[November 11, 2009] High-Cost Universal Service Support Tweet Nov 11, 2009 (Federal Communications Commission Documents and Publications/ContentWorks via COMTEX) -- SUMMARY: In this notice of proposed rulemaking, the Commission addresses the effect of line loss on universal service Local Switching Support (LSS) received by incumbent local exchange carriers (LECs) that are designated as eligible telecommunications carriers (ETCs). Pursuant to the LSS mechanism, an incumbent LEC ETC serving 50,000 or fewer lines in a study area may recover a portion of its switching costs from the universal service fund. Under the Commission's rules, as an incumbent LEC ETC's access lines increase above certain thresholds, the amount of LSS it may receive decreases, but its support does not increase if its number of access lines falls below the same thresholds. In this notice of proposed rulemaking, the Commission tentatively concludes that the LSS rules should be modified to permit incumbent LEC ETCs that lose lines to increase their LSS, and we seek comment on these proposed rule changes. EFFECTIVE DATE: Comments are due on or before November 24, 2009 and reply comments are due on or before December 1, 2009. ADDRESSES: You may submit comments, identified by WC Docket No. 05-337, by any of the following methods: * Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments. * Federal Communications Commission's Web Site: http://www.fcc.gov/cgb/ecfs/. Follow the instructions for submitting comments. * E-mail: [email protected], and include the following words in the body of the message, "get form." A sample form and directions will be sent in response. Include the docket number in the subject line of the message. * Mail: Secretary, Federal Communications Commission, 445 12th Street, SW., Washington, DC 20554. * People With Disabilities: Contact the FCC to request reasonable accommodations (accessible format documents, sign language interpreters, CART, etc.) by e-mail: [email protected] or phone: 202-418-0530 or TTY: 202-418-0432. For detailed instructions for submitting comments and additional information on the rulemaking process, see the SUPPLEMENTARY INFORMATION section of this document. FOR FURTHER INFORMATION CONTACT: Ted Burmeister, Wireline Competition Bureau, Telecommunications Access Policy Division, 202-418-7389 or TTY: 202-418-0484. SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's Notice of Proposed Rulemaking in WC Docket No. 05-337, FCC 09-89, adopted October 2, 2009, and released October 9, 2009. The complete text of this document is available for inspection and copying during normal business hours in the FCC Reference Information Center, Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC 20554. The document may also be purchased from the Commission's duplicating contractor, Best Copy and Printing, Inc., 445 12th Street, SW., Room CY-B402, Washington, DC 20554, telephone (800) 378-3160 or (202) 863-2893, facsimile (202) 863-2898, or via e-mail at: http://www.bcpiweb.com. It is also available on the Commission's Web site at: http://www.fcc.gov. Initial Paperwork Reduction Act of 1995 Analysis This notice of proposed rulemaking does not contain new, modified, or proposed information collections subject to the Paperwork Reduction Act of 1995. In addition, therefore, it does not contain any new, modified, or proposed "information collection burden for small business concerns with fewer than 25 employees" pursuant to the Small Business Paperwork Relief Act of 2002. Synopsis of the Notice of Proposed Rulemaking Introduction 1. In this order and notice of proposed rulemaking, the Commission addresses the effect of line loss on universal service Local Switching Support (LSS) received by incumbent local exchange carriers (LECs) that are designated as eligible telecommunications carriers (ETCs). Pursuant to the LSS mechanism, an incumbent LEC ETC serving 50,000 or fewer lines in a study area may recover a portion of its switching costs from the universal service fund. 47 CFR 54.301. Under the Commission's rules, as an incumbent LEC ETC's access lines increase above certain thresholds, the amount of LSS it may receive decreases. 47 CFR 36.125, 54.301. In the order portion of this item, the Commission denies the Coalition for Equity in Switching Support's (Coalition's) petition seeking clarification that the Commission's rules also allow an incumbent LEC ETC's LSS to increase if the carrier's access lines decrease below those thresholds. As described below, the Commission finds no basis in the rules or the record of the Commission's proceedings to support the clarification the Coalition seeks. In the notice of proposed rulemaking portion of this item, however, the Commission tentatively concludes that the LSS rules should be modified to permit incumbent LEC ETCs that lose lines to increase their LSS, and the Commission seeks comment on these proposed rule changes. Background 2. Pursuant to the Commission's jurisdictional separations rules, See 47 CFR 36.1 et seq., incumbent LECs apportion their switching costs to the interstate jurisdiction based on the ratio of interstate dial equipment minutes of use (DEM) to total DEM. 47 CFR 36.125(f). The incumbent LECs then recover their interstate switching costs through interstate tariffs, and recover the remaining intrastate switching costs as provided by the relevant state ratemaking authority. Incumbent LECs serving 50,000 access lines or fewer are permitted to allocate a higher portion of their switching costs to the interstate jurisdiction. 47 CFR 36.125(f), (j). The precise amount of the extra allocation depends on a weighting factor determined by the number of access lines served by the incumbent LEC, with key thresholds established at 10,000, 20,000, and 50,000 lines. See 47 CFR 36.125(f). A smaller DEM weighting factor allowed fewer switching costs to be recovered through interstate access charges and a larger DEM weighting factor allowed more switching costs to be recovered through interstate access charges. Prior to 1998, the costs allocated to the interstate jurisdiction, including the higher portion allocated pursuant to DEM weighting, were recovered through interstate access charges. 3. In the Universal Service First Report and Order, the Commission determined that recovering switching costs allocated based on the weighted DEM factor through interstate access charges constituted an implicit support mechanism disfavored by Congress when it adopted the Telecommunications Act of 1996. Telecommunications Act of 1996, Public Law 104-104, 110 Stat. 56 (1996). Accordingly, the Commission created LSS, which explicitly supports the additional switching costs allocated to the interstate jurisdiction through the universal service fund. Universal Service First Report and Order, 62 FR 32861. LSS retained DEM weighting as the method of calculating switching support with minor modifications. Specifically relevant to the discussion below, the Commission adopted the rule, now codified in nearly identical language at both SEC 36.125(j) (governing the allocation of switching costs) and SEC 54.301 (LSS), that "if * * * the number of a study area's access lines increased or will increase such that * * * the weighting factor would be reduced, that lower weighting factor shall be applied to the study area's 1996 unweighted interstate DEM factor to derive a new local switching support factor." 47 CFR 36.125(j). Under this rule section, if an incumbent LEC ETC's access lines exceeded the relevant threshold, the DEM weighting factor would decrease and this would also decrease the amount of LSS received by the incumbent LEC ETC. 4. In the 2001 Separations Freeze Order, the Commission froze the jurisdictional allocation factors used by incumbent LECs, while it considered comprehensive jurisdictional separations reform. Separations Freeze Order, 66 FR 33202. It codified the extension by adding effective dates, ending June 30, 2006, to each of the relevant rules. In 2006, the Commission adopted the Separations Freeze Extension Order, extending the effective date of the freeze to June 30, 2009, or upon completion of comprehensive jurisdictional separations reform, whichever occurred earlier. 2006 Separations Freeze Extension Order, 71 FR 29882. Recently, the Commission adopted an order extending the freeze again, to June 30, 2010. 2009 Separations Freeze Extension Order, 74 FR 23956. 5. Coalition for Equity in Switching Support Petition. The Coalition contends that there is no clear evidence of the Commission's intent to create a "one-way rule" that would limit the amount of LSS available to an incumbent LEC ETC if its number of access lines increased, but would not correspondingly increase its amount of LSS if its access lines decreased, and that the rules themselves are silent on the treatment of carriers that experience declining line counts. The Coalition argues that its proposed clarification, or in the alternative, an amendment to the Commission's rules, is necessary to provide incumbent LEC ETCs the level of support consistent with the rationale for LSS, thereby avoiding hardship to those carriers and inconsistent treatment of those carriers as compared to other carriers of similar size. Citing the Universal Service First Report and Order, the Coalition argues that the Commission has recognized that "rural carriers generally serve fewer subscribers, serve more sparsely populated areas, and do not generally benefit [as much] from economies of scale and scope." The Coalition maintains that the one-way rule prevents some small incumbent LEC ETCs from receiving the full amount of LSS intended by the Commission when it adopted the rule. --This is a summary of a Federal Register article originally published on the page number listed below-- Notice of proposed rulemaking. CFR Part: "47 CFR Parts 36 and 54" Citation: "74 FR 57980" Document Number: "WC Docket No. 05-337; FCC 09-89" Federal Register Page Number: "57980" "Proposed Rules" [ Back To TMCnet.com's Homepage ]