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Released: April 25, 2013

Federal Communications Commission

DA 13-607

Before the

Federal Communications Commission

Washington, D.C. 20554

In the Matter of
)
)
)

Federal-State Joint Board on Universal Service
)
CC Docket No. 96-45
)
Changes to the Board of Directors of the National )
CC Docket No. 97-21
Exchange Carrier Association, Inc.
)
)

Nominations for Board Member Positions on
)
the Universal Service Administrative Company
)
Board of Directors
)

ORDER

Adopted: April 25, 2013

Released: April 25, 2013

By the Chief, Wireline Competition Bureau:

I.


INTRODUCTION AND BACKGROUND

1.
In this order, we waive on our own motion1 appropriate portions of section 54.703(b) and
54.703(c)(3) of the Commission’s rules, which specify the composition of the Universal Service
Administrative Company (USAC) Board of Directors (USAC Board or Board).2 For the reasons
described below, we find good cause to waive these rules, to the extent described below, to enable the
Chairman of the Federal Communications Commission (Commission) to appoint members to the USAC
Board.
2.
USAC is the permanent administrator of all four of the Universal Service Fund (USF or
Fund) programs.3 USAC is overseen by a Board of Directors.4 Pursuant to the Commission’s rules and
USAC’s own by-laws, the USAC Board has 19 members and must include: (i) Three representatives of
incumbent local exchange carriers (ILECs), with one director representing the Bell Operating Companies
and GTE, one director representing other ILECs with annual operating revenues in excess of $40 million,
and one director representing ILECs with annual operating revenues of $40 million or less; (ii) Two
directors representing interexchange carriers (IXCs), with one director representing IXCs with more than
$3 billion in annual operating revenues and one director representing IXCs with annual operating
revenues of $3 billion or less; (iii) One director representing commercial mobile radio service providers;


1 See 47 C.F.R. § 1.3.
2 See 47 C.F.R. §§ 54.703(b), (c)(3).
3 See Federal-State Joint Board on Universal Service; Changes to the Board of Directors of the National Exchange
Carriers Association, Inc.
, Third Report and Order in CC Docket No. 97-21, Fourth Order on Reconsideration in CC
Docket No. 97-21, and Eighth Order on Reconsideration in CC Docket No. 96-45, 13 FCC Rcd 25058, 25069-70,
para. 20 (1998).
4 47 C.F.R. § 54.703(a).

Federal Communications Commission

DA 13-607

(iv) One director representing competitive local exchange carriers; (v) One director representing cable
operators; (vi) One director representing information service providers (ISPs); (vii) Three directors
representing schools that are eligible to receive discounts pursuant to 47 C.F.R. § 54.501; (viii) One
director representing libraries that are eligible to receive discounts pursuant to 47 C.F.R. § 54.501; (ix)
Two directors representing rural health care providers that are eligible to receive supported services
pursuant to 47 C.F.R. § 54.601; (x) One director representing low-income consumers; (xi) One director
representing state telecommunications regulators; (xii) One director representing state consumer
advocates; and (xiii) USAC’s Chief Executive Officer (CEO).5 Except for USAC’s CEO, who serves for
the length of his or her tenure as CEO, the members of the USAC Board serve staggered three year terms,
so that six members’ terms expire every year.6
3.
Section 54.703(c) of the Commission’s rules provides that, sixty days prior to the
expiration of a Board member’s term, the industry or non-industry group that is represented by such
director shall nominate by consensus a new director.7 The group must then submit the name of its
nominee, along with relevant professional and biographical information about the nominee, to the
Chairman of the Commission.8 Pursuant to the Commission’s rules, the Chairman reviews the
nominations selected by the relevant groups, and appoints new directors as the prior directors’ terms
expire.9 If a group does not reach consensus on a nominee or fails to submit a nomination, the Chairman
selects an individual to represent such group on the Board.10 The procedures for filling vacant seats are
the same as those for nominating new Board members at the start of a new term.11
4.
On September 13, 2012, the Wireline Competition Bureau (Bureau) released a public
notice seeking nominations for nine USAC Board member positions, including the position representing
IXCs with more than $3 billion in annual operating revenues, which has been vacant since 2010.12 On
March 12, 2013, the Bureau released a public notice seeking nominations for four additional Board
positions, including the position representing ISPs.13 The Bureau did not receive any nominations for the
Board seats representing ISPs, or IXCs with annual revenues in excess of $3 billion.


5 See 47 C.F.R. § 54.703(b); Article III of the BY-LAWS OF UNIVERSAL SERVICE ADMINISTRATIVE
COMPANY (a Delaware Corporation), available at
http://www.usac.org/_res/documents/about/pdf/bod/usacbylaws.pdf (last visited Apr. 23, 2013).
6 47 C.F.R. § 54.703(d).
7 Id. § 54.703(c).
8 Id.
9 Id.
10 Id.
11 Id. § 54.703(d).
12 See Wireline Competition Bureau Seeks Nominations for Nine Board Member Positions on the Universal Service
Administrative Company Board of Directors
, CC Docket Nos. 96-45, 97-21, Public Notice, 27 FCC Rcd 10995
(Wireline Comp. Bur. 2012); Letter from D. Scott Barash, Acting Chief Executive Officer, USAC, to Sharon Gillett,
Chief, Wireline Competition Bureau, FCC, CC Docket Nos. 96-45, 97-21 (dated Jan. 7, 2010) (attaching resignation
letter of Rex Knowles) (Knowles IXC Resignation Letter). On May 20, 2008, the Commission issued a waiver order
in which it determined that there was good cause to waive section 54.703 of the Commission’s rules, to enable the
Chairman to consider the nomination of a representative from an IXC with revenues less than $3 billion for the then-
vacant position for IXCs with revenues in excess of $3 billion. See Federal-State Joint Board on Universal Service;
Changes to the Board of Directors for the National Exchange Carrier Association, Inc.; Nominations for Two Board
Member Positions on the Universal Service Administrative Company Board of Directors
, CC Docket Nos. 96-45,
97-21, Order, 23 FCC Rcd 8260, 8262, paras. 7-8 (Wireline Comp. Bur. 2008).
13 See Wireline Competition Bureau Seeks Nominations for Four Board Member Positions on the Universal Service
Administrative Company Board of Directors
, CC Docket Nos. 96-45, 97-21, Public Notice, 28 FCC Rcd 2292
(Wireline Comp. Bur. 2013).
2

Federal Communications Commission

DA 13-607

II.

DISCUSSION

5.
On our own motion, we find that there is good cause to waive appropriate portions of
section 54.703(b) and 54.703(c)(3) of the Commission’s rules to the extent described below.14
6.
In determining the composition of the USAC Board in its rules, the Commission’s
“objective [was] to enable USAC’s Board to achieve a balance of broad industry and beneficiary
representation and administrative efficiency so that the Board can implement the [USF mechanisms] in a
neutral and efficient manner.”15 In addition, the Commission determined that a board of at least this size
was necessary “to assure balanced representation of both industry and beneficiary interests.”16 We find
that waiver of appropriate portions of section 54.703(b) and 54.703(c)(3) will further the goals of
universal service by enabling the Chairman to appoint members of the USAC Board in a manner that
meets the Commission’s stated objective of best reflecting a cross-section of the communications industry
(as well as non-industry), while recognizing that the communications landscape and USF have changed
since the Commission determined the current composition of the Board.
7. The rules governing the composition of the USAC Board and the process for appointments to
the Board have remained in place since 1998. Over the last 15 years, as the Fund has grown, the
Commission has made major modifications to the universal service programs and adopted measures to
improve the management, administration and oversight of the Fund.17 Over the same period of time, the
communications industry has experienced dramatic growth and change, and the set of stakeholders
interested in the USF has evolved. In light of the changes that have occurred since 1998, we find it in the
public interest to waive the requirements that one Board member be nominated by and represent ISPs, and
that one member of the Board be nominated by and represent IXCs with greater than $3 billion in annual
operating revenues. The Bureau did not receive any nominations to fill the ISPs’ representative position
on the Board,18 which may be driven in part by changes in the telecommunications industry — most


14 The Commission may waive any provision of its rules on its own motion and for good cause shown. 47 C.F.R. §
1.3. The Commission may exercise its discretion to waive a rule where the particular facts make strict compliance
inconsistent with the public interest. Northeast Cellular Telephone Co. v. FCC, 897 F.2d 1164, 1166, (D.C. Cir.
1990) (Northeast Cellular). In addition, the Commission may take into account considerations of hardship, equity,
or more effective implementation of an overall policy on an individual basis. WAIT Radio v. FCC, 418 F.2d 1153,
1159 (D.C. Cir. 1969); Northeast Cellular, 897 F.2d at 1166. Waiver of the Commission’s rules is therefore
appropriate only if special circumstances warrant a deviation from the general rule, and such deviation will serve the
public interest. NetworkIP, LLC v. FCC, 548 F.3d 116, 125-28 (D.C. Cir. 2008); Northeast Cellular, 897 F. 2d at
1166.
15 Federal-State Joint Board on Universal Service; Changes to the Board of Directors of the National Exchange
Carrier Association, Inc.
, CC Docket Nos. 96-45, 97-21, Report and Order and Second Order on Reconsideration,
12 FCC Rcd 18400, 18420, para. 34 (1997).
16 Id.
17 See, e.g., 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
Rcd 17663 (2011), pets. for review pending sub nom. In re: FCC 11-161, No. 11-9900 (10th Cir. filed Dec. 8, 2011)
(reforming the High-Cost universal service support mechanism); Lifeline and Link Up Reform and Modernization;
Lifeline and Link Up; Federal-State Joint Board on Universal Service; Advancing Broadband Availability Through
Digital Literacy Training
, WC Docket Nos. 11-42, 12-23, 03-109; CC Docket No. 96-45, Report and Order and
Further Notice of Proposed Rulemaking, 27 FCC Rcd 6656 (2012) (reforming the Low-Income universal service
support mechanism).
18 Letter from Julie A. Veach, Chief, Wireline Competition Bureau, Federal Communications Commission, to D.
Scott Barash, Acting Chief Executive Officer, USAC, CC Docket Nos. 96-45, 97-21, DA 13-608 (dated Apr. 25,
2013) (USAC Appointment Letter).
3

Federal Communications Commission

DA 13-607

telecommunications providers today operate as both telecommunications carriers and ISPs.19 There were
also no nominations submitted for the position representing IXCs with more than $3 billion in annual
operating revenues,20 and this position has been vacant since January 2010.21
8.
For the foregoing reasons, we find good cause to waive the telecommunications sector
criteria, as expressed in section 54.703(b) and 54.703(c)(3), for positions on the USAC Board of Directors
that are currently allocated to ISPs and IXCs with revenues in excess of $3 billion. The public interest
would be served by allowing the Chairman to consider the complete array of qualified
telecommunications nominees for the USAC Board of Directors, and by enabling USAC to operate with a
full complement of Directors that represent, to the extent possible, a cross section of industry and USF
beneficiary interests.

III.

ORDERING CLAUSES

9.
Accordingly, IT IS ORDERED, pursuant to sections 1, 4(i), 5(c), and 254 of the
Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 154(i), 155(c), 254, and sections 0.91,
0.291, and 1.3 of the Commission’s rules, 47 C.F.R. §§ 0.91, 0.291, and 1.3, that sections 54.703(b) and
54.703(c)(3) ARE WAIVED to the extent described herein.
10.
IT IS FURTHER ORDERED that, pursuant to sections 0.91, 0.291, and 1.102 of the
Commission’s rules, 47 C.F.R. §§ 0.91, 0.291, 1.102, this ORDER SHALL BE EFFECTIVE upon
release.
FEDERAL COMMUNICATIONS COMMISSION
Julie A. Veach
Chief
Wireline Competition Bureau


19 See Federal Communications Commission, Connecting America: The National Broadband Plan, at 38 (rel. Mar.
16, 2010); Implementation of Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993; Annual Report
and Analysis of Competitive Market Conditions With Respect to Mobile Wireless, Including Commercial Mobile
Services
, WT Docket No. 09-66, Fourteenth Report, 25 FCC Rcd 11407, 11437, para. 22 (2010).
20 See USAC Appointment Letter.
21 See Knowles IXC Resignation Letter.
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