20061127Comments.pdf

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O. Box 15855 . Washington D.C. 20003-0855 . Ph: [phone] . Email: roUsroyal~aol.com
Advisors to the Rural Communications Industry Barry L. Hjort
November 27, 2006
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Via Federal Express Overnight Delivery
Ms. Jean Jewel, Executive Secretary
Idaho Public Utilities Commission
472 W. Washington St.
PO Box 83720
Boise, ill 83720-0074
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Re: Case No. INC-06-
Dear Ms. Jewel:
Enclosed please find the original and seven copies of the Comments of the Potlatch
Telephone Company, Inc. for filing in the referenced matter
If you have questions concerning these filings, please contact me at [phone].
Thank you.
Very truly yours
2111 West Boulevard
Rapid City, SD 57701
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Morgan W. Richards, Jr.
BarNo. 1913
Richards Law Firm
804 East Pennsylvania Lane
Boise, Idaho 83706
208-345-8371
Email: mwrlaw~cableone.net
RECEIVED
2006 NOV 27 M1 8: 50
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Barry L. Hjort
Colorado Bar No. 19551
Guillory & Hjort
2111 West Boulevard
Rapid City, South Dakota 57701
303-550-4772
Email: rollsroyal~aol.com
BEFORE THE PUBLIC UTILITIES COMMISSION
OF THE STATE OF IDAHO
IN THE MATTER OF THE PETITION
OF INLAND CELLULAR FOR
DESIGNATION AS ELIGffiLE
TELECOMMUNICATIONS CARRIERS
UNDER 47 US.C. SECTION 214(e)(2)
Case No. INC-06-
COMMENTS OF THE POTLATCH TELEPHONE COMPANY, INC.
Potlatch Telephone Company Inc.
, ("
Potlatch") through its undersigned counsel
pursuant to Idaho Public Utility Commission ("IPUC") Order No. 30152 issued in this
matter, submits its Comments in opposition to the Petition and the two supplements
thereto ofInland Cellular Telephone Company ("ICTC") seeking designation as an
Eligible Telecommunications Carrier and in support thereof states as follows:
INTRODUCTION
On June 27 2006 ICTC filed its Petition for Designation as an Eligible
Telecommunications Carrier. Potlatch filed a timely Petition to Intervene. By
Commission Order No, 30144, dated October 4, 2006, the Potlatch petition was granted.
Subsequent to its initial filing, ICTC filed a Supplemental Petition with attachments on
September 27, 2006 and a second Supplement with attachments on October 12, 2006.
As this Commission is aware, Potlatch is an independent local exchange carrier
ILEC") which provides local exchange and other telecommunications services to
customers in rural areas of the state. It is and has been certified by the Idaho Public
Utilities Commission ("IPUC") to receive federal universal service support for the basic
service it provides to its customers. Both the company and its customers will be
potentially affected by the IPUC decision in this case,
As the ICTC Petition indicates in Exhibit C, the applicant seeks ETC designation in
the Potlatch wire centers of Julietta, Kendrick and Troy, ICTC is the first wireless carrier
to file a petition seeking ETC designation in the referenced Potlatch wire centers.
Potlatch opposes the ICTC petition and urges its rejection by this Commission. As is
outlined in more detail below, Potlatch argues that the ICTC Petition is procedurally
deficient in that it fails to comply both with certain of the applicable Federal
Communications Commission ("FCC") certification requirements, as well as with several
of the IPUC rule requirements concerning ETC certification applications. In addition, the
Petition, its Supplements and the associated attachments provide insufficient factual
information for this Commission to reach an informed, substantive conclusion that the
grant ofETC designation to ICTC would be in the public interest. The Petition and its
supplements contain a variety of generalized assertions pertaining to the requirements that
must be met by an ETC designee, but taken as a whole, lack both the specificity and
concrete commitments that are required of an applicant that seeks ETC designation.
BACKGROUND
On March 17, 2005, the FCC adopted new rules for designating eligible
telecommunications carriers ("ETC'
).
In the Matter o/the Federal-State Joint Board
on Universal Service CC Docket No. 96-, 20 F.c.R. 637. The referenced FCC
Order is appended to these comments as Attachment A. In its decision, the FCC urged
state commissions to adopt similar requirements to be applied when considering the
designation of new ETC's pursuant to 47 U.C. Section 214(e).
Subsequently, in Case No. WST - T -05-1 this Commission sought comments from
interested parties concerning the new FCC rules. After considering those comments, the
IPUC adopted new ETC eligibility and reporting requirements in Order No. 29841 issued
on August 4 2005. That Order with the new Idaho ETC certification rules appended are
attached as Attachment B. Those rules are applicable to and govern the review of the
instant ICTC Petition and its supplements.
In addition to the referenced federal and state rules, because the ICTC Petition
seeks ETC designation in areas served by rural telephone companies, including three wire
centers served by Potlatch, this Commission is required pursuant to 47 US.C. Section
214(e)(2) to find that the designation is in the public interest. In analyzing that federal law
requirement in the appended Order adopting new ETC certification rules, this Commission
specifically enumerated the public interest factors that it would consider that are
specifically applicable to those applications seeking ETC designation in rural telephone
company sefVlce areas.
(T)he value of increased competition, by itself, is not sufficient to
satisfy the public interest test in rural areas. Instead, in deter-
mining whether designation of a competitive ETC in a rural
telephone company s service area is in the public interest, we
weigh numerous factors, including the benefits of increased
competitive choice, the impact of multiple designations on the
universal service fund, the unique advantages and disadvantages
of the competitor s service offering, any commitments made
regarding the quality of the telephone service provided by com-
peting providers, and the competitive ETC's ability to provide
the supported services throughout the designated service area
within a reasonable time frame.
Citing the Clear Talk Order at p. 6 (quoting Virginia Cellular 19 F.R. at 1574)
ARGUMENT
Provision of Supported Services. The first requirement of the IPUC rules
concerning additional eligibility requirements for ETC certification indicates that an ETC
Applicant must certify that it will:
(a) provide service on a timely basis to reporting customers within the
applicant s service area where the applicant's network already passes
the potential customer s premises; and (b) provide service within a
reasonable period of time, if the potential customer is within the
applicant's licensed service area but outside its existing network
coverage, if service can be provided at reasonable cost by (i)
modifying or replacing the requesting customer s equipment; (ii)
deploying roof-mounted antenna or other equipment; (ill) adjusting
the nearest cell tower; (iv) adjusting network or customer facilities;
(v)reselling services from another carrier s facilities to provide
service; or (vi) employing, leasing or constructing an additional
cell site, cell extender, repeater, or other similar equipment.
A review of the ICTC petition and its supplements will reveal that no such
mandatory certification is contained within the filing papers. In the initial petition at
paragraph 25, which purports to address this rule requirement, the Applicant simply
describes its company history. No commitment or certification of compliance with the
specifics of the applicable IPUC rule is found. Additionally, while the relevant rule is
referenced at n., p. 2 of the Applicant's second supplement filed on October 12 , 2006
again there appears no promise, commitment or certification by the Applicant to the rule
requirements. Instead, the Applicant both skirts the certification commitment and qualifies
any potential compliance: ".,. Inland Cellular must have the flexibility to redirect
investment to those areas requiring additional facilities. This flexibility is also important in
order to be in compliance with the requirement,...
The commitment to provide the required supported services is central to
qualification as an ETC under both the federal and state rules. Further, as this
Commission noted in its Order adopting its ETC certification rules, the ETC applicant
must demonstrate an ability to provide the supported services throughout its proposed
designated service area within a reasonable time frame.
The Applicant's failure to provide the required certification, whether by oversight
or by design, coupled with an absolute absence of any commitment to provide the required
supported services throughout its designated service area must be adjudged fatal to its
Application.
Network Improvement Plan. Associated with this Commission s rule
requirement to provide supported services is the additional requirement to "
. , ,
submit a
two-year network improvement plan that describes with specificity proposed improvement
or upgrades to the applicant's network on a wire center by wire center basis throughout its
proposed designated service area." Again the Applicant s petition and supplements fail to
provide any information that approximates even rough compliance with this requirement.
At paragraph 26 of the initial Petition, Applicant states: "Its two-year plan, 2006
and 2007, involves an estimated investment of $2, 100 000 in Idaho; budgeted sites or site
improvements at Genesee, Kamiah, Nuxall (near Kooskie), Troy, Track (outside
Moscow), Highway 95 North and Highway 95 Summit." There is no indication in the
pleading whether this "two year plan" budget estimating a $2M-plus investment is
Applicant's ordinary course of business budget planning number; or is intended as
additional investment which the company contemplates based upon securing ETC
designation, Thus no conclusion can be reached as to whether the company
representation constitutes an actual proposal for "network improvement" or is simply a
description of the "ordinary course of business" inftastructure investments that wireless
carriers routinely make. Obviously an Applicant commitment on this requirement is very
important to this Commission as the tenor of its ETC certification rules plainly indicates
that it expects network improvements and upgrades as a condition of granting ETC
designation.
At section VI., p. 6, paragraph 13 - 18 of the Applicant's first supplement , filed on
September 27 2006 there is an expanded explanation of the company s two-year plan, In
paragraph 15, Applicant represents that"... although budgeted for 2006, the Troy, Track,
Highway 95 North and Highway 95 Summit sites will not be built until 2007." (There is
no indication as to whether this decision to delay upgrades and network improvements will
have an effect upon the company s investment plans or investment numbers for 2006 or
2007.) In paragraph 16, it is noted that: "The Genesee site should be able to cover
Genesee, Kendrick and Julietta and Inland Cellular s Orofino site would also over-lap
Julietta." And finally, in the second Supplement of October 12, 2006, Applicant states:
Although in the Supplement, estimated investment figures were
provided for proposed sites, we re-iterate that Inland Cellular
is in a highly competitive business and in order to answer customer
demand, Inland Cellular must have the flexibility to redirect
investment to those areas requiring additional facilities.
Nowhere in the Applicant pleadings is there a reference to its investment intentions
or a network improvement plan, laid out on a wire center-by-wire center basis that
addresses each of the wire centers in its proposed designated service area. Indeed it is
impossible on the face of the pleadings to ascertain whether the two year plan referenced
by the Applicant relates to "proposed improvements or upgrades" at all or is simply a
recounting of ordinary course of business investment planning. And finally, given the
careful qualification of the wording contained in the second supplement, its appears that
ICTC, in a desire to preserve its "flexibility", reserves to itself the ultimate decision as to
whether the investments it has noted that constitute elements of its two year plan will ever
be made at all.
For the affected Potlatch wire centers of Julietta, Kendrick and Troy the only
conclusions that can be drawn about the Applicant s "network improvement plan" is that
the building of a Troy site will be delayed into 2007; and that the Genesee site, when built
should be able to cover" Juliaetta and Kendrick.
Potlatch submits that the bare assertions of the Applicant s petition and
supplements do not, in any respect, satisfy the IPUC rules requiring "specificity
concerning "proposed improvements or upgrades" on a "wire center-by-wire center
basis , particularly in light of the Applicant's careful qualification concerning any potential
investment commitments.
3. Signal Quality, Coverage and Capacity. Also associated with the Applicant
commitment to provide supported services is the IPUC rule requirement that:
Each applicant must also demonstrate how signal quality, coverage or capacity
will improve due to the receipt of high-cost support; the projected start date and
completion date for each improvement and the estimated amount of investment for
each project that is funded by high cost support; the specific geographic areas
where the improvements will be made; and the estimated population that will be
served as a result of the improvements.
Applicant makes no pretense of attempting to comply with this requirement. A
careful reading of the Petition and its supplements will disclose no mention of how the
receipt of high cost support will cause an improvement in ICTC's signal quality, coverage
or capacity. The only reference in the pleadings that even tangentially touches this
requirement with respect to the Potlatch wire centers is the assertion, noted above, that
the Genesee site, when built
, "
should be able to cover" Julietta and Kendrick.
Potlatch submits that this section of the IPUC certification rules requires more than
a single sentence expression of hope from an ETC applicant. Critical factual information,
and concrete commitments, both central to compliance with this Commission s rules are
simply not provided in Applicant's pleadings,
It must be noted that this application, its supplements and attachments are singular
in their lack of supporting detail. The maps of the Applicant's licensed service areas are of
little use in any analysis because there are no geographic reference points except county
boundaries. Because existing cell site locations are not identified, terrain obstacles noted
or proposed new site locations identified on the maps and because no propagation studies
are affixed to provide corroboration of the pleading assertions - it is impossible for this
Commission, or indeed for any interested party, to determine whether any of the proposed
Applicant investments will result in any improvement in the company s signal quality,
coverage or capacity as required by the rule.
An associated rule requirement here requires Applicant information concerning the
projected start date and completion date for each improvement and the estimated amount
of investment for each project as well as the specific geographic areas where the
improvements will be made and the estimated population that will be served. Again the
pleadings provide no meaningful insights. For the Potlatch wire centers, the pleadings
only reveal as has been noted above, that the building of a Troy site will be delayed into
2007 and that the Genesee site, when built
, "
should be able to cover" Julietta and
Kendrick. The pleadings contain no commitment to build, no project by project
information concerning projected cost or start or completion date, and beyond the
Genesee reference - no geographic specifics. In the second supplemental, a minimal effort
at providing "population served" information is supplied, but again no effort is made to
identify "population served" estimates by wire center or geographic location.
Remaining Functional in Emergencies. The applicable Commission rule
requires a demonstration that the Applicant has reasonable back-up power to ensure
operability without an external power source, can re-route traffic around damaged
facilities, and can manage traffic spikes. Concerning this rule requirement, Applicant
indicates at paragraph 22, p. 8 of its September 27 2006 Supplemental that ifa cell site
becomes nonfunctional, that"... the wireless customer could receive service from any of
Inland Cellular s roaming partners should their service remain in tact (sic) and a signal can
be obtained." This representation is repeated at paragraph 8, p.4 of the October 12
Applicant Supplement.
Potlatch recognizes that wireless providers have the ability to program their
cellular handsets to default to their own channel. If the handset cannot be connected to
the primary provider s channel, it can also be programmed to then automatically search
for another channel or signal. This default and search process is the same regardless if the
call is initiated within the wireless provider s own serving area or outside its own serving
area. It is not clear from the application how the Applicant programs its handsets.
In some circumstances such as in an urban location with a relatively flat landscape
and a variety of competing ,wireless providers this back-up strategy may be a viable one.
However, in the mountainous terrain of the rural Potlatch service area, for wireless
customers to rely upon overlapping roaming partner signals for communications back-up
is a dubious proposition at best.
5. Local Usage. The federal and the IPUC requirements concerning local usage plans
differ. In 47 C.R. Section 54.202(a), an ETC Applicant is required to offer a local usage
plan "comparable to that of the incumbent local exchange carrier." The relevant IPUC
rule simply requires that an Applicant describe its local usage plans and those of the
competing ILEC. The IPUC decision adopting its new certification rules notes that
Applicant information concerning local usage plans . . . is essential to the public interest
analysis. "
The ICTC Petition contains information concerning local usage and its plan
descriptions at paragraphs 14 and 29 as well as at paragraphs 28 and 29, pp. 10-11 of the
September 27 2006 Supplement. Applicant represents that it will comply with" . . . any
and all minimum local usage requirements adopted by the FCC or the IPUC." It identifies
two of its existing calling plans as options to meet local usage requirements. The first is a
$29.95 per month post-pay plan for unlimited minutes of in-network calling and the
second is a post-pay plan of$19.95 for 150 minutes of non-toll usage.
Potlatch has two concerns with the Applicant's representations. First , it proposes
no specific basic universal service plan tailored to meet customer needs that is associated
with its proposed receipt ofETC designation by this Commission. The Applicant simply
describes its existing plans and by employing a "round peg in a square hole" analysis
seeks to cram the terms and conditions of two of its existing plans into the local usage
requirement.
Second, the Applicant makes no effort to demonstrate that its plan offerings which
are touted as responsive to the local usage requirement meet the federal rule requirement
concerning comparability with the basic service offering of the incumbent - either as to
price or as to minutes of use. Notwithstanding the provisions of the IPUC's rule
requirement concerning local usage, any Applicant proposal for local usage that does not
meet the federal rule requirement of "comparability" fails to meet the required public
interest test.
It is the Potlatch contention that any Idaho applicant for ETC certification should
be required to establish a specific basic universal service offering with local usage deemed
adequate by the IPUC Staff which is comparable to that of the competing incumbent ILEC
in order to meet the applicable public interest standard for certification in the service area
of a rural ILEC. Such a basic universal service plan offering should not only be proposed
but should be required to be separately identified in marketing materials, and should be
offered, advertised and posted along with all other service offerings on the Applicant'
Website. In its ETC rulemaking decision attached which referenced the federal
comparability requirement", this Commission noted: "The Commission Staff supported
this requirement explaining that the local usage plan need not be a fully flat-rated plan but
should allow sufficient minutes of use to meet customer needs.
Potlatch contends that by any calculus, 150 minutes of local usage per month for a
rate of$19.95 cannot be deemed adequate to meet either "customer needs" or the IPUC
or the FCC local usage rule requirements. It also urges this Commission to require a
specific basic universal service offering with adequate local usage as a condition of the
receipt ofETC designation.
6, Impact on Universal Service Fund. The new FCC certification rules, upon which the
IPUC rules build, include a public interest standard that applies to all competitive ETC
applicants. See, 47 C,F.R. Section 54.202(c). The public interest standard requires a
cost-benefit analysis that considers several factors. Included among these factors is the
requirement to examine "the impact of the designation on the universal service fund.
This Commission has adopted the public interest analysis contained in the FCC rules. In
its attached Order No. 29841 at page 15 the Commission stated: "Noting that all of the
commenters support the FCC'proposed public interest analysis, the Commission adopts
this analysis.
The ICTC Petition and its associated Supplements contain no reference to or
information concerning the impact of its proposed ETC certification upon the federal
universal service fund. The Application is silent concerning this requirement. In the
absence of relevant data, this Commission simply cannot perform and complete the public
interest "cost-benefit" analysis required both by applicable federal rules and its own
requirements, This omission constitutes an additional ground upon which the Applicant's
Petition must be rejected.
Summary. To meet its obligation to perform a public interest analysis concerning
an application for ETC certification, this Commission requires certain specific information
and positive, unqualified commitments from an Applicant. There are clear procedural
requirements embodied in the Commission s rules that must be met by any Applicant in
order to permit the Commission to reach substantive conclusions. The deficiencies of the
ICTC Petition and its Supplements have been outlined above. Those deficiencies are of
such a magnitude that adequate analysis cannot be performed nor substantive conclusions
reached.
Perhaps some of the shortcomings of the instant application could be considered
technical in nature. But there are certain bedrock assurances that this Commission must
have in order to complete its required public interest analysis and to approve Applicant
ETC statUs. These include: (a) specific information about where inftastructure and
network improvement investments will be made; (b) the projects that those investments
will be directed toward; ( c) the dollar amount of those investments; (d) a positive
unqualified commitment to make those investments ifETC status is granted; and (e) the
assurance that the investments proposed will be made because of the receipt ofETC
designation, not simply in the ordinary course of business. In short, the Commission needs
to be assured that that the citizens of Idaho will realize an improvement in
communications service in the state in exchange for the Applicant s receipt of federal
support. None of these bedrock assurances are contained in the ICTC application, The
Application fails the public interest test. It should be rejected.
WHEREFORE, having fully set forth its Comments, Potlatch respectfully requests that
the Commission deny the Application of ICTC for ETC status.
DATED this -e:: 1 ?A-day of November, 2006,
Applyin ou
Barry L. Hjort
Guillory & Hjort
2111 West Boulevard
Rapid City, SD 57701
303-550-4772
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Local Counsel
Morgan W. Richards, Jr.
Richards Law Firm
804 East Pennsylvania Lane
Boise, Idaho 83706
208-345-8371
CERTIFICATE OF SERVICE
, Barry L. Hjort, hereby certify that I have, on this t:'~of November, 2006, served
the foregoing COMMENTS OF THE POTLATCH TELEPHONE COMPANY, INc.
upon all parties listed in the Certificate provided with the Inland Cellular Application.
copy of the foregoing COMMENTS OF THE POTLATCH TELEPHONE
COMPANY, INC. filed today was placed in the United States mail, first class postage
pre-paid, addressed to the following:
James K. Brooks, Treasurer/Controller
Inland Cellular Telephone Company
103 S. 2nd St., PO Box 688
Ros1yn, W A 98941
Ms. Jean Jewel, Executive Secretary
Idaho Public Utilities Commission
472 W. Washington St.
PO Box 83720
Boise, ill 83720-0074
Nez Perce Tribal Executive Committee
Rebecca Miles, Chairman
P. O. Box 305
Lapwai, ill 83540
Ingo Henningsen, Manager
Frontier Communications Solutions
PO Box 708970
Sandy, UT 84070-8970
Conley Ward, Esq.
Givens Pursley LLP
P. 0, Box 2720
Boise, ill 83701
Qwest Corporation
Theresa Jensen, Director -Regulatory
1600 71st Avenue, Room 1806
Seattle, W A 98191
The Coeur d' Alene Tribe
Chief James Allen, Tribal Chairman
850 A Street
PO Box 408
Plummer, ill 83851
Verizon Northwest, Inc.
David Valdez, Vice President
1800 41 8t Street
O. Box 1003
Everett, W A 98206
Inland Telephone Company
Douglas Weis, President
O. Box 171
Roslyn, WA 98941~4r~
Gail Long, Manager External Affairs
IDS Telecom
PO Box 1566
Oregon City, OR 97045
Federal Communications Commission FCC 05-
Before the
Federal Communications Commission
Washington, D.c. 20554
In the Matter of
Federal-State Joint Board on
Universal Service CC Docket No. 96-
REPORT AND ORDER
Adopted: February 25, 2005 Released: March 17, 2005
By the Commission:Commissioners Abernathy, Copps, and Adelstein issuing separate statements;
Commissioner Martin approving in part, and dissenting in part.
TABLE OF CONTENTS
Heading Paragraph #
I. INTRODUCTION...,.,...........,.,...,..........................""""""""""""""""""""""""""""........."......,.
ll. BACKGROUND..........................................................................................,....................................
A, The Act..,..."...".,.,....,....,.......,.,....,.....",.........,.,.......,...,.........,..".,...,...."........,.".,........,.....,......
B. Joint Board Recommended Decision................
............................................ .................................
C. Commission Decisions Pending the Commission s Action on the Joint Board'
Recommendations...........
""""""""" """""""""""""""""""""""""""""""""""""""
........... 14
ill. SCOPE OF SUPPORT......................,................,.....................,.."...."......................,.....................
IV. ETC DESIGNATION PROCESS..................,............................................,..,................................. 17
A. Eligibility Requirements,.................",.................,......,.,..,."..."..,.."....,.......,.....".,.,.",....,..........
1. Commitment and Ability to Provide the Supported Services .................................................2. Ability to Remain Functional in Emergency Situations .........................................................
3, Consumer Protection .....................................................,....................,................................
4. Local Usage....................................................................................,...................,........ .......
5. Equal Access...... .............
"""""""""""'" .................. ..........,...,...... ....................................
6. Adequate Financial Resources.. .................
.....".......,........,....""... ....... ........
........ ................ 37
B. Public Interest Detenninations
"""'.""""""" ..................................,....,.. ..... ..............................
1, Cost-Benefit Analysis """""""""""""""""""""""""""'"......"...,...,......"......,..
..........,.....
2. Potential for Creamskimming Effects ...................................................................................
3. Impact on the Fund.........."....... ................." ................,.. .......,.., .........". ....,..,
...... .....,.., .......
C. Permissive Guidelines for State ETC Designation Proceedings................................................... 58
D. Administrat
' -- --~ -. -.,
............................. 65
V. ANNUAL CEI .............................VI. OTHER ISSUl .............................
Attachment A
Federal Communications Commission FCC 05-
A. Service Area Redefinition Process..............,...................... .............,. .......................................... 73
B. Pending Redefinition Petitions.... ........ .....
.......................... .............. .......... ....".... .......................
C. Identification of Wireless Customer Locations........................................ ..............................".... 80
D. Accurate, Legible, and Consistent Maps.... ..... ............... ............. ......" ..... ........................ ........... 84
E. Support to Newly Designated ETCs........................................................................................... 87F. Accepting Untimely Filed Certifications For Interstate Access Support. ...........................,......,...
vIT........ ,.......... ,.......,....,.... ....' ,....,.... ,.....,." ,....
,., ..... ,..,....,
'......,.......,..., PROCEDURA:L MATTERS
vrn. ORDERrnG CLAUSES..... ........ ................... ............ ....... .......... ............. ................. .."........... 1
Appendix A - Final Rules
Appendix B - Parties Filing Comments and Reply Comments
Appendix C - Final Regulatory Flexibility Analysis
I. INTRODUCTION
1. This Report and Order addresses the minimum requirements for a telecommunications
carrier to be designated as an "eligible telecommunications carrier" or "ETC " and thus eligible to receive
federal universal service support. Specifically, consistent with the recommendations of the Federal-State
Joint Board on Universal Service (Joint Board), we adopt additional mandatory requirements for ETC
designation proceedings in which the Commission acts pursuant to section 214( e)( 6) of the
Communications Act of 1934, as amended (the Act). 1 In addition, as recommended by the Joint Board,
we encourage states that exercise jurisdiction over ETC designations pursuant to section 214( e )(2) of the
Act, to adopt these requirements when deciding whether a common carrier should be designated as an
ETC.2 We believe that application of these additional requirements by the Commission and state
commissions will allow for a more predictable ETC designation process?
2. We also believe that because these requirements create a more rigorous ETC designation
process, their application by the Commission and state commissions will improve the long-term
sustainability of the universal service fund,4 Specifically, in considering whether a common carrier has
satisfied its burden of proof necessary to obtain ETC designation, we require that the applicant: (1)
provide a five-year plan demonstrating how high-cost universal service support will be used to improve
its coverage, service quality or capacity in every wire center for which it seeks designation and expects to
receive universal service support; (2) demonstrate its ability to remain functional in emergency situations;
(3) demonstrate that it will satisfy consumer protection and service quality standards; (4) offer local
usage plans comparable to those offered by the incumbent local exchange carrier (LEC) in the areas for
which it seeks designation; and (5) acknowledge that it may be required to provide equal access if all
other ETCs in the designated service area relinquish their designations pursuant to section 214( e)( 4) of
the Act. In addition, we make these additional requirements applicable on a prospective basis to all
ETCs previously designated by the Commission, and we require these ETCs to submit evidence
demonstrating how they comply with this new ETC designation framework by October 1, 2006, at the
47 US.C. ~ 214(e)(6). Section 214(e)(6) of the Act directs the Commission to designate carriers when those
carriers are not subject to the jurisdiction of a state commission.
47 US.C. ~ 214(e)(2). Section 214(e)(2) of the Act provides state commissions with the primary responsibility for
designating ETCs.
See Federal-State Joint Board on Universal Service Recommended Decision, CC Docket No. 96-, 19 FCC Rcd
4257, 4258, para. 2 (2004) (Recommended Decision).
See id.
Federal Communications Commission FCC 05-
same time they submit their annual certification filing. As explained in greater detail below, however, we
do not adopt the Joint Board's recommendation to evaluate separately whether ETC applicants have the
financial resources and ability to provide quality services throughout the designated service area because
we conclude the objective of such criterion will be achieved through the other requirements adopted in
this Report and Order.
3. In this Report and Order, we also set forth the analytical framework the Commission will use
to detennine whether the public interest would be served by an applicant's designation as an ETC. We
find that, under the statute, an applicant should be designated as an ETC only where such designation
serves the public interest, regardless of whether the area where designation is sought is served by a rural
or non-rural carrier. Although the outcome of the Commission s section 2l4(e)(6) analysis may vary
depending on whether the area is served by a rural or non-rural carrier, we clarify that the Commission
public interest examination for ETC designations will review many of the same factors for ETC
designations in areas served by non-rural and iural incumbent LECs, In addition, as part of our public
interest analysis, we will examine the potential for creamskimming effects in instances where an ETC
applicant seeks designation below the study area level of a rural incumbent LEC. We also encourage
states to apply the Commission s analysis in detennining whether or not the public interest would be
served by designating a carrier as an ETC.
4. In addition, we further strengthen the Commission s reporting requirements for ETCs in
order to ensure that high-cost universal service support continues to be used for its intended purposes,
An ETC, therefore, must submit, among other things, on an annual basis: (1) progress updates on its
five-year service quality improvement plan, including maps detailing progress towards meeting its five-
year improvement plan, explanations of how much universal service support was received and how the
support was used to improve service quality in each wire center for which designation was obtained, and
an explanation of why any network improvement targets have not been met; (2) detailed infonnation on
outages in the ETC's network caused by emergencies, including the date and time of onset of the outage
a brief description of the outage, the particular services affected by the outage, the geographic areas
affected by the outage, and steps taken to prevent a similar outage situation in the future; and (3) how
many requests for service from potential customers were unfulfilled for the past year and the number of
complaints per 1 000 handsets or lines. These annual reporting requirements are required for all ETCs
designated by the Commission. We encourage states to require these reports to be filed by all ETCs over
which they possess jurisdiction.
5. As explained below, we do not adopt the recommendation of the Joint Board to limit high-
cost support to a single connection that provides access to the public telephone network. Section 634
the 2005 Consolidated Appropriations Act prohibits the Commission from utilizing appropriated funds to
modify, amend, or change" its rules or regulations to implement this recommendation,S Nevertheless
we believe the rigorous ETC designation requirements adopted above will ensure that only ETCs that can
adequately provide universal service will receive ETC designation, thereby lessening fund growth
attributable to the designation and supporting the long-term sustainability of the universal service fund.
6. We also agree with the Joint Board's recommendation that changes are not warranted in our
rules concerning procedures for redefinition of service areas served by rural incumbent LECs,
addition, in this Report and Order, we grant several petitions for redefinition of rural incumbent LEC
service areas. Moreover, we direct the Universal Service Administrative Company (USAC), in
Consolidated Appropriations Act, 2005, Pub. L. No. 108-447, ~ 634, 118 Stat 2809 (2004) (2005 Consolidated
Appropriations Act). The proln'bition against using any appropriated funds for adopting a primary line restriction
expires September, 30, 2005. See id.
Federal Communications Commission FCC 05-
accordance with direction from the Wireline Competition Bureau, to develop standards as necessary for
the submission of any maps that ETCs are required to submit to USAC under the Commission s rules.
We also modify the Commission s annual certification and line count filing deadlines so that newly
designated ETCs are pennitted to file that data within sixty days of their ETC designation date, This will
allow high-cost support to be distributed as of the date of ETC designation. In addition, to enable price
cap LECs and/or competitive ETCs that miss the June 30 annual interstate access support (!AS)
certification deadline to receive IAS support, we modify the quarterly certification schedule for the
receipt ofIAS support. These carriers may file their certification after June 30 in order to receive !AS
support in the second calendar quarter after the certification is filed, Finally, we decline to define mobile
wireless customer location in tenus of "place of primary use " as defined by the Mobile
Telecommunications Sourcing Act (MTSA), for universal service purposes,
II.BACKGROUND
The Act
7. Section 254(e) of the Communications Act of 1934, as amended (the Act),6 provides that
only an eligible telecommunications carrier designated under section 214( e) shall be eligible to receive
specific Federal universal service support."? Pursuant to section 214(e)(I), a common carrier designated
as an ETC must offer the services supported by the federal universal service mechanisms throughout the
designated service area either by using its own facilities or by using a combination of its own facilities
and resale of another carrier s services (including the services offered by another ETC), and must
advertise these services throughout the designated service area.
8. Section 214(e)(2) of the Act provides state commissions with the primary responsibility for
performing ETC designations.9 Under section 214(e)(2), "(u)pon request and consistent with the public
interest, convenience, and necessity, the State commission may, in the case of an area served by a rural
telephone company, and shall, in the case of all other areas, designate more than one common carrier as
an eligible telecommunications carrier" for a designated service area, so long as the requesting carrier
meets the requirements of section 214(e)(l).10 Section 214(e)(2) further states: "(b)efore designating an
additional eligible telecommunications carrier for an area served by a rural telephone company, the State
commission shall find that the designation is in the public interest."l1 Section 214(e)(6) provides that
(i)n the case of a common carrier providing telephone exchange service and exchange access that is not
See 47 u.S.C, ~ 254(e). The Communications Act of 1934 was amended by the Telecommunications Act of 1996.
Pub. L. No. 104-104, lIO Stat. 56 (1996) (1996 Act),
47 u.S.C. ~ 254(e).
47 u.S.C. ~ 2l4(e)(1).
47 u.S.C. ~ 2l4(e)(2), See also Federal-State Joint Board on Universal Service; Promoting Deployment and
Subscribership in Unserved Areas, Including Tribal and Insular Areas CC Docket No, 96-45, Twelfth Report and
Order, Memorandum Opinion and Order, and Further Notice of Proposed Rulemaking, 15 FCC Red 12208, 12255
para. 93 (2000) (Twelfth Report and Order).
47 D.C. S 2l4(e)(1),
47 u.S.C. ~ 2l4(e)(2).
Federal Communications Commission FCC 05-
subject to the jurisdiction of a State commission, the Commission shall upon request" perform the
relevant ETC designation.
Joint Board Recommended Decision
9. On June 28, 2002, the Commission released the ETC Referral Order requesting that the
Joint Board "review certain of the Commission s rules relating to the high-cost universal service support
mechanisms to ensure that the dual goals of preserving universal service and fostering competition
continue to be fulfilled",13 Specifically, the Commission requested that the Joint Board make
recommendations regarding two issues: (1) a long-term universal service plan that ensures that support
is "specific, predictable, and sufficient to preserve and advance universal service;" and (2) the manner in
which support can be "effectively targeted to rural carriers serving the highest cost areas, while
protecting against excessive fund growth,"14 Consistent with these directives, the Joint Board sought
comment and held a public forum to address concerns regarding the designation and funding of ETCs in
high-cost areas.15 On February 27 2004, based on its review and consideration of the record developed
in response to the ETC Referral Order the Joint Board released the Recommended Decision which
made several recommendations to the Commission regarding the ETC designation process and the
Commission s rules regarding high-cost support.
47 US.C. ~ 214(e)(6). See Procedures for FCC Designation of Eligible Telecommunications Carriers Pursuant
to Section 214(e)(6) of the Communications Act Public Notice, 12 FCC Red 22947 22948 (1997) (Section
2l4(e)(6) Public Notice). The Commission requires that an ETC petition filed with the Commission contain the
following: (1) a certification and brief statement of supporting facts demonstrating that the petitioner is not subject
to the jurisdiction of a state commission; (2) a certification that the petitioner offers or intends to offer all services
designated for support by the Commission pursuant to section 254(c); (3) a certification that the petitioner offers or
intends to offer the supported services "either using its own facilities or a combination of its own facilities and
resale of another carrier s services;" (4) a description of how the petitioner "advertise(s) the availability of
(supported) services and the charges therefor using media of general distribution" and (5) if the petitioner is not a
rural telephone company, a detailed description of the geographic service area for which it requests an ETC
designation from the Commission. In addition, similar to section 214(e)(2), section 214(e)(6) of the Act directs the
Commission to determine whether designation of an ETC is "consistent with the public interest, convenience, and
necessity." 47 U.c. ~ 2l4(e)(6).
See Federal-State Joint Board on Universal Service Order, CC Docket No, 96-45, 17 FCC Rcd 22642, para, 1
(2002) (Referral Order). See also 47 U.C. ~ 553(b), which provides an exception to the notice and comment
requirement for "rules of agency organization, procedure, or practice.
See Referral Order 17 FCC Rcd at 22642, at para. 1.
0n February 7, 2003, the Joint Board issued a Public Notice inviting public comment on whether the
Commission s rules concerning high-cost support and the ETC designation process continue to fulfill their
intended purposes. See Federal-State Joint Board on Universal Service Seeks Comment on Certain of the
Commission s Rules Relating to High-Cost Universal Service Support and the ETC Designation Process Public
Notice, CC Docket No. 96-, 18 FCC Rcd 1941 (2003) (Joint Board Portability-ETC Public Notice). On July 31
2003, the Joint Board held an en banc hearing on the Commission s rules on designation and funding ofETCs in
high-cost areas. See http://www,fcc.gov/wcb/universal service/documents/030731.pdf. See also Federal-State
Joint Board on Universal Service to Hold En Banc Hearing on the Portability of High-Cost Universal Service
Support and the ETC Designation Process Public Notice, CC Docket No, 96-, 18 FCC Rcd 14486 (2003)
(providing notice of Joint Board en banc hearing).
Recommended Decision 19 FCC Rcd at 4258-4260, paras, 1-
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10, The Joint Board recommended that the Commission adopt permissive federal guidelines for
states to consider in proceedings to designate ETCs under section 214(e)(5) of the Act. 17 The Joint
Board concluded that permissive federal guidelines for minimum ETC qualifications would allow for a
more predictable application process in the states. In doing so, the Joint Board concluded that permissive
guidelines would also assist states in determining whether the public interest would be served by a
carrier s designation as an ETC.18 The Joint Board further stated that permissive guidelines would
improve the long-term sustamabi1ity of the universal service fund, ensuring that only fully qualified
carriers that are capable of and committed to providing universal service would be able to receive
support.19 The Joint Board further recommended that the Commission apply the guidelines as mandatory
requirements to those proceedings in which the Commission acts under section 214( e)( 6).
11. In order to curb growth of the fund due to the increasing number of ETC designations and
the increased costs of rural incumbent LECs, the Joint Board also recommended that the Commission
limit the scope of high-cost support to a single connection per household that provides access to the
public telephone network in high-cost areas throughout the nation.21 The Joint Board determined that
supporting a single connection would be more consistent with the goals of section 254 of the Act than the
present system, which in some cases provides support for multiple connections to the public switched
telephone network. The Joint Board determined that limiting the scope of support is necessary to
preserve the sustainability of the universal service fund.22 The Joint Board also concluded that
supporting a single connection would send more appropriate entry signals to carriers in rural and high-
cost areas, and would be competitively neutral.23 In conjunction with its proposal to limit high-cost
support to a primary line, the Joint Board recommended that high-cost support be capped on a per-line
basis and adjusted annually by an index factor in areas that are served by rural carriers and where a
competitive carrier is designated as an ETc.24 On December 8, 2004, however, Congress passed the
2005 Consolidated Appropriations Act, which prohibits the Commission from utilizing appropriated
funds to "modify, amend, or change its rules or regulations for Universal Service support payments to
implement the February 27, 2004 recommendations of the Federal-State Joint Board on Universal
Service regarding single connection or primary line restrictions on universal service payments, ,,25
12. The Joint Board declined to recommend that the Commission modify the basis of support
(i,the methodology used to calculate support) in study areas with multiple ETCs,26 Instead, the Joint
Board recommended that the Joint Board and the Commission consider possible modifications to the
See 47 US.C. ~ 214,
See Recommended Decision 19 FCC Rcd at 4258, para, 2.
See Recommended Decision 19 FCC Rcd at 4261, para. 9.
See Recommended Decision 19 FCC Rcd at 4259, para. 5,
21 See Recommended Decision 19 FCC Red at 4258-4259, para, 3.
Jd,
Jd.
Jd,
2005 Consolidated Appropriations Act at ~ 634.
See Recommended Decision 19 FCC Rcd at 4259, para. 4.
Federal Communications Commission FCC 05-
basis of support as part of an overall review of the high-cost support mechanisms for rural and non-rural
carriers.
13. On June 8 2004, the Commission released a Notice of Proposed Rulemaking seeking
comment on the proposals outlined in the Joint Board'Recommended Decision concerning the ETC
designation process and the Commission s rules regarding high-cost universal service support.28 In
addition, the Commission sought comment on whether to modify its rules governing the filing of annual
certifications and data submissions by ETCs.
Commission Decisions Pending the Commission s Action on the Joint Board'
Recommendations
14. As the Commission and the Joint Board contemplated changes to the ETC designation
process, the Commission acknowledged the need for a more thorough ETC designation framework.
Specifically, on January 22 2004, the Commission released the Virginia Cellular ErC Designation
Order which granted in part and denied in part the petition of Virginia Cellular, LLC (Virginia Cellular)
to be designated as an ETC throughout its licensed service area in the Commonwealth of Virginia. 30 In
that order, the Commission imposed reporting and other requirements on Virginia Cellular as conditions
of Virginia Cellular obtaining an ETC designation. These conditions required Virginia Cellular: (1) to
report annually on its progress toward achieving its build-out plans, the total number of unfulfilled
service requests, and the total number of complaints per 1 000 households; (2) to comply with consumer
protection and quality of service standards; (3) to provision service to requesting customers in the area
for which Virginia Cellular is designated, including those areas outside existing network coverage; and
(4) to construct new cell sites in areas outside Virginia Cellular s network coverage,3! The Commission
also conducted a more thorough public interest analysis, which analyzed the advantages and
disadvantages of designating Virginia Cellular as an ETC and the potential for "creamskimming" that
could result from Virginia Cellular s ETC designation.32 The Commission further stated that the
1d. On August 16, 2004, the Joint Board issued a Public Notice that sought comment on issues related to the
high-cost universal support mechanisms for rural carriers and the appropriate rural mechanism to succeed the five-
year plan adopted in the Rural Task Force Order. See Federal-State Joint Board on Universal Service Seeks
Comment on Certain of the Commission s Rules Relating to High-Cost Universal Service Support Public Notice
CC Docket No. 96-, FCC 04J-, (reI. Aug. 16, 2004). Specifically, the Joint Board sought comment on three
main issues: (1) whether the Commission should adopt a universal service support mechanism for rural carriers
based on forward-looking economic cost estimates or embedded costs; (2) whether the Commission should amend
the "rural telephone company" definition for high-cost universal service support to consider consolidating multiple
study areas within a state; and (3) whether the Commission should retain or modify section 54.305 of its roles
regarding the amount of universal service support for transferred exchanges. Id.
22, Federal-State Joint Board on Universal Service CC Docket No. 96-45, Notice of Proposed Rulemaking, 19 FCC
Rcd 10800 (2004) (ETC Designation NPRM),
See ETC Designation NPRM, 19 FCC Rcd at 10802, para. 5.
See Federal-State Joint Board on Universal Service; Virginia Cellular, LLC Petition for Designation as an
Eligible Telecommunications Carrier for the Commonwealth of Virginia Memorandum Opinion and Order, CC
Docket No. 96-, 19 FCC Rcd 1563, para. 1 (2004) (Virginia Cellular ETC Designation Order),
See Virginia Cellular ETC Designation Order 19 FCC Rcd at 1565, 1575-, 1584-, paras. 4, 27, 28, 46.
See Virginia Cellular ETC Designation Order 19 FCC Red at 1565, 1575-, 1585-, paras. 26-33.
Cream!:kimming occurs when ETCs serve a disproportionate share of the low-cost, high revenue customers in a
rural telephone company s study area, See id. at 19 FCC Rcd at 1585 , para. 32.
Federal Communications Commission FCC 05-
framework it established in the Virginia Cellular ErC Designation Order henceforth would apply to all
ETC designations pencling completion of this Report and Order.
15, FollowIDg the framework established in the Virginia Cellular ErC Designation Order
April 12, 2004, the Commission released the Highland Cellular ErC Designation Order which granted
in part and denied in part the petition of Highland Cellular, Inc, to be designated as an ETC in portions of
its licensed service area in the Commonwealth of Virginia. 34 In the Highland Cellular ErC Designation
Order the Commission concluded, among other things, that an ETC may not be designated below the
wire center level served by a rural incumbent LEC.35 The Wireline Competition Bureau and Wireless
Telecommunications Bureau subsequently issued several ETC designation orders that follow the
framework established in the Virginia Cellular ErC Designation Order and Highland Cellular ErC
Designation Order,
ill.SCOPE OF SUPPORT
16. On December 8, 2004, Congress passed the 2005 Consolidated Appropriations Act which
includes a provision prohibiting the Commission from utilizing appropriated funds to "modify, amend, or
change its rules or regulations for Universal Service support payments to implement the February 27
2004 recommendations of the Federal-State Joint Board on Universal Service regarding single connection
or primary line restrictions on universal service support payments, ,,37 Accordingly, in this Report and
Order, we do not consider the portion of the Joint Board'Recommended Decision related to limiting the
scope of high-cost support to a single connection that provides access to the public telephone network.
See Virginia Cellular ETC Designation Order 19 FCC Rcd at 1565, para, 4,
See Federal-State Joint Board on Universal Service; Highland Cellular, Inc. Petition for Designation as an
Eligible Telecommunications Carrier for the Commonwealth of Virginia Memorandum Opinion and Order, CC
Docket No. 96-45, 19 FCC Red 6438, para. 33 (2004) (Highland Cellular ETC Designation Order).
See Highland Cellular ETC Designation Order 19 FCC Rcd at 6438, para, 33.
See Federal-State Joint Board on Universal Service; Guam Cellular and Paging Inc. d/b/a Saipancell Petition
for Designation as an Eligible Telecommunications Carrier on the Islands ofSaipan, Tinian, and Rota in the
Commonwealth of the Northern Mariana Islands Order, CC Docket No. 96-, 19 FCC Red 13872 (2004) (Guam
Cellular ETC Designation Order); Federal-State Joint Board on Universal Service; ALLTEL Communications,
Inc. Petition for Designation as an Eligible Telecommunications Carrier in Alabama, Florida, Georgia, North
Carolina and Virginia Order, CC Docket No, 96-, DA 04-3046 (2004) (ALLTEL ETC Designation Order);
Federal-State Joint Board on Universal Service; NPCR, Inc. d/b/a Nextel Partners Petitions for Designation as an
Eligible Telecommunications Carrier in Alabama, Florida, Georgia, New York, Pennsylvania, Tennessee, and
Virginia Order, CC Docket No. 96-45, 19 FCC Rcd 16530, (2004) (Nextel Partners ETC Designation Order);
Federal-State Joint Board on Universal Service; Advantage Cellular Systems, Inc. Petition for Designation as an
Eligible Telecommunications Carrier in the State of Tennessee Order, CC Docket No, 96-, 19 FCC Red 20985
(2004) (Advantage Cellular ETC Designation Order); Federal-State Joint Board on Universal Service; Sprint
Corporation Applications for Designation as an Eligible Telecommunications Carrier in Alabama, Florida,
Georgia, New York, North Carolina, Tennessee, and Virginia Order, CC Docket No. 96-45, DA 04-3617 (2004)
(Sprint ETC Designation Order); Federal-State Joint Board on Universal Service; Public Service Cellular, Inc,
Petition for Designation as an Eligible Telecommunications Carrier in Georgia andAlabama Order, CC Docket
No. 96-45, DA 05-259 (2005) (PSC ETC Designation Order).
37 See 2005 Consolidated Appropriations Act at ~ 634, The prohibition against using any appropriated funds for
adopting a primary line restriction expires September, 30, 2005. See id.
Federal Communications Commission FCC 05-
IV.ETC DESIGNA nON PROCESS
17, State commissions and the Commission are charged with reviewing ETC designation
applications for compliance with section 2l4(e)(1) of the Act.38 A common carrier designated as an ETC
must offer the services supported by the federal universal service mechanisms throughout the designated
service area.39 The ETC must offer such services using either its own facilities or a combination of its
own facilities and resale of another carrier s services.40 The ETC must also advertise the supported
services and the associated charges throughout the service area for which designation is received, using
media of general distribution.41 In addition, an ETC must advertise the availability of Lifeline and Link
Up services in a manner reasonably designed to reach those likely to qualify for those services,42 In this
Report and Order, we adopt additional requirements consistent with section 214 of the Act that all ETC
applicants must meet to be designated an ETC by this Commission,43 Further, although specific
requirements set forth in this Report and Order may be relevant only for wireless ETC applicants and
some may be relevant for wire1ine ETC applicants, this ETC designation framework generally applies to
any type of common carrier that seeks ETC designation before the Commission under section 2l4( e)( 6)
of the ACt.
18. In addition, we set forth our public interest analysis for ETC designations, which includes an
examination of (1) the benefits of increased consumer choice, (2) the impact of the designation on the
universal service fund, and (3) the unique advantages and disadvantages of the competitor s service
offering. As part of our public interest analysis, we also will examine the potential for creamskimming in
instances where an ETC applicant seeks designation below the study area level of a rural incumbent
LEC.
See 47 u.S.c. ~ 214(e)(1).
47 u.S.C. ~ 214(e)(1)(A). The services that are supported by the federal universal service support mechanisms
are: (1) voice grade access to the public switched network; (2) local usage; (3) Dual Tone Multifrequency (DTMF)
signaling or its functional equivalent; (4) single-party service or its functional equivalent; (5) access to emergency
services, including 911 and enhanced 911; (6) access to operator services; (7) access to interexchange services; (8)
access to directory assistance; and (9) toll limitation for qualifying low-income customers. See 47 C.F.R. ~ 54.101.
While section 214(e)(1) requires an ETC to "offer" the services supported by the federal universal service support
mechanisms, the Commission has determined that this does not require a competitive carrier to actually provide
the supported services throughout the designated service area before designation as an ETC. Federal-State Joint
Board on Universal Service; Western Wireless Corporation Petition for Preemption of an Order of the South
Dakota Public Utilities Commission Declaratory Ruling, CC Docket No. 96-15 FCC Rcd 15168, 15172-
paras. 10-18 (2000), recon. pending (Section (e) Declaratory Ruling).
47 U.c. ~ 2l4(e)(1)(A). An entity that offers the supported services exclusively through resale shall not be
designated as an ETC. See 47 C,R. ~ 54.101(a)(5).
See 47 u.S,C. ~ 214(e)(1)(B),
47 C.R. 99 54.405(b) and 54.411(d). Lifeline is a program that provides discounts to consumers on theiI
monthly telephone bills, See 47 C.R. ~~ 54.401-54.409. Link Up helps consumers with telephone installation
costs. See 47 C.R. ~~ 54.411-54.415.
See Rec;:ommended Decision 19 FCC Rcd at 4259, para. 5.
47 u.S.C. ~ 214(e)(6). Specifically, portions of this order discuss the ETC framework as it relates to wireless
carriers because those are the common carriers that most frequently seek to be designated as ETCs before the
Commission, See infra para. 37.
Federal Communications Commission FCC 05-
19, We encourage state commissions to require ETC applicants over which they have
jurisdiction to meet these same conditions and to conduct the same public interest analysis outlined in this
Report and Order. We further encourage state commissions to apply these requirements to all ETC
applicants in a manner that is consistent with the principle that universal service support mechanisms and
rules be competitively neutral,
Eligibility Requirements
20. As described above, ETC applicants must meet statutorily prescribed requirements before
we can approve their designation as an ETC.46 Based on the record before us, we find that an ETC
applicant must demonstrate: (1) a commitment and ability to provide services, including providing
service to all customers within its proposed service area; (2) how it will remain functional in emergency
situations; (3) that it will satisfy consumer protection and service quality standards; (4) that it offers local
usage comparable to that offered by the incumbent LEC; and (5) an understanding that it may be
required to provide equal access if all other ETCs in the designated service area relinquish their
designations pursuant to section 214(e)(4) of the Act.47 As noted above, these requirements are
mandatory for all ETCs designated by the Commission. ETCs designated by the Commission prior to
this Report and Order will be required to make such showings when they submit their annual certification
filing on October 1 2006, We also encourage state commissions to apply these requirements to all ETC
applicants over which they exercise jurisdiction. We do not believe that different ETCs should be subject
to different obligations, going folWard, because of when they happened to first obtain ETC designation
from the Commission or the state. These are responsibilities associated with receiving universal service
support that apply to all ETCs, regardless of the date of initial designation.
Commitment and Ability to Provide the Supported Services
21, We adopt the requirement that an ETC applicant must demonstrate its commitment and
ability to provide supported services throughout the designated service area: (1) by providing services to
all requesting customers within its designated service area; and (2) by submitting a formal network
improvement plan that demonstrates how universal service funds will be used to improve coverage, signal
strength, or capacity that would not otherwise occur absent the receipt of high-cost support. We
encourage states to adopt these requirements and, as recommended by the Joint Board, to do so in a
manner that is flexible with applicable state laws and policies. For example, states that adopt these
requirements should determine, pursuant to state law, what constitutes a "reasonable request" for
service,48 In addition, we encourage states to follow the Joint Board's proposal that any build-out out
See 47 US.C, ~~ 254(b)(3), (5). In addition to the universal service principles specified in the 1996 Act
Congress directed the Joint Board and the Commission to be guided by such other principles as they determine to
be consistent with the Act, and necessary and appropriate for the protection of the public interest, convenience, and
necessity. See 47 US.C. ~ 254(b)(7). As recommended by the Joint Board, the Commission adopted competitive
neutrality as an additional principle for universal service. See Federal-State Joint Board on Universal Service
Report and Order, CC Docket No. 96-45, 12 FCC Red 8776, 8801-, paras. 45-52 (1997) (First Universal Service
Report and Order), The Commission defines competitive neutrality as "universal service support mechanisms and
rules that neither unfairly advantage nor disadvantage one provider over another, and neither unfairly favor nor
disfavor one technology over another.See id.
See 47 US.C. ~ 214.
See Recommended Decision 19 FCC Rcd at 4259, para, 5.
See Recommended Decision 19 FCC Rcd at 4268, para. 27.
Federal Communications Commission FCC 05-
commitments adopted by states "be harmonized with any existing policies regarding line extensions and
carrier of last resort obligations. ,,49
22. First, we agree with and adopt the Joint Board recommendation to establish a requirement
that an ETC applicant demonstrate its capability and commitment to provide service throughout its
designated service area to all customers who make a reasonable request for service , 50 We conclude that
this requirement, which we adopted in the Virginia Cellular ETC Designation Order and Highland
Cellular ETC Designation Order is appropriate as a general rule to ensure that all ETCs serve
requesting customers in their designated service area. Therefore, consistent with these orders, we require
that an ETC applicant make specific commitments to provide service to requesting customers in the
service areas for which it is designated as an ETc.51 If the ETC's network already passes or covers the
potential customer s premises, the ETC should provide service immediately. 52 In those instances where a
request comes from a potential customer within the applicant's licensed service area but outside its
existing network coverage, the ETC applicant should provide service within a reasonable period of time
if service can be provided at reasonable cost by: (1) modifying or replacing the requesting customer
equipment; (2) deploying a roof-mounted antenna or other equipment; (3) adjusting the nearest cell tower;
(4) adjusting network or customer facilities; (5) reselling services from another carrier s facilities to
provide service;53 or (6) employing, leasing, or constructing an additional cell site, cell extender, repeater
or other similar equipment. 54 We believe that these requirements will ensure that an ETC applicant is
committed to serving customers within the entire area for which it is designated, If an ETC applicant
determines that it cannot serve the customer using one or more of these methods, then the ETC must
report the unfulfilled request to the Commission within 30 days after making such determination,
23. Second, we require an applicant seeking ETC designation from the Commission to submit a
formal plan detailing how it will use universal service support to improve service within the service areas
for which it seeks designation. 56 Specifically, we require that an ETC applicant submit a five-year plan
describing with specificity its proposed improvements or upgrades to the applicant's network on a wire
center-by-wire center basis throughout its designated service area. 57 The five-year plan must demonstrate
See id.
See Recommended Decision 19 FCC Rcd at 4266, para. 23. The Commission and state commissions will need to
determine whether a particular request for service is "reasonable." We believe that requiring an ETC applicant to
demonstrate its willingness and capability to provide service to all customers within the designated service area
upon request will help detennine whether a request is reasonable,
51 See Virginia Cellular ETC Designation Order 19 FCC Red at 1570-1571, para. 15; Highland Cellular ETC
Designation Order 19 FCC Rcd at 6429-6430, para, 16.
Id.
Id.
See Virginia Cellular ETC Designation Order 19 FCC Red at 1571 , para. 16; Highland Cellular ETC
Designation Order 19 FCC Rcd at 6430, para. 17.
See infra para. 69.
See Virginia Cellular ETC Designation Order 19 FCC Rcd at 1565 1575-, 1584-, paras, 4, 27, 28, 46;
Highland Cellular ETC Designation Order 19 FCC Red at 1565, at para. 17.
Universal service support is not distributed for lines provided through resale of another carrier s services. In
addition, it should be noted that lines provided by an ETC through resale of another carrier s services will not
(continued.. ..
Federal Communications Commission FCC 05-
in detail how high-cost support will be used for service improvements that would not occur absent receipt
of such support. This showing must include: (1) how signal quality, coverage, or capacity will improve
due to the receipt of high-cost support throughout the area for which the ETC seeks designation;58 (2) the
projected start date and completion date for each improvement and the estimated amount of investment
for each project that is funded by high-cost support; (3) the specific geographic areas where the
improvements will be made; and (4) the estimated population that will be served as a result of the
improvements. To demonstrate that supported improvements in service will be made throughout the
service area, applicants should provide this information for each wire center in each service area for
which they expect to receive universal service support, or an explanation of why service improvements in
a particular wire center are not needed and how funding will otherwise be used to further the provision of
supported services in that area. We clarify that service quality improvements in the five-year plan do not
necessarily require additional construction of network facilities. Furthermore, as discussed infra
connection with its annual reporting obligations, an ETC applicant must submit coverage maps detailing
the amount of high-cost support received for the past year, how these monies were used to improve its
network, and specifically where signal strength, coverage, or capacity has been improved in each wire
center in each service area for which funding was received. 59 In addition, an ETC applicant must submit
on an annual basis a detailed explanation regarding why any targets established in its five-year
improvement plan have not been met.
24. Some commenters assert that an applicant should submit more detailed build-out plans than
discussed above 6O while other commenters request that the build-out plans include a specific timeline
including start and completion dates.61 Our approach incorporates many commenters' suggestions;
however, mandatory completion dates established by the Commission would not account for unique
circumstances that may affect build-out, including the amount of universal service support or customer
demand. On balance, we find that our approach allows consideration of fact-specific circumstances of
the carrier and the designated service area, while ensuring that high-cost support will be used to improve
sefV1ce.
Ability to Remain Functional in Emergency Situations
25. We adopt the Joint Board's recommendation that we require an ETC applicant to
demonstrate its ability to remain functional in emergency situations.62 Specifically, in order to be
designated as an ETC, an applicant must demonstrate it has a reasonable amount of back-up power to
ensure functionality without an external power source, is able to reroute traffic around damaged
(Continued from previous page)
impact the universal service fund, since high-cost support is not disbursed to ETC lines provided in this manner.
47 C.R. ~ 54.307. See also First Universal Service Report and Order FCC Rcd at 8933-8934, para. 290.
Therefore, carriers who improve their networks through resale will have little or no impact on the universal service
fund.
See infra para, 69. Ca..rriers can achieve this improvement through several different methods, such as the
construction of cell towers, leasing space on existing towers, or resale of other carriers' services.
See infra para, 69.
See Dobson Comments at 8, Iowa Board Reply Comments at 3, OPASTCO Comments at 33; NTCA Comments
at 17, State and Rural Coalition Comments at 8, and State and Rural Coalition Reply Comments at 13-14.
See Nebraska RlCs Reply Comments at 9; NTCA Comments at 17.
See Recommended Decision 19 FCC Red at 4269, para. 30; NTCA Comments at 8, State and Rural Coalition
Comments at 10, Iowa Board Reply Comments at 3.
Federal Communications Commission FCC 05-
facilities, and is capable of managing traffic spikes resulting from emergency situations,63 We believe
that functionality during emergency situations is an important consideration for the public interest,
Moreover, to ensure that ETCs continue to comply with this requirement, as discussed infra ETCs
designated by the Commission must certify on an annual basis that they are able to function in emergency
situations.64 Because most emergency situations are local in nature, we anticipate that state commissions
that choose to adopt an emergency functionality requirement may also identify other geographica11y-
specific factors that are relevant for consideration. If states impose any additional requirements, we
encourage them to do so in a manner that is consistent with the universal service principle of competitive
neutrality. 65
26. We also disagree with commenters that propose that the Commission adopt a specific
benchmark requiring an ETC to maintain eight hours of back-up power and ability to reroute traffic to
other cell sites in emergency situations.66 We believe that such a benchmark is inappropriate because
although an ETC may have taken reasonable precautions to remain functional during an emergency, the
extreme or unprecedented nature of the emergency may render the carrier inoperable despite any
precautions taken, including battery back-up and plans to reroute traffic. Furthermore, we reject
suggestions that ETCs should be required to publish signal strength for their primary digital technology
because signal coverage, quality, or capacity will already be reported on an annual basis to the
Commission as part of the five-year network improvement p1an.
27. Furthermore, as discussed infra in connection with its annual reporting obligations, an ETC
applicant must submit data concerning outages in its designated service areas on an annual basis.68 In
addition, to minimize the administrative burdens that may be associated with such reports, these reporting
requirements are modeled after the Commission s reporting requirements concerning outages adopted in
the Outage Reporting Order,
Consumer Protection
28. As recommended by the Joint Board, we require a carrier seeking ETC designation to
demonstrate its commitment to meeting consumer protection and service quality standards in its
application before the Commission.1O We find that an ETC applicant must make a specific commitment
See NTCA Comments at 18, and OPASTCO Comments at 35,
See infra para. 69.
65 See supra para, 19; Dobson Comments at 11.
Commenters also contend that specific enforceable requirements should be adopted that require ETCs to provide
an affidavit stating that they will remain functional in an emergency. We believe that an affidavit is unnecessary
and redundant because as part of its application, an ETC must already demonstIate the ability to function in
emergency situations. See OP ASTCO Comments at 35,
67
See CenturyTel Comments at 9. See also Recommended Decision 19 FCC Rcd 4281-, para, 61.
See infra para, 69.
See New Part of the Commission s Rules Concerning Disruptions to Communications Report and Order and
Further Notice of Proposed Rule Making, ET Docket No, 04-, 19 FCC Rcd 16830 (2004) (Outage Reporting
Order).
See Recommended Decision 19 FCC Rcd at 4270, para. 31; NTCA Comments at 20, Oregon Commission
Comments at 5 and Iowa Board Reply Comments at 3.
Federal Communications Commission FCC 05-
to objective measures to protect consumers. Consistent with the designation framework established in the
Virginia Cellular ETC Designation Order and Highland Cellular ETC Designation Order and as
suggested by commenters, a commitment to comply with the Cellular Telecommunications and Internet
Association s Consumer Code for Wireless Service will satisfy this requirement for a wireless ETC
applicant seeking designation before the Commission, 11 We will consider the sufficiency of other
commitments on a case-by-case basis.72 We believe that requiring an ETC applicant to demonstrate that
it will comply with these consumer protection requirements is consistent with section 254 of the Act, and
with related Commission orders that require policies that universal service serve "the public interest
convenience and necessity"13 and ensure that consumers are able to receive an evolving level of universal
service that "tak( es) into account advances in telecommunications, and infonnation technologies and
services, ,,14 In addition, an ETC applicant, as described infra must report infonnation on consumer
complaints per 1 000 handsets or lines on an annual basis.
29. We also believe that adopting state specific requirements as part of our ETC designation
process nright require the Commission to interpret state statutes and rules. An ETC applicant must
commit to serve the entire service area and must provide five-year network improvement plans addressing
each wire center for which it expects to receive support.16 We therefore conclude, given the consumer
protection measures and other requirements adopted above and the provision in section 2l4(e)(4) of the
Act that protects customers in the event that another ETC relinquishes designation, that it is unnecessary
to impose additional obligations as a condition of granting ETC status to a competitive carrier.
30. As with the other requirements adopted in this Report and Order, state commissions that
exercise jurisdiction over ETC designations may either follow the Commission s framework or impose
other requirements consistent with federal law to ensure that supported services are offered in a manner
that protects consumers, Several commenters argue that an ETC should be required to submit to the
same state laws concerning consumer protection that the incumbent LEC must follow.77 These include
for example, billing, collection, and mediation obligations. In determining whether any additional
See Virginia Cellular ETC Designation Order 19 PCC Red at 1576-, para, 30; Highland Cellular ETC
Designation Order PCC Rcd at 6433, para. 24, See also Dobson Comments at 12, and Dobson Reply Comments
at 7-8, CTIA, Consumer Code for Wireless Service, available at http://www,wow-com.com/pdflThe Code.pelf.
Under the CTIA Consumer Code, wireless carriers agree to: (1) disclose rates and terms of service to customers;
(2) make available maps showing where service is generally available; (3) provide contract tenus to customers and
confirm changes in service; (4) allow a trial period for new service; (5) provide specific disclosures in advertising;
(6) separately identify carrier charges from taxes on billing statements; (7) provide customers the right to terminate
service for changes to contract tenus; (8) provide ready access to customer service; (9) promptly respond to
consumer inquiries and complaints received from government agencies; and (10) abide by policies for protection of
consumer privacy,
Por example, to the extent a wireline or wireless ETC applicant is subject to consumer protection obligations
under state law, compliance with such laws may meet our requirement.
See 47 u.S.c. ~ 254(b)(7).
See 47 u.S.c. ~ 254(c),
Jd,
See supra para. 23.
See CenturyTel Comments at 11, NASCUA Comments at 39, SBC Comments at 7, andUSTA Comments at lO-
ll,
Federal Communications Commission FCC 05-
consumer protection requirement should apply as a prerequisite for obtaining ETC designation from the
state - where such a requirement would not otherwise apply to the ETC applicant - we encourage
states to consider, among other things, the extent to which a particular regulation is necessary to protect
consumers in the ETC context, as well as the extent to which it may disadvantage an ETC specifically
because it is not the incumbent LEC, We agree with the Joint Board's assertion that "states should not
require regulatory parity for parity s sake.,,78 We therefore encourage states that impose requirements on
an ETC to do so only to the extent necessary to further universal service goals.
31. We also reject commenters' arguments that consumer protection requirements imposed on
wireless carriers as a condition for ETC designation are necessarily inconsistent with section 332 of the
Act.79 While Section 332(c)(3) of the Act preempts states from regulating the rates and entry of CMRS
providers, it specifically allows states to regulate the other terms and conditions of commercial mobile
radio services.8O Therefore, states may extend generally applicable, competitively neutral requirements
that do not regulate rates or entry and that are consistent with sections 214 and 254 of the Act to all
ETCs in order to preserve and advance universal service,
Local Usage
32. We adopt the Joint Board's recommendation that we establish a local usage requirement as a
condition of receiving ETC designation.82 Specifically, we require an ETC applicant to demonstrate that
it offers a local usage plan comparable to' the ane offered by the mclli.'11bent LEC in the service areas for
which the applicant seeks designation. As in past orders, however, we decline to adopt a specific local
usage threshold.
33, The Commission requires an ETC to provide local usage in order to receive universal service
high-cost support.83 In the First Report and Order the Commission determined that an ETC should
provide some minimum amount of local usage as part of its "basic service" package of supported
services, but declined to specify the exact amount of local usage required. 84 We believe the Commission
should review an ETC applicant's local usage plans on a case-by-case basis.85 For example, an ETC
applicant may offer a local calling plan that has a different calling area than the local exchange area
provided by the LECs in the same region, or the applicant may propose a local calling plan that offers a
specified number of free minutes of service within the local service area, 86 We also can envision
See Recommended Decision 19 FCC Rcd at 4271, para. 34.
See Nextel Comments at 18.
See 47 u.S.C. ~ 332(c)(3),
See 47 u.S.c. ~~ 214, 254.
See Recommended Decision 19 FCC Red at 4271, para. 35.
See 47 C.R ~ 54,lOl(a)(2).
See Federal-State Joint Board on Universal Service Report and Order, CC Docket No. 96-, 12 FCC Red
8776 8812-14 (1997) (First Universal Service Report and Order). See 47 C.R ~ 54.1O1(a)(2).
See Recommended Decision 19 FCC Rcd at 4271-4272, para. 35-36; F. Williamson Comments at
(maintaining that wireless ETCs should be required to provide at least the average local usage utilized by the
customers of the incumbent LEC in the designated service area).
Federal Communications Commission FCC 05-
circumstances in which an ETC is offering an unlimited calling plan that bundles local minutes with long
distance minutes. The applicant may also plan to provide unlimited free calls to government, social
service, health facilities, educational institutions, and emergency numbers.8? Case-by-case consideration
of these factors is necessary to ensure that each ETC provides a local usage component in its universal
service offerings that is comparable to the plan offered by the incumbent LEC in the area.
34. We encourage state commissions to consider whether an ETC offers a local usage plan
comparable to those offered by the incumbent in examining whether the ETC applicant provides adequate
local usage to receive designation as an ETc. 88 In addition, although the Commission has not set a
minimum local usage requirement, there is nothing in the Act, Commission s rules, or orders that would
limit state commissions from prescribing some amount of local usage as a condition ofETC statuS.
Equal Access
35. The Joint Board recommended that the Commission adopt guidelines that would encourage
states to require an ETC be prepared to provide equal access90 if all other ETCs in that service area
relinquish their designations pursuant to section 214(e)(4) of the Act.91 Although we do not impose a
general equal access requirement on ETC applicants at this time, ETC applicants should acknowledge
that we may require them to provide equal access to long distance carriers in their designated service area
in the event that no other ETC is providing equal access within the service area,92 Specifically, we find
that if such CITc'J,'11Stances arise, the Commission should consider whether to impose an equal access or
similar requirement under the Act.93 Accordingly, we will decide whether to impose any equal access
requirements on a case-by-case basis.
36, Under section 2l4(e)(4) of the Act, if an ETC relinquishes its ETC designation, the
Commission must examine whether the customers that are being served by the relinquishing carrier will
be served by the remaining ETC or ETCs.94 As part of that process, the Commission might also examine
(Continued from previous page)
the Highland Cellular ETC Designation Order and the Virginia Cellular ETC Designation Order the
Commission found that Highland Cellular and Virginia Cellular customers were subjected to fewer toll charges
than the customers using the incumbent's plan and that customers had a choice of a variety of local usage plans
many of which included a large volume of minutes. See Highland Cellular ETC Designation Order 19 FCC Rcd
at 6433 , para. 23; Virginia Cellular ETC Designation Order 19 FCC Red at 1576, para, 29.
87 See Recommended Decision 19 FCC Rcd at 4272, para. 36.
See Recommended Decision 19 FCC Rcd at 4271, para. 35,
See fd.
~qual access includes, among other things, the ability to access the presubscribed long distance carrier of the
customer s choice by dialing 1+ the phone number. See Definitions Order 18 FCC Rcd at 15092, para. 6.
91 See Recommended Decision 19 FCC Red at 4268, para. 28.
See id.
See, e,47 D.C. ~~ 214(e)(4), 332(c)(8), 252(h)(2).
47 US.C. ~ 214(e)(4), The statutory provision states that a state commission or, in the case ofa common carrier
not subject to state commission jurisdiction, the Commission "shall permit an eligible telecommunications carrier
to relinquish its designation as such a carrier in any area served by more than one eligible telecommunications
carrier,Id. The carrier seeking to relinquish its designation must give advance notice to the state commission or
(continued.. ..
Federal Communications Commission FCC 05-
whether it is necessary to require the remainillg ETC to provide equal access. Furthermore, under section
251(h)(2) of the Act, the Commission may treat another carrier as the incumbent LEC if that carrier
occupies a position in the market that is comparable to the position occupied by the incumbent LEC, if
such carrier has substantially replaced an incumbent LEC, and if such treatment is consistent with the
public interest, convenience and necessity.95 One obligation imposed on incumbent LECs is the
requirement to offer equal access in connection with their wireline services.
Adequate Financial Resources
37. We decline to adopt the Joint Board's recommendation that an ETC applicant demonstrate
that it has the financial resources and ability to provide quality services throughout the designated service
area,97 We believe that compliance with the existing requirements for ETC designation, along with the
criteria adopted above, will require an ETC applicant to show that it has significant financial resources.
Specifically, an applicant must demonstrate the ability to offer all the supported services in the
designated area by submitting detailed commitments to build-out facilities, abide by service quality
standards, and provide services throughout its designated service area upon request.98 And in its annual
certification and reporting requirements, an ETC must demonstrate that it has used universal service
support to provide quality service throughout the designated area. In addition, most wireless carriers, the
largest group of competitive ETCs that the Commission designates, are already operating systems within
their licensed market areas, thereby demonstrating in practice their ability to provide such services. Since
1994, moreover, wireless licensees have purchased their licenses at auction, which evinces that they have
sufficient resources to provide service.99 After obtaining a license, whether by auction or other means
wireless carriers must further comply with the Commission s rules by meeting build-out or substantial
service requirements for the particular service.lOo Therefore, we find additional financial requirements are
(Continued from previous page)
the Commission. !d. Prior to allowing the carrier to cease providing universal service in the area, the remaining
ETC or ETCs will be required to ensure that all customers served by the relinquishing carrier will continue to be
served. The remaining ETC or ETCs will be permitted up to one year from the approval of the request to
relinquish ETC status to purchase facilities or equipment and complete construction to be able to serve the
relinquishing carrier s customers. Id.
95
See 47 U .C. ~ 25l(h)(2).
See 47 US.C. ~ 251(g) (preserving equal access obligations applicable to local exchange carriers prior to the
1996 Act), See also 47 u.S.C, ~~ 3(26), 25l(b)(3), Section 3(26) of the Act excludes CMRS providers from the
definition of "local exchange carrier
" "
except to the extent that the Commission finds that such service should be
included in the definition of such term." If the Commission were to make such a finding, section 251 (b )(3)
requires provision of dialing parity, which is a major component of equal access. 47 V.C. ~ 251(b)(3).
See Recommended Decision 19 FCC Rcd at 4266, para. 22,
See infra paras. 21-23.
See Dobson Comments at 7-
loaThe specific requirements vary according to service. For example, 30 MHz broadband PCS licensees must
provide adequate service to ii3 of the population within five years of being licensed and 2/3 of the population
within 10 years of licensing. See 47 C.R ~ 24.203(a). In the cellular service, any areas not built out within five
years of licensing become "unserved areas" that maybe licensed to another applicant. See 47 C.R ~~ 22.911
22,947, 22.949. In other services, licensees may satisfy construction requirements by offering "substantial service
in their licensed area. See, e.47 c.F.R ~~ 24.203(b) (substantial service as alternative to specific build-out
requirements for 10 MHz broadband PCS licensees), 90.685 (substantial service as alternative to specific build-out
requirements for Economic Area Specialized Mobile Radio licensees); 27.l4(a) (substantial service requirement for
(continued... .
Federal Communications Commission FCC 05-
unwarranted to demonstrate that an ETC applicant is capable of sustainillg operations and supported
services.1O1
38, We further disagree with conunenters that argue that an ETC should be required to
demonstrate that it has the financial capability to sustain operations and supported services if an
incumbent LEC relinquishes its designation.1O2 As
discussed infra section 2 1 4 (e)(4) of the Act already
contemplates safeguards for protecting customers served by an ETC that relinquishes its designation.103
39. In sum, we do not believe that additional requirements concerning financial qualifications are
necessary when detennining whether to designate an ETC applicant. We believe that existing ETC
obligations adequately ensure financial stability. In the event that state commissions do consider
financial qualification factors in their ETC designations, we encourage them to do so in a manner that is
consistent with the principle that universal service support mechanisms and rules be competitively
neutral. 104
B. Public Interest Determinations
40. Under section 214 of the Act, the Commission and state commissions must determine that an
ETC designation is consistent with the public interest, convenience and necessity.1O5 The Commission
also must consider whether an ETC designation serves the public interest consistent with Section 254 of
the Act.1O6 Congress did not establish specific criteria to be applied under the public interest tests in
section 214 or section 254,107 The public interest benefits of a particular ETC designation must be
analyzed in a manner that is consistent with the purposes of the Act itself, including the fundamental
(Continued from previous page)
Wireless Communications Services licensees). Substantial service was established for circumstances where the
Commission has determined that more flexible construction requirements rather than fixed benchmarks would
more likely result in the efficient use of spectrum and the provision of service to rural, remote, and insular areas.
See Amendment of the Commission s Rules to Establish Part the Wireless Communications Service (awcs'
Report and Order, 12 FCC Rcd 10785, 10843 , at para. 111 (1997) (WCS Report and Order). In addition, the
Commission considers whether a licensee offers substantial service in determining whether to grant a renewal
expectancy. See, e,
g.,
47 c.F.R. ~~ 22.940(a)(1) (cellular), 24.16 (PCS). The Commission has defined
substantial service" as "service which is sound, favorable, and substantially above a level of mediocre service
which just might minimally warrant renewal.fa.
1O1See NTCA Comments at 16, and SBC Comments at 6-7. See also WTA Comments, at 14 (WTA argues that
prospective carriers seeking regulatory authorization have often employed "creative" methods for bolstering their
financial representation).
102See California Comments at 4, and USTA Comments at 8.
10347 u.S.C. ~ 2l4(e)(4), See infra para. 36.
104See First Universal Service Report and Order 12 FCC Rcd at 8801-, paras. 45-52.
10547 U.C. ~ 214(e)(2).
10647 u.s,c. 9 254(b)(7). Section 254 requires that support be distributed in a manner that is specific and
predictable, and also requires that the Commission, in conjunction with the Joint Board, consider principles it
determines "are necessary and appropriate for the protection of the public interest, convenience and necessity and
are consistent with this Act." 47 u.S,C. ~~ 254(b)(1), (7).
1O7"Before designating an additional eligible telecommunications carrier for an area served by a rural telephone
company, the Commission shall find that the designation is in the public interest." 47 u.S.C. ~ 2l4(e)(2).
Federal Communications Commission FCC 05-
goals of preserving and advancing universal service; 108 ensuring the availability of quality
telecommunications services at just, reasonable, and affordable rates; 109 and promoting the deployment of
advanced telecommunications and infonnation services to all regions of the nation, including rural and
high-cost areas.ll0 Beyond the principles detailed in the Act, the Commission and state commissions have
used additional factors to analyze whether the designation of an additional ETC is in the public
interest. III
41. In instances where the Commission has jurisdiction over an ETC applicant, the Commission
in this Report and Order adopts the fact-specific public interest analysis it has developed in prior
orders.ll2 First, the Commission will consider a variety of factors in the overall ETC determination
including the benefits of increased consumer choice, and the unique advantages and disadvantages of the
competitor s service offering.ll3 Second, in areas where an ETC applicant seeks designation below the
study area level of a rural telephone company, the Commission also will conduct a creamskimming
analysis that compares the population density of each wire center in which the ETC applicant seeks
designation against that of the wire centers in the study area in which the ETC applicant does not seek
designation.114 Based on this analysis, the Commission will deny designation if it concludes that the
potential for creamskimming is contrary to the public interest.115 The Commission plans to use this
analysis to review future ETC applications and strongly encourages state commissions to consider the
same factors in their public interest reviews.
42. We find that before designating an ETC, we must make an affinnative deteI'111.h,ation that
such designation is in the public interest, regardless of whether the applicant seeks designation in an area
served by a rural or non-rural carrier.116 In the Virginia Cellular ETC Designation Order the
10847 u.S,C. ~ 254(b).
10947 U.C. ~ 254(b)(1).
11047 U.C, ~ 254(b)(3). See, e,
g"
Application ofWWC Texas RSA Limited Partnership for Designation as an
Eligible Telecommunications Carrier Pursuant to 47 US.C. ~ 2l4(e) and PUC Subst. R 26.418, PUC Docket No.
22289, SOAR Docket No, 473-00-1167, Order at 25 (Tex. Pub. Utii. Comm n Oct. 30 2000),
111 For instance, the Alaska Commission considers the availability of new choices for customers; affordability;
quality of service; service to unserved customers; comparison of benefits to public cost; and considerations of
material harm. Request by Alaska Digitel, LLC for Designation as a Carrier Eligible to Receive Federal Universal
Service Support Under the Telecommunications Act of 1996, U-02-, Order No. 10, Order Granting Eligible
Telecommunications Carrier Status and Requiring Filings (Reg. Comm n of Ala. Aug. 28, 2003).
112See Virginia Cellular ETC Designation Order 19 FCC Rcd at 1574-, paras. 26-39; Highland Cellular ETC
Designation Order 19 FCC Red at 6431-, paras. 20-35.
113See e,g., Advantage Cellular ETC Designation Order at para, 18; Highland Cellular ETC Designation Order
19 FCC Rcd at 6432, para. 22; Virginia Cellular ETC Designation Order 19 FCC Rcd at 1575-, para. 28,
114
See Advantage Cellular ETC Designation Order at para. 20; Highland Cellular ETC Designation Order
FCC Rcd at 6434-, para. 26; Virginia Cellular ETC Designation Order 19 FCC Rcd at 1578, para. 32.
115
See Advantage Cellular ETC Designation Order at 24; Highland Cellular ETC Designation Order 19 FCC Rcd
at 6434-, para. 26; Virginia Cellular ETC Designation Order 19 FCC Rcd at 1580, para. 35.
~le the Virginia Cellular ETC Designation Order analysis did not require that the ETC applicant meet the
same public interest standard for both rural and non-rural study areas, it found that if the applicant met the public
interest standard for the rural study areas, that would be sufficient to satisfy the public interest test for non-rural
designations. It deferred to this proceeding the broader question of whether applicants must always satisfy the same
public interest requirements for rural and non-rural study areas. Virginia Cellular ETC Designation Order
(continued.. ..
Federal Communications Commission FCC 05-
Commission determined that merely showing that a requesting carrier in a non-rural study area complies
with the eligibility requirements outlined in section 214( e)( 1) of the Act would not necessarily show that
an ETC designation would be consistent with the public interest in every instance.ll7 We:find the public
interest concerns that exist for carriers seeking ETC designation in areas served by rural carriers also
exist in study areas served by non-rural carriers, Accordingly, we :find that many of the same factors
should be considered in evaluating the public interest for both rural and non-rural designations, except
that creamskimming effects will be analyzed only in rural study areas because the same potential for
creamskimming does not exist in areas served by non-rural incumbent LECs.
43, We note that section 214 of the statute provides that, for areas served by a rural incumbent
LEC, more than one ETC may be designated if doing so would serve the public intereSt.118 In addition,
(b)efore designating an additional (ETCJ for an area served by a rural telephone company, the (state
Commission under section 214(e)(2) or Commission under section 214(e)(6)) shall:find that the
designation is in the public interest. ,,119 In contrast
, section 214 provides that additional ETCs shall
designated in an area served by a non-rural incumbent LEC. Therefore, although we adopt one set of
criteria for evaluating the public interest for ETC designations in rural and non-rural areas, in performing
the public interest analysis, the Commission and state commissions may conduct the analysis differently,
or reach a different outcome, depending upon the area served, For example, the Commission and state
commissions may give more weight to certain factors in the rural context than in the non-rural context
and the same or similar factors could result in divergent public interest determinations, depending on the
specific characteristics of the proposed service area, or whether the area is served by a rural or non-rural
carner.
1. Cost-Benefit Analysis
44, We conclude that we will continue to consider and balance the factors listed below as part of
our overall analysis regarding whether the designation of an ETC will serve the public interest. In
determining whether an ETC has satisfied these criteria, the Commission places the burden of proof upon
the ETC applicant. 120
(1) Consumer Choice The Commission takes into account the benefits of
increased consumer choice when conducting its public interest analysis.121 In
(Continued from previous page)
FCC Rcd at 1575, para. 27. See also Highland Cellular ETC Designation Order 19 FCC Rcd at 6431-, para.
21.
1l7See Virginia Cellular ETC Designation Order 19 FCC Rcd at 1575, para. 27. See also Highland Cellular ETC
Designation Order 19 FCC Red at 6431-, para. 21. Prior to these orders, the Wireline Competition Bureau
found designation of additional ETCs in areas served by non-rural telephone companies to be per se in the public
interest based upon a demonstration that the requesting carrier complied with the statutory eligibility obligations of
section 214( e)(1) of the Act. See, e,g" Cellco Partnership d/b/a Bell Atlantic Mobile Petition for Designation as
an Eligible Telecommunications Carrier CC Docket No, 96-, Memorandum Opinion and Order, 16 FCC Rcd
39 (Com. Car. Bur. 2000).
11847 US.C. ~~ 2l4(e)(2), (6).
119ld.
120See Advantage Cellular ETC Designation Order at para. 16; Highland Cellular ETC Designation Order
FCC Rcd at 6431, para. 20; Virginia Cellular ETC Designation Order 19 FCC Rcd at 1574, para, 26.
121See Advantage Cellular ETC Designation Order at para. 18; Highland Cellular ETC Designation Order
FCC Rcd at 6424, para. 4; Virginia Cellular ETC Designation Order 19 FCC Rcd at 1565. para. 4.
Federal Communications Commission FCC 05-
particular, granting an ETC designation may serve the public interest by
providing a choice of service offerings in rural and high-cost areas.122 The
Commission has determined that, in light of the numerous factors it considers in
its public interest analysis, the value of increased competition, by itseJi, is
unlikely to satisfy the public interest test. 123
(2)Advantages and Disadvantages of Particular Service Offering The
Commission also considers the particular advantages and disadvantages of an
ETC's service offering. For instance, the Commission has examined the
benefits of mobility that wireless carriers provide in geographically isolated
areas l24 the possibility that an ETC designation will allow customers to be
subject to fewer toll charges l25 and the potential for customers to obtain
services comparable to those provided in urban areas, such as voicemail
numeric paging, call forwarding, three-way calling, call waiting, and other
premium services.l26 The Commission also examines disadvantages such as
dropped call rates and poor coverage.127
45. In addition, we believe that the requirements we have established in this Report and Order
for becoming an ETC will help ensure that each ETC designation will serve the public interest. For
example, the requirements to demonstrate compliance with a service quality improvement plan and to
respond to any reasonable request for service will ensure designation of ETC applicants that are
committed to using high-cost support to alleviate poor service quality in the ETC's service area.128
46. We disagree with commenters who contend that we should adopt a more precise cost-benefit
test for the purpose of malcing public interest determinations.129 While we believe that a consideration of
both benefits and costs is inherent in conducting a public interest analysis, we agree with the Joint
Board's recommendation and decline to provide more specific guidance at this time on how this balancing
should be perfonned.13O The specific determination, and the relative weight of the relevant
considerations, must be evaluated on a case-by-case basis.
122See Virginia Cellular ETC Designation Order 19 FCC Rcd at 1569, para. 12.
123See Highland Cellular ETC Designation Order 19 FCC Rcd at 6424, para. 4; Virginia Cellular ETC
Designation Order 19 FCC Red at 1565, para. 4.
124See Advantage Cellular ETC Designation Order at para, 19; Highland Cellular ETC Designation Order
FCC Rcd at 6432-, para. 23; Virginia Cellular ETC Designation Order 19 FCC Rcd at 1569, para. 12.
125See Highland Cellular ETC Designation Order 19 FCC Rcd at 6432-, para, 23.
126See Advantage Cellular ETC Designation Order at para, 19.
127See Highland Cellular ETC Designation Order 19 FCC Rcd at 6433, para, 24; Virginia Cellular ETC
Designation Order 19 FCC Rcd at 1576, para. 30.
128See supra paras. 21-23.
129See CenturyTel Comments at 11-, GVNW Comments at 13, F. Williamson Comments at 18-, ITTA
Comments at 21-, NASUCA Comments at 33-34.
130See Recommended Decision 19 FCC Rcd. at 4274, para. 42.
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47. We also reject the assertions of several commenters that a more stringent analysis is
necessary to detennine whether an ETC designation is in the public interest.l3) These commenters argue
that the current ETC application process is not rigorous enough to meet section 214(e)(2) of the Act and
that ETC applicants should be required to demonstrate the public benefit they will confer as a result of
the ETC designation,132 We
believe that the factors set out in the Virginia Cellular ETC Designation
Order as expanded in this Report and Order, allow for an appropriate public interest determination.
2. Potential for Creamskimming Effects
48. As part of the public interest analysis for ETC applicants that seek designation below the
service area level of a rural incumbent LEC, we will perform an examination to detect the potential for
creamskimming effects that is similar to the analysis employed in the Virginia Cellular ETC Designation
Order and the Highland Cellular ETC Designation Order.133 As discussed below, the state
commissions that apply a creamskimming analysis similar to the Commission s will facilitate the
Commission s review of petitions seeking redefinition of incumbent LEC service areas filed pursuant to
section 214(e)(5) of the Act. 134
49. When a competitive carrier requests ETC designation for an entire rural service area, it does
not create creamskimming concerns because the affected ETC is required to serve all wire centers in the
designated service area.135 The potential for creamskimming, however, arises when an ETC seeks
designation in a disproportionate share of the higher-density wire centers in an incumbent LEC's service
l3lCC Communications Comments at 3-, Coalition Comments at 4-, F, Williamson Comments at 12-
GVNW Consulting, Inc. Comments at 12-, ITTA Comments at 20-, NASUCA Comments at 36, SBC
Comments at 8, TCA Comments at 9-11.
132CC Communications Comments at 3-, Coalition Comments at 4-, F. Williamson Comments at 12-
GVNW Consulting, Inc. Comments at 12-, ITTA Comments at 20-, NASUCA Comments at 36, SBC
Comments at 8, TCA Comments at 9-11.
I33In this Order, the term "service area" is used in reference to both study and service areas. The 1996 Act
provided that the term "service area" means the company s "study area" in areas served by a rural telephone
company. See 47 US.C. ~ 2l4(e)(5); Federal-State Joint Board on Universal Service Report and Order, CC
Docket No. 96-, 12 FCC Rcd 8776, 8791-, para, 25 (1997).
13447 US.c. ~ 214(e)(5). Section 54.207 of the Commission s rules, which implements section 2l4(e)(5) of the
Communications Act of 1934, as amended, provides that a rural telephone company s service area will be its study
area "unless and until the Commission and the states, after taking into account the recommendations of a Federal-
State Joint Board instituted under section 41O(c), establish a different definition of service area for such company.
47 C.R ~ 54.207(b). Among other things, the Joint Board recommended that the state commissions and the
Commission consider and protect against the potential for creamskimming when contemplating a request to
redefine a service area. See Federal-State Joint Board on Universal Service Recommended Decision, CC Docket
No. 96-45 12 FCC Rcd 97 179-80 para, 172 (1996) (1996 Recommended Decision). In Virginia Cellular ETC
Designation Order and Highland Cellular ETC Designation Order the Commission applied to certain service area
redefinition petitions the creamskimming analysis the Commission uses to decide ETC applications. Highland
Cellular ETC Designation Order 19 FCC Rcd at 6440, para. 39; Virginia Cellular ETC Designation Order
FCC Rcd at 1578, para. 32.
135See Advantage Cellular ETC Designation Order at para. 20; Highland Cellular ETC Designation Order
FCC Rcd at 6434-, para, 26; Virginia Cellular ETC Designation Order 19 FCC Rcd at 1578, para, 32.
Federal Communications Commission FCC 05-
area,136 By serving a disproportionate share of the high-density portion of a service area, an ETC may
receive more support than is reflective of the rural incumbent LEC' s costs of serving that wire center
because support for each line is based on the rural telephone company s average costs for serving the
entire service area unless the incumbent LEC has disaggregated its support.137 Because line density is a
significant cost driver, it is reasonable to assume that the highest-density wire centers are the least costly
to serve, on a per-subscriber basis. The effects of creamskimming also would unfairly affect the
incumbent LEC's ability to provide service throughout the area since it would be obligated to serve the
remaining high-cost wire centers in the rural service area while ETCs could target the rural incumbent
LEC's customers in the lowest cost areas and also receive support for serving the customers in these
areas,138 In order to avoid disproportionately burdening the universal service fund and ensure that
incumbent LECs are not banned by the effects of creamskimming, the Commission strongly encourages
states to examine the potential for creamskimming in wire centers served by rural incumbent LECs. This
would include examining the degree of population density disparities among wire centers within rural
service areas, the extent to which an ETC applicant would be serving only the most densely concentrated
areas within a rural service area, and whether the incumbent LEC has disaggregated its support at a
smaller level than the service area (e,at the wire center leve1).139
50, Because a low population density typically indicates a high-cost area, analyzing the
disparities in densities can reveal when an ETC would serve only the lower cost wire centers to the
exclusion of other less profitable areas.l40 For instance
, the Commission found in the Virginia Cellular
ETC Designation Order that designating a wireiess carrier as an ETC in a particular service area was
not in the public interest due to the disparity in density between the high-density wire center in the area
that the applicant was proposing to serve and the wire centers within the service area that the wireless
carrier was not proposing to serve. 141 Even if a carrier seeks to serve both high and low density wire
136See 1996 Recommended Decision 12 FCC Rcd at 180, para. 172. The Commission recognizes that the type of
service provided by a competitive ETC may force it to seek designation in a service area that is smaller than or
different from the rural incumbent LEC's service area. For example, the Commission has recognized that the
lowest cost portion of a rural service area may be the only portion of the service area that a wireless carrier is
licensed to serve, See Virginia Cellular ETC Designation Order 19 FCC Rcd at 1578, para. 33; Highland
Cellular ETC Designation Order 19 FCC Rcd at 6435, para. 27. Under these circumstances, granting a carrier
ETC designation for only its licensed portion of the rural service may have the same effects on the universal service
fund and the rural incumbent LEC as creamskimming. Accordingly, the analysis should consider not whether the
competitive ETC intends to creamskim, but whether the ETC applicant's proposed service area has the effect of
creamskimmin
137 See Federal-State Joint Board on Universal Service Report and Order, CC Docket No, 96-, 12 FCC Rcd
8776, 9454-, para. 196, App. J (1997).
138See Federal-State Joint Board on Universal Service Report and Order, CC Docket No, 96-, 12 FCC Rcd
8776, 9399, para. 82 (1997).
139See 47 C,R. ~ 54.315. As discussed infra a rural incumbent LEC's wire center is the minimum geographic
area for ETC designation. See iry7a. paras. 77-78.
140See Virginia Cellular ETC Designation Order 19 FCC Rcd at 1578-, para. 34.
141See Virginia Cellular ETC Designation Order 19 FCC Rcd at 1579-, para. 35, In that case, the highest-
density study area had a population density of 273 persons per square mile, while the average population density of
the remaining wire centers in the study area was about 33 persons per square mile. ld.
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centers, the potential for creamskimming still exists if the vast majority of customers that the carrier is
proposing to serve are located in the 10w-cost, high-density wire centers.142
51, The Commission has also determined that creamskimming concerns may be lessened when a
rural incumbent LEC has disaggregated support to the higher-cost portions of the incumbent's service
area,I43 Specifically, under the Commission s rules, rural incumbent LECs are permitted to depart from
service area averaging and instead disaggregate and target per-line high-cost support into geographic
areas below the service area 1eve1.144 By doing so, per-line support varies to reflect the cost of service in
a particular geographic area, such as a wire center, within the service area.145 By reducing per-line
support in high density areas, disaggregation may create less incentive in certain circumstances for an
ETC to enter only those areas,l46 Nevertheless, although disaggregation may alleviate some concerns
regarding creamskimming by ETCs, because an incumbent's service area may include wire centers with
widely disparate population densities, and therefore highly disparate cost characteristics, disaggregation
may be a less viable alternative for reducing creamskimming opportunities.147 This problem may be
compounded where the cost characteristics of the rural incumbent LEC and competitive ETC applicant
differ substantially.148 Thus, creamskimming may remain a concern where a competitive ETC seeks
designation in a service area where the incumbent rural LEC has disaggregated high-cost support to the
higher-cost portions of its service area,I49
52. We find that a creamskimming analysis is unnecessary for ETC applicants seeking
designation below the service area level of non-rural incumbent LECs, Unlike the rural mechanism,
which uses embedded costs to distribute support on a service area-wide basis, the non-rural mechanism
uses a forward-looking cost model to distribute support to individual wire centers where costs exceed the
national average by a certain amount. 150 Therefore, under the non-rural methodology, high-density, 10w-
142See Highland Cellular ETC Designation Order 19 FCC Rcd at 6436-, para. 31.
143See Highland Cellular ETC Designation Order 19 FCC Red at 6437, para, 32,
144See Federal-State Joint Board on Universal Service, Multi-Association Group (lvlAG) Plan for Regulation
Interstate Services of Non-Price Cap Incumbent Local Exchange Carriers and Interexchange Carriers Fourteenth
Report and Order, Twenty-Second Order on Reconsideration, and Further Notice of Proposed Rulemaking in CC
Docket No. 96-45, and Report and Order in CC Docket No, 00-256, 16 FCC Rcd 11244, 11300, para, 137 (2001)
(Rural Task Force Order), as corrected by Errata, CC Docket Nos. 96-, 00-256 (Acc. Pol. Div. reI. Jun. 1, 2001),
recon. pending; 47 c.FR ~ 54,315.
145See id.
146Virginia Cellular ETC Designation Order FCC Rcd at 1580, para. 35. See also 'IDS Comments at 12.
See Recommended Decision 19 FCC Rcd at 4278-, para. 54; Highland Cellular ETC Designation Order
FCC Rcd at 6437, para. 32,
148Highland Cellular ETC Designation Order 19 FCC Red at 6437, para. 32,
149See id.
150See 47 C.R ~~ 54,309; 36.611 to 36.641. We note that rural incumbent LECs may also disaggregate support
to the wire center level. See 47 c.FR ~ 54.315.
Federal Communications Commission FCC 05-
cost wire centers receive little or no high-cost support, thereby protecting against the potential for
creamskimming.151
53, We urge state commissions to apply the Commission s creamskimming analysis when
determinillg whether to designate an ETC in a rural service area. We reject assertions that a bright-line
test is needed to determine whether creamskimming concerns are present. 152 As demonstrated in the
Virginia Cellular ErC Designation Order and Highland Cellular ErC Designation Order we believe
that a rigid standard would fail to take into account variations in population distributions, geographic
characteristics, and other individual factors that could affect the outcome of a rural service area
creamskimming effects ana1ysis.153 We believe that the factors indicated above provide states adequate
guidance in determining whether an ETC application presents creamskimming concerns.
3. Impact on the Fund
54. We decline to adopt a specific test to use when considering if the designation of an ETC will
affect the size and sustainabi1ity of the high-cost fund, As the Commission has found in the past
analyzing the impact of one ETC on the overall fund may be inconclusive,l54 Indeed, given the size of the
total high-cost fund approximately $3.8 billion a year it is unlikely that any individual ETC
designation would have a substantial impact on the overall size of the fund.155 In addition, the
Commission is considering in other proceedings, such as the Rural Referral Proceeding, how support is
15J The non-rural mechanism determines the amount offederal support to be provided to non-rural carriers in each
state by comparing the statewide average cost per line, as estimated by the Commission s cost model, to a
nationwide cost benchmark that is two standard deviations above the national average cost per line. Federal-State
Joint Board on Universal Service CC Docket No. 96-45, Order on Remand, 18 FCC Rcd 22559, 22589, para. 49
(2003) (Ninth Report and Order Remand Order), appeal pending sub nom, Qwest Communications International
Inc. v. FCC USA Tenth Cir, No, 03-9617; Vermont Public Service Boardv. FCC USA c. Cir. No. 04-
1015; and SBC Communications Inc, v. FCC USA C. Cir, No, 04-1018, Even in a non-rural study area
where an incumbent LEC receives high-cost support, creamskimming concerns would not be present because
support is targeted at the wire-center level based on relative cost, thereby calculating high-cost support on a more
granular basis and significantly reducing the possibility that carriers would receive a windfall from support for that
wire center, Federal-State Joint Board on Universal Service CC Docket No. 96-, Ninth Report and Order and
Eighteenth Order on Reconsideration, 14 FCC Rcd 20432, 20471, para. 70 (1999) (Ninth Report and Order),
remanded, Qwest Corp, v, FCC 258 F,3d 1191 (10th Cir, 2001) (Qwest)
152State and Rural Coalition Comments at 9 (recommending a bright-line test for creamskirnrning when an
applicant seeks to serve only the highest-density wire centers in a rural study area).
I53See Highland Cellular ETC Designation Order at 19 FCC Rcd 6436-, para. 31; Virginia Cellular ETC
Designation Order 19 FCC Rcd at 1579-, para. 35,
154See Highland Cellular ETC Designation Order 19 FCC Rcd at 6432, n. 73; Virginia Cellular ETC Designation
Order 19 FCC Rcd at1577, n. 96,
I55See Federal Universal Service Support Mechanisms Fund Size Projections for the First Quarter of 2005
Appendix HC 1 (Universal Service Administrative Company, November 2, 2004); Federal Universal Service
Support Mechanisms Fund Size Projections for the Fourth Quarter of 2004, Appendix HC 1 (Universal Service
Administrative Company, August 2, 2004); Federal Universal Service Support Mechanisms Fund Size Projections
for the Third Quarter of 2004, Appendix HC 1 (Universal Service Administrative Company, April 30, 2004);
Federal Universal Service Support Mechanisms Fund Size Projections for the Second Quarter of 2004, Appendix
HC 1 (Universal Service Administrative Company, January 30, 2004).
Federal Communications Commission FCC 05-
calculated for both rural incumbent LECs and ETCs,156 We also find, as discussed below, that certain
proposals examining the effect on the fund as part of an ETC public interest analysis may be inconsistent
with sections 214 and 254 of the Act and related Commission orders.
55. We find that per-line support received by the incumbent LEC should be one of many
considerations in our ETC designation analysis. We believe that states making public interest
detenninations may properly consider the level of federal high-cost per-line support to be received by
ETCs. High-cost support is an explicit subsidy that flows to areas with demonstrated levels of costs
above various national averages. Thus, one relevant factor in considering whether or not it is in the
public interest to have additional ETCs designated in any area may be the level of per-line support
provided to the area. If the per-line support level is high enough, the state may be justified in limiting the
number of ETCs in that study area, because funding multiple ETCs in such areas could impose strains on
the universal service fund,
56. We decline, however, based on the record before us to adopt a specific national per-line
support benchmark for designating ETCs. As the Joint Board noted, "(m)any factors mentioned by
commenters as relevant to the public interest determination-such as topography, population density, line
density, distance between wire centers, loop lengths and levels of investment-may all affect the level of
high-cost support received in an individual service area. ,,162 Many commenters have argued that a per-
line benchmark that denies entry to competitive ETCs in high-cost areas may prevent consumers in high-
cost areas from receiving the benefit of competitive service offerings,165 Although giving support to
ETCs in particularly high-cost areas may increase the size of the fund, we must balance that concern
against other objectives, including giving consumers throughout the country access to services
comparable to services in urban areas and ensuring competitive neutrality. 163 In addition, as a practical
matter, we do not believe we currently have an adequate record to determine what specific benchmark orbenchmark should be set.
57. For similar reasons, we also decline to adopt a proposal that would allow only one wireline
ETC and one wireless ETC in each service area.157 Such a proposal that limits the number of ETCs in
each service area creates a practical problem of determining which wireless and wiIeline provider would
be selected, We also reject the application of a rebuttable presumption that it is not in the public interest
to have more than one ETC in each rural high-cost area.158 We believe that a more comprehensive public
interest analysis, which considers the specific facts of the application, is a better approach and is
consistent with congressional intent. We also reject arguments that we should treat smaller wireless rural
carriers differently than larger carriers. 159 We do not believe that subjecting smaller wireless carriers to
156See Federal-State Joint Board on Universal Service CC Docket No. 96-45, Order, 19 FCC Red 11538, para. 1
(2004) (Rural Referral Order),
162Recommended Decision 19 FCC Rcd at 4274-, para. 43.
165CTIA Comments at 13, Sprint Comments at 33, WTA Comments at 1, Oregon Commission Comments at 5,
163See First Universal Service Report and Order 12 FCC Rcd at 8801-, paras. 46-48 (pursuant to section
254(b )(7), adopting the principle that federal support mechanisms should be competitively neuiral, neither unfairly
advantaging nor disadvantaging particular service providers or technologies).
157F, Williamson Comments at 10-11,
158Verizon Comments at 9-14,
159See Rural Telecommunications Associations Comments at 30-31.
Federal Communications Commission FCC 05-
an expedited ETC application process or a lower level of scrutiny would serve the public interest 160 and
we further believe that it may be contrary to the principle of competitive neutrality.
C. Permissive Guidelines for State ETC Designation Proceedings
58. We encourage state commissions to require all ETC applicants over which they have
jurisdiction to meet the same conditions and to conduct the same public interest analysis outlined in this
Report and Order. We also encourage states to impose the annual certification and reporting
requirements unifonnly on all ETCs they have previously designated. In doing so, we encourage states to
confonn these guidelines with any similar conditions imposed on previously designated ETCs in order to
avoid duplicative or inapplicable eligibility criteria and reporting requirements. We agree with the Joint
Board's recommendation that a rigorous ETC designation process ensures that only fully qualified
applicants receive designation as ETCs and that all ETC designees are prepared to serve all customers
within the designated service area. Additionally, a set of guidelines allows for a more predictable
application process among the states. We believe that these guidelines will assist states in determining
whether the public interest would be served by a carrier s designation as an ETC. We also believe that
these guidelines will improve the 10ng-tenn sustainability of the fund, because, if the guidelines are
followed, only fully qualified carriers that are capable of and committed to providing universal service
will be able to receive support.
59. ..s suggested by commenters and the Joint Board, we encourage state commissions to
consider the requirements adopted in this Report and Order when examining whether the state should
designate a carrier as an ETC, An ETC'designation by a state commission can ultimately impact the
amount of high-cost and low income monies distributed to an area served by a non-rural carrier, 161 an
area served by one or more rural carriers 162 or both.163 A single set of guidelines will encourage states to
develop a single, consistent body of eligibility standards to be applied in all cases, regardless of the
characteristics of the incumbent carrier. As noted above, however, the public interest ana1~s for ETC
applications for areas served by rural carriers should be more rigorous than the analysis of applications
for areas served by non-rural carriers.
60. We also find that states that exercise jurisdiction over ETC proceedings should apply these
requirements in a manner that will best promote the universal service goals found in section 254(b ).164
While Congress delegated to individual states the right to make ETC decisions, collectively these
decisions have national implications that affect the dynamics of competition, the national strategies of
new entrants, and the overall size of the federal universal service fund. In addition, these guidelines are
160See Rural Telecommunications Associations Comments at 30-, Attach. A.
161 See, e., Designation of Eligible Telecommunications Carriers Under the Telecommunications Act of 1996
RCC Atlantic, Inc, d/b/a Voicel, Docket No. 5918 (Vt. Pub. Servo Bd. June 26, 2003) (Vermont Unicel ETCOrder).
162See , Request by Alaska Digitel, LLC for Designation as a Carrier Eligible to Receive Federal Universal
Service Support Under the Telecommunications Act of 1996, U-02-, Order No. 10, Order Granting Eligible
Telecommunications Ca..rrier Status and Requiring Filings (Reg. Comm n of Ala. Aug. 28, 2003) (Alaska Digitel
ETC Order).
163See 47 u.S.C, 2l4(e)(2) (noting that state commissions can designate both rural and non-rural carriers providing
the carriers meet the requirements of the Act).
164 47 U. .C, ~ 254(b),
Federal Communications Commission FCC 05-
designed to ensure designation of carriers that are financially viable, likely to remain in the market
willing and able to provide the supported services throughout the designated service area, and able to
provide consumers an evolving level of universal service. Moreover, state commissions that apply these
guidelines will facilitate the Commission s review of petitions seeking redefinition of incumbent LEC
service areas filed pursuant to section 2l4(e)(5) of the Act 165
61. We decline to mandate that state commissions adopt our requirements for ETC
designations.166 Section 214(el(2) of the Act gives states the primary responsibility to designate ET~
anp prescribes that all state designation decisions must be consistent with the public interest,
convem , a.1'l.O'IieCessity.
1 (j I We believe that section 2l4( e )(2) demonstrates Congress s intent that
state coIllLlll:;~lOns evaluate local factual situations in ETC cases and exercise discretion in reaching their
conclusions regarding the public interest, convenience and necessity, as long as such determinations are
consistent with federal and other state 1aw.168 States that exercise jurisdiction over ETCs should apply
these-;quirem;rts in arnanner lliaiTSconsistent with section 2l4(e)(2) of the Act. Furtbennore, state
commissions, as the entities most familiar with the service area for which ETC designation is sought, are
particularly well-equipped to determine their own ETC eligibility requirements 169 Because the guidelines
we establish in this port and Orner are notb aiiig upon t:nestates, we reject arguments suggesting that
such guidelines would restrict the lawful rights of states to make ETC designations.17o We also find that
federal guidelines are consistent with the holding of United States Court of Appeals for the Fifth Circuit
that nothing in section 214( e) of the Act prohibits the states from imposing their own eligibility
requirements in addition to those described in section 214(e)(I),171 Consistent with our adoption of
permissive federal guidelines for ETC designation, state commissions will continue to maintain the
flexibility to impose additional eligibility requirements in state ETC proceedings, if they so choose.
62. We reject the argument that mandatory requirements are necessary to prevent waste, fraud,
and abuse in the distribution of high-cost support.172 We note that safeguards already exist to protect
against the misuse of high-cost support. For example, if a state commission believes that high-cost
support is being used by an ETC in a manner that is inconsistent with section 254 of the Act, the state
165
See 47 u.S,c. ~ 214(e)(5); 47 C.R ~ 54.207.
166See Recommended Decision 19 FCC Rcd at 4261, para. 10. See also ALL TEL Comments at 5, Bell South
Comments at 4, Iowa Board Comments at 2, Nebraska Companies Comments at 2, Iowa Board Reply Comments at
16747 u.S.C, ~ 214(e)(2).
168See 47 u.S.C, ~ 2l4(e)(2).
169See Recommended Decision 19 FCC Red at 4261, at para. 10.
170See id. (citing CTIA Comments at 10, Idaho Tel. Ass n Comments at 12, Montana Telecomms, Ass
Comments at 10, Nebraska Rural Indep. Coso Comments at 27).
!7l See TOPUC v, FCC 183 F. 3d at 418, The Fifth Circuit Court detennined that states may subject carriers
designated as ETCs to eligibility requirements in addition to the eligibility requirements detailed in section
214(e)(1) of the Act. Jd.
172See ITTA Comments at 18. Because section 214(e)(2) of the Act gives primary responsibility to the states to
designate ETCs, we reject comments that support guidelines that are binding on state commissions to counteract an
alleged state bias in designating ETCs. See NASCUA Comments at 36, WTA Comments at 9, USTA Comments
at 5-
Federal Communications Commission FCC 05-
commission may decline to file an annual certification or may withdraw an ETC's designation, which
would ensure that funds are no longer distributed to the ETC. 173
63. We also note that the Commission may institute an inquiry on its own motion to ensure that
high-cost support is used "only for the provision, mamtenance, and upgracling of facilities and services
for the areas in which ETCs are designated,174 In addition, if an ETC designated by the Commission fails
to fulfill the requirements of sections 214 and 254 of the Act, the Commission has the authority to revoke
a carrier s ETC designation.175 The Commission also may assess forfeitures for violations of
Commission rules and orders.176 Consequently, we find that adequate measures exist to prevent waste
fraud and abuse of high-cost support by ETCs. Nevertheless, the Commission will continue to monitor
use of universal service funds by ETCs and develop rules as necessary to continue to ensure that funds
are used in a manner consistent with section 254 of the Act,
64. Commenters further argue that mandatory requirements are necessary to prevent growth of
the universal service fund.l77 As discussed above
, the Joint Board is currently contemplating in the Rural
Referral Proceeding how universal service support can be effectively targeted to rural incumbent LECs
and ETCs serving high-cost areas, while protecting against excessive fund growth.178 We believe that
proceeding is a more appropriate forum for detennining ways to limit fund growth.
D. Administrative Requirements for ETC Designation Proceedings
65. Consistent with USAC's request, we note that all future ETC designation orders adopted by
the Commission will include: (1) the name of each incumbent LEC study area in which an ETC has been
designated; (2) a clear statement of whether the ETC has been designated in all or part of each incumbent
LEC's study area; and (3) a list of all wire centers in which the ETC has been designated, using either the
wire center s common name or the Common Language Location Identification (CLL!) code,179 In
addition, in instances where follow-up filings or other conditions have been imposed before the ETC
designation is final, the Commission will notify USAC when the conditions have been fulfilled.18O
also encourage state commissions to follow these procedures in ETC orders they adopt, USAC contends
and we agree, that inclusion of this infonnation in ETC designation orders will greatly facilitate USAC'
I73See 47 C.R ~~ 54.313, 54.314.
17447 US.C. ~~ 220, 403; 47 C.R. ~~ 54,313, 54.314.
175See Federal-State Joint Board on Universal Service, Western Wireless Corporation Petition for Preemption
an Order of the South Dakota Public Utilities Commission Declaratory Ruling, CC Docket No. 96-, 15 FCC
Red 15168, at 14174, para, 15 (2000) (Declaratory Ruling), recoll. pending. See also 47 US,C. ~ 254(e).
176See 47 US,c. ~ 503(b).
177See Alaska Telephone Comments at 3 , ITTA Comments at 18, IDS Comments at 6, Montana ITS Reply
Comments at 6.
178See Rural Referral Order 19 FCC Red at 11538, para. 1.
~SAC Comments at 21.
180See id.
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data validation and other efforts to ensure that all carriers receive high-cost universal service support
only in the areas in which they have been deemed eligib1e.181
66, In addition, for carriers that file ETC petitions with the Commission seeking designation on
triba11ands, we establish procedures to ensure that the appropriate tribal governments and tribal
regulatory authorities are notified and provided with an opportunity to engage in consultation with the
Commission and to comment in the ETC designation proceeding. 182 We find these procedures are
consistent with the Commission Tribal Policy Statement released in June 2000, which commits the
Commission "to consult with tribal governments prior to implementing any regulatory action or policy
that will significantly or uniquely affect tribal governments, their land and resources",183 Through
consultation, the Commission and the tribal government have an opportunity to discuss how the ETC
petition affects public interests of the particular tribal community, for example, the effects of the ETC
designation on tribal self-detemrination efforts and potential economic opportunities, and on the tribal
government s own communications priorities and goals, which the Commission recognizes as the
sovereign right of tribal governments.l84
67, Specifically, the Commission requires that any applicant seeking ETC designation on tribal
lands before the Commission provide copies of its petition to the affected tribal governments and tribal
regulatory authorities at the time of filing. 185 In addition, the Commission will send the relevant public
notice seeking comment on those petitions to the affected tribal governments and tribal regulatory
, authorities by overnight express mai1.186 As with the other guidelines adopted herein, we encourage state
commissions to follow these guidelines for ETC designation proceedings affecting tribal lands so that the
appropriate tribal governments and tribal regulatory authorities are notified of any tribal ETC petitions
related comment cycles or other opportunities to consult with the state commission and participate in the
specific ETC designation proceeding.18?
181Jd.
182See NTTA Comments at 2; NNPC Reply Comments at 2. See also Twelfth Report and Order 15 FCC Rcd at
12265, para. 115 (concluding that a carrier seeking a designation of eligibility to receive federal universal service
support for telecommunications service offered on tn'ballands may petition the Commission for designation under
section 214(e)(6) without first seeking designation from the state commission).
183See Statement of Policy on Establishing a Government-to-Government Relationship with Indian Tribes Policy
Statement, 16 FCC Rcd 4078, 4081 (2000) (Tribal Policy Statement).
184See NTTA Comments at 5-8; See also Tn'bal Policy Statement at 4.
185See NTTA Comments at 4.
186See NTTA Comments at 4. See also 47 u.S.C, ~ 553(b), which provides an exception to the notice and
comment requirement for "rules of agency organization, procedure, or practice.
18? Although commenters request that the FCC impose mandatory requirements upon state commissions that
exercise jurisdiction over ETC designations on tribal lands, we find state commissions are better suited to
determine how to amend their ETC designation proceedings that involve tn'ballands , in order to encourage
consultation and participation by the affected tribal governments and tribal regulatory authorities.
Federal Communications Commission FCC 05-
V. ANNUAL CERTIFICATION AND REPORTING REQUIREMENTS
68. Our rules currently require all ETCs to make an annual certification, on or before October 1
that universal service support will be used for its intended purposes,
188 As recommended by the Joint
Board, we maintain and augment this requn-ement. Specifically, in order to continue to receive universal
service support each year, we require each ETC over which we have jurisdiction, including an ETC
designated by the Commission prior to this Report and Order, to submit annually certain infonnation
regarding its network and its use of universal service funds. 189 These reporting requirements will ensure
that ETCs continue to comply with the conditions of the ETC designation and that universal service
funds are used for their intended purposes. This information will initially be due on October 1 2006, and
thereafter annually on October 1 of each year, at the same time as the carrier s certification that the
universal service funds are being used consistent with the Act.190 In addition, following the effective date
of this Report and Order, we anticipate initiating a proceeding to develop procedures for review of these
annual reports, Moreover, we anticipate initiating a separate proceeding on or before February 25 2008
to examine whether the requn-ements adopted herein are promoting the use of high-cost support by ETCs
in a manner that is consistent with section 254 of the Act. We further clarify that a carrier that has been
previously designated as an ETC under section 214( e)( 6) does not have to reapply for designation, but
must comply with the annual certification and reporting requirements on a going-forward basis,
69. Every ETC designated by the Commission must submit the following infonnation on an
annual basis:
(1)progress reports on the ETC's five-year service quality improvement plan,
including maps detailing progress towards meeting its plan targets, an
explanation of how much universal service support was received and how the
support was used to improve signal quality, coverage, or capacity; and an
explanation regarding any network improvement targets that have not been
fulfilled. 191 The infonnation should be submitted at the wire center level;
(2)detailed information on any outage lasting at least 30 minutes, for any service
area in which an ETC is designated for any facilities it owns, operates, leases
or otherwise utilizes that potentially affect at least ten percent of the end users
served in a designated service area, or that potentially affect a 911 special
facility (as defined in subsection (e) of section 4.5 of the Outage Reporting
Order),I92 An outage is defined as a significant degradation in the ability of an
188 47 .R ~~ 54.313, 54.314.
189These reporting requirements go beyond the CUlTent certification requirements of sections 54.313 and 54.314 of
the Commission s rules. See 47 C.R ~~ 54.313 , 54.314 (requiring annual certification that carrier is using high-
cost support "only for the provision, maintenance, and upgrading offacilities and services for which support
intended.
).
See also 47 u.S.C, ~ 254(e),
1905ee e.47 C.FR ~ 54.313; 54.314.
191If an ETC had not previously submitted a network improvement plan to the Commission, it should do so with its
first reporting compliance filing. An ETC that has not previously submitted a network improvement plan should
include a description of improvements or upgrades it has made since the date of its initial designation.
1925ee New Part of the Commission s Rules Concerning Disruptions to Communications Report and Order and
Further Notice of Proposed Rulemaking, 19 FCC Rcd 16830, 16923-, ~ 4.5 (2004) (Outage Reporting Order).
Federal Communications Commission FCC 05-
end user to establish and maintain a channel of communications as a result of
failure or degradation in the performance of a communications provider
network193 Specifically, the ETC's annual report must include: (1) the date and
time of onset of the outage; (2) a brief description of the outage and its
resolution; (3) the particular services affected; (4) the geographic areas affected
by the outage; (5) steps taken to prevent a similar situation in the future; and (6)
the number of customers affected; 194
(3)the number of requests for service from potential customers within its service
areas that were unfulfilled for the past year. The ETC must also detail how it
attempted to provide service to those potential customers; 195
(4)the number of complaints per 1 000 handsets or lines;
(5)certification that the ETC is complying with applicable service quality standards
and consumer protection rules
g.,
the CTIA Consumer Code for Wireless
Service; 196
(6)
(7)
certification that the ETC is able to function in emergency situations; 197
certification that the ETC is offering a local usage plan comparable to that
offered by the incumbent LEC in the relevant service areas; and
(8)certification that the carrier acknowledges that the Commission may require it to
provide equal access to long distance carriers in the event that no other eligible
telecommunications carrier is providing equal access within the service area.
1935ee Outage Reporting Order 19 FCC Red at 16925, ~ 4.
-+We do not adopt the threshold established in the Outage Reporting Order that, for an outage to be included in a
report, it must potentially affect 900 000 user minutes of either telephony or associated data. See Outage
Reporting Order 19 FCC Rcd at 16925, ~ 4.9. In particular, we believe that a user minute threshold may be
insufficient for the purpose of determining ETC functionality during emergency situations in designated service
areas because populations can vary, As a result, we instead require that ETCs report any outages that potentially
affect 10% or more of their customers in a designated service area. Unlike the Outage Reporting Order however
we require these reports annually instead of shortly after the outage occurs.
195
5ee supra para. 22 for a description of the steps a carrier must take to provide service upon reasonable request.
196CTIA, Consumer Code for Wireless Service available at http://www,wow-com,cornJpdf/The Code,pdf. Under
the CTIA Consumer Code, wireless carriers agree to: (1) disclose rates and terms of service to customers; (2) make
available maps showing where service is generally available; (3) provide contract terms to customers and confirm
changes in service; (4) allow a trial period for new service; (5) provide specific disclosures in advertising; (6)
separately identify carrier charges from taxes on billing statements; (7) provide customers the right to terminate
service for changes to contract terms; (8) provide ready access to customer service; (9) promptly respond to
consumer inquiries and complaints received from government agencies; and (10) abide by policies for protection of
consumer privacy.
197Ifan ETC had not previously submitted a plan demonstrating how it will remain functional in an emergency, it
should do so with its first reporting compliance filing.
Federal Communications Commission FCC 05-
70, We conclude that these reporting regulations are reasonable and consistent with the public
interest and the Act. These reporting requirements will further the Commission s goal of ensuring that
ETCs satisfy their obligation under section 214(e) of the Act to provide supported services throughout
their designated service areas.198 The administrative burden placed on carriers is outweighed by
strengthening the requirements and certification guidelines to help ensure that high-cost support is used in
the manner that it is intended. These reporting requirements also will help prevent carriers from seeking
ETC status for purposes unrelated to providing rural and high-cost consumers with access to affordable
telecommunications and information services.l99
71. We encourage state commissions to adopt these annual reporting requirements. To the
extent that they do so, we urge state commissions to ~ly the reeorting requirements to all ETCs not
just co~ti~Cs, In addition, state~mmissions may requinUhe .s.ubmission of any oth.er
information that they believe is necessary ensure that ETCs are operating in accordance with
applicable state and fu!eral ~S,200 In doing so, states should conform these requirements with
any s'iii'iilar eondrtlons imposed o previously designated ETCs in order to avoid duplicative or
inapplicable reporting requirements, Individual state commissions are uniquely qualified to determine
what information is necessary to ensure that ETCs are complying with all applicable requirements
including state-specific ETC eligibility requirements.
f:z
72. If a review of the data submitted by an ETC indicates that the ETC is no longer in
compliance with the Commission s criteria for ETC designation, the Commission may suspend support
disbursements to that carrier or revoke the carrier s designation as an ETC.201 Likewise, as the Joint
Board noted, state commissions possess the authority to rescind ETC designations for failure of an ETC
to comply with the requirements of section 214( e) of the Act or any other conditions imposed by the
state. 202
-&=-
198In addition, the Commission may institute an inquiry on its own motion to examine any ETC's records and
documentation to ensure that the high-cost support it receives is being used "only for the provision, maintenance
and upgrading of facilities and services" in the areas where it is designated as an ETC. 47 US,C. ~~ 220, 403; 47
R. ~~ 54,313, 54.314.
1995ee 47 US.C. ~ 254(b)(3),
200See Highland Cellular ETC Designation Order 19 FCC Rcd at 6441-, para. 43; Virginia Cellular ETC
Designation Order 19 FCC Rcd at 1584-, para. 46; TOPUC v. FCC 183 F.3d at 417-18,
20lRural Telecommunications Associations Comments at 48-, US Cellular Comments at 20-23, In addition,
carriers must submit their reports on a timely basis, In order to encourage timely filings, if a carrier files its annual
reports late, it will not receive the entire amount of funding for the year. Instead, it will lose funding for the
quarter of the funding year, consistent with how late it files. For example, if a carrier files its report on December
, it will lose funding for the first quarter of the next year. If the carrier does not file until the second quarter
after the due date, for example, on February 4, it will not receive funding for the first two quarters,
202See Federal-State Joint Board on Universal Service; Western Wireless Corporation Petition for Preemption
an Order of the South Dakota Public Utilities Commission Declaratory Ruling, CC Docket No. 96-, 15 FCC
Rcd 15168 15174, para. 15 (2000), recon. pending. In addition, state commissions that believe support is not
being used for its intended purposes may refrain from certifying a competitive ETC, which in turn will suspend
distribution of high-cost support to that ETC.
Federal Communications Commission FCC 05-
VI. OTHER ISSUES
Service Area Redefinition Process
73. Section 2l4(e)(5) of the Act provides that states may establish geographic service areas
within which competitive ETCs are required to comply with universal service obligations and
are eligible to receive universal service sUpport,203 For an area served by a rural incumbent LEC
however, the Act states that a company s service area for the purposes ofETC designation will be the
rural incumbent LEC' s study area "unless and until the Commission and the States, after taking
into account the recommendations of a Federal-State Joint Board instituted under section
41 O( c), establish a different definition of service area for such company, ,,204 This process of
changing the incumbent LEC's service area - and therefore the competitive ETC's service area
known as the redefinition of a service area, The Commission adopted section 54.207(c) of its rules to
implement this requirement. 205
74. In its Recommended Decision the Joint Board recommended that the Commission retain
procedures established by the Commission in 1997 for the redefinition of rural service areas.2O6
agree with that recommendation, and do not believe that changes are necessary at this time to our
procedures for redefining rural service areas. We agree with the Joint Board that in redefining an
incumbent LEC' s service area so as to conform with the service area of a new ETC, the states and
Commission should continue to work in concert to decide whether a different service area defmition
would better serve the public interest.2o7 First, under the current redefinition procedures for new
ETCs, both state commissions and the Commission employ rigorous and fact-intensive analyses of
203See 47 u.S.C, ~ 2l4(e)(5) ("The term 'service area' means a geographic area established by a State commission
(or the Commission under paragraph (6)) for the purpose of determining universal service obligations and support
mechanisms. "
204Id.
205Section 54.207(c) of the Commission s rules provides the mechanism by which a state commission may propose
to redefine a rural incumbent LEC's service area for pmposes of determining universal service obligations and support.
See 47 C,FR ~~ 54.207(a), (c). The Commission has authority to propose a service area redefinition on its own
motion under section 54.207(d) of the Commission s roles, but such redefinition would not go into effect without the
agreement of the relevant state commission, See 47 C.R ~ 54.207(d). Under section 54.207(c)(1), a state may
petition the Commission for a redefinition or a party may petition the Commission with the state s proposal to
redefine, The petition must contain: (i) the definition proposed by the state commission; and (ii) the state
commission s ruling or other official statement presenting the state commission s reason for adopting its proposed
definition, inclruling an analysis that takes into account the recommendations of any Federal-State Joint Board convened
to provide recommendations with respect to the definition ora service area served by a rural carrier, See 47 C,R. ~
54.207(c)(1). Section 54.207(c)(3) provides that the Commission may initiate a proceeding to consider
a state commission s proposal to redefine the area served by a rural incumbent LEC within 90 days of the release
date of a public notice. See 47 C.R ~ 54.207(c)(3). If the Commission initiates a proceeding to consider the
petition, the proposed definition will not take effect until both the state commission and the Commission agree upon
the definition of a rural carrier service area, in accordance with section 214(c)(5) of the Act. If the Commission
does not act on a petition to redefine a service area wit.1rin 90 days of the rei e a s e of the public notice, the
definition proposed is deemed approved by the Commission and takes effect in accordance with state procedures. See
47 C.R ~ 54.207(c)(3)(ii).
206See Recommended Decision 19 FCC Rcd at 4279, para, 55.
207See Recommended Decision 19 FCC Rcd at 4279, para. 55.
Federal Communications Commission FCC 05-
requests for service area redefinitions that examine the impact of any redefinition on the affected rural
incumbent LEC' s ability to serve the entire study area , including the potential for creamskimming that
may result from the redefinition?08 In addition, public comment is invited during every step in the
process to ensure that the states and Commission are fully apprised of any impact the redefinition may
have on the rural incumbent LEe. 209
75. We disagree with commenters that argue that the Commission should adopt rules prohibiting
redefinition below the study area level when new ETCs are designated in an incumbent LEC' s service
area.21O In particular, we find that this proposal ignores the provision in section 214(e)(5) that allows
redefinition to occur,211 In any event, the process described above adequately protects against hann to
the rural incumbent LEC that may result from redefinition. We also reject the argument posed by certain
commenters that contend that the Commission should require redefinition of all service areas for which
competitive ETCs seek designation or have been designated instead of redefining service areas on a case-
by-case basis,212 At this time, we believe that the existing case-specific analysis adequately protects the
interests of incumbent LECs.
Pending Redefinition Petitions
76. The Commission has before it several petitions seeking redefinition of incumbent LEC
service areas.213 We grant these petitions as described below, These petitions, which were filed by either
208See supra paras. 48-52, The Commission employs the same creamskimming analysis based on population
density data used in the ETC designations for which it possesses jurisdiction for redefinition petitions. See
Highland Cellular ETC Designation Order 19 FCC Rcd at 6440, para. 39; Virginia Cellular ETC Designation
Order 19 FCC Rcd at 1582, para. 42. See also Recommended Decision 19 FCC Rcd at 4279, para. 55.
209See Recommendation Decision 19 FCC Rcd at 4279, para. 55.
210See USTA Comments at 12-13; NebraskaRlCs Reply Comments at 13.
211 47 u.S.C, ~2l4(e)(5).
2l2See Dobson Comments at 15; Gel Comments at 24; Rural Telecommunications Associations Comments at 23;
US Cellular Comments at 40; Cox Reply Comments at 3-
213See Petition of ALL TEL Communications, Inc. for Consent to Redefine the Service Areas of Rural Telephone
Companies in the State of Michigan, filed December 17, 2003 (ALL TEL-Michigan Petition); Petition of ALL TEL
Communications, Inc. for Consent to Redefine the Service Areas of Rural Telephone Companies in the State of
Wisconsin, filed November 21, 2003 (ALL TEL-Wisconsin Petition); Petition by the Colorado Public Utilities
Commission, Pursuant to 47 CFR ~ 54.207(c), for Commission Agreement in Redefining the Service Area of Delta
County Tele-Comm, Inc., a Rural Telephone Company, filed August 12 2002 (Colorado PUC-Delta Petition);
Petition by the Colorado Public Utilities Commission, Pursuant to 47 CFR ~ 54.207(c), for Commission Agreement
in Redefining the Service Area of Wiggins Telephone Association, a Rural Telephone Company, filed May 30
2003 (Colorado PUC-Wiggins Petition), Petition of the Minnesota Public Utilities Commission for FCC Agreement
to Redefine the Service Areas of Twelve Minnesota Rural Telephone Companies, filed August 7 2003 (Minnesota
PUC Petition); Petition by RCC Minnesota, Inc., Pursuant to 47 C.Section 54,207(c), for Commission
Agreement in Redefining the Service Areas of Rural Telephone Companies in the State of Maine, filed June 24
2003 (RCC :Minnesota-State of Maine Petition); American Cellular Corporation Petition ror Agreement in
Redefining the Service Area Requirement for Certain Rural Telephone Company Study Areas in the State of
Wisconsin pursuant to 47 C.R ~ 54.207(c), filed July 16, 2004 (American Cellular Petition); Petition of CTC
Telecom, Inc. for Redefinition of the Service Area of CenturyTel of the Midwest-Wisconsin, filed June 30 2004
(CTC Telecom-Wisconsin); Petition by RCC Minnesota, Inc. and Wireless Alliance, LLC., Pursuant to 47 c.FR
Section 54.207(c), for Commission Agreement in Redefining the Service Areas of Rural Telephone Companies in
the State of Minnesota, filed August 27 2004 (RCC Minnesota-State of Minnesota Petition).
Federal Communications Commission FCC 05-
a competitive ETC or a state commission, fall into three categories. One category involves petitions
seeking to redefine a rural incumbent LEC's service area into multiple smaller service areas at the wire
center level. 214 The second category of petitions involves ETCs that were designated for service areas
that included portions of the incumbent LEC's wire centers instead of entire wire centers. These petitions
seek to redefine the rural incumbent LEC service area for the same areas, including some partial wire
centers, such that the ETC's designated service area and the incumbent LEC's redefined service area
would be the same.215 The third category involves two petitions that seek to redefine the incumbent
LEC's service area into multiple smaller service areas at the wire center 1evel.216 However, the state
commissions had designated these carriers' service areas to include some areas smaller than the
incumbent LEC's wire centers. .AJ3 a result, the designated service areas and the proposed redefined areas
are not the same.
77. Since these petitions were filed 217 the
Commission released the Highland Cellular ErC
Designation Order in which the Commission rejected Highland's petition for designation in only a
portion of a rural incumbent LEC's service area.218 Specifically, Highland requested that it be allowed to
serve parts of the rural incumbent LEC' s wire centers, We concluded that designating an ETC for only a
portion of a wire center served by a rural incumbent LEC would be inconsistent with the public
interest,219 We also found that the competitive ETC applicant must commit to provide the supported
services to customers throughout a minimum geographic area. We concluded that a rural telephone
company s wire center is the appropriate minimum geographic area for ETC designation because rural
carrier wire centers typically correspond with county or town boundary lines.220 We continue to believe
as we stated in the Highland Cellular ErC Designation Order that requiring a competitive ETC to
serve an entire wire center will make it less likely that the competitor will relinquish its ETC designation
at a later date and will best address creamskimming concerns in an administratively feasible manner.221
78. In this Report and Order, we conclude that the same principles that we apply to ETC
designation requests also apply when we are considering whether to grant a petition for redefinition, 222
We recognize, however, that because of the timing of the underlying state ETC designation decisions
214
See ALLTEL-Michigan Petition; ALLTEL-Wisconsin Petition; CTC Telecom-Wisconsin; See Colorado PUC-
Delta Petition; Colorado PUC- Wiggins Petition.
2l5
See American Cellular Petition; Minnesota PUC Petition.
216See RCC Minnesota-State of Maine Petition; RCC Minnesota-State of Minnesota Petition.
217
Three of the pending petitions seeking redefinition were submitted subsequent to the Virginia Cellular ETC
Designation Order and Highland Cellular ETC Designation Order decisions. Specifically, the CTC Telecom-
Wisconsin was filed on June 30, 2004, the American Cellular Petition was filed on July 16, 2004, and the RCC
Minnesota-State of Minnesota Petition was filed on August 27 2004. We believe that because these proceedings
were being conducted as our Virginia Cellular ETC Designation Order and Highland Cellular ETC Designation
Order decisions were being released, it was difficult for the petitioners and their respective state commissions to be
fully aware of the requirements of our decisions.
218See Highland Cellular ETC Designation Order 19 FCC Rcd at 6438, para. 33.
2l9See id.
220See id.
221Id.
222See supra para. 74.
FederaJ Communications Commission FCC 05-
many of these pending petitions could not be in full compliance with the factors considered in the
Highland Cellular ETC Designation Order, For example, some petitions follow the ETC designation
and redefinition framework that was applied by the Commission prior to the Highland Cellular ETC
Designation Order.223 Other petitions have not presented a creamskimming analysis that examines
population density data to determine whether the ETC is seelcing designation only in high-density wire
centers of the affected study area, which could undercut the rural incumbent LEC' s ability to provide
service throughout its entire study area, as detailed in the Virginia Cellular ETC Designation Order?7A
As a result, because the Commission had not fully elaborated on its creamskimming analysis based on
population density or adopted the policy that competitive LEC service areas should not be defined below
the wire center level, these state commissions granting ETC designation and seelcing redefinition could
not have applied the requirements set forth in the Highland Cellular ETC Designation Order,
79. Because the states complied with applicable federal rules and guidelines at the time the
redefinition petitions were filed, we decline to upset those determinations, We therefore find that granting
these redefinition petitions would serve the public interest. Accordingly, we grant these redefinition
petitions pursuant to section 214(e)(5) of the Act.225 On a going forward basis, however, we intend to
rigorously apply the standards set forth in the Highland Cellular ETC Designation Order and Virginia
Cellular ETC Designation Order,
Identification of Wireless Customer Locations
80. Background ill the Rural Task Force Order the Commission required wireless competitive
ETCs to use the customer s billing address to identify the location of a mobile wireless customer?26 The
Commission concluded that this approach was reasonable and the most administratively simple solution
to the problem of detennining the location of a wireless customer for universal service purposes.227 The
Commission recognized, however, that the use of a customer s billing address might allow carriers to
identify a customer in a high-cost zone when service is primarily taken in a low-cost zone for the purpose
of receiving a higher level of per-line support,228 The Commission stated that it would take appropriate
enforcement action if an ETC were to engage in such arbitrage, and that it might revisit the use of a
customer s billing address as more mobile wireless carriers become eligible to receive support.229
81. ill the Rural Task Force Order the Commission declined to use the Mobile
Telecommunications Sourcing Act (MTSA) definition of "place of primary use" to determine a mobile
wireless customer s 10cation?30 ill declining to adopt the MTSA definition to determine wireless
223See RCC Alabama ETC Designation Order 17 FCC Rcd at 23547-, paras. 37-42.
224See e.ALL TEL-Wisconsin Petition; RCC Minnesota-State of Maine Petition, See supra paras, 49-51.
22547 u.S.C, ~ 2l4(e)(5).
226Rural Task Force Order 16 FCC Rcd at 11314, para. 180.
227Rural Task Force Order 16 FCC Red at 11314-, paras. 180-181.
228Rural Task Force Order 16 FCC Rcd at 11315-, para. 183.
229 Jd.
230 Rural Task Force Order 16 FCC Rcd at 11315, para. 182, The MTSA, which was intended to address the
difficulty in identifying the site of a mobile telephone call for transactional tax purposes, sources all wireless calls
and mobile telecommunications services to the "place of primary use." Mobile Telecommunications Sourcing Act
4 u.S.C. ~~ 116-126, In the MTSA, the place of primary use is defined as "the street address representative of
(continued.. ..
Federal Communications Commission FCC 05-
customer location for universal service purposes, the Commission expressed concern that states might not
have established databases pursuant to the Act, and that use of the MTSA definition might impose undue
administrative burdens on mobile wireless ETCs.231 In its Recommended Decision the Joint Board
determined that the Commission should further develop the record on defining mobile wireless customer
location in terms of place of primary use, as defined by the MTSA, for universal service purposes. 232 In
particular, the Joint Board concluded that the place of primary use represents the preferred definition of
wireless customer location for universal service purposes because it reflects whether a customer actually
uses mobile wireless phone service in a high-cost area. The Joint Board therefore recommended that the
Commission develop the record on: (1) whether the MTSA' s place of primary use approach is an
efficient method for determining the location of mobile service lines; (2) whether a "place of primary use
definition should be optional or mandatory; (3) whether a definition based on place of primary use would
alleviate concerns about fraudulent billing addresses, and; (4) if the place of primary use definition is
adopted, how it should work in conjunction with virtual NXX,233
82. Discussion.We are not convinced that there is a significant difference between our current
definition, which relies on a customer s billing address, and the MTSA definition, which relies on the
customer s residential street address or primary business street address. In a large percentage of cases
the two will be the same. In both cases, the underlying address information will be provided by the
customer, who is unlikely to be providing false information in order to increase universal service
payments to its service provider, 234 If anything, customers have a greater incentive to provide false or
misleading information under the MTSA, which will govern applicable taxes imposed on the customer.
Further, as noted in the Rural Task Force Order if a competitive ETC misuses a customer s billing
address by identifying a customer in a high-cost zone when service is primarily provided in a low-cost
zone for the purpose of receiving a higher level of per-line support, the Commission may take appropriate
enforcement action.235 We further note that, to date, we are not aware of any carriers :filing petitions
before the Commission contending that a wireless ETC is misusing customer billing addresses for
arbitrage purposes.
83. As a result, we decline to change our method for identifying the location of mobile wireless
customers. We, therefore, do not adopt the place of primary use definition at this time. Moreover, we
note that few commenters provided responses to the specific questions from the Joint Board,z36 The Iowa
(Continued from previous page)
where the customer s use of the mobile telecommunications service primarily occurs, which must be - (A) the
residential street address or the primary business street address of the customer; and (B) within the licensed service
area of the (customer s mobile telecommunications service provider).Id.
231Rural Task Force Order 16 FCC Rcd at 11315, para. 182,
232See Recommended Decision 19 FCC Rcd at 4280, para. 57.
233Recommended Decision 19 FCC Rcd at 4300, para. 103, NXX refers to the first three digits of a seven digit
telephone number, Virtual NXX is a service where carriers assign an NXX to a customer who is physically not
located in the exchange where the NXX is rate centered.
2344 US.c. ~ 122(a)(1) (service providers may rely on the address provided by the customer).
235See Seventh Report and Order 14 FCC Rcd at 8115-16 para. 78 (noting the availability of the formal complaint
process under section 208 of the Act if a State or other party believes a carrier has mis-applied its high-cost support
in a manner that violates the Communications Act or Commission rules), See also Ninth Report and Order
FCC Rcd at 20488, para. 1l0.
236CenturyTel states that the billing address method and primary use standard proposed by the Joint Board are not
sufficient for detennining wireless ETC lines in a service area. See CenturyTel Comments at 10-11. ITTA and
(continued.. .
. )
Federal Communications Commission FCC 05-
Utilities Board, one of the few commenters responding to the Joint Board's questions, submitted an
analysis concerning the billing address methodology that found that only a small number of customers
have billing addresses in locations other than where service is 10cated.237 Given the limited data we
currently have, we see no reason to modify our method of detel1l'lillillg wireless customer locations.238
Accurate, Legible, and Consistent Maps
84, Background Under the Commission s rules, a rural incumbent LEC electing to
disaggregate and target high-cost support must submit to USAC "maps which precisely identify the
boundaries of the designated disaggregation zones of support within the incumbent LEC's studyarea.,,239
In the Rural Task Force Order the Commission explained that "the integrity and flow of information to
competitors is central to ensuring that support is distributed in a competitively neutral manner.,,240 The
Commission further stated that
, "
in order to ensure portability and predictability in the delivery of
support " it would require rural incumbent LECs to "submit to USAC maps in which the boundaries of
the designated disaggregation zones of support are clearly specified, ,,241 USAC was directed to make
those maps available for public inspection by competitors and other interested parties.242 Some
commenters indicate that the maps filed by rural incumbent LECs pursuant to section 54.315(f)(1) and
the information available through USAC are of varying quality and utility,243 Others suggest that
improved quality and reliability of maps submitted by incumbent LECs would allow for better targeting
of support, 244
85. In response to the concerns raised by commenters, the Joint Board recommended that the
Commission direct USAC to develop standards for the submission of any maps that ETCs are required to
submit to USAC under the Commission s rules in a uniform, electronic format. The Joint Board
contended that the development of such standards would promote the integrity and flow of information to
competitive ETCs by increasing the accuracy, consistency, and usefulness of maps submitted to USAC
(Continued from previous page)
Sprint support the Joint Board's proposal that wireless customer location should be the place of primary use. See
ITTA Comments at 28, Sprint Comments at 35.
237Iowa Board Comments at 8-9. Centennial also stated that no evidence suggests the current method results in
support being distributed improperly. Centennial Comments at 17.
238For similar reasons, we see no need to adopt CenturyTel's proposal to provide support to wireless ETC
customers where usage primarily occurs in high-cost areas. See CenturyTel Comments at 10-11, Specifically,
because we do not distribute high-cost support based on an ETC's customer s usage, we do not believe that we
should look into wireless ETC customers' usage to determine support levels.
23947 C.R. ~ 54.3l5(f)(4).
24ORural Task Force Order 16 FCC Rcd at 11307-, para. 161.
241Id,
242Id.
243See, e.
g.,
US Cellular Comments at 17-18; Rural Indep. Competitive Alliance Comments at 27,
244See Recommended Decision 19 FCC Rcd at 4300, n, 290 ("What will improve the ability to target subscribers is
an FCC requirement that incumbent LECs who disaggregate support submit accurate and legible cost zone maps in
a consistent electronic format so that competitive ETCs are able to easily determine the appropriate cost zones for
customers," (quoting Rural Cellular Ass niAlliance of Rural CMRS Carriers Comments at 26)).
Federal Communications Commission FCC 05-
and that, as the universal service administrator, USAC is the appropriate entity to develop such
standards.245
86, Discussion We agree with the Joint Board and commenters and find that accurate, legible
and consistent maps would promote the integrity and flow of information to competitive ETCs by
increasing the accuracy, consistency, and usefulness of maps submitted to USAC.246 Among other
things, accurate and legible maps will assist in the ETC designation process and ensure that high-cost
support is targeted to the appropriate service areas. Accordingly, we direct USAC, in accordance with
direction from the Wireline Competition Bureau, to develop standards as necessary for the submission of
any maps that ETCs are required to submit to USAC under the Commission s rules.
E. Support to Newly Designated ETCs
87. Background.Section 254(e) of the Act provides that "only an eligible telecommunications
carrier designated under section 214(e) shall be eligible to receive specific Federal universal service
support, ,,247 Once a carrier is designated as an ETC, additional requirements also must be satisfied
before a carrier can begin receiving high-cost universal service support. In particular, section 254(e)
requires that support shall be used "only for the provision, maintenance, and upgrading of facilities and
services for which support is intended. ,,243
88. To implement this statutory provision, the Commission adopted an ~nnual certification
requirement. Specifically, sections 54.313 and 54.314 of the Commission s rules provide that state
commissions must file an annual certification with USAC and with the Commission stating that all high-
cost support received by carriers within the state will be used "only for the provision, maintenance, and
upgrading of facilities and services for which support is intended. ,,249 In instances where carriers are not
subject to the jurisdiction of a state, the Commission allows an ETC to cerfu")r directly to the Commission
and to USAC that federal high-cost support will be used in a manner consistent with section 254(e)?50
Sections 54.313 and 54.314 also provide that certifications must be filed by October 1 of the preceding
calendar year to receive support beginning in the first quarter of a subsequent calendar year, 251 If the
October 1 deadline for first quarter support is missed, the certification must be filed by January 1 for
support to begin in the second quarter, by April 1 for support to begin in the third quarter, and by July 1
for support to begin in the fourth quarter.252 The Commission established this schedule to allow USAC
245See Recommended Decision 19 FCC Rcd at 4301, para. 105,
246Dobson Comments at 31; Iowa Board Comments at 9-10,
24747 V.C. ~ 254(e).
24847 US.C. ~ 254(e),
24947 C.R ~~ 54.313, 54.314. The certification requirement for non-rural ETCs is found in section 54.313 ofllie
Commission s rules.
250See Rural Task Force Order, 16 FCC Rcd at 11318, para, 189; 47 C.R ~ 54,3l4(b).
25147 C.R ~ 54.3l4(d)(I).
252See 47 c.F.R ~ 54.3l4(d).
Federal Communications Commission FCC 05-
sufficient time to process section 254(e) certifications and to calculate estimated high-cost demand
amounts for submission to the Commission,253
89. Under the Commission s current certification rules, the timing of a carrier s ETC designation
may cause it to miss a certification filing deadline. As a result, a recently designated ETC's support may
not begin to be disbursed until well after the ETC's designation date, For example, if a carrier is
designated as an ETC on December 20, and the state commission with jurisdiction over the carrier files a
certification on behalf of the ETC on January 15, that carrier will not begin to receive support until the
third quarter of that year - more than six months after the carrier was designated an ETC. Therefore
although the Commission s rules provide a mechanism for certifications to be filed on a quarterly basis
payment of high-cost support for recently designated ETCs under this schedule may be delayed until well
after the initial certification is made. Consequently, newly designated ETCs that have missed the
Commission s certification filing deadlines due to the timing of their ETC designation date have been
granted waivers of the certification filing deadlines. 254
90. Under section 54.307(d) of the Commission s rules, as a prerequisite for universal service
high-cost support, ETCs serving both rural and non-rural service areas must also file the number of
worlcing loops and other related data for the customers they serve in the incumbent's service area.255 To
ensure that the interval between the submission of data and receipt of support is as short as possible in
rural carrier study areas, the Commission requires that ETCs submit such line count data on a quarterly
basis?56 Therefore, under the quarterly schedule established by the Commission, li'1e count data are due
on July 31, September 30, December 30, and March 30 of each year.257 Consistent with section
253See Rural Task Force Order 16 FCC Red at 11319, para. 191. Two months prior to the beginning of each
quarter, USAC submits to the Commission estimated demand for the universal service support mechanisms
including high-cost support, See 47 C.R ~ 54.709(a)(3). Therefore, for the first quarter, USAC submits
eStimated demand amounts to the FCC on or before November 1. In order to submit an accurate estimate by that
date, USAC needs to know no later than October 1 which carriers have been certified under the Commission
rules. See Rural Task Force Order 16 FCC Rcd at 11319, para. 191.
254See, e.g., Federal-State Joint Board on Universal Service, West Virginia Public Service Commission, Request
for Waiver of State Certification Requirementsfor High-Cost Universal Service Support for Non-Rural Carriers
Order, CC Docket No. 96-45, 16 FCC Rcd 5784 (2001) (granting a waiver of the October 1 certification filing
deadline); Federal-State Joint Board on Universal Service, RFB Cellular, Inc., Petitions for Waiver of Sect ions
54.314(d) and 54.307(c) of the Commission s Rules and Regulations Order, CC Docket No. 96-45, 17 FCC Rcd
24387 (Wireline Compet. Bur. 2002) (granting a waiver of the October 1 certification filing deadline); Federal-
State Joint Board on Universal Service, Guam Cellular and Paging, Inc., Petition for Waiver of Section 54.314
the Commission s Rules and Regulations Order, CC Docket No. 96-, DA 03-1169 (Wireline Compet. Bur.
2002) (granting a waiver of the October 1 certification filing deadline). See also Federal-State Joint Board on
Universal Service, Western Wireless Corporation Petition for Waiver of Section 54.314 of the Commission s Rules
and Regulations Declaratory Ruling, CC Docket No. 96-, 18 FCC Rcd 14689, 14691, para. 6 (Wireline Compet.
Bur., Telecom. Access Policy Div. reI. July 18, 2003) (Western Wireless Order).
25547 C.R ~ 54.307(b).
25647 C.R ~ 54.307; see Rural Task Force Order 16 FCC Rcd at 11298, para. 134; Federal-State Joint Board
on Universal Service CC Docket No. 96-, Twentieth Order on Reconsideration, 15 FCC Rcd 12070, 12078
para. 18 (2000) (Twentieth Order on Reconsideration).
25747 C.R ~ 54.307(c). Specifically, section 54.307 states
, "
(c) (aJ competitive eligible telecommunications
carrier must submit the data required pursuant to paragraph (b) of this section according to the schedule. (1) No
later than July 31st of each year, submit data as of December 31st of the previous calendar year; (2) No later than
September 30th of each year, submit data as of March 31st of the existing calendar year; (3) No later than
(continued. .. .
Federal Communications Commission FCC 05-
54.307(c) of the Commission s rules, under its administration of the high-cost program, USAC bases its
quarterly support payments on these quarterly line count data submissions. For ETCs designated in
areas served by rural incumbent LECs, line count data submitted on March 30 are used to target support
for the third and fourth quarters of each year, line count data filed on September 30 are used to target
support for the first quarter of the following year, and line count data filed on December 30 are used to
target support for the second quarter of the following year. For ETCs designated in areas served by non-
rural incumbent LECs, line counts filed on March 30 are used for third quarter support, line counts filed
on July 31 are used for fourth quarter support, line counts filed on September 30 are used for first
quarter support, and line counts filed on December 30 are used for second quarter support?58
91. Under the :filing schedules described above, carriers that receive a late ETC designation may
miss quarterly filing deadlines that could affect USAC's cost estimates for the relevant quarter. Also, an
ETC receiving a late designation that did not file quarterly line counts in anticipation of its ETC
designation could suffer significant delay in receipt of support. In light of the delay in support that can
be caused by ETC designations occurring after line count certification filing deadlines, we sought
comment in the ETC Designation NPRM on whether to amend our rules to allow newly designated ETCs
to begin receiving high-cost support as of their ETC designation date, provided that the required
certifications and line-count data are filed within 60 days of the carrier s ETC designation date,259
92. Discussion We conclude that in order to provide universal service support to newly
designated ETCs on a timely basis, ETCs shall be eligible for support as oft.~eir ETC designation date
provided that the required certifications and line-count data are filed within 60 days of the carrier s ETC
designation date.260 As suggested by commenters, including USAC, revising the certification and line
count deadline rules will enable customers of newly designated ETCs to begin to receive the benefits of
universal service support as of the ETC's designation date. Additionally, this modification will eliminate
the need for carriers to seek waivers of filing deadline rules in order to receive support on a timely basis.
At the same time, for administrative efficiency and predictability, we must impose some time limits so
that USAC can accurately calculate total high-cost support payments. Therefore, a newly-designated
ETC's certification and line-count data must be filed within 60 days of its initial ETC designation from
the state commission or Commission. If the newly designated ETC does not file within 60 days of the
carrier s ETC designation date, the ETC will not receive support retroactively to its ETC designation
date, but only on a going-forward basis. We note that although USAC supports this revision, it has
indicated that such funding should not flow to a newly designated ETC until its line count data are
included in USAC's quarterly demand projections.261 In order to avoid any administrative burdens
associated with processing payments to a newly designated ETC, we agree that USAC shall distribute
support only after the required line count data are available in USAC's quarterly demand projections?62
(Continued from previous page)
December 30th of each year, submit data as of June 30th of the existing calendar year; (4) No later than March
30th of each year, submit data as of September 30th of the previous calendar year.
258See Twentieth Order on Reconsideration 15 FCC Rcd at 12078, para. 17, n. 25,
259See ETC Designation NPRM 19 FCC Rcd at 10801, para. 5. See also 47 C.R. ~~ 54,307, 54,313 , 54.314,
260See Appendix A for the revised rules,
261See USAC Comments at 19.
262See e., Federal-State Joint Board on Universal Service, Grande Communications, Inc.Petition for Waiver of
Sections 54.307 and 54.314 of the Commission s Rules and Regulations, CC Docket No. 96-, Order, 19 FCC
Red 15580, 15584, para, 9, n.34 (2004) (establishing a process for USAC to disburse funds retroactively to an
ETC's designation date).
Federal Communications Commission FCC 05-
As a result, unless a carrier has filed its data with USAC in advance of its ETC designation date, a
carrier might have to wait an additional quarter before it begins receiving support.
F. Accepting Untimely Filed Certifications For Interstate Access Support.
93. Background Section 54.809(c) of the Commission s rules states that in order for an ETC to
receive Interstate Access Support (!AS), the ETC must file an annual certification on the date that it first
files line count information and thereafter on June 30 of each year.263 As a result, the current rule
prohibits an otherwise eligible carrier from receiving !AS for as much as a year if it misses the annual
certification deadline, In the MAG Order the Commission detennined that a carrier that untimely files
its annual certification for Interstate Common Line Support (ICLS) would not be eligible for support
until the second calendar quarter after the certification is filed.264 For example, if a carrier untimely files
its required annual June 30 certification on July 15, it will be eligible to receive ICLS support beginnjng
January 1 of the following year. Therefore, the MAG Order establishes a supplemental certified filing
process that prevents an ETC from losing ICLS for an entire year if it misses the June 30 certification
deadline,z65 In the ETC Designation NPRM the Commission proposed adopting a similar supplemental
process for accepting untimely certifications for the receipt of !AS. 266
94. Discussion We adopt the proposal in the ETC Designation NPRMthat establishes a
procedure for accepting untimely filed certifications for IAS. We conclude that allowing an ETC that
misses the June 30 certification deadline to receive LA..S support following the filing of the untimely
certification will not unduly hann a carrier that files an annual certification late and will eliminate the
need for a carrier to seek a waiver of the filing certification deadlines rules.267 At the same time, by not
allowing a carrier to receive !AS support for the entire year, the carrier still has the incentive to file the
certification on a timely basis in order to not interrupt its receipt of !AS support. We, therefore, adopt a
quarterly certification schedule to accommodate late filings, Specifically, a price cap LEC or competitive
ETC that misses the June 30 annual !AS certification deadline shall receive support pursuant to the
following schedule: (1) carriers that file no later than September 30 shall receive support for the fourth
quarter of that year and the first and second quarters of the subsequent year; (2) carriers that file no later
than December 31 shall receive support for the first and second quarters of the subsequent year; and (3)
carriers that file no later than March 31 of the subsequent year shall receive support for the second
quarter of the subsequent year,
26347 C.R. ~ 54.809(c). IAS helps offset interstate access charges for price-cap carriers. 47 C.R. ~~ 54.800 et.
seq. Each competitive ETC that provides supported services within the study area of a price-cap local exchange
carrier receives IAS for each line that it serves within that study area. 47 C.R ~ 54.807(a).
264Multi-Association Group (A.1AG) Plan for Regulation of Interstate Services of Non-Price Cap Incumbent Local
Exchange Carriers and Interexchange Carriers, Federal-State Joint Board on Universal Service, Access Charge
Reform for Incumbent Local Exchange Carriers Subject to Rate-of-Retum Regulation, Prescribing the Authorized
Rate of Return From Interstate Services of Local Exchange Carriers, Second Report and Order and Further
Notice of Proposed Rulemaking in CC Docket No. 00-256 Fifteenth Report and Order in CC Docket No. 96-45
Report and Order in CC Docket No. 98-, Report and Order in CC Docket 98-166, 16 FCC Rcd 19613, 19687-
para. 176 (2001) (MAG Order); 47 C.R. ~ 54.904(d).
265MAG Order 16 FCC Rcd at 19687-, para. 176,
266See ETC Designation NPRM 19 FCC Red at 10801 , para. 5.
267 See Appendix A for the revised rule.
Federal Communications Commission FCC 05-
VII.PROCEDURAL MATTERS
Regulatory Flexibility Analysis
95. As required by the Regulatory Flexibility Act, 5 u.S,C, ~ 604, the Commission has prepared
a Final Regulatory Flexibility Analysis (FRF A) for the Report and Order set forth at Appendix C,
Congressional Review Act
96. The Commission will send a copy of the Report and Order in a report to be sent to Congress
pursuant to the Congressional Review Act,268 In addition, the
Commission will send a copy of the Report
and Order to the Chief Counsel for Advocacy of the Small Business Administration. A copy of the
Report and Order (or summaries thereof) will also be published in the Federal Register,269
Paperwork Reduction Act
97. This document contains new or modified infonnation collection requirements subject to the
Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. It will be submitted to the Office of
Management and Budget (OMB) for review under Section 3507(d) of the PRA. OMB the general
public, and other Federal agencies are invited to comment on the new or modified infonnation collection
requirements contained in this proceeding.
Filing Procedures
98, Pursuant to sections 1.415 and 1.419 of the Commission s rules 270 interested parties may file
comments not later than 60 days after publication of this Report and Order in the Federal Register and
may file reply comments not later than 90 days after publication of this Report and Order in the Federal
Register. In order to facilitate review of comments and reply comments, parties should include the name
of the filing party and the date of the filing on all pleadings, Comments may be filed using the
Commission s Electronic Comment Filing System (ECFS) or by filing paper copies.271
99. Comments filed through the ECFS can be sent as an electronic file via the Internet to
http://www.fcc.gov/cgb/ecfs. Generally, only one copy of an electronic submission must be filed.
multiple docket or ru1emaking numbers appear in the caption of this proceeding, however, commenters
must transmit one electronic copy of the comments to each docket or ru1emaking number referenced in the
caption, In completing the transmittal screen, commenters should include their full name, u.S, Postal
Service mailing address, and the applicable docket or rulemaking number. Parties may also submit an
electronic comment by Internet e-mail. To get filing instructions for e-mail comments, commenters should
send an e-mail to ecfs~fcc.gov, and should include the following words in the body of the message
, "
get
fonn." A sample fonD and directions will be sent in reply, Or you may obtain a copy of the ASCII
Electronic Transmittal Fonn (FORM-ET) at www.fcc,gov/e-file/email.html,
268
See 5 US.C, ~ 801(a)(l)(A),
269See 5 US,C, ~ 604(b).
27047 C.R ~~ 1.415, 1.419.
271
See Electronic Filing of Documents in Rulemaking Proceedings 13 FCC Rcd 11322, 11326 (1998).
Federal Communications Commission FCC 05-
100, Parties that choose to file by paper must file an original and four copies of each filing.
Filings can be sent by hand or messenger delivery, by commercial overnight courier, or by first-class or
overnight US, Postal Service mail (although we continue to experience delays in receiving US. Postal
Service mail). The Commission s contractor, Natek, Inc., will receive hand-delivered or messenger-
delivered paper filings for the Commission s Secretary at a new location in downtown Washington, DC.
The address is 236 Massachusetts Avenue, NE, Suite 1l0, Washington, DC 20002. The filing hours at
this location will be 8:00 a.m. to 7:00 p.m, All hand deliveries must be held together with rubber bands or
fasteners. Any envelopes must be disposed of before entering the building.
101. Commercial overnight mail (other than US. Postal Service Express Mail and Priority Mail)
must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743. US, Postal Service first-class
mail, Express Mail, and Priority Mail should be addressed to 445 12th Street, SW, Washington, D.
20554. All filings must be addressed to the Commission s Secretary, Office of the Secretary, Federal
Communications Commission,
If you are sending this type of document or
usin this delive method...
Hand-delivered or messenger-delivered paper
filings for the Commission s Secretary
CY..her messenger-delivered documents
including documents sent by overnight mail
(other than United States Postal Service
ress Mail and Priori Mail)
United States Postal Service first-class mail
Ex ress Mail, and Priori Mail
It should be addressed for delivery to. .
236 Massachusetts
Avenue, NE, Suite 1l0
Washin n, DC 20002 (8:00 to 7:00 .
9300 East Hampton Drive
Capitol Heights, MD 20743
(8:00 a.m. to 5:30 p.
445 12th Street, SW
Was on, DC 20554
102. Parties who choose to file by paper should also submit their comments on diskette. These
diskettes, plus one paper copy, should be submitted to: Sheryl Todd, Telecommunications Access Policy
Division, Wireline Competition Bureau, Federal Communications, at the filing window at 236
Massachusetts Avenue, N., Suite 110, Washington, D.C, 20002. Such a submission should be on a
3.5-inch diskette fonnatted in an ffiM compatible fonnat using Word or compatible software. The
diskette should be accompanied by a cover letter and should be submitted in "read only" mode, The
diskette should be clearly labeled with the commenter s name, proceeding (including the docket number, in
this case WC Docket No. 02-, type of pleading (comment or reply comment), date of submission, and
the name of the electronic file on the diskette, The label should also include the following phrase "Disk
Copy - Not an Original." Each diskette should contain only one party's pleadings, preferably in a single
electronic file. In addition, commenters must send diskette copies to the Commission s copy contractor
Qualex International, Portals IT, 445 1281 Street, S., Room CYB402, Washington, D.c. 20554 (see
alternative addresses above for delivery by hand or messenger).
103, Regardless of whether parties choose to file electronically or by paper, parties should also
file one copy of any documents filed in this docket with the Commission s copy contractor, Qualex
International, Port.als n, 445 12th Street S., CY-B402, Washi..'1gton, D.C, 20554 (see alternative
addresses above for delivery by hand or messenger) (telephone [phone]; facsimile 202-863-2898) or
via e-mail at qualexint~ao1.com.
104. Written comments by the public on the proposed and/or modified infonnation collections are
due on the same day as comments on this Report and Order, i.on or before 60 days after publication of
this Report and Order in the Federal Register. Written comments must be submitted by OMB on the
Federal Communications Commission FCC 05-
proposed and/or modified information collections on or before 60 days after publication of this Report and
Order in the Federal Register. In addition to filing comments with the Secretary, a copy of any comments
on the information collections contained herein should be submitted to Judith B. Herman, Federal
Communications Commission, Room l-C804, 445 12th Street, S., Washington, D.C. 20554, or via the
Internet to jbherman~fcc.gov, and to Jeanette Thornton, OMB Desk Officer, Room 10236 NEOB, 725
17th Street, N., Washington, D.c. 20503 or via the Internet to JThornto~omb.eop.gov.
105. The full text of this document is available for public inspection and copying during regular
business hours at the FCC Reference Information Center, Portals n, 445 12th Street, SW, Room CY-
A257, Washington, DC, 20554. This document may also be purchased from the Commission
duplicating contractor, Qualex International, Portals n, 445 12th Street, SW, Room CY-B402
Washington, DC, 20554, telephone [phone] , facsimile [phone], or via e-mail
qualexintcgyao1. com.
Further Information
106, Alternative formats (computer diskette, large print, audio recording, and Braille) are
available to persons with disabilities by contacting Brian Millin at [phone] voice, [phone]
TTY, or bmillin~fcc.gov, This Report and Order can also be downloaded in Microsoft Word and Ascn
formats at OO::::http://www,fcc.gov/ccb/universalservice/bighcost?
107. For further information, contact Gina Spade or Thomas Buckley at [phone] in the
Telecommunications Access Policy Division, Wireline Competition Bureau.
VIII.ORDERING CLAUSES
108. Accordingly, IT IS ORDERED that, pursuant to the authority contained in sections 1 , 4(i),
4(j), 201-205, 214, 254, and 403 of the Communications Act of 1934, as amended, 47 u.S.c. ~~ 151
l54(i), 154(j), 201-205, 214, 254, and 403 , this Report and Order IS ADOPTED.
109. IT IS FURTHER ORDERED that Part 54 of the Commission s rules, 47 c.F,R. Part 54, IS
AMENDED as set forth in the attached Appendix A, effective thirty (30) days after the publication of this
Report and Order in the Federal Register, except that the requirements subject to the Paperwork
Reduction Act are not effective until approved by Office of Management and Budget. The Commission
will publish a document in the Federal Register announcing the effective date of the requirements.
110. IT IS FURTHER ORDERED that the Commission s Consumer and Governmental Affairs
Bureau, Reference Information Center, SHALL SEND a copy of this Report and Order including the
Final Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business
Administration,
Ill. IT IS FURTHER ORDERED that the Universal Service Administrative Company shall to
develop standards for the submission of any maps that eligible telecommunications carriers are required to
submit to the Universal Service Administrative Company under the Commission s rules, to the extent
discussed herein.
112. IT IS FURTHER ORDERED that the petition for redefinition filed by the Colorado Public
Utilities Commission, on August 12, 2002, IS GRANTED, to the extent discussed herein.
113. IT IS FURTHER ORDERED that the petition for redefinition filed by the Colorado Public
Utilities Commission, on May 30 2003 , IS GRANTED, to the extent discussed herein.
Federal Communications Commission FCC 05-
114, IT IS FURTHER ORDERED that the petition for redefinition filed by RCC Minnesota, Inc
on June 24, 2003 , IS GRANTED, to the extent discussed herein.
115. IT IS FURTHER ORDERED that the petition for redefinition filed by the Minnesota Public
Utilities Commission, on August 7 2003, IS GRANTED, to the extent discussed herein.
116, IT IS FURTHER ORDERED that the petition for redefinition filed by ALLTEL
Communications, Inc., on November 21 2003, IS GRANTED, to the extent discussed herein,
117. IT IS FURTHER ORDERED that the petition for redefinition filed by ALL TEL
Communications, Inc., on December 17 2003, IS GRANTED, to the extent discussed herein
118, IT IS FURTHER ORDERED that the petition for redefinition filed by CTC Telecom, Inc.
on June 30, 2004, IS GRANTED, to the extent discussed herein.
119, IT IS FURTHER ORDERED that the petition for redefinition filed by American Cellular
Corporation, on July 16, 2004, IS GRANTED, to the extent discussed herein.
120. IT IS FURTHER ORDERED that the petition for redefinition filed by RCC Minnesota, Inc,
and Wireless Alliance, LLC, on August 27 2004, IS GRANTED, to the extent discussed herein,
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary
Federal Communications Commission FCC 05-
APPENDIX A - FINAL RULES
Part 54 of Title 47 of the Code of Federal Regulations is amended as follows:
PART 54 - UNIVERSAL SERVICE
Subpart C - Carriers Eligible for Universal Service Support
1. Section 54.202 is added to subpart C to read as follows:
~ 54.202 Additional requirements for Commission designation of eligible telecommunications carriers.
(a) On or after the effective date of these rules, in order to be designated an eligible telecommunications
carrier under section 214(e)(6), any common carrier in its application must:
(1) (A) commit to provide service throughout its proposed designated service area to all customers making
a reasonable request for service. Each applicant shall certify that it will (1) provide service on a timely
basis to requesting customers within the applicant s service area where the applicant s network already
passes the potential customer s premises; and (2) provide service within a reasonable period of time, if
the potential customer is within the applicant's licensed service area but outside its existing network
coverage, if service can be provided at reasonable cost by (a) modifying or replacing the requesting
customer s equipment; (b) deploying a roof-mounted antenna or other equipment; ( c) adjusting the
nearest cell tower; (d) adjusting network or customer facilities; (e) reselling services from another
carrier s facilities to provide service; or (f) employing, leasing or constructing an additional cell site
cell extender, repeater, or other similar equipment; and
(B) submit a five-year plan that describes with specificity proposed improvements or upgrades to the
applicant's network on a wire center-by-wire center basis throughout its proposed designated service
area. Each applicant shall demonstrate how signal quality, coverage or capacity will improve due to
the receipt of high-cost support; the projected start date and completion date for each improvement and
the estimated amount of investment for each project that is funded by high-cost support; the specific
geographic areas where the improvements will be made; and the estimated population that will be
served as a result of the improvements, If an applicant believes that service improvements in a
particular wire center are not needed, it must explain its basis for this detennination and demonstrate
how funding will otherwise be used to further the provision of supported services in that area,
(2) demonstrate its ability to remain functional in emergency situations, including a demonstration that it
has a reasonable amount of back-up power to ensure functionality without an external power source, is
able to reroute traffic around damaged facilities, and is capable of managing traffic spikes resulting
from emergency situations.
(3) demonstrate that it will satisfy applicable consumer protection and service quality standards.
commitment by wireless applicants to comply with the Cellular Telecommunications and Internet
Association s Consumer Code for Wireless Service will satisfy this requirement. Other commitments
will be considered on a case-by-case basis.
(4) demonstrate that it offers a local usage plan comparable to the one offered by the incumbent LEC in the
service areas for which it seeks designation,
(5) certify that the carrier acknowledges that the Commission may require it to provide equal access to long
Federal Communications Commission FCC 05-
distance carriers in the event that no other eligible telecommunications carrier is providing equal access
within the service area.
(b) Any common carrier that has been designated under section 214( e)( 6) as an eligible telecommunications
carrier or that has submitted its application for designation under section 214( e)( 6) before the effective date
of these rules must submit the information required by paragraph (a) of this section no later than October 1
2006, as part of its annual reporting requirements under section 54.209,
(c) Public Interest Standard. Prior to designating an eligible telecommunications carrier pursuant to
section 214(e)(6), the Commission determine that such designation is in the public interest. In doing so, the
Commission shall consider the benefits of increased consumer choice, and the unique advantages and
disadvantages of the applicant's service offering. In instances where an eligible telecommunications carrier
applicant seeks designation below the study area level of a rural telephone company, the Commission shall
also conduct a creamskimming analysis that compares the population density of each wire center in which
the eligible telecommunications carrier applicant seeks designation against that of the wire centers in the
study area in which the eligible telecommunications carrier applicant does not seek designation. In its
creamskimming analysis, the Commission shall consider other factors, such as disaggregation of support
pursuant to ~ 54.315 by the incumbent local exchange carrier.
(d) A common carrier seeking designation as an eligible telecommunications carrier under section
214( e)( 6) for any part of tribal lands shall provide a copy of its petition to the affected tribal government
and tribal regulatory authority, as applicable, at the time it files its petition with the Federal
Communications Commission. In addition, the Commission shall send the relevant public notice seeking
comment on any petition for designation as an eligible telecommunications carrier on tribal lands, at the
time it is released, to the affected tribal government and tribal regulatory authority, as applicable, by
overnight express mail,
Section 54.209 is added to subpart C to read as follows:
~ 54.209 Annual reporting requirements for designated eligible telecommunications carriers.
(a) A common carrier designated under section 214(e)(6) as an eligible telecommunications carrier shall
provide:
(1) a progress report on its five-year service quality improvement plan, including maps detailing its
progress towards meeting its plan targets, an explanation of how much universal service support
was received and how it was used to improve signal quality, coverage, or capacity, and an
explanation regarding any network improvement targets that have not been fulfilled. The
information shall be submitted at the wire center level;
(2) detailed information on any outage, as thatterm is defined in 47 C,R. ~ 4,, of at least 30
minutes in duration for each service area in which an eligible telecommunications carrier is
designated for any facilities it owns, operates, leases, or otherwise utilizes that potentially affect (a)
at least ten percent of the end users served in a designated service area; or (D) a 911 special
facility, as defined in 47 c.F.R. ~ 4.5(e), Specifically, the eligible telecommunications carrier
annual report must include information detailing: (a) the date and time of onset of the outage; (b) a
brief description of the outage and its resolution; (c) the particular services affected; (d) the
geographic areas affected by the outage; (e) steps taken to prevent a similar situation in the future;
and (f) the number of customers affected,
Federal Communications Commission FCC 05-
(3) the number of requests for service from potential customers within the eligible telecommunications
carrier s service areas that were un:ful:filled during the past year. The carrier shall also detail how
it attempted to provide service to those potential customers, as set forth in 954.202(a)(1)(A);
(4) the number of complaints per 1 000 handsets or lines;
(5) certification that it is complying with applicable service quality standards and consumer protection
rules;
(6) certification that the carrier is able to function in emergency situations as set forth in
954.20 1 (a)(2);
(7) certification that the carrier is offering a local usage plan comparable to that offered by the
incumbent LEC in the relevant service areas; and
(8) certification that the carrier acknowledges that the Commission may require it to provide equal
access to long distance carriers in the event that no other eligible telecommunications carrier is
providing equal access within the service area,
(b) Filing deadlines. In order for a common carrier designated under section 2l4(e)(6) to continue to
receive support for Lhe following calendar year, or retain its eligible telecommwications carrier
designation, it must submit the annual reporting information in paragraph (a) no later than October 1
2006, and thereafter annually by October 1 of each year. Eligible telecommunications carriers that file
their reports after the October 1 deadline shall receive support pursuant to the following schedule:
(1) Eligible telecommunication cat-ners that file no later than January 1 of the subsequent year shall
receive support for the second, third and fourth quarters of the subsequent year.
(2) Eligible telecommunication carriers that file no later than April 1 of the subsequent year shall
receive support for the third and fourth quarters of the subsequent year.
(3) Eligible telecommunication carriers that file no later than July 1 of the subsequent year shall receive
support for the fourth quarter of the subsequent year.
Section 54.307 is amended by adding paragraph (d) to subpart D to read as follows:
~ 54.307 Support to a competitive eligible telecommunications carrier.
(a)-(c) * * * (unchanged)
(d) Newly designated eligible telecommunications carriers, Notwithstanding the deadlines in paragraph
(c) of this section, a carrier shall be eligible to receive support as of the effective date of its designation as
an eligible telecommunications carrier under section 214(e)(2) or (e)(6), provided that it submits the data
required pursuant to paragraph (b) of this section within 60 days of that effective date, Thereafter, the
eligible telecommunications carrier must submit the data required in paragraph (b) of this section pursuant
to the schedule in paragraph ( c).
Section 54.313 is amended by adding paragraph (d)(3)(vi) to subpart D to read as follows:
~ 54.313 State certification of support for non-rural carriers.
Federal Communications Commission FCC 05-
(a)-(d)(3)(v) * * * (unchanged)
(vi) Newly designated eligible telecommunications carriers. Notwithstanding the deadlines in paragraph
(d) of this section, a carrier shall be eligible to receive support pursuant to ~ 54.309 or ~ 54.311, whichever
is applicable, as of the effective date of its designation as an eligible telecommunications carrier under
section 214(e)(2) or (e)(6), provided that it files the certification described in paragraph (b) of this section
or the state commission files the certification described in paragraph (a) of this section within 60 days of
the effective date of the carrier s designation as an eligible telecommunications carrier, Thereafter, the
certification required by paragraphs (a) or (b) of this section must be submitted pursuant to the schedule in
paragraph (d).
Section 54.314 is amended by adding paragraph (d)(6) to subpart D to read as follows:
~ 54.314 State certification of support for rural carriers.
(a)-(d)(5) * * * (unchanged)
(6) (vi) Newly designated eligible telecommunications carriers. Notwithstanding the deadlines in
paragraph (d) of this section, a carrier shall be eligible to receive support pursuant to ~~54.301, 54.305, or
54.307 or part 36 subpart F of this chapter, whichever is applicable, as of the effective date of its
designation as an eligible telecommunications carrier under section 214(e)(2) or (e)(6), provided that it files
the certification described in paragraph (b) of this section or the state commission files the certification
described in paragraph (a) of this section within 60 days of the effective date of the carrier s designation as
an eligible telecommunications carrier. Thereafter, the certification required by paragraphs (a) or (b) of
this section must be submitted pursuant to the schedule in paragraph (d).6, Section 54,809 is amended by adding the last sentence to paragraph (c) to subpart D to read as
follows:
~ 54.809 Carrier certification.
(a)-(b) * * * (unchanged)
(c) Filing deadlines. In order for a price cap local exchange carrier or an eligible telecommunications
carrier serving lines in the service area of a price cap local exchange carrier to receive interstate access
universal service support, such carrier shall file an annual certification, as described in paragraph (b) of
this section, on the date that it first files its line count information pursuant to ~ 54.802, and thereafter on
June 30 of each year. Such carrier that files its line count infonnation after the June 30 deadline shall
receive support pursuant to the following schedule:
(I) Carriers that file no later than September 30 shall receive support for the fourth quarter of that year
and the first and second quarters of the subsequent year.
(2) Carriers that file no later than December 31 shall receive support for the first and second quarters
or the subsequent year.
(3) Carriers that file no later than March 31 orthe subsequent year shall receive support for the second
quarter of the subsequent year.
APPENDIX
Requirements for Eligible Telecommunications Carrier (ETq
Designation, Reporting, and Certification.
A. STATUTORY DESIGNATION REQUIREMENTS
All ETC applicants must follow the federal statutory requirements for ETC
designation. See 47 D.C. ~ 214(e)(I).
1. Common Carrier
The ETC applicant must be a "common carrier" as defined by 47 D.C. ~ 153(10).
2. Provide the Universal Services
The ETC applicant must demonstrate that it is capable of providing and will
continuously provide throughout its proposed service area the utUversal services set forth in 47
R. 9 54.101(a), either by using its own facilities or a combination of its own facilities and
resale of another carrier s services. See 47 U.C. g 214(e)(1)(A). These services include:
(a) Voice grade access to the public switched network;
(b) Local calling;
(c) Touch tone signaling or its functional equivalent;
Cd) Single-party service or its functional eqwvalent;
(e) Access to 911 emergency services where available;
(f) Access to operator services;
(g) Access to long-distance service;
(h) Access to directory assistance; and
0) Toll limitation service.
See 47 c.F.R. ~ 54.101(a).
3. Advertising
The ETC applicant must demonstrate that it will advertise the availability of its
universal service offering and the charges therefore using media of general distribution.
See
c. ~ 2i4(e)(1)(B).
Attachment B
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ORDER NO. 29841
CASE NO. WST-O5-
4. Public Interest
The ETC applicant must demonstrate that ETC designation is consistent with the
public interest, convenience, and, necessity; and, in the case , of an area served by a rural
telephone company, demonstrate that the public interest will be met by an additional designation.
5. Tribal Notification
An ETC applicant seeking ETC designation for any part of tribal lands shall provide
a copy of its application to the affected tribal government or tribal regulatory authority, as
applicable, at the time it files its application with the Commission. In addition, the COnu11ission
shall send the relevant public notice seeking comment on ariy petition for designation as an ETC
on tribal lands, at the time it is released, to the affected tribal government and tribal regulatory
authority, as applicable.
B. ADDITIONAL ELIGIBILITY REQUIREMENTS
, All ETC applicants in Idaho must also satisfy the following additional requirements
for ETC designation in Idaho. All ETCs previously designated by this Commission pursUant to
47 U.s.C. g 214(e)(2) must provide tillS infonnation by September 1,2006.
1. The Commitment and Ability to Provide Supported Sen'ices
The ETC applica . .Il: (a) provide service on a timely basis to
requesting Cl1stomers within the applicant's service area where the applicant's network already
passes the potential customer s premises; and (b) provide service within a reasonable period of
time, if the potential customer is within the applicant's licensed service area but outside its
existing network coverage, if service can be provided at reasonable cost by (i) modifying or
replacing the requesting customer s equipment; (ii) deploying roof~mounted antenna or other
equipment; (iii) adjusting the nearest cell tower; (iv) adjusting network or customer facilities; (v)
reselling services from another carrier s facilities to provide service; or (vi) employing, leasing
or constructing an additional cell site~ cell extender, repeater, or other similar equipment.
The ETC applicant must also submit a tv.;o-year network improveme11t plan that
oposed improvement or upgrades to the applicant's network lr~
. ;;~~J~J9JR~is throughout its proposed designated service area. Each applicant
c=""~=.~"".,, . -
:U:'ii~rffy;c:cov~ra:ge'Oro Pllt1.~~~t1~;:cc
;,;,~~;:,
e~jili';;
;~, the projected stfu-t date and completion date for each improvement and the
APPENDIX
PAGE 2
ORDER NO, 29841
CASE NO. WST-O5-
e sti'mat ed, amo Ufitq,jf.: In Ve stine n to i ot"ea c wpm) ec t: ill!iF 150m rldetP \))11 ~ltr gTI'-"co st"'s up port;: 1 th e s pee i fi c
geographic areas where the improvements will be made;C'm1a"fneIcestfmat:edL~PQP1!!la.tiQn.w1h~:kM'iJl('fi,
be"iserved\;'as'f~Ult2of;tlf~;fmpf6v'ements;j"'If an applicant believes that service improvements in
a particular wire center are not needed, it must explain its basis for this determination and
demonstrate how funding will otherwise be used to further the provision of supported services in
that area.
2. The Ability to Rcmain Functional in Emergencies
The ETC applicant must demonstrate that it has a reasonable amount of back-up
power to ensure functionality without an external power sourcef"ts5i~Me3t0"'Ef~1!011te:'1tafi1:c~aroundi;i,
damaged faci Ii ti es, an d,,~;,i~pahle'\'&~Fc;;m1lnaging6?;tramlt,~'spfke-S'!1Ttes-\T1ti'rrgrs:fr0m?1;,;'C:merg ene)i;:;~x:~
sit
3. A Commitment to Consumer Protection and Service
The ETC applicant must certify that it will comply with all applicable service quality
standards , and consumer protection roles.In addition. an wireless carriers seeking ETC
designation must agree to comply with the Cellular Telecommunications and Internet
Association s Consumer Code for Wireless Service ("CTIA Code
4. Description of the Local Usage Plans
The ETC applicant must provide '~dres~iip,!i,Q!ki,9.fc~
j~;:
J,QC~jnsageiEiplanS'i~iaQd a
'-~'
C"',c"""'b""
""""-'
description of the local usage planes) of the incumbent local exchange carrier (ILEC).
C. REPORTING REQUIREMENTS
Beginning on September 1, 2006, and every year thereafter, all carriers requesting
high-cost support must submit an annual report to the Commission.
1. Two-Year Network Improvement Plan and Progress Report
The annual report must include a progress report demonstrating what progress has
been made in the last year toward goals outlined in the most recent two-year network
improvement plan. The progress report must include maps detailing the ETC's progress towards
meeting its plan targets, an explanation of how much universal service support was received and
how it was used to improve signal quality, coverage, or capacity, and an expLanation regarding
any network i.rnprovement targets that have not been fulfilled. This infOl111ation should be
submitted at the wire center level, The annual report must also include a new t'vVo-year network
APPENDIX
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ORDER NO. 29&41
CASE NO. WST-O5-
improvement plan indica:ting plans for future investment. The two-year network improvement
plan mu,st provide the same infonnation required for ETC designation. See, infra Appendix B.l.
2. Outages
'The annual report must include detailed infonnation on any outage, as that term is
defined in. 47 C.R. ~ 4., of at least thirty (30) minutes in duration for each service area in
which an ETC is designated for any facilities it owns, operates, J eases or otheI"\\lise utilizes that
potentially affect (a) at least ten percent of .the end users served in a designated service area; or
(b) a 911 special facility, as defined in 47 C:F.R. ~ 4.5(e). Specifically, the annual report must
include information detailing: (a) the date and time of onset of the outage; (b) a brief description
of the , outage and its resolution; (c) the particular services affected; (d) the geographic areas
affected by the outage; (e) the steps taken to prevent a similar situation in the future; and (f) the
number of customers affected.
3. Unfulfilled Service Requests
The annual report must include the number of requests for service ITom potential
customers within the ETC's service areas that were unfulfilled in the previous year. The carrier
shan also detail how it attempted to provide service to those potential customers.
4. Customer Complaints
The annual report must include the number of complaints per 1 000 handsets or lines.
5. Service Quality and Consumer Protection Certification
The annual report must include certification that the ETC is complying with
applica:ble service quality standards and consumer protection rules.
6. Descriptions of the Applicant's local usage plan and that of the ILEC.
TI1e annual report must include a description of the ETC's local usage planes) and a
description ofthe ILEC's local usage planes).
D. CERTIFICATION REQUIREMENTS
In order to be eligible for federal USF funding in any given year, the carrier must
comply with the annual reporting requirements above. In addition, the carrier must certify to the
Commissjon that aU federal high-cost support provided to the carrier for service areas in Idaho
will be used only for tile provision, maintenance, and upgrading of facilities and services for
which the support waS intended.
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ORDER NO. 29841
CASE NO. WST-05~