[Federal Register Volume 63, Number 233 (Friday, December 4, 1998)]
[Rules and Regulations]
[Pages 67006-67010]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-32303]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Parts 54, 64 and 69
[CC Docket Nos. 97-21 and 96-45; FCC 98-206]
Changes to the Board of Directors of the National Exchange
Carrier Association, Inc., Federal-State Joint Board on Universal
Service
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: In this document, the Commission reconsiders its July 18, 1997
order to the extent that the Universal Service Worksheet (Worksheet)
attached to that order required universal service contributors to
report as end-user telecommunications revenues those revenues derived
from the provision of inside wiring maintenance. The Commission amends
of its rules to permit the Administrator of the federal universal
service support mechanisms to utilize Telecommunications Relay Services
Fund data to verify the accuracy of revenue information provided on the
Worksheet. The Commission also amends its rules to clarify that a
telecommunications carrier seeking reimbursement from the Administrator
may request that the amount of the discount afforded to that school or
library be applied either as an offset to the carrier's universal
service contribution obligation or reimbursed to the carrier from the
universal service support mechanisms.
EFFECTIVE DATE: January 4, 1999.
FOR FURTHER INFORMATION CONTACT: Lisa Boehley, Attorney, Common Carrier
Bureau, Accounting Policy Division, (202) 418-7400.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's
document released on November 17, 1998. The full text of this document
is available for public inspection during regular business hours in the
FCC Reference Center, Room 239, 1919 M Street, N.W., Washington, D.C.
20554.
Summary of Second Report and Order in CC Docket No. 97-21, Third
Order on Reconsideration in CC Docket No. 97-21 and Sixth Order on
Reconsideration in CC Docket No. 96-45
I. Introduction
1. In this Order, we reconsider the Commission's July 18, 1997
order to the extent that the Universal Service Worksheet attached as an
appendix to that order required universal service contributors to
report as end-user telecommunications revenues those revenues derived
from the provision of inside wiring maintenance. We also adopt
amendments to the Commission's Part 54 and Part 64 rules to permit the
Administrator of the federal universal service support mechanisms to
utilize Telecommunications Relay Services (TRS) Fund data to verify the
accuracy of revenue information provided on the Universal Service
Worksheet by contributors to the universal service support mechanisms.
In addition, we amend Secs. 54.515 of our rules to clarify that a
telecommunications carrier seeking reimbursement from the Administrator
for the provision of services to a school or library may request that
the amount of the discount afforded to that school or library be
applied either as an offset to the carrier's universal service
contribution obligation or reimbursed to the carrier from the universal
service support mechanisms. We find, however, that a carrier that fails
to remit its monthly universal service obligation is not entitled to
choose direct reimbursement under the universal service support
mechanism for schools and libraries. Rather, any support amounts owed
to such a carrier under the support mechanism for schools and libraries
must first be applied as an offset to the carrier's contribution
obligation.
II. Inside Wiring Maintenance
2. We reconsider the NECA Order, 62 FR 41294 (August 1, 1997), to
the extent that the Worksheet attached as an appendix to that order
required universal service contributors to include as end-user
telecommunications revenues those revenues derived from the provision
of inside wiring maintenance. We are persuaded by petitioners that the
provision of inside wiring maintenance does not constitute
``telecommunications'' or a ``telecommunications service'' and we
therefore conclude that revenues derived from this activity should not
be included as end-user telecommunications revenues on the Worksheet.
As the Commission stated in the Inside Wiring Order, 51 FR 44479
(December 10, 1986), inside wiring is severable from underlying common
carrier transmission services and includes all telephone plant located
on the customer's side of the demarcation point marking the end of the
telephone network.
3. We conclude that inside wiring maintenance--the maintenance of
telephone plant--does not constitute telecommunications or a
telecommunications service because it
[[Page 67007]]
does not involve the ``transmission'' of information. MCI, the only
party asking us to include in the universal service contribution base
revenues derived from the provision of inside wiring maintenance,
correctly points out that internal connections make possible the
transmission of information. Consistent with the rationale set forth in
the Inside Wiring Order, however, we note that inside wiring
maintenance does not itself constitute ``telecommunications'' as that
term is statutorily defined. MCI references language in paragraph 451
of the Universal Service Order, 62 FR 32862 (June 17, 1997), as support
for its proposition that the Commission has concluded, in the context
of defining eligible services for schools and libraries, that the
installation and maintenance of internal connections constitute
telecommunications services. Paragraph 451 and the surrounding
discussion make clear, however, that the Commission determined only
that the installation and maintenance of internal connections are among
the additional non-telecommunications services for which eligible
schools and libraries may receive discounts under section 254 of the
Act. Neither this paragraph, nor the surrounding discussion, support
MCI's assertion that the provision of inside wire maintenance
constitutes telecommunications as that term is defined by the statute.
4. This change relieving contributors of their obligation to report
as end-user telecommunications revenues those revenues derived from the
provision of inside wiring maintenance will become effective 30 days
after publication of this Order in the Federal Register. We note,
however, that contributors are not required to file another Worksheet
until March 31, 1999. Accordingly, we direct carriers to adjust the
1998 full-year data that they will report on the March 31, 1999
Worksheet to reflect this change starting from the effective date of
this Order.
III. The Use of TRS Data by the Universal Service Administrator
5. We amend Sec. 64.604(c)(4)(iii)(I) as proposed in the NECA II
Further Notice, 62 FR 47369 (September 9, 1997), to permit the use of
TRS data by the Administrator for purposes of verifying the accuracy of
information reported by contributors on the Universal Service
Worksheet. We conclude that authorizing the Administrator to use TRS
data for this purpose may assist the Administrator in monitoring
contributors' compliance with the universal service contribution
requirements by revealing potential inconsistencies between revenue
data reported on the TRS Fund Worksheet and revenue data reported on
the Universal Service Worksheet. As noted by NECA, the use of TRS data
for this purpose will provide a more efficient method of monitoring
contributors' compliance with the contribution requirements than if the
universal service Administrator were forced to rely on audits alone.
MCI, BellSouth, and NECA support the Commission's proposal to authorize
the use of TRS data for this purpose. No parties filed comments
opposing the Commission's proposal. We also amend Sec. 54.711(a) to
direct the TRS administrator to provide to the Administrator TRS data
so that the Administrator may verify the accuracy of information
reported by contributors on the Universal Service Worksheet. As an
outgrowth of our decision to authorize the Administrator to use TRS
data, we also amend Sec. 69.616 to ensure that the Administrator
exercises this authority in an equitable and non-discriminatory manner.
We direct the Administrator, in comparing the revenue data filed by
universal service contributors with that filed by TRS Fund
contributors, to undertake company-by-company comparisons for all
entities filing Universal Service Worksheets and TRS Fund Worksheets.
6. We also amend Sec. 54.711(b) as proposed in the NECA II Further
Notice to require the Administrator to keep confidential all TRS data
obtained from the Administrator of the TRS Fund, prohibit the
Administrator from using TRS data for purposes other than the
administration of federal universal service support mechanisms, and
prohibit the disclosure of TRS data in company-specific form unless
directed to do so by the Commission. We direct the Bureau to make
decisions regarding disclosure of company-specific information.
7. We agree with NECA that Sec. 54.711(b)'s prohibition on the
disclosure of company-specific information does not prohibit the
Administrator from releasing aggregate, non-company specific data. In
order to ensure that any report or document containing aggregate, non-
company-specific data does not, by virtue of the manner in which
particular data are organized, inadvertently reveal company-specific
information, we require the Administrator to obtain the approval of the
Bureau prior to release of such a report or document to persons outside
of the Commission.
8. BellSouth requests that the Commission declare all commercial
mobile radio service (CMRS) subscriber and financial data reported on
TRS and Universal Service Worksheets confidential data subject to
Exemption 4 of the Freedom of Information Act (FOIA). BellSouth asserts
that requiring each CMRS provider to request confidential treatment for
such data creates unnecessary paperwork for contributors and the
Commission. On March 4, 1998 and July 31, 1998, the Bureau announced
revisions to the Universal Service Worksheet. The revised Worksheet
provides a space for contributors to indicate that they wish to request
confidential treatment of the data contained on the Worksheet.
Contributors making such an election must certify that the information
contained on the Worksheet is privileged or confidential commercial or
financial information and that disclosure of such information would
likely cause substantial harm to the competitive position of the
company filing the Worksheet. If the Commission receives a request for,
or proposes disclosure of, the information contained on the Worksheet,
the carrier will be required to make the full showing required by our
rules. We anticipate that this revision will ease significantly the
paperwork burden on all contributors, not just CMRS providers.
Contributors to the TRS Fund shall continue to comply with Secs. 0.459
and 0.461 of the Commission's rules in order to request confidential
treatment of the revenue data reported on the TRS Worksheet. We do not
believe that this poses a substantial burden on TRS contributors,
because the TRS Worksheet, unlike the Universal Service Worksheet, is
filed only annually, rather than semi-annually.
9. The Bureau will make the initial decision regarding disclosure
of company-specific information derived from the Universal Service
Worksheet or from the TRS Administrator. In the event that it directs
disclosure of data for which confidential treatment was requested by
the contributor, the Bureau will follow the procedures specified in
Secs. 0.459 and 0.461 of the Commission's rules. Accordingly, the
company will be given an opportunity to file an application for review
by the Commission of any decision to release assertedly confidential
data and, if it is denied, to seek a judicial stay before any
assertedly confidential information is released. Consequently, we do
not find it necessary to conclude that all CMRS subscriber and
financial data reported on the Worksheets are confidential.
10. BellSouth also asserts that the release of company-specific
CMRS subscriber and revenue data should be prohibited under any
circumstances and maintains that the Commission should be precluded
from releasing such
[[Page 67008]]
information. Although we recognize the competitively sensitive nature
of the CMRS data in question, we decline to foreclose altogether the
Commission's or the Bureau's ability to disclose or direct the
disclosure of company-specific subscriber or revenue data reported for
purposes of determining TRS or universal service contributions. The
Commission has no present intention to disclose company-specific
subscriber or revenue data and, absent substantial justification, does
not anticipate disclosing or directing the disclosure of such data. In
view of the possibility, however, that an occasion may arise in which
the Commission or the Bureau determines that disclosure would be in the
public interest (e.g., in the context of an action brought against a
contributor to enforce the contribution requirements, or after a long
delay so that financial information would no longer be competitively
sensitive), and the safeguards provided by Secs. 0.459 and 0.461 of our
rules, we decline to amend our rules to preclude the disclosure of
company-specific subscriber or revenue data under any circumstances.
IV. Offset Versus Reimbursement
11. In light of the inconsistency that USAC has brought to our
attention between paragraph 586 of the Universal Service Order and
Sec. 54.515 of the Commission's rules, we conform Sec. 54.515 to the
text of paragraph 586 of the Universal Service Order by adopting the
amendments reflected below. As amended, a telecommunications carrier
applying for support under Sec. 54.515 for services provided to an
eligible school or library either may apply the amount of the discount
afforded to a school or library as an offset to its universal service
contribution obligation or be reimbursed for that amount from the
universal service support mechanisms. We further find, however, that
the statute does not provide carriers participating in the support
mechanism for schools and libraries with an unconditional right to
select between offset and direct reimbursement. As USAC explains in its
September 16, 1998 letter, it may be costly and administratively
burdensome if USAC is asked to alter on a frequent basis the method by
which a carrier is reimbursed. We therefore require carriers that are
owed support under the universal service support mechanism for schools
and libraries to elect on an annual basis the method by which they will
receive payment. Such carriers shall elect a payment method in January
of each year and shall remain subject to that method for the duration
of the calendar year.
12. Additionally, consistent with USAC's July 31, 1998 letter, we
find that any support amount that is owed to a carrier participating in
the support mechanism for schools and libraries that fails to remit its
monthly universal service obligation must first be applied as an offset
to that carrier's contribution obligation. Thus, a carrier
participating in the support mechanism for schools and libraries that
has failed to make its required contribution to universal service in a
given month is entitled to receive direct reimbursement from the
universal service support mechanisms only to the extent that the amount
owed the carrier under the schools and libraries support mechanism
exceeds the amount of the carrier's total universal service obligation.
We find that this decision is reasonable because, to the extent that a
carrier is in arrears on its universal service obligations, it has
already effectively chosen an offset method of compensation. We are
persuaded that requiring the use of an offsetting procedure as
described above for a carrier that fails to make timely contributions
serves the public interest by ensuring an appropriate universal service
fund and minimizing the need for costly and time-consuming enforcement
actions. Consistent with USAC's recommendation in its September 16,
1998 letter, carriers that are in arrears on their universal service
contribution obligations will remain subject to the offsetting method
for the remainder of the calendar year in which they failed to remit
their monthly universal service obligation. A carrier with an
outstanding balance at the end of a calendar year shall remain subject
to the offsetting method for the next calendar year. A carrier that has
been subject to this mandatory offsetting procedure by USAC but that
disputes its contribution obligation may bring this matter to the
attention of the Commission through a request for declaratory ruling.
V. Final Regulatory Flexibility Certification
13. The Regulatory Flexibility Act (RFA) requires that a regulatory
flexibility analysis be prepared for notice-and-comment rulemaking
proceedings, unless the agency certifies that ``the rule will not, if
promulgated, have a significant economic impact on a substantial number
of small entities.'' The RFA generally defines ``small entity'' as
having the same meaning as the terms ``small business,'' ``small
organization,'' and ``small governmental jurisdiction.'' In addition,
the term ``small business'' has the same meaning as the term ``small
business concern'' under the Small Business Act. A small business
concern is one which: (1) is independently owned and operated; (2) is
not dominant in its field of operation; and (3) satisfies any
additional criteria established by the Small Business Administration
(SBA).
14. In the NECA II Further Notice, the Commission certified,
pursuant to Sec. 605(b) of the RFA, that the proposed rule amendments
attached thereto, which would permit the Administrator to use TRS data
to verify the accuracy of data provided on the Universal Service
Worksheet, would not have a significant economic impact on a
substantial number of small entities. The Commission did not receive
any comments on this tentative conclusion. The rules adopted in this
order permit the Administrator to use TRS data to verify the accuracy
of data provided by universal service contributors on the Worksheet.
This Order therefore permits the transfer of already collected data.
This exchange of information will enable the Administrator to verify
the accuracy of universal service data, thus ensuring the sufficiency
of the universal service support mechanisms. We conclude that the rules
adopted in this order regarding the use of TRS data will not have a
significant economic impact on small entities.
15. We find that our amendment to Sec. 54.515, which clarifies that
telecommunications carriers seeking reimbursement for the provision of
services to a school or library may request either that the
reimbursement amount be applied as an offset to the carrier's universal
service contribution obligation or that it receive direct reimbursement
from the universal service support mechanisms, will not have a
significant economic impact on small entities. This amendment will
provide telecommunications carriers providing services to schools and
libraries with flexibility in structuring the manner in which they will
be reimbursed. Additionally, we do not believe that small entities will
experience a significant economic impact due to our determination that
any support amount owed to a carrier that fails to remit its monthly
universal service obligation should first be applied as an offset
against that carrier's contribution obligation. We find that, to the
extent that a carrier is in arrears on its universal service
obligations, it has already effectively chosen an offset method of
compensation. We also find that requiring carriers to select a
reimbursement method on an annual basis, or be subject to mandatory
offset for the remainder of the year during which they failed to pay
their universal
[[Page 67009]]
service contribution obligation, will not have a significant economic
impact on small entities. Rather, we find that allowing carriers to
elect annually the method by which they will be reimbursed provides
carriers with a reasonable degree of flexibility in structuring their
operations. Furthermore, we find that requiring nonpaying carriers to
accept the offsetting procedure for the remainder of the calendar year
in which they failed to pay their universal service contributions is
reasonable in light of the need to establish a reliable payment history
on the part of such carriers and to maintain the certainty and
sufficiency of the universal service support mechanisms.
16. We also conclude that our determination in this Order to
eliminate the requirement that contributors report as end-user
telecommunications revenues those revenues derived from the provision
of inside wiring maintenance will not have a significant economic
impact on small entities. In fact, this determination will lessen
contributors' reporting requirements and may lessen the contribution
amount of some contributors.
VI. Ordering Clauses
17. Accordingly, it is ordered that, pursuant to the authority
contained in Sec. 1-4, 201-205, 254, and 405 of the Communications Act
of 1934, as amended, 47 U.S.C. 151-154, 201-205, 254, and 405 and
Sec. 553 of the Administrative Procedure Act, 5 U.S.C. 553, the
adoption of this Second Report and Order, Third Order on
Reconsideration, and Sixth Order on Reconsideration is effective
January 4, 1999.
18. It is further ordered that the amendments to parts 54, 64, and
69 of the Commission's rules are effective January 4, 1999.
List of Subjects
47 CFR Part 54
Healthcare providers, Libraries, Reporting and recordkeeping
requirements, Schools, Telecommunications, Telephone.
47 CFR Part 64
Communications common carriers.
47 CFR Part 69
Communications common carriers, Reporting and recordkeeping
requirements, Telephone.
Federal Communications Commission.
Magalie Roman Salas,
Secretary.
Rule Changes
Parts 54, 64, and 69 of Title 47 of the Code of Federal Regulations
are amended as follows:
PART 54--UNIVERSAL SERVICE
1. The authority citation for part 54 continues to read as follows:
Authority: 47 U.S.C. 1, 4(i), 201, 205, 214, and 254 unless
otherwise noted.
2. Section 54.515 is amended by revising paragraphs (a) and (b) and
removing paragraphs (c) and (d).
Sec. 54.515 Distributing support.
(a) A telecommunications carrier providing services eligible for
support under this subpart to eligible schools and libraries may, at
the election of the carrier, treat the amount eligible for support
under this subpart as an offset against the carrier's universal service
contribution obligation for the year in which the costs for providing
eligible services were incurred or receive a direct reimbursement from
the Administrator for that amount. Carriers shall elect in January of
each year the method by which they will be reimbursed and shall remain
subject to that method for the duration of the calendar year. Any
support amount that is owed a carrier that fails to remit its monthly
universal service contribution obligation, however, shall first be
applied as an offset to that carrier's contribution obligation. Such a
carrier shall remain subject to the offsetting method for the remainder
of the calendar year in which it failed to remit their monthly
universal service obligation. A carrier that continues to be in arrears
on its universal service contribution obligations at the end of a
calendar year shall remain subject to the offsetting method for the
next calendar year.
(b) If a telecommunications carrier elects to treat the amount
eligible for support under this subpart as an offset against the
carrier's universal service contribution obligation and the total
amount of support owed to the carrier exceeds its universal service
obligation, calculated on an annual basis, the carrier shall receive a
direct reimbursement in the amount of the difference. Any such
reimbursement due a carrier shall be submitted to that carrier no later
than the end of the first quarter of the calendar year following the
year in which the costs were incurred and the offset against the
carrier's universal service obligation was applied.
3. Section 54.711 is amended by revising paragraphs (a) and (b) to
read as follows:
Sec. 54.711 Contributor reporting requirements.
(a) Contributions shall be calculated and filed in accordance with
the Universal Service Worksheet. The Universal Service Worksheet sets
forth information that the contributor must submit to the Administrator
on a semi-annual basis. The Commission shall announce by Public Notice
published in the Federal Register and on its website the manner of
payment and dates by which payments must be made. An officer of the
contributor must certify to the truth and accuracy of the Universal
Service Worksheet, and the Commission or the Administrator may verify
any information contained in the Universal Service Worksheet at the
discretion of the Commission. The administrator of the
Telecommunications Relay Service Fund shall provide data reported on
the Telecommunications Relay Service Worksheet to the Administrator so
that the Administrator may verify information contained in the
Universal Service Worksheet. Inaccurate or untruthful information
contained in the Universal Service Worksheet may lead to prosecution
under the criminal provisions of Title 18 of the United States Code.
The Administrator shall advise the Commission of any enforcement issues
that arise and provide any suggested response.
(b) The Commission shall have access to all data reported to the
Administrator, Rural Health Care Corporation, and Schools and Libraries
Corporation. Contributors may make requests for Commission
nondisclosure of company-specific information by so indicating on the
Universal Service Worksheet. The Commission shall make all decisions
regarding nondisclosure of company-specific information. The
Administrator, Rural Health Care Corporation, and Schools and Libraries
Corporation shall keep confidential all data obtained from
contributors, including all data obtained from the administrator of the
Telecommunications Relay Service Fund, shall not use such data except
for purposes of administering the universal service support programs,
and shall not disclose such data in company-specific form unless
directed to do so by the Commission.
* * * * *
[[Page 67010]]
PART 64--MISCELLANEOUS RULES RELATING TO COMMON CARRIERS
4. The authority citation for part 64 continues to read as follows:
Authority: 47 U.S.C. 154, 201, 202, 203, 205, 218, 220, 254, and
403 unless otherwise noted.
5. Section 64.604 is amended by revising paragraph (c)(4)(iii)(I)
to read as follows:
Sec. 64.604 Mandatory minimum standards.
* * * * *
(c) * * *
(4) * * *
(iii) * * *
(I) Information filed with the administrator. The administrator
shall keep all data obtained from contributors and TRS providers
confidential and shall not disclose such data in company-specific form
unless directed to do so by the Commission. The administrator shall not
use such data except for purposes of administering the TRS Fund,
enabling the universal service Administrator to verify revenue
information provided by contributors to those mechanisms, calculating
the regulatory fees of interstate common carriers, and aggregating such
fee payments for submission to the Commission. The Commission shall
have access to all data reported to the administrator, and shall have
the authority to audit TRS providers.
* * * * *
PART 69--ACCESS CHARGES
6. Section 69.616 is amended by adding paragraph (e) as follows:
Sec. 69.616 Independent subsidiary functions.
* * * * *
(e) Pursuant to its responsibility for billing and collecting
contributions, the independent subsidiary shall compare periodically
information collected by the Administrator of the TRS Fund from TRS
Fund Worksheets with information submitted by contributors on Universal
Service Worksheets in order to verify the accuracy of information
submitted on Universal Service Worksheets. When performing a comparison
of contributor information as provided by this subsection, the
independent subsidiary must undertake company-by-company comparisons
for all entities filing Universal Service and TRS Fund Worksheets.
[FR Doc. 98-32303 Filed 12-3-98; 8:45 am]
BILLING CODE 6712-01-P
