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WCB Seeks Comment on Proposed Urban Rates Survey and Related Issues

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Released: July 26, 2012

PUBLIC NOTICE

Federal Communications Commission

News Media Information 202 / 418-0500

445 12th Street, S.W.

Internet: http://www.fcc.gov

TTY: 1-888-835-5322

Washington, D.C. 20554

DA 12-1199

Released July 26, 2012

WIRELINE COMPETITION BUREAU SEEKS COMMENT ON

PROPOSED URBAN RATES SURVEY AND ISSUES RELATING TO REASONABLE

COMPARABILITY BENCHMARKS AND THE LOCAL RATE FLOOR

WC Docket No. 10-90

Comments: [30 days after publication in the Federal Register]

1. In this Public Notice, the Wireline Competition Bureau seeks comment on a proposed survey of
urban rates for fixed voice and fixed broadband residential services. The Bureau also seeks comment
concerning how, using data from the urban rates survey, to determine the local voice rate floor and the
reasonable comparability benchmarks for fixed voice and fixed broadband services.
2. Background. On November 18, 2011, the Commission released the USF/ICC Transformation
Order and FNPRM, which comprehensively reforms and modernizes the universal service and intercarrier
compensation systems.1 In the Order, among other things, the Commission directed the Wireline
Competition Bureau and Wireless Telecommunications Bureau to conduct a survey of residential urban rates
for fixed voice, fixed broadband, mobile voice, and mobile broadband services.2 In the Further Notice, the
Commission sought comment on various issues associated with determining reasonable comparability for
voice and broadband rates.3
3. The rate survey, conducted once each year, will be used to establish a rate floor that carriers
receiving high-cost loop support (HCLS) or high-cost model support must meet in order to receive their full
support amounts, beginning in 2014.4 In addition, the rate survey will be used to develop reasonable
comparability benchmarks for voice and broadband rates that carriers will annually certify their rates do not
exceed, with the first certification due July 1, 2013.


1 Connect America Fund, WC Docket No. 10-90 et al., Report and Order and Further Notice of Proposed Rulemaking,
26 FCC Rcd 17663 (2011) (USF/ICC Transformation Order or Order); pets. for review pending sub nom. In re: FCC
11-161
, No. 11-9900 (10th Cir. filed Dec. 8, 2011); Connect America Fund, WC Docket No. 10-90 et al., Order on
Reconsideration, 26 FCC Rcd 17633 (2011); Connect America Fund, WC Docket No. 10-90 et al., Second Order on
Reconsideration, FCC 12-47 (rel. Apr. 25, 2012) (Second Reconsideration Order); Connect America Fund, WC Docket
No. 10-90 et al., Third Order on Reconsideration, FCC 12-52 (rel. May 14, 2012) (Third Reconsideration Order).
2 USF/ICC Transformation Order, 22 FCC Rcd at 17694, para. 85, 17708, para. 114. We do not address the mobile
voice and broadband components of the survey at this time.
3 Id. at 18046-47, paras. 1018-27.
4 Id. at 17751, para. 239, 17855, para. 592. The rate floor is set at $10 for the year beginning July 1, 2012, and $14 for
the year beginning July 1, 2013. Supported carriers are required to report their local rates that are below the relevant
benchmark beginning July 1, 2012. These reports will be used to determine whether support reductions are required for
carriers with artificially low rates.

4. Content of Rate Survey. Appendix A to this Public Notice contains the survey instrument that
the Bureau proposes to gather data regarding fixed voice and fixed broadband rates. We seek comment on
the details of the proposed rate survey as described below.
5. In the fixed voice section of the survey, the Bureau proposes that providers will separately report
non-discounted rates and other charges (i.e. taxes, fees, etc.) for their unlimited or flat-rate local service,
unlimited all-distance service, and measured or messaged local service. If the provider does not offer such
service, it will indicate as such and not report data for that item. Providers will report rates for both public
switched telephone network (PSTN) and Voice over Internet Protocol (VoIP) service, to the extent each is
offered. Various non-recurring charges will also be surveyed. We seek comment on the proposed data to be
collected in the fixed voice section of the survey.
6. In the fixed broadband section of the survey, the Bureau proposes that providers will separately
report non-discounted rates and other charges for four specific advertised speed tiers of broadband service.5
Are the four proposed speed tiers a reasonable set on which to collect rates? For each offering, the provider
will also report on any capacity limits and what action is taken if the capacity limit is reached. Such actions
may include overage charges, blocking traffic, and rate limiting.6 Are there any other service provider
practices regarding capacity limits that should be included? Do the survey’s questions about capacity limits
adequately capture market offerings given the current market for residential, fixed broadband? Is the
proposed format appropriate for collecting information on usage-based broadband pricing for fixed services,
and, if not, how should the format be modified?
7. The Bureau intends to implement this survey through an online reporting form accessible to
those urban providers of fixed voice and broadband services who are selected to participate. Urban providers
will be chosen to create a statistically valid sample for the purpose of setting a reasonable comparability
benchmark for fixed voice and fixed broadband services and a rate floor for fixed voice service. Independent
samples will be chosen for the fixed voice and fixed broadband sections of the survey. The proposed survey
will use as a population from which to sample all terrestrial providers of residential voice or broadband
services in urban areas. The Bureau proposes defining “urban” for the purposes of this survey as all 2010
Census urban areas and urban clusters that sit within a Metropolitan Statistical Area (MSA). We seek
comment on this approach.
8. For each section (fixed voice and fixed broadband), urban providers will be chosen in order to
generate a statistically valid sample for the purpose of calculating benchmarks and rate floors. Responding
providers will be asked for rates in a specified geographic area. We propose specifying, for each surveyed
provider, a 2010 Census tract (that is “urban,” as explained above) for which rates should be reported. For
sampling purposes, the Bureau will use in-house data to determine which providers are serving a Census
tract. To aid providers in locating the specified Census tract when completing the survey, the survey will
include hyperlinks where the respondent can look up the Census tract on a map. Will this approach allow
respondents to easily and accurately report rates?
9. In the interest of simplicity, the proposed survey will not collect rates for bundles of applications
(i.e., voice and broadband bundle; voice, broadband, and TV bundle, etc.). The survey will also only collect


5 The proposed survey asks for broadband rates for service within the following advertised speed ranges (download
range)/( upload range): Tier 1 (≥4 Mbps and <6 Mbps)/(≥1 Mbps and <1.5 Mbps); Tier 2 (≥6 Mbps and <10
Mbps)/(≥1.5 Mbps and <2 Mbps); Tier 3 (≥10 Mbps and <25 Mbps)/(≥2 Mbps and <3 Mbps); Tier 4 (≥25 Mbps)/(≥3
Mbps).
6 Rate limiting is an action taken by an Internet service provider that restricts the rate at which a user can send or receive
data over the provider’s network.
2

non-discounted rates that are available to potential customers rather than actual rates paid by existing
customers. For the survey’s intended purposes, obtaining information about bundles, discounts and
promotional pricing of limited duration would unnecessarily increase the complexity and burden of the data
collection on service providers that are selected to respond to the survey. We seek comment on this
approach.
10. To the extent commenters contend that we should modify the content of the proposed survey,
they should specify with particularity how the proposed survey should be altered and explain why their
preferred approach better serves to accomplish the Commission’s objectives. Should any of the survey’s
questions or terminology be altered for clarity or accuracy? Should we modify proposed sampling and
collection process in any way? Are there any other changes that should be made?
11. Use of Data for Urban Rate Floor. The Bureau also seeks comment on how the information
collected in the proposed urban rates survey should be used to establish the local rate floor. Historically, the
Bureau surveyed local rates (both flat-rate and measured local service) and developed a single urban local
rate average.7 For purposes of the rate floor, we propose to use the urban flat local rate data to derive a
population-weighted national urban average that will be used as the local rate floor in 2014 and updated
annually thereafter. We seek comment on this proposal.
12. Use of Data for Reasonable Comparability of Voice Service. In the USF/ICC Transformation
Order, the Commission required that carriers certify that their voice rates are within two standard deviations
of “the national average” for voice service.8 We request comment on how rate survey data should be used to
determine this national average.
13. For fixed voice service, the Bureau seeks comment on deriving the national average for rate
comparability purposes solely from data collected regarding local, flat rate voice service in urban areas.
Alternatively, should we instead develop the national average based solely on urban data for unlimited, all-
Distance service, as determined from the survey? A reason to adopt a national average based on the urban
unlimited, all-distance rates rather than the local, flat rate is that the unlimited, all-distance service best
reflects the varied ways - in terms of call frequency, duration, and distance - that households typically
communicate using voice services. We seek comment on these two alternatives and the implications of each
in terms of the ability of carriers to meet the certification requirement. Under either approach, we propose to
develop a population-weighted average. We seek comment on this approach. How, if at all, should we take
into account non-recurring charges when computing the fixed voice benchmark?
14. The Bureau proposes to establish a single benchmark for fixed voice service by which supported
carriers would certify their rates, for purposes of reasonable comparability, regardless of the voice service
offered (i.e. flat, local; unlimited, all-distance; measured local). One reason for doing so is that the urban
availability of some services may diminish over time and reduce the available sample population for a given
service. This in turn could increase the year-to-year variability in the benchmarks, while also creating, as a
statistical artifact, wide deviations in the benchmarks for different types of voice services.
15. Another alternative would be to develop a separate national average for each voice service
surveyed (i.e. flat, local; unlimited, all distance; measured, local). To the extent commenters believe the
Bureau should establish multiple, service-specific reasonable comparability benchmarks for voice rather than
simply developing a single average for urban voice service, they should explain why such an approach is


7 IATD, Wir. Comp. Bur., Universal Service Monitoring Report, Table 7.6, Average Residential Rates for Local Service
in Urban Areas, 1986-2007 (Dec. 2008).
8 Id. at 17694, para. 85.
3

preferable and consistent with the framework established by the Commission in the USF/ICC
Transformation Order
. The Bureau also proposes not combining multiple service rates collected in the
survey into a single benchmark because this would require weighting each service’s rate by its number of
subscribers. Collecting such subscriber information would unnecessarily impose more burden on the carriers
surveyed. To the extent commenters contend that the Bureau should combine multiple services’ rates into a
single benchmark, how should the rates be combined and what measures could be taken to minimize burden
on those providers that are surveyed?
16. The Further Notice sought comment on whether to adopt a presumption that if a given provider
is offering the same rates, terms and conditions (including capacity limits) to both urban and rural customers,
that is sufficient to meet the statutory requirement that services be reasonably comparable. 9 Under such a
presumption, providers that serve both rural and urban markets would not be required to certify their voice
rates against a national urban benchmark derived from the proposed rate survey. We seek further focused
comment on this potential approach. In particular, commenters are encouraged to identify the universe of
providers that would be able to utilize the presumption, under the proposed survey approach that would
define urban areas as MSAs.
17. Calculation of Voice Rates for Certifying Carriers Offering Measured Service. We also seek
comment on how a fixed voice provider offering only measured service will determine its rate that should be
compared to the national urban average for voice service, for purposes of rate comparability. The Bureau
proposes allowing such carriers to calculate a “blended” rate which will be compared to the national urban
rate voice average, consistent with the approach adopted by the Commission for purposes of the local rate
floor. 10 In particular, we propose that a supported carrier with measured service should use its average
minutes of use data during each rate period (e.g. peak, off-peak) to calculate its rate for reasonable
comparability purposes. We seek comment on this approach.
18. Use of Data for Reasonable Comparability of Fixed Broadband Service. To the extent there
were a presumption that offering the same service in both rural and urban areas meets the reasonable
comparability requirements of the statute, there would be no need for some providers to compare their
broadband rates to a national average urban rate benchmark derived from the results of the proposed rate
survey. For fixed broadband, the Bureau proposes using the surveyed rate data for each speed tier to set
reasonable comparability benchmarks for those providers that are required to certify against a national urban
benchmark. Each speed tier would have its own benchmark, and providers would certify their rates against
the speed tier corresponding to the slowest broadband service they offer. We are proposing to establish
different benchmarks for different speed tiers so that supported providers offering substantially faster
broadband service than the minimum required under the Commission’s public interest obligations can certify
their rates against a more comparable urban service, rather than an urban benchmark for a much slower
service or an average of rates for both slower and faster services. We seek comment on this approach.
Would such an approach be a workable way to determine reasonable comparability for providers that do not
offer broadband services in urban areas?
19. Alternatively, should the several speed tiers be combined to form a single benchmark? How, if
at all, should we take into account non-recurring charges when computing the fixed broadband benchmark?


9 Further Notice at 18047, para. 1027.
10 In the Third Reconsideration Order, the Commission clarified that for purposes of the rate floor, the local service rate
reported by carriers that provide measured or message rate plans should reflect 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. Connect America Fund, WC
Docket No. 10-90 et al., Third Order on Reconsideration, 27 FCC Rcd 5622, 5630, para. 22 (2012).
4

How, if at all, should the capacity limit data be used for determining reasonable comparability? Given the
emergence of usage-based broadband pricing, how should such rates be incorporated into the benchmark?
Should the Bureau collect usage data on such plans so a “blended” rate can be calculated? How might a
supported broadband provider with a usage-based service certify its rates?

Procedural Matters

20. Filing Requirements. Pursuant to sections 1.415 and 1.419 of the Commission’s rules, interested
parties may file comments on or before the dates indicated on the first page of this document.11 Comments
may be filed using the Commission’s Electronic Comment Filing System (ECFS).12
§
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. If
more than one docket or rulemaking number appears in the caption of this proceeding, filers must
submit two additional copies for each additional docket or rulemaking number.
21. 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.
§
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.
§
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.
§
U.S. Postal Service first-class, Express, and Priority mail must be addressed to 445 12th Street, SW,
Washington DC 20554.
22. 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).
23.

In addition, one copy of each pleading must be sent to each of the following:


(1) Jay Schwarz, Industry Analysis and Technology Division, Wireline Competition Bureau, 445 12th
Street, S.W., 6-A134, Washington, D.C. 20554; e-mail: Jay.Schwarz@fcc.gov.
(2) Alexander Minard, Telecommunications Access Policy Division, Wireline Competition Bureau, 445
12th Street, S.W., 5-A334, Washington, D.C. 20554; e-mail: Alexander.Minard@fcc.gov.
24. The proceeding this Notice initiates shall be treated as a “permit-but-disclose” proceeding in
accordance with the Commission’s ex parte rules.13 Persons making ex parte presentations must file a copy


11 47 C.F.R. §§ 1.415, 1.419.
12 See Electronic Filing of Documents in Rulemaking Proceedings, GC Docket No. 97-113, Report and Order, 13 FCC
Rcd 11322 (1998).
13 47 C.F.R. §§ 1.1200 et seq.
5

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.
25. Paperwork Reduction Act. This document contains proposed new information collection
requirements. The Bureau, 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, Public Law 107-198, see
44 U.S.C. 3506(c)(4), the Bureau seeks specific comment on how it might further reduce the information
collection burden for small business concerns with fewer than 25 employees.
26. Initial Regulatory Flexibility Analysis. As required by the Regulatory Flexibility Act of 1980
(RFA),14 the Bureau has prepared an Initial Regulatory Flexibility Analysis (IRFA) of the possible significant
economic impact on small entities of the policies and rules proposed in the Public Notice. The analysis is
found in the Appendix B. The Bureau requests written public comment on the analysis. Comments must be
filed in accordance with the same deadlines as comments filed in response to the Public Notice and must
have a separate and distinct heading designating them as responses to the IRFA. The Commission’s
Consumer and Governmental Affairs Bureau, Reference Information Center, will send a copy of this Report
and Order and Further Notice of Proposed Rulemaking, including the IRFA, to the Chief Counsel for
Advocacy of the Small Business Administration.
- FCC -
For more news and information about the Federal Communications Commission
please visit: www.fcc.gov


14 See 5 U.S.C. § 603.
6

APPENDIX A

Proposed Rate Survey Questions for Fixed Services Sections of Rate Survey

Note: The below survey instrument is intended to be implemented via an online interface accessible to
survey participants. The particular format used in this appendix is for explanatory purposes only.


I. SURVEY RESPONDENT INFORMATION

This survey asks questions about PROVIDER NAME’s (FIXED VOICE, FIXED BROADBAND,
MOBILE) services and rates. Please answer all questions as they pertain to the specific geographic location
indicated below on MONTH DAY, YEAR.
Enter identifying information below as it pertain to the location identified in the bottom line of Section I.

I. SURVEY RESPONDENT INFORMATION

Provider Name:
Pre-populated by FCC
Provider FRN (used on Dec 31, 2011 Form 477):
Provider Study Area Code (if current USF recipient):
Name of Person Completing Form:
Contact Phone Number:
Contact Email Address:
Name of Certifying Official:
Certifying Official's Phone Number:
Certifying Official's Email Address:
Location for Which Reported Rates Apply:
Pre-populated by FCC
7

II. FIXED VOICE

Report rates on fixed voice service provided in GEOGRAPHIC LOCATION. All reported rates should be
non-discounted, residential rates available on MONTH DAY, YEAR to any existing or potential customer at
the specified location. Report rates for fixed voice service that is not bundled with any other product (e.g.
Internet, TV).

II. FIXED VOICE INFORMATION

Indicate which fixed voice plan types are offered and whether the service is available to customers
through circuit switched, VoIP or both.
II.a Does this carrier offer unlimited or flat-rate local voice
Yes - circuit
service?
No
switched, VoIP?
II.b Does this carrier offer unlimited or flat-rate, all-distance
service?
Yes - circuit
No
switched, VoIP?
II.c Does this carrier offer measured/metered local voice
Yes - circuit
service?
No
switched, VoIP?
For each service offered (as indicated "Yes" in II-a, II-b, and II-c), report each component of the rate in
dollar and cents amounts. If both PSTN and VoIP service is offered, answer questions separately as
prompted for each service. "All-distance" services include only domestic calling, not international.
(Answered separately, as appropriate, for PSTN and VoIP)

Unlimited or Flat-

Unlimited All-

Measured or

II.d - Monthly Rates

Rate Local Service

Distance Service

Messaged Local

(II-a)
(II-b)

Service (II-c)

II.d.1 Recurring service charge
(without SLC)
II.d.2 Federal subscriber line charge
(SLC), if any
II.d.3 Access Recovery Charge
(ARC), if any
II.d.4 Federally tariffed local number
portability (LNP) surcharge, if any
II.d.5 Federal universal service
surcharge on Fed. SLC, LNP or
ARC, if any
II.d.6 State SLC, if any
II.d.7 State USF charge, if any
II.d.8 Mandatory extended area
service (EAS) charges, if any
II.d.9 Other mandatory surcharges
(such as gross receipts tax)
accounted as company revenue and
not included elsewhere
II.d.10 Tax or surcharge for funding
911 service
8

II.d.11 Interstate telecommunications
relay service (TRS or relay)
II.d.12 State TRS
II.d.13 Total other taxes (such as
sales, excise, etc.) levied on
customers by state, county, local
governments.
II.d.14 Federal excise tax on local
service
NA
II.d.15 Number of voice calls or
message units included in monthly
rate if measured service (local
NA
NA
service area calls only)
II.d.16 Dollar calling allowance for
voice calls included in monthly rate if
measured service (local service area
NA
NA
calls only).
11.d.17 Peak period local rate per
Indicate if rate is
unit (minute or call/message) once
NA
NA
per call or per
allowance exceed, if measured
minute
service.
11.d.18 Off-peak period local rate per
unit (minute or call/message) once
Indicate if rate is
allowance exceeded, if measured
NA
NA
per call or per
service.
minute

II.e - Service Initiation Charges

II.e.1 Total connection charge for
residential service if no premises visit
is required.
II.e.2 Minimum additional charge if
drop line and terminal block are
needed to connect service. Do not
include any inside wiring charges.
II.e.3 Mandatory surcharges on
connection accounted as company
revenue
II.e.4 State, county, and local taxes
and surcharges on connection
II.e.5 Other mandatory connection
charges
9

III. FIXED BROADBAND

Report rates on fixed broadband service provided in GEOGRAPHIC LOCATION. All reported rates should
be standard, non-discounted, residential rates available on MONTH DAY, YEAR to any existing or potential
customer. Report rates for fixed broadband service that is not bundled with any other product (e.g.
telephone, TV). Exclude residential broadband service that is provided via satellite.

III. BROADBAND INTERNET SERVICE
INFORMATION

III.a Does this provider offer a standalone broadband Internet service with advertised data transfer
speeds in the following ranges? Note that the service must meet both the download and upload
speed criteria.
III.a.1 SERVICE RANGE 1: Download: at or above
4 Mbps and less than 6 Mbps; Upload: at or above 1
Yes
No
Mbps and less than 1.5 Mbps
III.a.2 SERVICE RANGE 2: Download: at or above
6 Mbps and less than 10 Mbps; Upload: at or above
Yes
No
1.5 Mbps and less than 2 Mbps
III.a.3 SERVICE RANGE 3: Download: at or above
10 Mbps and less than 25 Mbps; Upload: at or above
Yes
No
2 Mbps and less than 3 Mbps
III.a.4 SERVICE RANGE 4: Download: at or above
Yes
No
25 Mbps; Upload: at or above 3 Mbps
III.b If the provider offers at least one standalone service in the specified range, report in Mbps the
advertised download and upload speeds of the slowest service meeting the criteria of the service
range. Also, report each capacity limit (in GB) applied to the service, if any. If multiple capacity
limits are available for the same service speed, list each separately. If only one capacity limit is
offered, only report this limit. A capacity limit is the level at which the ISP begins to block, rate-
limit, or charge excess fees for additional data transmission. If no limit is applied, enter
"Unlimited." For each capacity limit in place, indicate what action is taken when the limit is
reached. If a capacity limit is based on a customer's use relative to other customers, report the data
amount for which the limit would be reached as of MONTH DAY, 2012.
Note: For services with capacity limits, a drop down box will offer a menu of actions the ISP will
take once the limit is reached. These include: "Overage Charge," "Blocking Traffic", "Rate-
limiting," and "Other (explain)."

SERVICE RANGE 1

Action Taken

Capacity Limit(s)

Advertised Speed (Mbps)

When Limit

(GB)

Reached

Download Upload
1
1
2
2
3
3

SERVICE RANGE 2

Capacity Limit(s)

Action Taken

Advertised Speed (Mbps)

(GB)

When Limit

10

Reached

Download Upload
1
1
2
2
3
3

SERVICE RANGE 3

Action Taken

Capacity Limit(s)

Advertised Speed (Mbps)

When Limit

(GB)

Reached

Download Upload
1
1
2
2
3
3

SERVICE RANGE 4

Action Taken

Capacity Limit(s)

Advertised Speed (Mbps)

When Limit

(GB)

Reached

Download Upload
1
1
2
2
3
3
For each service offered (as indicated "Yes" in III.a.1 to III.a.4), report each component of the rate
in dollar and cents amounts. Reported monthly rates should be standard, non-discounted residential
rates. In some cases, this may be the month-to-month rate available to a customer not eligible for
introductory rates, etc.

SERVICE RANGE

III.c - Recurring Access Rates

1
2
3
4
III.c.1 Recurring monthly charge
III.c.2 Total of state, local, and municipal taxes
III.c.3 Total of all other mandatory fees and taxes
(such as provider surcharges, etc.) passed through.
III.c.4 Surcharges on the service accounted as
company revenue (i.e. non-pass through)
For each item listed, report the minimum amount a customer would pay for each non-recurring
charge in the event the item was required for the customer to access the Internet via the broadband
service. If an item is not offered by the provider, then mark it as "NA".

SERVICE RANGE

III.d - Non-Recurring Charges (Minimums)

1
2
3
4
III.d.1 Activation or Connection not requiring a
service visit to the premises
III.d.2 Activation or connection requiring a service
visit (but assuming the premises is already
physically wired)
III.d.3 Does this service require the customer use a
Yes/No
Yes/No
Yes/No
Yes/No
modem or other hardware?
11

III.d.4 If "Yes" for III.h.3, what is the purchase price
for necessary hardware? (If provider sells such
hardware.)
III.d.5 If "Yes" for III.h.3, what is the monthly rental
price for necessary hardware? (If provider rents
hardware.)
III.d.6 Computer/laptop hook-up by service
technician already making a service visit.
12

APPENDIX B

Initial Regulatory Flexibility Act Analysis

As required by the Regulatory Flexibility Act of 1980, as amended (RFA),
1 the Bureau has prepared this Initial Regulatory Flexibility Analysis (IRFA) of the possible
significant economic impact on a substantial number of small entities by the policies and rules proposed in
this Notice. Written comments are requested on this IRFA. Comments must be identified as responses to the
IRFA and must be filed by the deadlines for comments on the Public Notice. The Commission will send a
copy of the Public Notice, including this IRFA, to the Chief Counsel for Advocacy of the Small Business
Administration (SBA).2 In addition, the Public Notice and IRFA (or summaries thereof) will be published in
the Federal Register.3

A.

Need for, and Objectives of, the Proposed Rules

The Public Notice seeks comment on a proposed survey of urban rates for fixed voice and fixed
broadband residential services. The Bureau also seeks comment concerning how, using data from the urban
rates survey, to determine the local voice rate floor and the reasonable comparability benchmarks for fixed
voice and fixed broadband services. The rate survey, and benchmarks and rate floors based on the survey, is
part of implementing the USF/ICC Transformation Order to insure supported provider’s rates are not
unreasonably high or unnecessarily low.4

B.

Legal Basis

The legal basis for any action that may be taken pursuant to the Notice is contained in sections 1, 2,
4(i), 214, 254, 303(r), 403, and 706 of the Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 152,
154(i), 214, 254, 303(r), 403, and 706, and sections 1.1 and 1.1421 of the Commission’s rules, 47 C.F.R. §§
1.1, 1.421.

C.

Description and Estimate of the Number of Small Entities to Which the Proposed

Rules Will Apply

The RFA directs agencies to provide a description of, and where feasible, an estimate of the number
of small entities that may be affected by the proposed rules, if adopted.5 The RFA generally defines the term
“small entity” as having the same meaning as the terms “small business,” “small organization,” and “small
governmental jurisdiction.”6 In addition, the term “small business” has the same meaning as the term “small-
business concern” under the Small Business Act.7 A small-business concern” is one which: (1) is


1 See 5 U.S.C. § 603. The RFA, see 5 U.S.C. §§ 601–612, has been amended by the Small Business Regulatory
Enforcement Fairness Act of 1996 (SBREFA), Pub. L. No. 104-121, Title II, 110 Stat. 857 (1996).
2 See 5 U.S.C. § 603(a).
3 See id.
4 See Notice at para. 2.
5 See 5 U.S.C. § 603(b)(3).
6 See 5 U.S.C. § 601(6).
7 See 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 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.”
13

independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any
additional criteria established by the SBA.8

Small Businesses

. Nationwide, there are a total of approximately 27.5 million small businesses,
according to the SBA.9

Wired Telecommunications Carriers

. The SBA has developed a small business size standard for
Wired Telecommunications Carriers, which consists of all such companies having 1,500 or fewer
employees.10 According to Census Bureau data for 2007, there were 3,188 firms in this category, total, that
operated for the entire year.11 Of this total, 3144 firms had employment of 999 or fewer employees, and 44
firms had employment of 1000 employees or more.12 Thus, under this size standard, the majority of firms
can be considered small.

Local Exchange Carriers (LECs)

. Neither the Commission nor the SBA has developed a size
standard for small businesses specifically applicable to local exchange services. The closest applicable size
standard under SBA rules is for Wired Telecommunications Carriers. Under that size standard, such a
business is small if it has 1,500 or fewer employees.13 According to Commission data, 1,307 carriers
reported that they were incumbent local exchange service providers.14 Of these 1,307 carriers, an estimated
1,006 have 1,500 or fewer employees and 301 have more than 1,500 employees.15 Consequently, the
Commission estimates that most providers of local exchange service are small entities, that may be affected
by the rules and policies proposed in the Public Notice.

Incumbent Local Exchange Carriers (incumbent LECs)

. Neither the Commission nor the SBA
has developed a size standard for small businesses specifically applicable to incumbent local exchange
services. The closest applicable size standard under SBA rules is for Wired Telecommunications Carriers.
Under that size standard, such a business is small if it has 1,500 or fewer employees.16 According to
Commission data, 1,307 carriers reported that they were incumbent local exchange service providers.17 Of
these 1,307 carriers, an estimated 1,006 have 1,500 or fewer employees and 301 have more than 1,500
employees.18 Consequently, the Commission estimates that most providers of incumbent local exchange
service are small businesses that may be affected by rules adopted pursuant to the Public Notice..
We have included small incumbent LECs in this present RFA analysis. As noted above, a “small
business” under the RFA is one that, inter alia, meets the pertinent small business size standard (e.g., a
telephone communications business having 1,500 or fewer employees), and “is not dominant in its field of
operation.”19 The SBA’s Office of Advocacy contends that, for RFA purposes, small incumbent LECs are


8 See 15 U.S.C. § 632.
9 See SBA, Office of Advocacy, “Frequently Asked Questions,” http://www.sba.gov/advo/stats/sbfaq.pdf (accessed
Dec. 2010).
10 13 C.F.R. § 121.201, NAICS code 517110.
11 U.S. Census Bureau, 2007 Economic Census, Subject Series: Information, Table 5, “Establishment and Firm Size:
Employment Size of Firms for the United States: 2007 NAICS Code 517110” (issued Nov. 2010).
12 See id.
13 13 C.F.R. § 121.201, NAICS code 517110.
14 See Trends in Telephone Service, Federal Communications Commission, Wireline Competition Bureau, Industry
Analysis and Technology Division at Table 5.3 (Sept. 2010) (Trends in Telephone Service).
15 See id.
16 See 13 C.F.R. § 121.201, NAICS code 517110.
17 See Trends in Telephone Service at Table 5.3.
18 See id.
19 5 U.S.C. § 601(3).
14

not dominant in their field of operation because any such dominance is not “national” in scope.20 We have
therefore included small incumbent LECs in this RFA analysis, although we emphasize that this RFA action
has no effect on Commission analyses and determinations in other, non-RFA contexts.

Competitive Local Exchange Carriers (competitive LECs), Competitive Access Providers

(CAPs), Shared-Tenant Service Providers, and Other Local Service Providers. Neither the Commission
nor the SBA has developed a small business size standard specifically for these service providers. The
appropriate size standard under SBA rules is for the category Wired Telecommunications Carriers. Under
that size standard, such a business is small if it has 1,500 or fewer employees.21 According to Commission
data, 1,442 carriers reported that they were engaged in the provision of either competitive local exchange
services or competitive access provider services.22 Of these 1,442 carriers, an estimated 1,256 have 1,500 or
fewer employees and 186 have more than 1,500 employees.23 In addition, 17 carriers have reported that they
are Shared-Tenant Service Providers, and all 17 are estimated to have 1,500 or fewer employees.24 In
addition, 72 carriers have reported that they are Other Local Service Providers.25 Of the 72, seventy have
1,500 or fewer employees and two have more than 1,500 employees.26 Consequently, the Commission
estimates that most providers of competitive local exchange service, competitive access providers, Shared-
Tenant Service Providers, and Other Local Service Providers are small entities that may be affected by rules
adopted pursuant to the Public Notice.

Wireless Telecommunications Carriers (except Satellite)

. Since 2007, the SBA has recognized
wireless firms within this new, broad, economic census category.27 Prior to that time, such firms were within
the now-superseded categories of Paging and Cellular and Other Wireless Telecommunications.28 Under the
present and prior categories, the SBA has deemed a wireless business to be small if it has 1,500 or fewer
employees.29 For this category, census data for 2007 show that there were 1,383 firms that operated for the
entire year.30 Of this total, 1,368 firms had employment of 999 or fewer employees and 15 had employment
of 1000 employees or more.31 Similarly, according to Commission data, 413 carriers reported that they were
engaged in the provision of wireless telephony, including cellular service, Personal Communications Service
(PCS), and Specialized Mobile Radio (SMR) Telephony services.32 Of these, an estimated 261 have 1,500 or


20 See Letter from Jere W. Glover, Chief Counsel for Advocacy, SBA, to William E. Kennard, Chairman, FCC (May 27,
1999). The Small Business Act contains a definition of “small business concern,” which the RFA incorporates into its
own definition of “small business.” See 15 U.S.C. § 632(a); see also 5 U.S.C. § 601(3). SBA regulations interpret
“small business concern” to include the concept of dominance on a national basis. See 13 C.F.R. § 121.102(b).
21 See 13 C.F.R. § 121.201, NAICS code 517110.
22 See Trends in Telephone Service at Table 5.3.
23 See id.
24 See id.
25 See id.
26 See id.
27 See 13 C.F.R. § 121.201, NAICS code 517210.
28 U.S. Census Bureau, 2002 NAICS Definitions, “517211 Paging”;
http://www.census.gov/epcd/naics02/def/NDEF517.HTM.; U.S. Census Bureau, 2002 NAICS Definitions, “517212
Cellular and Other Wireless Telecommunications”; http://www.census.gov/epcd/naics02/def/NDEF517.HTM.
29 13 C.F.R. § 121.201, NAICS code 517210. The now-superseded, pre-2007 C.F.R. citations were 13 C.F.R. §
121.201, NAICS codes 517211 and 517212 (referring to the 2002 NAICS).
30 U.S. Census Bureau, Subject Series: Information, Table 5, “Establishment and Firm Size: Employment Size of Firms
for the United States: 2007 NAICS Code 517210” (issued Nov. 2010).
31 Id. Available census data do not provide a more precise estimate of the number of firms that have employment of
1,500 or fewer employees; the largest category provided is for firms with “100 employees or more.”
32 See Trends in Telephone Service at Table 5.3.
15

fewer employees and 152 have more than 1,500 employees.33 Consequently, the Commission estimates that
approximately half or more of these firms can be considered small. Thus, using available data, we estimate
that the majority of wireless firms can be considered small.

Local Multipoint Distribution Service

. Local Multipoint Distribution Service (“LMDS”) is a fixed
broadband point-to-multipoint microwave service that provides for two-way video telecommunications.34
The auction of the 986 LMDS licenses began and closed in 1998. The Commission established a small
business size standard for LMDS licenses as an entity that has average gross revenues of less than $40
million in the three previous calendar years.35 An additional small business size standard for “very small
business” was added as an entity that, together with its affiliates, has average gross revenues of not more than
$15 million for the preceding three calendar years.36 The SBA has approved these small business size
standards in the context of LMDS auctions.37 There were 93 winning bidders that qualified as small entities
in the LMDS auctions. A total of 93 small and very small business bidders won approximately 277 A Block
licenses and 387 B Block licenses. In 1999, the Commission re-auctioned 161 licenses; there were 32 small
and very small businesses winning that won 119 licenses.

Cable and Other Program Distribution.

Since 2007, these services have been defined within the
broad economic census category of Wired Telecommunications Carriers; that category is defined as follows:
“This industry comprises establishments primarily engaged in operating and/or providing access to
transmission facilities and infrastructure that they own and/or lease for the transmission of voice, data, text,
sound, and video using wired telecommunications networks. Transmission facilities may be based on a single
technology or a combination of technologies.”38 The SBA has developed a small business size standard for
this category, which is: all such firms having 1,500 or fewer employees.39 According to Census Bureau data
for 2007, there were a total of 955 firms in this previous category that operated for the entire year.40 Of this
total, 939 firms had employment of 999 or fewer employees, and 16 firms had employment of 1000
employees or more.41 Thus, under this size standard, the majority of firms can be considered small and may
be affected by rules adopted pursuant to the Public Notice.

Cable Companies and Systems

. The Commission has developed its own small business size
standards, for the purpose of cable rate regulation. Under the Commission’s rules, a “small cable company”
is one serving 400,000 or fewer subscribers, nationwide.42 Industry data indicate that, of 1,076 cable


33 See id.
34 See Rulemaking to Amend Parts 1, 2, 21, 25, of the Commission’s Rules to Redesignate the 27.5-29.5 GHz
Frequency Band, Reallocate the 29.5-30.5 Frequency Band, to Establish Rules and Policies for Local Multipoint
Distribution Service and for Fixed Satellite Services
, CC Docket No. 92-297, Second Report and Order, Order on
Reconsideration, and Fifth Notice of Proposed Rule Making, 12 FCC Rcd 12545, 12689-90, para. 348 (1997) (“LMDS
Second Report and Order
”).
35 See LMDS Second Report and Order, 12 FCC Rcd at 12689-90, para. 348.
36 See id.
37 See Alvarez to Phythyon Letter 1998.
38 U.S. Census Bureau, 2007 NAICS Definitions, “517110 Wired Telecommunications Carriers” (partial definition),
http://www.census.gov/naics/2007/def/ND517110.HTM#N517110.
39 See 13 C.F.R § 121.201, NAICS code 517110.
40 U.S. Census Bureau, 2007 Economic Census, Subject Series: Information, Table 5, Employment Size of Firms for the
United States: 2007, NAICS code 5171102 (issued Nov. 2010).
41 See id.
42 See 47 C.F.R. § 76.901(e). The Commission determined that this size standard equates approximately to a size
standard of $100 million or less in annual revenues. See Implementation of Sections of the 1992 Cable Television
Consumer Protection and Competition Act: Rate Regulation
, MM Docket Nos. 92-266, 93-215, Sixth Report and Order
and Eleventh Order on Reconsideration, 10 FCC Rcd 7393, 7408 para. 28 (1995).
16

operators nationwide, all but eleven are small under this size standard.43 In addition, under the
Commission’s rules, a “small system” is a cable system serving 15,000 or fewer subscribers.44 Industry data
indicate that, of 7,208 systems nationwide, 6,139 systems have under 10,000 subscribers, and an additional
379 systems have 10,000-19,999 subscribers.45 Thus, under this second size standard, most cable systems
are small and may be affected by rules adopted pursuant to the Public Notice.

Cable System Operators

. The Act also contains a size standard for small cable system operators,
which is “a cable operator that, directly or through an affiliate, serves in the aggregate fewer than 1 percent
of all subscribers in the United States and is not affiliated with any entity or entities whose gross annual
revenues in the aggregate exceed $250,000,000.”46 The Commission has determined that an operator serving
fewer than 677,000 subscribers shall be deemed a small operator, if its annual revenues, when combined with
the total annual revenues of all its affiliates, do not exceed $250 million in the aggregate.47 Industry data
indicate that, of 1,076 cable operators nationwide, all but ten are small under this size standard.48 We note
that the Commission neither requests nor collects information on whether cable system operators are
affiliated with entities whose gross annual revenues exceed $250 million,49 and therefore we are unable to
estimate more accurately the number of cable system operators that would qualify as small under this size
standard.

Open Video Services

. The open video system (“OVS”) framework was established in 1996, and is
one of four statutorily recognized options for the provision of video programming services by local exchange
carriers.50 The OVS framework provides opportunities for the distribution of video programming other than
through cable systems. Because OVS operators provide subscription services,51 OVS falls within the SBA
small business size standard covering cable services, which is “Wired Telecommunications Carriers.”52 The
SBA has developed a small business size standard for this category, which is: all such firms having 1,500 or
fewer employees. According to Census Bureau data for 2007, there were a total of 955 firms in this previous
category that operated for the entire year.53 Of this total, 939 firms had employment of 999 or fewer


43 These data are derived from R.R. BOWKER, BROADCASTING & CABLE YEARBOOK 2006, “Top 25 Cable/Satellite
Operators,” pages A-8 & C-2 (data current as of June 30, 2005); WARREN COMMUNICATIONS NEWS, TELEVISION &
CABLE FACTBOOK 2006, “Ownership of Cable Systems in the United States,” pages D-1805 to D-1857.
44 See 47 C.F.R. § 76.901(c).
45 WARREN COMMUNICATIONS NEWS, TELEVISION & CABLE FACTBOOK 2006, “U.S. Cable Systems by Subscriber
Size,” page F-2 (data current as of Oct. 2005). The data do not include 718 systems for which classifying data were not
available.
46 47 U.S.C. § 543(m)(2); see also 47 C.F.R. § 76.901(f) & nn.1–3.
47 47 C.F.R. § 76.901(f); see FCC Announces New Subscriber Count for the Definition of Small Cable Operator, Public
Notice, 16 FCC Rcd 2225 (Cable Services Bureau 2001).
48 These data are derived from R.R. BOWKER, BROADCASTING & CABLE YEARBOOK 2006, “Top 25 Cable/Satellite
Operators,” pages A-8 & C-2 (data current as of June 30, 2005); WARREN COMMUNICATIONS NEWS, TELEVISION &
CABLE FACTBOOK 2006, “Ownership of Cable Systems in the United States,” pages D-1805 to D-1857.
49 The Commission does receive such information on a case-by-case basis if a cable operator appeals a local franchise
authority’s finding that the operator does not qualify as a small cable operator pursuant to section 76.901(f) of the
Commission’s rules.
50 47 U.S.C. § 571(a)(3)-(4). See Annual Assessment of the Status of Competition in the Market for the Delivery of
Video Programming
, MB Docket No. 06-189, Thirteenth Annual Report, 24 FCC Rcd 542, 606 para. 135 (2009)
(“Thirteenth Annual Cable Competition Report”).
51 See 47 U.S.C. § 573.
52 U.S. Census Bureau, 2007 NAICS Definitions, “517110 Wired Telecommunications Carriers”;
http://www.census.gov/naics/2007/def/ND517110.HTM#N517110.
53 U.S. Census Bureau, 2007 Economic Census, Subject Series: Information, Table 5, Employment Size of Firms for the
United States: 2007, NAICS code 5171102 (issued Nov. 2010).
17

employees, and 16 firms had employment of 1000 employees or more.54 Thus, under this second size
standard, most OVS operators are small and may be affected by rules adopted pursuant to the Public Notice.
In addition, we note that the Commission has certified some OVS operators, with some now providing
service.55 Broadband service providers (“BSPs”) are currently the only significant holders of OVS
certifications or local OVS franchises.56 The Commission does not have financial or employment
information regarding the entities authorized to provide OVS, some of which may not yet be operational.
Thus, again, at least some of the OVS operators may qualify as small entities.

Internet Service Providers

. Since 2007, these services have been defined within the broad
economic census category of Wired Telecommunications Carriers; that category is defined as follows: “This
industry comprises establishments primarily engaged in operating and/or providing access to transmission
facilities and infrastructure that they own and/or lease for the transmission of voice, data, text, sound, and
video using wired telecommunications networks. Transmission facilities may be based on a single
technology or a combination of technologies.”57 The SBA has developed a small business size standard for
this category, which is: all such firms having 1,500 or fewer employees.58 According to Census Bureau data
for 2007, there were 3,188 firms in this category, total, that operated for the entire year.59 Of this total, 3144
firms had employment of 999 or fewer employees, and 44 firms had employment of 1000 employees or
more.60 Thus, under this size standard, the majority of firms can be considered small. In addition, according
to Census Bureau data for 2007, there were a total of 396 firms in the category Internet Service Providers
(broadband) that operated for the entire year.61 Of this total, 394 firms had employment of 999 or fewer
employees, and two firms had employment of 1000 employees or more.62 Consequently, we estimate that
the majority of these firms are small entities that may be affected by rules adopted pursuant to the Public
Notice.

D. Description of Projected Reporting, Recordkeeping, and Other Compliance Requirements

for Small Entities
In this Public Notice, the Commission seeks public comment on a proposed survey of urban rates for
fixed voice and fixed broadband residential services. The Bureau also seeks comment concerning how, using
data from the urban rates survey, to determine the local voice rate floor and the reasonable comparability
benchmarks for fixed voice and fixed broadband services. The Public Notice seeks comment on data
requirements that would require reporting by small entities. Specifically, the Public Notice seeks comment
on the collection of advertised rates and product offerings from small entities in urban areas that are included
in the sample.


54 See id.
55 A list of OVS certifications may be found at http://www.fcc.gov/mb/ovs/csovscer.html.
56 See Thirteenth Annual Cable Competition Report, 24 FCC Rcd at 606-07 para. 135. BSPs are newer firms that are
building state-of-the-art, facilities-based networks to provide video, voice, and data services over a single network.
57 U.S. Census Bureau, 2007 NAICS Definitions, “517110 Wired Telecommunications Carriers” (partial definition),
http://www.census.gov/naics/2007/def/ND517110.HTM#N517110.
58 13 C.F.R. § 121.201, NAICS code 517110.
59 U.S. Census Bureau, 2007 Economic Census, Subject Series: Information, Table 5, “Establishment and Firm Size:
Employment Size of Firms for the United States: 2007 NAICS Code 517110” (issued Nov. 2010).
60 See id.
61 U.S. Census Bureau, 2007 Economic Census, Subject Series: Information, Table 5, Employment Size of Firms for the
United States: 2007, NAICS code 5171103 (issued Nov. 2010).
62 See id.
18

E.

Steps Taken to Minimize the Significant Economic Impact on Small Entities, and
Significant Alternatives Considered

The RFA requires an agency to describe any significant, specifically small business, alternatives that
it has considered in reaching its proposed approach, which may include the following four alternatives
(among others): “(1) the establishment of differing compliance or reporting requirements or timetables that
take into account the resources available to small entities; (2) the clarification, consolidation, or
simplification of compliance and reporting requirements under the rules for such small entities; (3) the use of
performance rather than design standards; and (4) an exemption from coverage of the rule, or any part
thereof, for such small entities.”63
The Public Notice seeks comment on issues related to the rates survey and how the benchmarks and
rate floors should be determined. The rate survey issues are not anticipated to have a significant economic
impact on small entities because the survey will only sample a small number of providers. Furthermore,
since the statistical sampling methodology will result in larger entities being more likely to be surveyed, we
anticipate small entities will only compose a minor portion of the overall sample. Moreover, the survey only
asks about advertised rates and product offerings which should be readily available to entities of any size.
Furthermore, any significant economic impact cannot necessarily be minimized through alternatives since the
survey sample will already be restricted to a small set of the total population of carriers necessary for
generating a statistically valid sample, and the survey will only ask for readily available advertised rates and
will be implemented in an easily accessible online format.

F.

Federal Rules that May Duplicate, Overlap, or Conflict with the Proposed Rules

None.


63 5 U.S.C. § 603(c)(1)–(c)(4).
19

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