the second round
of Phase I. We determine a slightly longer time period is reasonable in this circumstance, as changes in planned
deployment can come at any time during the three-year term of Phase I.
20 The upcoming Phase I challenge process is the only opportunity Phase I recipients have to challenge the
designation of a census block as served for the purposes of Phase I. Phase I Order, 28 FCC Rcd at 7776-79, paras.
28-33. A recipient cannot challenge the designation of an area as served as shown on the National Broadband Map
at some future date if it seeks to deploy to newly identified locations.
21 "Received" means either actual notice or constructive notice through posting to the Commission's ECFS.
22 For purposes of a location's Phase I eligibility, the location in question must be eligible at the time the recipient
makes the requisite certifications associated with the location. For example, if a carrier elected to receive support in
July 2012, and then in 2014 identifies new locations to which it plans to build, those locations must be shown as
unserved on the most recent National Broadband Map available at the time it makes its certification in 2014.
23 Id. at 7770, para. 10.
24 See Letter from Karen Brinkmann, Counsel to FairPoint Communications, to Marlene H. Dortch, Secretary,
Federal Communications Commission, WC Docket No. 10-90 (filed June 25, 2013).
25 47 C.F.R. 1.3.
26 Phase I Order, 28 FCC Rcd at 7777, para. 30. This waiver also has the effect of extending by 15 days the date by
which carriers are requested to provide advance notice of their elections to the Commission.
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IV.

PROCEDURAL MATTERS

A.

Paperwork Reduction Act

9.
This document contains new or modified information collection requirements subject to
the PRA. It will be submitted to OMB for review under section 3507(d) of the PRA.27 OMB, the general
public, and other Federal agencies are invited to comment on the new or modified information collection
requirements contained in this proceeding. In addition, we note that pursuant to the Small Business
Paperwork Relief Act of 2002, Public Law 107-198,28 we previously sought specific comment on how the
Commission might further reduce the information collection burden for small business concerns with
fewer than 25 employees.
10.
In this present document, we have assessed the effects of requiring carriers to report
changes in planned Phase I deployment, and we find that the burden on companies with fewer than 25
employees will be minimal. Only price cap carriers or rate-of-return carriers affiliated with price cap
carriers are eligible for Phase I support. All such entities have more than 25 employees. Other providers,
including cable companies and wireless Internet service providers, have the option to file with the price
cap carrier in question and/or on the Commission's ECFS a notice that they already provide service to a
given location. These providers may be small businesses. However, the option to make this filing is
designed to benefit such providers by reducing the likelihood that Connect America funds are used to
subsidize the overbuilding of their existing networks.

B.

Final Regulatory Flexibility Certification

11.
The Regulatory Flexibility Act (RFA)29 requires that agencies prepare a regulatory
flexibility analysis for notice-and-comment rulemaking proceedings, unless the agency certifies that "the
rule will not have a significant economic impact on a substantial number of small entities."30 The RFA
generally defines "small entity" as having the same meaning as the terms "small business," "small
organization," and "small governmental jurisdiction."31 In addition, the term "small business" has the
same meaning as the term "small business concern" under the Small Business Act.32 A small business
concern is one which: (1) is independently owned and operated; (2) is not dominant in its field of
operation; and (3) satisfies any additional criteria established by the SBA.33
12.
This document modifies the reporting requirements contained in the Phase I Order.34
This modification does not create any burdens, benefits, or requirements that were not addressed by the


27 44 U.S.C. 3507(d).
28 See 44 U.S.C. 3506(c)(4).
29 See 5 U.S.C. 601 et seq. The RFA has been amended by the Small Business Regulatory Enforcement Fairness
Act of 1996 (SBREFA), Pub. L. No. 104-121, Title II, 110 Stat. 857.
30 5 U.S.C. 605(b).
31 5 U.S.C. 601(6).
32 5 U.S.C. 601(3) (incorporating by reference the definition of "small business concern" in the Small Business
Act, 15 U.S.C. 632). Pursuant to 5 U.S.C. 601(3), the statutory definition of a small business applies "unless an
agency, after consultation with the Office of Advocacy of the Small Business Administration (SBA) and after
opportunity for public comment, establishes one or more definitions of such term which are appropriate to the
activities of the agency and publishes such definition(s) in the Federal Register."
33 Small Business Act, 15 U.S.C. 632.
34 Phase I Order, 28 FCC Rcd at 7780, para. 36.
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Final Regulatory Flexibility Analysis attached to USF/ICC Transformation Order.35 Therefore, we
certify that the requirements adopted in this Order on Reconsideration will not have a significant
economic impact on a substantial number of small entities. The Commission will send a copy of the
Order on Reconsideration, including a copy of this final certification, in a report to Congress pursuant to
SBREFA.36 In addition, the Order on Reconsideration and this certification will be sent to the Chief
Counsel for Advocacy of the SBA, and will be published in the Federal Register.37

C.

Congressional Review Act

13.
The Commission will send a copy of this Order on Reconsideration to Congress and the
Government Accountability Office pursuant to the Congressional Review Act.38

V.

ORDERING CLAUSES

14.
ACCORDINGLY, IT IS ORDERED, pursuant to the authority contained in sections 1,
4(i), 4(j), 5, 201(b), 214, 218-220, and 254 of the Communications Act of 1934, as amended, and section
706 of the Telecommunications Act of 1996, 47 U.S.C. 151, 154(i), 154(j), 155, 201(b), 214, 218-220,
254, 1302, and sections 1.1 and 1.108 of the Commission's rules, 47 C.F.R. 1.1, 1.108, that this Order
on Reconsideration IS ADOPTED.
15.
IT IS FURTHER ORDERED, pursuant to section 1.103(a) of the Commission's rules, 47
C.F.R. 1.103(a), that the "Reconsideration of Reporting Requirements" section of this Order on
Reconsideration involves Paperwork Reduction Act burdens, and SHALL BE EFFECTIVE immediately
upon announcement in the Federal Register of OMB approval of the information collection requirements
and an effective date.
16.
IT IS FURTHER ORDERED, pursuant to section 1.3 of the Commission's rules, 47
C.F.R. 1.3, that the deadline for carriers to file Phase I second round elections IS WAIVED to the extent
described above, and, pursuant to section 1.103(a) of the Commission's rules, 47 C.F.R. 1.103(a),
SHALL BE EFFECTIVE immediately upon release of this Order on Reconsideration.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary


35 See USF/ICC Transformation Order, 26 FCC Rcd at 18324-63, App. O.
36 See 5 U.S.C. 801(a)(1)(A).
37 See 5 U.S.C. 605(b).
38 See 5 U.S.C. 801(a)(1)(A).
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APPENDIX

Final Rules

For the reasons discussed in the Order on Reconsideration, the Federal Communications Commission
amends 47 C.F.R. Part 54 to read as follows:

PART 54 UNIVERSAL SERVICE

1. The authority citation for Part 54 continues to read as follows:
Authority: Sections 1, 4(i), 5, 201, 205, 214, 219, 220, 254, 303(r), and 403 of the Communications Act
of 1934, as amended, and section 706 of the Communications Act of 1996, as amended; 47 U.S.C. 151,
154(i), 155, 201, 205, 214, 219, 220, 254, 303(r), 403, and 1302 unless otherwise noted.
2. Amend 54.312 by revising paragraph (b) and paragraph (c) as follows:
54.312 Connect America Fund in Price Cap Territories Phase I.
* * * * *
(b)(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 54.313(b)(2).
* * * * *
(c)(4) 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, the Administrator, relevant state commissions, and any
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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 54.313(b)(2).
* * * * *
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