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Bureau Seeks Comment on Extending Phase-in of Phone Subsidy Reform

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Released: March 20, 2014


Federal Communications Commission

News Media Information 202 / 418-0500

445 12th St., S.W.


Washington, D.C. 20554

TTY: 1-888-835-5322

DA 14-384

Released March 20, 2014





WC Docket No. 10-90

Oppositions Date: March 21, 2014
Replies Date: March 31, 2014

Today, the Wireline Competition Bureau announces the results of the urban rate survey for fixed
voice services, which will be used to determine the 2014 rate floor for incumbent eligible
telecommunications carriers (ETCs) and the reasonable comparability benchmark for voice services.1 We
also seek comment on a petition to extend the deadline for compliance with the 2014 rate floor.
In the USF/ICC Transformation Order, the Commission adopted a rate floor “to ensure that states
are contributing to support and advance universal service and that consumers are not contributing to the
Fund to support customers whose rates are below a reasonable level.”2 To be consistent with section
254(b) of the Communications Act, the Commission also determined that “ETCs must offer voice
telephony service, including voice telephone service offered on a standalone basis, at rates that are
reasonably comparable to urban rates,”3 and it adopted a presumption that “a voice rate is within a
reasonable range if it falls within two standard deviations above the national average.”4 In the USF/ICC
Transformation Order
, the Commission directed the Wireline Competition Bureau and Wireless
Telecommunications Bureau to conduct a survey of residential urban rates for, among other things, fixed
voice and fixed broadband services.5
On April 3, 2013, the Wireline Competition Bureau (Bureau) and the Wireless
Telecommunications Bureau adopted an order setting the form and content for a survey of urban rates for

1 See 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, 17694, 17751, paras. 84-85, 238 (2011) (USF/ICC Transformation Order), pets. for review pending sub
nom. In re: FCC 11-161
, No. 11-9900 (10th Cir. argued Nov. 19, 2013).
2 USF/ICC Transformation Order, 26 FCC Rcd at 17751, para. 238 (emphasis and footnote omitted).
3 Id. at 17693, para. 81.
4 Id. at 17694, para. 84.
5 Id. at 17694, 17708, paras. 85, 114.

fixed voice and fixed broadband residential services, as required by the USF/ICC Transformation Order.6
On December 16, 2013, the Bureau initiated the survey and collected the rates offered by a statistically
valid sample of facilities-based providers of fixed services identified using the most recent FCC Form 477
data in 500 urban Census tracts.7
Based on the survey results, the Bureau has calculated that the average local end-user rates plus
state regulated fees of the surveyed ILECs in urban areas is $20.46. The USF/ICC Transformation Order
defined the average urban rate to include local end-user rates plus state regulated fees (specifically, state
subscriber line charges (SLCs), state universal service, and mandatory extended area service charges).8
The Commission specifically did not include the federal SLC in the calculation for the rate floor. The
Bureau found that non-ILEC provider recurring monthly rates collected in the survey typically were
higher than ILEC reported recurring monthly rates. Non-ILEC providers who do not separately charge
and report a federal SLC may charge recurring monthly rates similar to an ILEC’s monthly charge plus
the federal SLC. The Bureau calculated the average using urban ILEC rates from the sample in order to
avoid inclusion of rates that may be designed to match the ILEC’s monthly local rate plus the federal
Based on the survey responses, the Bureau also calculated the reasonable comparability
benchmark for voice services to be $46.96. 9 For purposes of the reasonable comparability benchmark,
the Bureau concluded that the rates of all local flat-rate providers (both ILEC and non-ILEC providers)
and, consistent with existing precedent, federal SLCs, should be included.10 The purpose of the
reasonable comparability measurement is to ensure that rural rates do not significantly exceed urban rates.
From the consumer’s perspective, it is the total local rate (the base charge plus the federal SLC) that is
relevant. Therefore, establishing a benchmark based on the price of local voice services offered by all
voice providers in urban areas is the most reasonable basis for comparison.
Under the Commission’s rules, by July 1, 2014, all ETCs that are ILEC recipients of high-cost
support must report the number of residential service lines for which the sum of the rate and state fees are
below $20.46 as of June 1, 2014.11 In addition, each ETC, including competitive ETCs, must certify that
the pricing of the voice services is no more than $46.96.12
On March 11, 2014, the Eastern Rural Telecom Association (ERTA), the Independent Telephone
& Telecommunications Alliance (ITTA), NTCA, the National Exchange Carrier Association (NECA), the

6 Connect America Fund, WC Docket No. 10-90, Order, 28 FCC Rcd 4242 (Wireline Comp. Bur. and Wireless
Telecom. Bur. 2013).
7 Wireline Competition Bureau Announces Timeline for Completion of Urban Rates Survey, WC Docket No. 10-90,
Public Notice, 28 FCC Rcd 16753 (Wireline Comp. Bur. 2013). The sample included fixed, facilities-based,
terrestrial (not mobile) voice providers, including incumbent local exchange carriers (ILECs), cable companies, and
fixed wireless providers.
8 USF/ICC Transformation Order, 26 FCC Rcd at 17751, para. 238.
9 Id. at 17694, para. 84.
10 Id.
11 47 C.F.R. § 54.313(h). To the extent that an ILEC’s local rates (plus state regulated fees) are less than the urban
rate floor, that carrier’s high-cost support will be reduced on a dollar-for-dollar basis. This applies both to price cap
and rate-of-return carriers, and to high-cost loop support as well as Connect America Fund Phase I frozen support.
See USF/ICC Transformation Order, 26 FCC Rcd at 17751-52, para. 239.
12 47 C.F.R. § 54.313(a)(10).

United States Telecom Association (USTelecom), and WTA – Advocates for Rural Broadband filed a
joint petition requesting that the deadline for compliance with the 2014 local service rate floor be
extended from July 1, 2014 to January 2, 2015, and that subsequent adjustments to the rate floor should
then be made annually on January 2.13 Pursuant to section 1.45 of the Commission’s rules, oppositions to
the petition are due on March 21, 2014, and replies would be due on March 26, 2014. Pursuant to section
1.3 of the Commission’s rules,14 however, we waive the provisions in section 1.45(c) of the
Commission’s rules relating to the replies filing deadline and the substantive content of replies, to extend
the reply period to March 31, 2014 in order to allow more time for parties to comment on the petition, as
well as any alternative approaches that would protect consumers while ensuring swift implementation of
the Commission’s statutory obligation to ensure reasonably comparable rates. For example, we seek
comment on a longer phase-in of the rate floor than the extension requested by petitioners.
Pursuant to sections 1.45, 1.47-1.49, and 1.51-1.52 of the Commission’s rules,15 interested parties
may file oppositions to the petition on or before March 21, 2014 and replies on or before March 31,
. All pleadings are to reference

WC Docket No. 10-90

. Pleadings may be filed using the
Commission’s Electronic Comment Filing System (ECFS) or by filing paper copies.16
Electronic Filers: Pleadings may be filed electronically using the Internet by accessing the
Paper Filers: Parties who choose to file by paper must file an original and one copy of each
filing. Filings can be sent by hand or messenger delivery, by commercial overnight courier, or by
first-class or overnight U.S. Postal Service mail. All filings must be addressed to the
Commission’s Secretary, Office of the Secretary, Federal Communications Commission.
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.
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 or call the
Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-418-0432 (tty).

Additional Copies.

In addition, we request that you send one copy of each pleading to each of the

13 Petition for Extension of Time by ERTA, ITTA, NECA, NTCA, USTelecom and WTA, WC Docket No. 10-90
(filed Mar. 11, 2014).
14 47 C.F.R. § 1.3.
15 47 C.F.R. §§ 1.45, 1.47-1.49, 1.51-52.
16 See Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (1999).

(1) Suzanne Yelen, Industry Analysis and Technology Division, Wireline Competition Bureau, 445
12th Street, SW, 6-B115, Washington, DC 20554; e-mail:
(2) Alexander Minard, Telecommunications Access Policy Division, Wireline Competition Bureau,
445 12th Street, SW, 5-A334, Washington, DC 20554; e-mail:

Ex Parte Rules.

The proceeding this Notice initiates shall be treated as a “permit-but-disclose”
proceeding in accordance with the Commission’s ex parte rules.17 Persons making ex parte presentations
must file a copy of any written presentation or a memorandum summarizing any oral presentation within
two business days after the presentation (unless a different deadline applicable to the Sunshine period
applies). Persons making oral ex parte presentations are reminded that memoranda summarizing the
presentation must (1) list all persons attending or otherwise participating in the meeting at which the ex
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
For further information, please contact Alexander Minard, Telecommunications Access Policy
Division, Wireline Competition Bureau at (202) 418-7400 or TTY (202) 418-0484, or
- FCC -

17 47 C.F.R. §§ 1.1200 et seq.

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