83_FR_18014 83 FR 17934 - Connect America Fund; Universal Service Reform-Mobility Fund

83 FR 17934 - Connect America Fund; Universal Service Reform-Mobility Fund

FEDERAL COMMUNICATIONS COMMISSION

Federal Register Volume 83, Issue 80 (April 25, 2018)

Page Range17934-17942
FR Document2018-08689

In this document, the Federal Communications Commission (Commission) resolves the remaining petitions for reconsideration regarding the requirements for Mobility Fund Phase II (MF-II). The Commission revises the language of its rule for collocation, and reduces the value of the letter of credit that a Mobility Fund Phase II support recipient is required to hold after the Universal Service Administration Company (USAC), together with the Commission, has verified that the MF-II support recipient has achieved significant progress toward completing their buildout and service provision requirements. The Commission affirms its Mobility Fund Phase II rules in all other respects.

Federal Register, Volume 83 Issue 80 (Wednesday, April 25, 2018)
[Federal Register Volume 83, Number 80 (Wednesday, April 25, 2018)]
[Rules and Regulations]
[Pages 17934-17942]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-08689]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[WC Docket No. 10-90, WT Docket No. 10-208; FCC 18-19]


Connect America Fund; Universal Service Reform--Mobility Fund

AGENCY: Federal Communications Commission.

ACTION: Final rule; petition for reconsideration.

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SUMMARY: In this document, the Federal Communications Commission 
(Commission) resolves the remaining petitions for reconsideration 
regarding the requirements for Mobility Fund Phase II (MF-II). The 
Commission revises the language of its rule for collocation, and 
reduces the value of the letter of credit that a Mobility Fund Phase II 
support recipient is required to hold after the Universal Service 
Administration Company (USAC), together with the Commission, has 
verified that the MF-II support recipient has achieved significant 
progress toward completing their buildout and service provision 
requirements. The Commission affirms its Mobility Fund Phase II rules 
in all other respects.

DATES: Effective May 25, 2018, except for the amendment to Sec.  
54.1016 (a)(1)(ii), which contains information collection requirements 
that have not been approved by OMB. The Commission will publish a 
document in the Federal Register announcing the effective date.

FOR FURTHER INFORMATION CONTACT: Wireless Telecommunications Bureau, 
Auction and Spectrum Access Division, Audra Hale-Maddox, at (202) 418-
0660. For further information concerning the Paperwork Reduction Act 
information collection requirements contained in this document, contact 
Cathy Williams at (202) 418-2918 or via the internet at [email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Second 
Order on Reconsideration (MF-II Second Order on Reconsideration), WC 
Docket No. 10-90, WT Docket No. 10-208; FCC 18-19, adopted on February 
22, 2018 and released on February 27, 2018. The complete text of this 
document is available for public

[[Page 17935]]

inspection and copying from 8:00 a.m. to 4:30 p.m. Eastern Time (ET) 
Monday through Thursday or from 8 a.m. to 11:30 a.m. ET on Fridays in 
the FCC Reference Information Center, 445 12th Street SW, Room CY-A257, 
Washington, DC 20554. The complete text is also available on the 
Commission's website at http://transition.fcc.gov/Daily_Releases/Daily_Business/2017/db0804/FCC-17-102A1.pdf. Alternative formats are 
available to persons with disabilities by sending an email to 
[email protected] or by calling the Consumer & Governmental Affairs Bureau 
at (202) 418-0530 (voice), (202) 418-0432 (TTY).

Regulatory Flexibility Analysis

    As required by the Regulatory Flexibility Act of 1980, the 
Commission has prepared a Supplemental Final Regulatory Flexibility 
Analysis (FRFA) of the possible significant economic impact on small 
entities of the policies and rules adopted in this document. The 
Supplemental FRFA is set forth in an appendix to the MF-II Second Order 
on Reconsideration, and is summarized below. The Commission's Consumer 
and Governmental Affairs Bureau, Reference Information Center, will 
send a copy of this MF-II Second Order on Reconsideration, including 
the Supplemental FRFA, to the Chief Counsel for Advocacy of the Small 
Business Administration (SBA).

Paperwork Reduction Act

    The MF-II Second Order on Reconsideration contains new and modified 
information 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 will be 
invited to comment on the new and modified information collection 
requirements contained in this proceeding.

Congressional Review Act

    The Commission will send a copy of this MF-II Second Order on 
Reconsideration in a report to Congress and the Government 
Accountability Office pursuant to the Congressional Review Act (CRA), 
see 5 U.S.C. 801(a)(1)(A).

I. Introduction

    1. In the MF-II Second Order on Reconsideration, the Commission 
addresses the remaining issues raised in petitions for reconsideration 
filed in response to the MF-II Report & Order, 82 FR 15422, March 28, 
2017. Resolving these petitions is a significant step toward holding an 
auction in which service providers will compete for Mobility Fund Phase 
II (MF-II) support to offer 4G Long Term Evolution (LTE) service in 
primarily rural areas that lack qualified unsubsidized 4G LTE service.

II. Background

    2. In February 2017, the Commission adopted rules to move forward 
expeditiously to an MF-II auction. The Commission established a budget 
of $4.53 billion to be disbursed monthly over a term of ten years to 
provide ongoing support for the provision of service in areas that lack 
adequate mobile voice and broadband coverage absent subsidies. The 
Commission further decided that geographic areas lacking unsubsidized, 
qualified 4G LTE service would be deemed ``eligible areas'' for MF-II 
support, and that it would use a competitive bidding process 
(specifically, a reverse auction) to distribute funding to providers to 
serve those areas. The Commission also decided that, prior to an MF-II 
auction, it would compile a list of areas that were presumptively 
eligible for MF-II support and it would provide a limited timeframe for 
challenges to areas that were found to be ineligible for support during 
the pre-auction process.
    3. Seven petitions were filed seeking reconsideration of the MF-II 
Report & Order, and petitions for reconsideration of issues related to 
the MF-II challenge process were addressed in the MF-II Challenge 
Process Order on Reconsideration and Second Report and Order (MF-II 
Challenge Process Order or MF-II Order on Reconsideration), adopted on 
August 3, 2017, released on August 4, 2017, 82 FR 42473, September 8, 
2017. The Commission deferred addressing the petitions, or portions 
thereof, requesting reconsideration of aspects of the MF-II Report & 
Order outside of the challenge process.

III. Second Order on Reconsideration

    4. We now resolve the remaining issues raised by petitioners. We 
grant the requests of petitioners, insofar as we amend the rules to 
apply the collocation requirement for MF-II recipients to ``all newly 
constructed'' towers. We affirm our decision to require that MF-II 
recipients obtain a letter of credit (LOC), but grant the petitions 
insofar as we modify the LOC requirements to align our MF-II rules with 
recent changes made in the Connect America Fund Phase II (CAF-II) 
proceeding. These modifications should provide MF-II support recipients 
with some additional relief from the costs of maintaining an LOC and 
alleviate some of the concerns raised by petitioners and commenters. 
Additionally, for the reasons explained below, we deny the petitions 
seeking reconsideration of the Commission's decisions to: (i) Establish 
an MF-II budget of $4.53 billion over a term of ten years; (ii) 
disburse annual support on a monthly basis; (iii) adopt performance 
metrics for supported networks requiring a median data speed of 10/1 
megabits per second (Mbps) and data latency of 100 milliseconds (ms) 
round trip; (iv) not adopt bidding credits for the auction; and (v) not 
prevent MF-II support recipients from entering into equipment 
exclusivity arrangements. We also decline to clarify or limit the role 
of the Universal Service Administrative Company (USAC) in testing 
winning bidders' compliance with MF-II performance metrics, public 
interest obligations, or other program requirements.

A. Tower Collocation

    5. First, we clarify that the MF-II collocation rule, 47 CFR 
54.1015(f), should require a recipient of MF-II funds to allow for 
reasonable collocation by other providers of services that meet the 
technological requirements of MF-II on all towers that the MF-II 
recipient owns or manages that it ``newly constructed'' to satisfy MF-
II performance obligations in the areas for which it receives support. 
The Commission stated its intent to adopt the same collocation and 
voice and data roaming obligations for MF-II winning bidders as it had 
adopted for MF-I. However, the rule in MF-I required reasonable 
collocation by other providers of services that met the technological 
requirements of MF-I on ``all newly constructed towers that the 
recipient owns or manages in the area for which it receives support,'' 
while the language of the rule adopted in the MF-II Report & Order 
applies to ``all towers.'' We make this clarification in order to 
promote our goal of ensuring that publicly funded investments can be 
leveraged by other service providers. Accordingly, we amend the 
language of section 54.1015(f) to provide that the MF-II collocation 
requirement applies to ``all newly constructed'' towers that the MF-II 
recipient owns or manages in the areas for which it receives support.

B. Letters of Credit

    6. We affirm the Commission's decision to require an MF-II 
recipient to obtain an LOC before it begins receiving support 
disbursements, but we modify the Commission's rules to provide some 
additional relief from the burden

[[Page 17936]]

associated with maintaining an LOC. Specifically, we will permit an MF-
II recipient to reduce the value of an LOC to 60 percent of the total 
support already disbursed plus the amount of support that will be 
disbursed in the coming year once it has been verified that the MF-II 
recipient has met the 80 percent service milestone for the area(s) 
covered by the LOC. This modification should alleviate some of the 
concerns raised by petitioners and commenters and aligns our MF-II 
requirements with recent changes made to the CAF-II requirements. We 
also clarify, consistent with the Commission's stated intent in the MF-
II Report & Order, that an MF-II recipient may further reduce its costs 
by canceling the LOC as soon as USAC, in coordination with the 
Commission, verifies that the recipient has met the final performance 
milestone (i.e., we do not require that the LOC be maintained after its 
purpose is no longer served). We deny the petitions for reconsideration 
to the extent they seek other changes to our LOC requirements.
    7. In the MF-II Report & Order, the Commission adopted an LOC 
requirement for all winning bidders. Specifically, before a winning 
bidder can be authorized to receive MF-II support, it must obtain an 
irrevocable stand-by LOC(s) from an eligible bank that covers the first 
year of support for all of the winning bids in the state. Before a 
recipient can receive its MF-II support for the coming year, the 
recipient must modify, renew, or obtain a new LOC to ensure that it is 
valued at a minimum at the total amount of support that has already 
been disbursed plus the amount of support that is going to be provided 
in the next year. Once the MF-II recipient has met its 60 percent 
service milestone, its LOC may be valued at 90 percent of the total 
support amount already disbursed plus the amount that will be disbursed 
in the coming year. Once the MF-II recipient has met its 80 percent 
service milestone, it may reduce the value of the LOC to 80 percent of 
the total support amount already disbursed plus the amount that will be 
disbursed in the coming year. The LOC must remain open until USAC, in 
coordination with the Commission, has verified that the MF-II recipient 
has met its final benchmark: Deployment to a minimum of 85 percent of 
the required coverage area by state and at least 75 percent by each 
census block group or census tract in a state. If an MF-II recipient 
fails to meet a required service milestone after it begins receiving 
support, then fails to cure within the requisite time period, and is 
unable to repay the support that USAC seeks to recover, either the 
Wireline Competition Bureau or the Wireless Telecommunications Bureau 
will issue a letter evidencing the failure and declaring a default. 
USAC will then draw on the LOC(s) to recover 100% of the support that 
has been disbursed to the ETC for that state. The MF-II Report & Order 
provides that if service ceases after the final deployment milestone 
has been reached and the LOC has been terminated, the Commission will 
cease payment of ongoing support until service resumes. At the time 
these MF-II rules were adopted, they were consistent with the 
requirements for CAF-II recipients.
    8. We are convinced by claims of petitioners and commenters that 
the Commission's existing MF-II LOC requirements may warrant additional 
relief on reconsideration. We continue to conclude that MF-II bidders 
will take into account the costs associated with program requirements, 
including an LOC, as they formulate their bids, and that many bidders 
can do so without the consequences alleged by some petitioners and 
commenters. We nonetheless recognize that the costs associated with 
maintaining an LOC may pose a greater financial burden on those bidders 
that lack the resources of larger, more established companies. Such 
bidders may have to factor relatively higher LOC-related costs into 
their bids. One purpose of using competitive bidding to select support 
recipients is that it promotes providing support to those parties that 
can accomplish the MF-II program goals in the most cost-effective 
manner. However, we recognize that the exact cost of any requirement, 
including obtaining and maintaining an LOC, will affect each 
prospective bidder in the MF-II auction differently. A bidder's LOC-
related costs will likely vary based on the amount of support that it 
is authorized to receive, and the impact of those costs on the bidder 
will also vary based on its size and creditworthiness. Thus, we cannot 
reasonably predict the costs of our LOC requirements for each potential 
winning bidder and weigh them relative to the benefit to the public of 
protecting the funds from default. The fees associated with maintaining 
an LOC can range by several percentage points and, when applied to the 
sizable amounts of support that may be awarded to bidders here, the 
costs may become substantial over time, particularly for winning 
bidders that are small businesses and new entrants.
    9. Accordingly, consistent with the rule modifications we recently 
adopted in the Connect America Fund Phase II Auction Order on 
Reconsideration, WC Docket No. 10-90 et al., FCC 18-5, we modify our 
LOC requirements to permit an MF-II recipient to reduce the value of an 
LOC to 60 percent of the total support already disbursed plus the 
amount of support that will be disbursed in the coming year once it has 
been verified that the MF-II recipient has met the 80 percent service 
milestone for the area(s) covered by the LOC. In the MF-II Report & 
Order, the Commission indicated that it would require MF-II recipients 
to demonstrate compliance with our coverage requirements by submitting 
data consistent with the evidence we determined to be necessary in the 
MF-II challenge process. Once USAC is able to verify that a recipient's 
80 percent service milestone has been met, the recipient will be able 
to reduce the value of its LOC.
    10. By increasing the amount by which an LOC may be reduced after 
verification that an MF-II recipient has met a significant portion of 
its performance obligations, we can provide MF-II recipients with a 
measure of relief from the costs of maintaining an LOC without posing 
undue risks to the Universal Service Fund. As the Commission stated in 
the MF-II Report & Order, we expect that the risk of default will 
decrease as an MF-II recipient meets its deployment milestones. We 
therefore conclude that the benefits of providing additional relief 
from some of the costs associated with maintaining an LOC outweigh the 
risk that we will not be able to recover an additional portion of the 
support if the recipient is unable to repay the Commission in the event 
of a default. Moreover, as we discuss below, an MF-II recipient that is 
affected by high LOC-related costs may also choose to build out its 
network more quickly so that its LOC can be terminated sooner. We 
therefore find it reasonable to grant the petitions for 
reconsideration, in part, to reduce the burden associated with 
maintaining an LOC until the final performance benchmark has been met 
and verified by USAC.
    11. We are not, however, persuaded by arguments that we should 
eliminate the requirement for an MF-II recipient to obtain an LOC 
because they are unnecessary to protect the public interest. Our 
obligation to safeguard the disbursement of universal service support 
justifies requiring an LOC and outweighs the limited burden incurred by 
winning bidders. For this same reason, we are not convinced by the 
contentions that an MF-II LOC requirement is unnecessary for rural 
telephone companies based on their history of providing service and 
using

[[Page 17937]]

universal service support without default. Our responsibility to 
protect universal service funds does not diminish based on a support 
recipient's past performance, the nature of its business, or its size. 
We are equally unpersuaded by a petitioner's suggestion that because 
the Commission has not yet had to draw on any LOC in MF-I, it is 
unnecessary for us to require one for MF-II. To the contrary, we find 
that premise supports our conclusion that an LOC requirement deters 
defaults and fulfills its intended purpose of protecting the public 
funds.
    12. Similarly, we disagree with the assertion that the Commission 
should eliminate the LOC requirement and instead ensure the security of 
program funds by imposing a monetary forfeiture on the defaulting MF-II 
recipient or using the threat of revocation or non-renewal of its 
licenses as leverage to demand repayment of the funds. The exercise of 
our forfeiture, revocation, and licensing authority requires additional 
procedures and standards that are not well suited to the prompt action 
required in enforcing our milestones because, among other reasons, such 
authority does not effectively address the regulatory purpose behind 
our adoption of the LOC--making the Universal Service Fund whole if a 
support recipient failed to fulfill its MF-II performance requirements. 
Without an LOC, the Commission has no security to protect itself 
against the risks of default. Accordingly, we affirm the Commission's 
prior conclusion that the LOC requirement is necessary to ensure the 
recovery of a significant amount of MF-II support should such a need 
arise, and we find that, on balance, our commitment to fiscal 
responsibility supports the limited burden faced by support recipients.
    13. We also decline to grant requests in the petitions for 
reconsideration to take further steps to modify our LOC requirements. 
In the MF-II Report & Order, the Commission already took a number of 
steps to help lessen LOC costs, including expanding the number and 
types of banks eligible to issue LOCs so that winning bidders can 
obtain LOCs from banks with which they have existing relationships. 
Although some entities may still find that participating in the MF-II 
auction is cost-prohibitive or that they are less likely to place 
winning bids, we are not convinced that we should jeopardize our 
ability to recover a significant amount of support if such entities 
were to participate and later become unable to meet the MF-II 
performance milestone obligations and to repay the Commission for their 
compliance gap. While we have not implemented any of the specific 
proposals of these petitioners, we conclude that, on balance, the 
relief provided above should adequately address the nature of the 
concerns they raise. The approaches suggested by petitioners would add 
greater complexity and testing expenses for support recipients and 
would impose increased verification burdens on USAC without the 
corresponding benefit of significantly speeding the completion of MF-II 
performance requirements. Finally, we decline to adopt the request by a 
mobile provider to accelerate the service milestones, eliminate the LOC 
requirement, and pay a recipient only after compliance with a milestone 
has been verified. Such an approach, like the other suggestions we 
reject above, would require us to disburse universal service funds 
without being able to recoup support from a recipient if the recipient 
subsequently defaulted on its remaining performance requirements.
    14. In reviewing arguments regarding the costs of maintaining an 
LOC, we also emphasize that the Commission's LOC requirements already 
include an incentive for a recipient to meet its final performance 
milestone as soon as possible, because once it has been verified that a 
support recipient has met its final performance milestone, the 
recipient can further reduce costs by no longer maintaining that LOC. 
In this regard, we note that the Commission provided in the MF-II 
Report & Order that the LOC must remain in place until it has been 
verified that an MF-II participant has met its minimum coverage and 
service requirements at the end of the six-year milestone. We interpret 
this language to allow the MF-II recipient to further reduce its costs 
by no longer maintaining the LOC as soon as USAC, in coordination with 
the Commission, verifies that the recipient has met the final 
performance milestone (i.e., we do not require that the LOC be 
maintained after its purpose is no longer served). We anticipate that 
this clarification, together with the rule modification we adopt above, 
should provide MF-II recipients with additional relief from the burden 
of maintaining an LOC.

C. Mobility Fund Phase II Budget

    15. We affirm the MF-II total budget amount of $4.53 billion that 
the Commission adopted in the MF-II Report & Order, and we deny the 
petition seeking to increase it. Petitioners addressing the budget 
contend that this amount is insufficient to achieve ubiquitous 
availability of mobile services and reasonable comparability of service 
between urban and rural areas. They also argue that the budget was not 
supported by actual carrier cost data related to coverage needs. The 
Commission established the amount of the MF-II budget by starting with 
the $483 million of current annual legacy high-cost support received by 
wireless providers, excluding Alaska. It multiplied that amount over 
the ten-year term of MF-II and then subtracted $300 million, 
representing the estimated amount needed for the phase-down of 
competitive eligible telecommunications carrier (CETC) support in areas 
already fully covered with unsubsidized 4G LTE, for a total budget of 
$4.53 billion over ten years. The Commission reasoned that basing its 
budget upon this amount best balanced its goal of preserving and 
advancing mobile broadband service with its obligation to be fiscally 
responsible with limited universal service funds.
    16. We are not persuaded that we should reconsider that decision 
and base the MF-II budget on carriers' projected costs for deployment 
as some parties advocate. Phase II of the Mobility Fund is a 
considerable departure from the prior method of distributing CETC 
funding, and we anticipate that a $4.53 billion budget, distributed in 
a more efficient and targeted manner, will lead to significant 
expansion and improvement in the provision of mobile voice and 
broadband services to areas that would otherwise be underserved or 
unserved without support. After the Commission has the opportunity to 
evaluate the impact of the MF-II auction, it can determine whether 
additional funding (and if so, how much) is needed. Furthermore, while 
we believe that the total budget of $4.53 billion will be sufficient to 
address a more targeted set of eligible areas, we reiterate that MF-II 
is only one component of our broader universal service reform efforts, 
and we need not wait until the end of the MF-II support term to 
determine if additional funding is necessary.
    17. Moreover, the proposal to base the MF-II budget on carriers' 
projected costs for providing service to all census blocks throughout 
the U.S. unserved by 4G LTE fails to address the Commission's long-
standing commitment to fiscal responsibility and would be inconsistent 
with extensive 4G LTE deployment through private investment in recent 
years. As a responsible steward of the Universal Service Fund, the 
Commission adopted a budget that reflected its priorities in allocating 
finite funds to areas of

[[Page 17938]]

greatest need to maintain and expand critical mobile voice and 
broadband services. To increase the size of the MF-II budget 
significantly above the amount of legacy support currently provided to 
mobile CETCs would improperly ignore the burden on those paying for the 
fund, thereby abandoning one of the main concerns the Commission sought 
to address through universal service reform. Indeed, if the Commission 
were to adopt this proposal, consumers and businesses would shoulder 
the burden of potentially increasing the MF-II budget by tens of 
billions of dollars. This increase would not be consistent with the 
Commission's stated intention to limit universal service expenditures 
in light of extensive 4G LTE deployment in recent years.
    18. Recognizing that the Universal Service Fund is limited, the 
Commission has consistently determined the amount of the MF-II budget 
by starting with the amount of existing CETC support, subtracting the 
support going to areas where support is not needed, and redirecting 
that amount to the areas in need. By weighing the need to distribute 
support to areas that would otherwise be unserved against the burden 
that consumers and businesses must bear by contributing to the 
Universal Service Fund, the Commission has demonstrated a commitment to 
fiscal responsibility while acknowledging that its efforts are needed 
to supplement private investment. Taking this type of balanced approach 
has been previously upheld by the Tenth Circuit Court of Appeals, which 
noted that, in challenging the sufficiency of the MF-II budget, the 
petitioners in In re FCC 11-161, 753 F.3d 1015, 1098-100 (10th Cir. 
2014), had failed to discredit (i) the Commission's reliance on its 
finding that then-current CETC funding was being misallocated or (ii) 
the Commission's predictive judgment that redirecting those funds would 
be sufficient to sustain and expand mobile broadband service. In the 
MF-II Report & Order, the Commission similarly relied on staff analysis 
of data that continued to reveal that current mobile CETC funds remain 
misallocated, and it again exercised its predictive judgment in 
determining that an MF-II budget of $4.53 billion, when distributed 
cost effectively, should make meaningful progress in eliminating 
lingering coverage gaps. The petitioners have failed to convince us 
that this decision to apply a balanced approach in setting the MF-II 
budget is in error. We continue to maintain that using the current 
level of mobile CETC support, minus the phase-down amount needed for 
areas where support is not needed, and redirecting funding to areas 
unserved by qualified 4G LTE will provide a significant improvement in 
mobile coverage while not increasing the burden on those contributing 
to universal service funding.
    19. For similar reasons, we further conclude that the claim that 
the amount of the MF-II budget is not supported by data related to 
coverage needs is equally flawed. While it is true that, for the 
reasons explained above, the Commission did not base the amount of its 
MF-II budget upon carrier cost deployment data, it did use data 
regarding the provision of service to eligible areas when establishing 
the budget. Specifically, the Commission relied on a 2016 analysis by 
the Wireless Telecommunications Bureau (Wireless Bureau) of mobile 
broadband providers, which revealed that, conservatively, three 
quarters of support currently distributed to mobile providers is being 
directed to areas where it is not needed. Moreover, the Wireless 
Bureau's analysis showed that, as of 2016, 1.4 million people in the 
U.S. have no LTE coverage and another 1.7 million live in areas where 
LTE coverage is provided only on a subsidized basis, so that 3.1 
million people (or approximately 1 percent of the U.S. population) live 
in areas with no LTE or only subsidized LTE. Thus, staff analysis of 
data regarding the provision of service revealed that, despite 
extensive private investment spurring 4G LTE deployment generally, 
certain areas remain unserved without government subsidies, which the 
Commission took into consideration when it chose to reallocate current 
CETC support and derive greater coverage from the limited amount of 
funding.
    20. In addition, to ensure that the MF-II support is directed 
specifically to areas that lack unsubsidized qualifying 4G LTE 
coverage, we have adopted a challenge process that is administratively 
efficient and fiscally responsible, and will enable us to resolve 
eligible area disputes quickly and expeditiously, so that limited funds 
are focused on the areas that need it the most. As part of the 
challenge process, we have also undertaken a new, one-time collection 
of standardized, up-to-date 4G LTE coverage data from mobile wireless 
providers. These actions, taken together with the use of competitive 
bidding to distribute support, will focus MF-II funds on areas that 
lack unsubsidized qualified 4G LTE service, thereby providing 
additional funds for those targeted areas that warrant such funding. 
These actions also will ensure the budget is used to minimize service 
disparities between rural and urban areas, while continuing our 
obligation to be a fiscally responsible steward of universal service 
funding. Therefore, we decline to revise the MF-II budget at this time.

D. Monthly Disbursement Schedule

    21. We decline to alter the Commission's monthly disbursement 
schedule for MF-II. The Commission, in deciding to provide support in 
monthly disbursements as it had adopted for the CAF program, including 
CAF-II, reasoned that such an approach would provide MF-II recipients 
with reliable and predictable support payments that conform to a 
variety of business cycles. We are not persuaded that, instead of 
monthly disbursements of MF-II support to winning bidders, the program 
should provide larger installment payments early in the construction 
process that are more closely matched to some providers' expected 
outlays. Although the Commission recognized that some MF-II support 
recipients might incur higher up-front project costs, it also observed 
that the timing of project expenses varies. Thus, it is 
administratively burdensome, if not impossible, for the Commission, 
USAC, and the winning bidders to try to match payments to expenses in a 
manner that would synchronize precisely with the budgetary needs of all 
bidders. Further, the Commission observed that, in Mobility Fund Phase 
I (MF-I), even with support payments based on deployment milestones, 
disbursements were not tied to the timing of expenditures, as 
petitioners request. A shift to a front-loaded disbursement mechanism 
or a cost reimbursement process, as requested by petitioners, would 
place undue strains on the universal service budget, and would thereby 
undermine the ability of the Commission to ensure continued program 
compliance over the entire 10-year term. We note that the Commission 
also purposefully aligned its disbursement schedule with the schedule 
adopted for CAF-II, which established regular and predictable monthly 
payments that would not exceed the budget in any one year of the term. 
We believe that this approach best balances the burdens on the 
Commission and USAC with the budgetary needs of recipients.

[[Page 17939]]

E. Minimum Baseline Performance Requirements for Data Speeds and 
Latency

    22. We also decline to reconsider the minimum baseline performance 
requirements for recipients of MF-II funding. In the MF-II Report & 
Order, the Commission decided that a recipient of MF-II support must 
provide a minimum level of service with a median data speed of 10 Mbps 
download speed or greater and 1 Mbps upload speed or greater, with at 
least 90 percent of the required download speed measurements being not 
less than a certain threshold speed to be specified as part of the pre-
auction process. In addition, an MF-II support recipient must provide 
reports of speed and latency demonstrating that at least 90 percent of 
the required measurements have a data latency of 100 milliseconds (ms) 
or less round trip. The Commission determined that recipients of MF-II 
support must provide service that meets the minimum baseline 
performance requirements of 4G LTE or better, and concluded that these 
requirements will ensure that finite universal service funds are used 
efficiently to provide rural consumers access to robust mobile 
broadband service at speeds reasonably comparable to the 4G LTE service 
being offered in urban areas.
    23. We are not persuaded that the minimum baseline performance 
requirement for median data speeds should be reduced to \5/1\ Mbps, as 
one provider urges. The Commission seeks to ensure that the performance 
of broadband service in rural and high-cost areas is reasonably 
comparable to that in urban areas, and the Commission's own analysis at 
the time the MF-II Report & Order was adopted indicated that customers 
of nationwide carriers were receiving data at median speeds of around 
10/1 Mbps or faster. Furthermore, in our more recent MF-II Order on 
Reconsideration, we explained that, in contrast to the 5 Mbps 
eligibility benchmark in the challenge process, which serves to target 
support where it is currently needed most, the 10 Mbps minimum baseline 
performance requirement makes sure that service in eligible areas is 
reasonably comparable to future urban offerings.'' This forward-looking 
approach is consistent with past Commission decisions in the universal 
service context and recognizes that consumer demand for faster mobile 
wireless services is growing. Moreover, MF-II funding provides on-
going, long-term support over a 10-year period, and reducing the 
performance requirement to a 5 Mbps download speed increases the risk 
of directing funds to areas that are already receiving download speeds 
just below the 5 Mbps eligibility threshold because such areas could 
require very little investment to meet the lowered performance 
requirement and would, accordingly, be more competitive at auction. 
Awarding funds to such areas increases the risk of only marginally 
benefiting consumers in those areas by not significantly improving the 
status quo download speeds for a decade. Further, a lowered performance 
requirement would reduce the final performance milestone for median 
data speeds in all areas, thereby increasing the likelihood that those 
areas will not receive service that is reasonably comparable to urban 
areas by the end of the support term, despite the distribution of 
potentially significant MF-II support. We therefore conclude that 
reducing the performance benchmark to a median data speed of only 5/1 
Mbps would risk relegating rural areas with the greatest need to a 
lower standard of service that is not comparable to urban 4G LTE 
service.
    24. Similarly, with respect to latency, the Commission has noted 
that latency is important for a variety of real-time, interactive 
applications, including Voice over internet Protocol (VoIP), video 
calling, and distance learning, which ``may be effectively unusable 
over high latency connections, regardless of the download/upload speeds 
being offered.'' Contrary to petitioner's assertion that the Commission 
failed to account for the inherent differences between wireless and 
wireline technologies in adopting the 100 ms latency standard, the 
Commission established the performance metrics, including latency, to 
ensure reasonably comparable service. According to petitioner's own 
data analysis, the majority (approximately 75 percent) of existing 
networks already meet the 100 ms standard with 90 percent probability 
in Metropolitan Statistical Areas (MSAs). Further, technological 
improvements, including newly available 600 MHz spectrum, will likely 
enable more carriers to exceed this performance requirement in the near 
future. Thus, reducing the performance benchmark for data latency to 
220 ms would risk relegating rural areas to a lower standard of service 
that is not comparable to urban 4G LTE service, which includes support 
for advanced mobile applications. Accordingly, in light of the 
statutory mandate with respect to reasonably comparable service, we 
affirm that the minimum baseline performance requirement for data 
latency is that at least 90 percent of all required measurements must 
be at or below 100 ms round trip.

F. Bidding Credits

    25. We decline to reconsider the Commission's decision not to adopt 
bidding preferences for the MF-II auction. In the MF-II Report & Order, 
the Commission rejected the notion that small and rural carriers needed 
targeted assistance to secure MF-II support based, in part, on its 
observation that numerous smaller carriers had placed winning bids in 
the Mobility Fund Phase I (MF-I) auction without the aid of bidding 
credits. Contrary to petitioners' assertions, the Commission 
specifically noted that commenters had advocated for bidding 
preferences for other entities, including rural carriers, for the MF-II 
auction. The Commission also reasoned that small business bidding 
credits would potentially decrease the reach of MF-II funding, and 
thereby decrease additional coverage expansion or preservation. This 
rationale is equally applicable to any type of bidding preference, 
including those for rural service providers.
    26. We reject petitioners' claims that the Commission has a 
statutory obligation under section 309(j) of the Act to promote small 
business and rural carrier participation in the universal service 
context. The Commission's authority to award universal service support 
through competitive bidding is not derived from section 309(j), which 
authorizes the use of competitive bidding for granting spectrum 
licenses or construction permits, not for reverse auctions to award 
universal service funding. Moreover, even in spectrum auctions, where 
section 309(j) does apply, the Commission does not always provide 
bidding credits, and courts have held that the statutorily prescribed 
objectives in section 309(j)(3) are not mandatory. Additionally, the 
Commission's primary goal in using competitive bidding in MF-II is to 
maximize the impact of the funding to increase and preserve mobile 
coverage. Since bidding preferences for any entities (be they small 
businesses or rural service providers) would hamper that goal by 
effectively decreasing the number of eligible areas covered by the 
finite level of funding, the Commission chose not to award bidding 
preferences in lieu of greater coverage. Accordingly, we are not 
persuaded that section 309(j) obligates us to overlook this concern and 
adopt bidding preferences for the MF-II auction.
    27. Likewise, we reject petitioner's assertion that the Commission 
should not have factored into its decision for

[[Page 17940]]

MF-II the fact that numerous small and rural carriers participated 
successfully in the MF-I auction without bidding credits. We find it 
reasonable, and certainly useful, to consider past auction 
participation in formulating our policy concerning bidding preferences 
in future auctions. Moreover, even if we were to accept petitioner's 
claim that MF-II is fundamentally different from MF-I because it 
involves ongoing support provided for more significant projects, the 
petitioner has failed to demonstrate that small and rural carriers 
would be less inclined, or able, to compete effectively in the auction 
absent bidding preferences. In the absence of such a demonstration, and 
in light of our concerns about the most efficient use of limited 
universal service funds, we affirm the decision in the MF-II Report & 
Order not to provide bidding credits in the MF-II auction.

G. Equipment Exclusivity Arrangements

    28. We dismiss a provider's request to impose a new certification 
requirement on all MF-II support recipients that they do not and will 
not participate in equipment exclusivity arrangements. The petition 
relies on comments that the provider filed in this proceeding in 2014; 
however, those 2014 comments make no reference to exclusivity 
arrangements. Thus, to the extent that the provider raises this 
argument for the first time in its Petition, we dismiss it as untimely. 
Further, in its 2012 Fourth Order on Reconsideration in the MF-I 
proceeding, adopted and released July 18, 2012, 77 FR 48453, August 14, 
2012, the Commission previously considered and rejected this provider's 
request for adoption of a bar on equipment exclusivity arrangements. In 
the MF-II Report & Order, the Commission again rejected proposals to 
restrict participation in an MF-II auction through additional 
eligibility requirements and confirmed its intention to encourage 
participation by the widest range of applicants. Petitioner has 
identified no substantive basis upon which to reconsider the 
Commission's prior decisions not to restrict participation in the 
Mobility Fund by adopting additional requirements, including a bar on 
equipment exclusivity arrangements.

H. USAC's Role in Testing Winning Bidder Buildout Performance

    29. We decline to limit USAC's role in testing winning bidders' 
compliance with MF-II performance metrics, public interest obligations, 
or other program requirements as requested by a provider. We find no 
merit in contentions that we should limit USAC's responsibility for 
conducting compliance reviews in order to ensure a cost-efficient 
process.
    30. In the MF-II Report & Order, the Commission determined that it 
would require MF-II support recipients to submit data sufficient to 
demonstrate compliance with the MF-II coverage requirements. 
Specifically, section 54.1015 of our rules requires an MF-II support 
recipient to provide the data necessary to support its certifications, 
and that the submitted data must be in compliance with the standards 
set forth in the applicable public notice. In our role as a responsible 
steward of public funds, we are obligated to ensure that the funds 
disbursed through universal service programs are used for the purposes 
for which they were intended and that the recipients of support have 
met the terms and conditions under which the funds were awarded. 
Accordingly, in the USF/ICC Transformation Order or FNPRM, adopted 
October 27, 2011, released November 18, 2011, 76 FR 78384, December 16, 
2011, the Commission directed USAC to test the accuracy of 
certifications made pursuant to the new reporting requirements, noting 
that any oversight program to assess compliance should be designed to 
ensure that support recipients are reporting accurately to the 
Commission. The Commission specifically stated that such oversight 
should be designed to test some of the underlying data that form the 
basis for a recipient's certification of compliance with various 
requirements.
    31. In the case of MF-I, USAC's compliance reviews did not entail 
duplication of a recipient's drive tests as the petitioner contends, 
but rather verification of data transmission rates and transmission 
latency for a statistically valid random sample of a small portion of 
the total road miles for which a recipient claimed it was entitled to a 
support payment. Although the petitioner argues that USAC's role was 
redundant because USAC's drive tests ultimately validated the data the 
provider had already submitted for MF-I, we are not persuaded by the 
petitioner's claim that the benefits of USAC compliance review testing 
in the context of MF-I were outweighed by the time and expense spent 
conducting such testing. We decline to draw a conclusion about the 
overall value of USAC's compliance testing based only on the experience 
of one MF-I participant. Further, we find it lacking in logic to argue 
that it serves no purpose to attempt to verify, even by sampling, 
recipients' compliance with program requirements, merely because some 
recipients have been found, through such testing, to be in compliance. 
Compliance reviews, like audits, are an essential tool for the 
Commission and USAC to ensure program integrity and to detect and deter 
waste, fraud, and abuse. Therefore, we will not limit USAC's role in 
verifying the data that recipients submit to demonstrate compliance 
with our MF-II coverage requirements.

IV. Procedural Matters

A. Paperwork Reduction Act Analysis

    32. This Second Order on Reconsideration contains new or modified 
information 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 will be 
invited to comment on the new or modified information collection 
requirements contained in this proceeding. In addition, the Commission 
notes that pursuant to the Small Business Paperwork Relief Act of 2002, 
Public Law 107-198, we previously sought specific comment on how the 
Commission might further reduce the information collection burden for 
small business concerns with fewer than 25 employees.
    33. In this present document, we have assessed the effects of the 
modifications that the Commission is making to the letter of credit 
rule and the collocation rule adopted by the Commission in the MF-II 
Report & Order regarding the information collection burdens on small 
business concerns. The Commission describes impacts that might affect 
small businesses, which include most businesses with fewer than 25 
employees, in the Supplemental Final Regulatory Flexibility Analysis 
(FRFA) in Appendix B of the Second Order on Reconsideration.

B. Congressional Review Act

    34. The Commission will send a copy of the Second Order on 
Reconsideration to Congress and the Government Accountability Office 
pursuant to the Congressional Review Act.

C. Supplemental Final Regulatory Flexibility Analysis

    35. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), the Commission prepared Initial Regulatory Flexibility 
Analyses (IRFAs) in connection with the USF/ICC Transformation FNPRM, 
the CAF Further Notice, adopted April 23, 2014, released June 10, 2014, 
79 FR 39195,

[[Page 17941]]

July 9, 2014, and the MF-II FNPRM (collectively, MF-II FNPRMs). The 
Commission sought written public comment on the proposals in the MF-II 
FNPRMs including comments on the IRFAs and Supplemental IRFA. The 
Commission included Final Regulatory Flexibility Analyses (FRFAs) in 
connection with the CAF Report & Order, adopted April 23, 2014, 
released June 10, 2014, 79 FR 39163, July 9, 2014, the MF-II Report & 
Order, and the MF-II Challenge Process Order (collectively, the MF-II 
Orders). This Supplemental Final Regulatory Flexibility Analysis 
(Supplemental FRFA) supplements the FRFAs in the MF-II Orders to 
reflect the actions taken in the Second Order on Reconsideration and 
conforms to the RFA.
1. Need for, and Objectives of, the Second Order on Reconsideration
    36. The Second Order on Reconsideration addresses the remaining 
issues raised by parties in petitions for reconsideration of the 
Commission's MF-II Report & Order that adopted the framework for the 
Mobility Fund Phase II (MF-II) and the Tribal Mobility Fund Phase II. 
These universal service funding mechanisms will provide on-going high-
cost support to extend mobile voice and broadband coverage to unserved 
and underserved areas. In the Second Order on Reconsideration, the 
Commission amends the collocation rules adopted in the MF-II Report & 
Order to apply the collocation requirement for MF-II recipients to 
``all newly constructed'' towers and modifies the letter of credit 
(LOC) requirements to align our MF-II rules with recent changes made in 
the CAF-II Order on Reconsideration. These LOC modifications should 
provide MF-II support recipients with some additional relief from the 
costs of maintaining an LOC. Moreover, by resolving these petitions, 
the Commission takes another significant step toward holding an MF-II 
auction in which service providers will compete for support to offer 
service meeting the minimum baseline performance requirements of 4G LTE 
or better in primarily rural areas of the country that lack qualified 
unsubsidized 4G LTE service.
2. Summary of Significant Issues Raised by Public Comments in Response 
to the IRFAs
    37. There were no comments filed that specifically addressed the 
IRFAs that are relevant to the issues discussed here.
3. Response to Comments by the Chief Counsel for Advocacy of the Small 
Business Administration
    38. Pursuant to the Small Business Jobs Act of 2010, which amended 
the RFA, the Commission is required to respond to any comments filed by 
the Chief Counsel for Advocacy of the Small Business Administration 
(SBA), and to provide a detailed statement of any change made to the 
proposed rules as a result of those comments.
    39. The Chief Counsel did not file any comments in response to the 
proposed rules in this proceeding.
4. Description and Estimate of the Number of Small Entities to Which 
the Procedures Will Apply
    40. The RFA directs agencies to provide a description of and, where 
feasible, an estimate of the number of small entities that may be 
affected by the rules adopted herein. The RFA generally defines the 
term ``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 SBA.
    41. As noted above, FRFAs were incorporated into the MF-II Orders. 
In those analyses, we described in detail the small entities that might 
be significantly affected. Accordingly, in this Supplemental FRFA we 
hereby incorporate by reference the descriptions and estimates of the 
number of small entities from the previous FRFAs in the MF-II Orders.
5. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements for Small Entities
    42. We expect the amended rules in the Second Order on 
Reconsideration will not impose any new or additional reporting or 
recordkeeping or other compliance obligations on small entities and, as 
described below, will reduce their costs.
6. Steps Taken To Minimize the Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered
    43. The RFA requires an agency to describe any significant 
alternatives that it has considered in reaching its proposed approach, 
which may include the following four alternatives (among others): ``(1) 
The establishment of differing compliance or reporting requirements or 
timetables that take into account the resources available to small 
entities; (2) the clarification, consolidation, or simplification of 
compliance or reporting requirements under the rule for small entities; 
(3) the use of performance, rather than design, standards; and (4) and 
exemption from coverage of the rule, or any part thereof, for small 
entities.''
    44. The Commission has taken steps which will minimize the economic 
impact on small entity MF-II recipients because we recognize that the 
costs associated with maintaining an LOC may pose a greater financial 
burden on those bidders that lack the resources of larger, more 
established companies. Such bidders may have to factor relatively 
higher LOC-related costs into their bids. One purpose of using 
competitive bidding to select support recipients however is that it 
promotes providing support to those parties that can accomplish the MF-
II program goals in the most cost-effective manner. Therefore, in the 
Second Order on Reconsideration we have made a modest reduction in the 
required value of the letter of credit for MF-II recipients that have 
met the 80 percent service milestone for the area(s) covered by the 
LOC. Moreover, we clarify that small entity and other MF-II recipients 
may further reduce their costs by no longer maintaining the LOC as soon 
as USAC, in coordination with the Commission, verifies that the 
recipient has met the final performance milestone (i.e., we do not 
require that the LOC be maintained after its purpose is no longer 
served). These steps should alleviate some of the economic impact for 
small entity MF-II recipients and aligns our MF-II requirements with 
recent changes made to the CAF-II requirements.
7. Report to Congress
    45. The Commission will send a copy of the Second Order on 
Reconsideration, including this Supplemental FRFA, in a report to 
Congress pursuant to the Congressional Review Act. In addition, the 
Commission will send a copy of the Second Order on Reconsideration, 
including this Supplemental FRFA, to the Chief Counsel for Advocacy of 
the SBA.

VI. Ordering Clauses

    46. Accordingly, it is ordered, pursuant to the authority contained 
in sections 1, 2, 4(i), 5, 10, 201-206, 214, 218-220, 251, 252, 254, 
256, 303(r), 332, 403, 405, and 503 of the Communications Act of 1934, 
as amended, and section 706 of the

[[Page 17942]]

Telecommunications Act of 1996, 47 U.S.C. 151, 152, 154(i), 155, 160, 
201-206, 214, 218-220, 251, 252, 254, 256, 303(r), 332, 403, 405, 503, 
1302, and Sec. Sec.  1.1, 1.427, and 1.429 of the Commission's rules, 
47 CFR 1.1, 1.427, and 1.429, that the Second Order on Reconsideration 
is adopted.
     The parameters set forth in the Second Order on 
Reconsideration, along with all associated requirements also set forth 
therein, go into effect May 25, 2018, except for the new or modified 
information collection requirements that require approval by the Office 
of Management and Budget (OMB). The Commission will publish a document 
in the Federal Register announcing the approval of those information 
collection requirements and the date they will become operative.
     The Petition for Reconsideration and/or Clarification 
filed by Rural Wireless Association, Inc. on April 12, 2017, is granted 
in part and denied in part to the extent described herein.
     The Petition for Reconsideration filed by Blooston Rural 
Carriers on April 27, 2017, is granted in part and denied in part to 
the extent described herein.
     The Petition for Reconsideration filed by Rural Wireless 
Carriers on April 27, 2017, is granted in part and denied in part to 
the extent described herein.
     The Petition for Reconsideration filed by T-Mobile USA, 
Inc. on April 27, 2017, is denied to the extent described herein.
     The Petition for Reconsideration filed by Buffalo-Lake 
Erie Wireless Systems L.L.C. dba Blue Wireless on April 27, 2017, is 
granted in part and denied in part to the extent described herein.
     The Commission's Consumer and Governmental Affairs Bureau, 
Reference Information Center, shall send a copy of the Second Order on 
Reconsideration, including the Supplemental Final Regulatory 
Flexibility Analysis, to the Chief Counsel for Advocacy of the Small 
Business Administration.

List of Subjects in 47 CFR Part 54

    Communications common carriers, internet, Reporting and 
recordkeeping requirements, Telecommunications.

Federal Communications Commission.
Marlene Dortch,
Secretary.

Final Rules

    For the reasons discussed in the preamble, the Federal 
Communications Commission amends 47 CFR part 54 as follows:

PART 54--UNIVERSAL SERVICE

0
1. The authority citation for part 54 continues to read as follows:

    Authority:  47 U.S.C. 151, 154(i), 155, 201, 205, 214, 219, 220, 
254, 303(r), 403, and 1302 unless otherwise noted.


0
2. Amend Sec.  54.1015 by revising paragraph (f) to read as follows:


Sec.  54.1015   Public interest obligations.

* * * * *
    (f) Collocation obligations. During the period when a recipient 
shall file annual reports pursuant to Sec.  54.1019, the recipient 
shall allow for reasonable collocation by other providers of services 
that would meet the technological requirements of Mobility Fund Phase 
II on all newly constructed towers it owns or manages in the area for 
which it receives support. In addition, during this period, the 
recipient may not enter into facilities access arrangements that 
restrict any party to the arrangement from allowing others to collocate 
on the facilities.
* * * * *

0
3. Amend Sec.  54.1016 by revising paragraph (a)(1)(ii) to read as 
follows:


Sec.  54.1016   Letter of credit.

    (a) * * *
    (1) * * *
    (ii) Once the recipient has met its 80 percent service milestone as 
described in Sec.  54.1015(c) of this chapter, it may, subject to the 
consent of the Universal Service Administrative Company, obtain a new 
letter of credit or renew its existing letter of credit so that it is 
valued at a minimum at 60 percent of the total support amount already 
disbursed plus the amount that will be disbursed in the coming year.
* * * * *
[FR Doc. 2018-08689 Filed 4-24-18; 8:45 am]
 BILLING CODE 6712-01-P



                                              17934            Federal Register / Vol. 83, No. 80 / Wednesday, April 25, 2018 / Rules and Regulations

                                              the Federal Register, the rule at 47 CFR                   Obligation to Respond: Required to                 Federal Communications Commission.
                                              9.7(a) is now effective. If you have any                obtain or retain benefits. Statutory                  Marlene Dortch,
                                              comments on the burden estimates                        authority for this information collection             Secretary, Office of the Secretary.
                                              listed below, or how the Commission                     is contained in the New and Emerging                  [FR Doc. 2018–08568 Filed 4–24–18; 8:45 am]
                                              can improve the collections and reduce                  Technologies 911 Improvement Act of
                                                                                                                                                            BILLING CODE 6712–01–P
                                              any burdens caused thereby, please                      2008 (NET 911 Act), Public Law 110–
                                              contact Nicole Ongele, Federal                          283, Stat. 2620 (2008) (to be codified at
                                              Communications Commission, Room                         47 CFR Section 615a–1), and section                   FEDERAL COMMUNICATIONS
                                              1–A620, 445 12th Street SW,                             222 of the Communications Act of 1934,                COMMISSION
                                              Washington, DC 20554. Please include                    as amended.
                                              the OMB Control No. 3060–1131 in your                      Total Annual Burden: 5 hours.                      47 CFR Part 54
                                              correspondence. The Commission will
                                                                                                         Total Annual Cost: No Cost.                        [WC Docket No. 10–90, WT Docket No. 10–
                                              also accept your comments via email at
                                                                                                         Nature and Extent of Confidentiality:              208; FCC 18–19]
                                              PRA@fcc.gov. To request materials in
                                              accessible formats for people with                      To implement section 222 of the
                                                                                                      Communications Act of 1934, as                        Connect America Fund; Universal
                                              disabilities (Braille, large print,                                                                           Service Reform—Mobility Fund
                                              electronic files, audio format) send an                 amended, the Commission’s rules
                                              email to fcc504@fcc.gov or call the                     impose a general duty on carriers to                  AGENCY:  Federal Communications
                                              Consumer and Governmental Affairs                       protect the privacy of customer                       Commission.
                                              Bureau (202) 418–0530 (voice), (202)                    proprietary network information and                   ACTION: Final rule; petition for
                                              418–0432 (TTY).                                         carrier proprietary information from                  reconsideration.
                                                                                                      unauthorized disclosure. See 47 CFR
                                              Synopsis                                                64.2001 et seq. In the Order, the                     SUMMARY:     In this document, the Federal
                                                As required by the Paperwork                          Commission additionally has clarified                 Communications Commission
                                              Reduction Act of 1995 (44 U.S.C. 3507),                 that the Commission’s rules                           (Commission) resolves the remaining
                                              the FCC is notifying the public that it                 contemplate that incumbent LECs and                   petitions for reconsideration regarding
                                              received final OMB approval on                          other owners or controllers of 911 or                 the requirements for Mobility Fund
                                              December 3, 2009, for the information                   E911 infrastructure will acquire                      Phase II (MF–II). The Commission
                                              collection requirement contained in the                 information regarding interconnected                  revises the language of its rule for
                                              Commission’s rule at 47 CFR 9.7(a).                     VoIP providers and their customers for                collocation, and reduces the value of the
                                                Under 5 CFR part 1320, an agency                      use in the provision of emergency                     letter of credit that a Mobility Fund
                                              may not conduct or sponsor a collection                 services. The Commission fully expects                Phase II support recipient is required to
                                              of information unless it displays a                     that these entities will use the                      hold after the Universal Service
                                              current, valid OMB Control Number.                      information only for the provision of                 Administration Company (USAC),
                                                No person shall be subject to any                     E911 services. No entity may use                      together with the Commission, has
                                              penalty for failing to comply with a                    customer information obtained as a                    verified that the MF–II support recipient
                                              collection of information subject to the                result of the provision of 911 or E911                has achieved significant progress toward
                                              Paperwork Reduction Act that does not                   services for marketing purposes.                      completing their buildout and service
                                              display a current, valid OMB Control                       Privacy Act: No impact(s).                         provision requirements. The
                                              Number. The OMB Control Number is                                                                             Commission affirms its Mobility Fund
                                                                                                         Needs and Uses: On October 21, 2008,
                                              3060–1131.                                                                                                    Phase II rules in all other respects.
                                                                                                      the Commission released a Report and
                                                The foregoing notice is required by                                                                         DATES: Effective May 25, 2018, except
                                                                                                      Order, FCC 08–249, WC Docket No. 08–
                                              the Paperwork Reduction Act of 1995,                                                                          for the amendment to § 54.1016
                                                                                                      171, that implements certain provisions
                                              Public Law 104–13, October 1, 1995,                                                                           (a)(1)(ii), which contains information
                                                                                                      of the NET 911 Act, New and Emerging
                                              and 44 U.S.C. 3507.                                                                                           collection requirements that have not
                                                                                                      Technologies 911 Improvement Act of
                                                The total annual reporting burdens                                                                          been approved by OMB. The
                                                                                                      2008, Public Law 110–283, 122 Stat.
                                              and costs for the respondents are as                                                                          Commission will publish a document in
                                                                                                      2620 (2008). The Report and Order
                                              follows:                                                                                                      the Federal Register announcing the
                                                OMB Control Number: 3060–1131.                        requires an owner or controller of a
                                                                                                      capability that can be used for 911 or                effective date.
                                                OMB Approval Date: December 3,
                                                                                                      E911 service to make that capability                  FOR FURTHER INFORMATION CONTACT:
                                              2009.
                                                                                                      available to a requesting interconnected              Wireless Telecommunications Bureau,
                                                OMB Expiration Date: December 31,
                                                                                                      Voice over internet Protocol (VoIP)                   Auction and Spectrum Access Division,
                                              2012.
                                                Title: Implementation of the NET 911                  provider under certain circumstances.                 Audra Hale-Maddox, at (202) 418–0660.
                                              Improvement ACT of 2008: Location                       In particular, an owner or controller of              For further information concerning the
                                              Information from Owners and                             such capability must make it available                Paperwork Reduction Act information
                                              Controllers of 911 and E911                             to a requesting interconnected VoIP                   collection requirements contained in
                                              Capabilities.                                           provider if that owner or controller                  this document, contact Cathy Williams
                                                Form Number: N/A.                                     either offers that capability to any                  at (202) 418–2918 or via the internet at
                                                Respondents: Business or other for-                   commercial mobile radio service                       PRA@fcc.gov.
                                              profit.                                                 (CMRS) provider or if that capability is              SUPPLEMENTARY INFORMATION: This is a
                                                Number of Respondents and                             necessary to enable the interconnected                summary of the Commission’s Second
sradovich on DSK3GMQ082PROD with RULES




                                              Responses: 60 respondents; 60                           VoIP provider to provide 911 or E911                  Order on Reconsideration (MF–II
                                              responses.                                              service in compliance with the                        Second Order on Reconsideration), WC
                                                Estimated Time per Response: 0.0833                   Commission’s rules. 47 CFR 9.7(a). This               Docket No. 10–90, WT Docket No. 10–
                                              hours (5 minutes).                                      requirement, in turn, involves the                    208; FCC 18–19, adopted on February
                                                Frequency of Response: On occasion                    collection and disclosure to emergency                22, 2018 and released on February 27,
                                              reporting requirements and third party                  services personnel of customers’                      2018. The complete text of this
                                              disclosure requirement.                                 location information.                                 document is available for public


                                         VerDate Sep<11>2014   16:26 Apr 24, 2018   Jkt 244001   PO 00000   Frm 00034   Fmt 4700   Sfmt 4700   E:\FR\FM\25APR1.SGM   25APR1


                                                               Federal Register / Vol. 83, No. 80 / Wednesday, April 25, 2018 / Rules and Regulations                                         17935

                                              inspection and copying from 8:00 a.m.                   response to the MF–II Report & Order,                 relief from the costs of maintaining an
                                              to 4:30 p.m. Eastern Time (ET) Monday                   82 FR 15422, March 28, 2017. Resolving                LOC and alleviate some of the concerns
                                              through Thursday or from 8 a.m. to                      these petitions is a significant step                 raised by petitioners and commenters.
                                              11:30 a.m. ET on Fridays in the FCC                     toward holding an auction in which                    Additionally, for the reasons explained
                                              Reference Information Center, 445 12th                  service providers will compete for                    below, we deny the petitions seeking
                                              Street SW, Room CY–A257,                                Mobility Fund Phase II (MF–II) support                reconsideration of the Commission’s
                                              Washington, DC 20554. The complete                      to offer 4G Long Term Evolution (LTE)                 decisions to: (i) Establish an MF–II
                                              text is also available on the                           service in primarily rural areas that lack            budget of $4.53 billion over a term of
                                              Commission’s website at http://                         qualified unsubsidized 4G LTE service.                ten years; (ii) disburse annual support
                                              transition.fcc.gov/Daily_Releases/Daily_                                                                      on a monthly basis; (iii) adopt
                                                                                                      II. Background
                                              Business/2017/db0804/FCC-17-                                                                                  performance metrics for supported
                                              102A1.pdf. Alternative formats are                         2. In February 2017, the Commission                networks requiring a median data speed
                                              available to persons with disabilities by               adopted rules to move forward                         of 10/1 megabits per second (Mbps) and
                                              sending an email to FCC504@fcc.gov or                   expeditiously to an MF–II auction. The                data latency of 100 milliseconds (ms)
                                              by calling the Consumer &                               Commission established a budget of                    round trip; (iv) not adopt bidding
                                              Governmental Affairs Bureau at (202)                    $4.53 billion to be disbursed monthly                 credits for the auction; and (v) not
                                              418–0530 (voice), (202) 418–0432                        over a term of ten years to provide                   prevent MF–II support recipients from
                                              (TTY).                                                  ongoing support for the provision of                  entering into equipment exclusivity
                                                                                                      service in areas that lack adequate                   arrangements. We also decline to clarify
                                              Regulatory Flexibility Analysis                         mobile voice and broadband coverage                   or limit the role of the Universal Service
                                                As required by the Regulatory                         absent subsidies. The Commission                      Administrative Company (USAC) in
                                              Flexibility Act of 1980, the Commission                 further decided that geographic areas                 testing winning bidders’ compliance
                                              has prepared a Supplemental Final                       lacking unsubsidized, qualified 4G LTE                with MF–II performance metrics, public
                                              Regulatory Flexibility Analysis (FRFA)                  service would be deemed ‘‘eligible                    interest obligations, or other program
                                              of the possible significant economic                    areas’’ for MF–II support, and that it                requirements.
                                              impact on small entities of the policies                would use a competitive bidding
                                                                                                      process (specifically, a reverse auction)             A. Tower Collocation
                                              and rules adopted in this document.
                                              The Supplemental FRFA is set forth in                   to distribute funding to providers to                    5. First, we clarify that the MF–II
                                              an appendix to the MF–II Second Order                   serve those areas. The Commission also                collocation rule, 47 CFR 54.1015(f),
                                              on Reconsideration, and is summarized                   decided that, prior to an MF–II auction,              should require a recipient of MF–II
                                              below. The Commission’s Consumer                        it would compile a list of areas that                 funds to allow for reasonable
                                              and Governmental Affairs Bureau,                        were presumptively eligible for MF–II                 collocation by other providers of
                                              Reference Information Center, will send                 support and it would provide a limited                services that meet the technological
                                              a copy of this MF–II Second Order on                    timeframe for challenges to areas that                requirements of MF–II on all towers that
                                              Reconsideration, including the                          were found to be ineligible for support               the MF–II recipient owns or manages
                                              Supplemental FRFA, to the Chief                         during the pre-auction process.                       that it ‘‘newly constructed’’ to satisfy
                                              Counsel for Advocacy of the Small                          3. Seven petitions were filed seeking              MF–II performance obligations in the
                                              Business Administration (SBA).                          reconsideration of the MF–II Report &                 areas for which it receives support. The
                                                                                                      Order, and petitions for reconsideration              Commission stated its intent to adopt
                                              Paperwork Reduction Act                                 of issues related to the MF–II challenge              the same collocation and voice and data
                                                The MF–II Second Order on                             process were addressed in the MF–II                   roaming obligations for MF–II winning
                                              Reconsideration contains new and                        Challenge Process Order on                            bidders as it had adopted for MF–I.
                                              modified information collection                         Reconsideration and Second Report and                 However, the rule in MF–I required
                                              requirements subject to the Paperwork                   Order (MF–II Challenge Process Order or               reasonable collocation by other
                                              Reduction Act of 1995 (PRA), Public                     MF–II Order on Reconsideration),                      providers of services that met the
                                              Law 104–13. It will be submitted to the                 adopted on August 3, 2017, released on                technological requirements of MF–I on
                                              Office of Management and Budget                         August 4, 2017, 82 FR 42473, September                ‘‘all newly constructed towers that the
                                              (OMB) for review under section 3507(d)                  8, 2017. The Commission deferred                      recipient owns or manages in the area
                                              of the PRA. OMB, the general public,                    addressing the petitions, or portions                 for which it receives support,’’ while the
                                              and other Federal agencies will be                      thereof, requesting reconsideration of                language of the rule adopted in the MF–
                                              invited to comment on the new and                       aspects of the MF–II Report & Order                   II Report & Order applies to ‘‘all
                                              modified information collection                         outside of the challenge process.                     towers.’’ We make this clarification in
                                              requirements contained in this                                                                                order to promote our goal of ensuring
                                                                                                      III. Second Order on Reconsideration
                                              proceeding.                                                                                                   that publicly funded investments can be
                                                                                                         4. We now resolve the remaining                    leveraged by other service providers.
                                              Congressional Review Act                                issues raised by petitioners. We grant                Accordingly, we amend the language of
                                                The Commission will send a copy of                    the requests of petitioners, insofar as we            section 54.1015(f) to provide that the
                                              this MF–II Second Order on                              amend the rules to apply the collocation              MF–II collocation requirement applies
                                              Reconsideration in a report to Congress                 requirement for MF–II recipients to ‘‘all             to ‘‘all newly constructed’’ towers that
                                              and the Government Accountability                       newly constructed’’ towers. We affirm                 the MF–II recipient owns or manages in
                                              Office pursuant to the Congressional                    our decision to require that MF–II                    the areas for which it receives support.
                                              Review Act (CRA), see 5 U.S.C.                          recipients obtain a letter of credit (LOC),
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                                                                                                      but grant the petitions insofar as we                 B. Letters of Credit
                                              801(a)(1)(A).
                                                                                                      modify the LOC requirements to align                    6. We affirm the Commission’s
                                              I. Introduction                                         our MF–II rules with recent changes                   decision to require an MF–II recipient to
                                                 1. In the MF–II Second Order on                      made in the Connect America Fund                      obtain an LOC before it begins receiving
                                              Reconsideration, the Commission                         Phase II (CAF–II) proceeding. These                   support disbursements, but we modify
                                              addresses the remaining issues raised in                modifications should provide MF–II                    the Commission’s rules to provide some
                                              petitions for reconsideration filed in                  support recipients with some additional               additional relief from the burden


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                                              17936            Federal Register / Vol. 83, No. 80 / Wednesday, April 25, 2018 / Rules and Regulations

                                              associated with maintaining an LOC.                     recover, either the Wireline Competition              Docket No. 10–90 et al., FCC 18–5, we
                                              Specifically, we will permit an MF–II                   Bureau or the Wireless                                modify our LOC requirements to permit
                                              recipient to reduce the value of an LOC                 Telecommunications Bureau will issue                  an MF–II recipient to reduce the value
                                              to 60 percent of the total support                      a letter evidencing the failure and                   of an LOC to 60 percent of the total
                                              already disbursed plus the amount of                    declaring a default. USAC will then                   support already disbursed plus the
                                              support that will be disbursed in the                   draw on the LOC(s) to recover 100% of                 amount of support that will be
                                              coming year once it has been verified                   the support that has been disbursed to                disbursed in the coming year once it has
                                              that the MF–II recipient has met the 80                 the ETC for that state. The MF–II Report              been verified that the MF–II recipient
                                              percent service milestone for the area(s)               & Order provides that if service ceases               has met the 80 percent service milestone
                                              covered by the LOC. This modification                   after the final deployment milestone has              for the area(s) covered by the LOC. In
                                              should alleviate some of the concerns                   been reached and the LOC has been                     the MF–II Report & Order, the
                                              raised by petitioners and commenters                    terminated, the Commission will cease                 Commission indicated that it would
                                              and aligns our MF–II requirements with                  payment of ongoing support until                      require MF–II recipients to demonstrate
                                              recent changes made to the CAF–II                       service resumes. At the time these MF–                compliance with our coverage
                                              requirements. We also clarify, consistent               II rules were adopted, they were                      requirements by submitting data
                                              with the Commission’s stated intent in                  consistent with the requirements for                  consistent with the evidence we
                                              the MF–II Report & Order, that an MF–                   CAF–II recipients.                                    determined to be necessary in the MF–
                                              II recipient may further reduce its costs                  8. We are convinced by claims of                   II challenge process. Once USAC is able
                                              by canceling the LOC as soon as USAC,                   petitioners and commenters that the                   to verify that a recipient’s 80 percent
                                              in coordination with the Commission,                    Commission’s existing MF–II LOC                       service milestone has been met, the
                                              verifies that the recipient has met the                 requirements may warrant additional                   recipient will be able to reduce the
                                              final performance milestone (i.e., we do                relief on reconsideration. We continue                value of its LOC.
                                              not require that the LOC be maintained                  to conclude that MF–II bidders will take                 10. By increasing the amount by
                                              after its purpose is no longer served).                 into account the costs associated with                which an LOC may be reduced after
                                              We deny the petitions for                               program requirements, including an                    verification that an MF–II recipient has
                                              reconsideration to the extent they seek                 LOC, as they formulate their bids, and                met a significant portion of its
                                              other changes to our LOC requirements.                  that many bidders can do so without the               performance obligations, we can
                                                                                                      consequences alleged by some                          provide MF–II recipients with a
                                                 7. In the MF–II Report & Order, the                  petitioners and commenters. We                        measure of relief from the costs of
                                              Commission adopted an LOC                               nonetheless recognize that the costs                  maintaining an LOC without posing
                                              requirement for all winning bidders.                    associated with maintaining an LOC                    undue risks to the Universal Service
                                              Specifically, before a winning bidder                   may pose a greater financial burden on                Fund. As the Commission stated in the
                                              can be authorized to receive MF–II                      those bidders that lack the resources of              MF–II Report & Order, we expect that
                                              support, it must obtain an irrevocable                  larger, more established companies.                   the risk of default will decrease as an
                                              stand-by LOC(s) from an eligible bank                   Such bidders may have to factor                       MF–II recipient meets its deployment
                                              that covers the first year of support for               relatively higher LOC-related costs into              milestones. We therefore conclude that
                                              all of the winning bids in the state.                   their bids. One purpose of using                      the benefits of providing additional
                                              Before a recipient can receive its MF–II                competitive bidding to select support                 relief from some of the costs associated
                                              support for the coming year, the                        recipients is that it promotes providing              with maintaining an LOC outweigh the
                                              recipient must modify, renew, or obtain                 support to those parties that can                     risk that we will not be able to recover
                                              a new LOC to ensure that it is valued                   accomplish the MF–II program goals in                 an additional portion of the support if
                                              at a minimum at the total amount of                     the most cost-effective manner.                       the recipient is unable to repay the
                                              support that has already been disbursed                 However, we recognize that the exact                  Commission in the event of a default.
                                              plus the amount of support that is going                cost of any requirement, including                    Moreover, as we discuss below, an MF–
                                              to be provided in the next year. Once                   obtaining and maintaining an LOC, will                II recipient that is affected by high LOC-
                                              the MF–II recipient has met its 60                      affect each prospective bidder in the                 related costs may also choose to build
                                              percent service milestone, its LOC may                  MF–II auction differently. A bidder’s                 out its network more quickly so that its
                                              be valued at 90 percent of the total                    LOC-related costs will likely vary based              LOC can be terminated sooner. We
                                              support amount already disbursed plus                   on the amount of support that it is                   therefore find it reasonable to grant the
                                              the amount that will be disbursed in the                authorized to receive, and the impact of              petitions for reconsideration, in part, to
                                              coming year. Once the MF–II recipient                   those costs on the bidder will also vary              reduce the burden associated with
                                              has met its 80 percent service milestone,               based on its size and creditworthiness.               maintaining an LOC until the final
                                              it may reduce the value of the LOC to                   Thus, we cannot reasonably predict the                performance benchmark has been met
                                              80 percent of the total support amount                  costs of our LOC requirements for each                and verified by USAC.
                                              already disbursed plus the amount that                  potential winning bidder and weigh                       11. We are not, however, persuaded
                                              will be disbursed in the coming year.                   them relative to the benefit to the public            by arguments that we should eliminate
                                              The LOC must remain open until USAC,                    of protecting the funds from default.                 the requirement for an MF–II recipient
                                              in coordination with the Commission,                    The fees associated with maintaining an               to obtain an LOC because they are
                                              has verified that the MF–II recipient has               LOC can range by several percentage                   unnecessary to protect the public
                                              met its final benchmark: Deployment to                  points and, when applied to the sizable               interest. Our obligation to safeguard the
                                              a minimum of 85 percent of the required                 amounts of support that may be                        disbursement of universal service
                                              coverage area by state and at least 75                  awarded to bidders here, the costs may                support justifies requiring an LOC and
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                                              percent by each census block group or                   become substantial over time,                         outweighs the limited burden incurred
                                              census tract in a state. If an MF–II                    particularly for winning bidders that are             by winning bidders. For this same
                                              recipient fails to meet a required service              small businesses and new entrants.                    reason, we are not convinced by the
                                              milestone after it begins receiving                        9. Accordingly, consistent with the                contentions that an MF–II LOC
                                              support, then fails to cure within the                  rule modifications we recently adopted                requirement is unnecessary for rural
                                              requisite time period, and is unable to                 in the Connect America Fund Phase II                  telephone companies based on their
                                              repay the support that USAC seeks to                    Auction Order on Reconsideration, WC                  history of providing service and using


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                                                               Federal Register / Vol. 83, No. 80 / Wednesday, April 25, 2018 / Rules and Regulations                                        17937

                                              universal service support without                       Commission for their compliance gap.                  mobile services and reasonable
                                              default. Our responsibility to protect                  While we have not implemented any of                  comparability of service between urban
                                              universal service funds does not                        the specific proposals of these                       and rural areas. They also argue that the
                                              diminish based on a support recipient’s                 petitioners, we conclude that, on                     budget was not supported by actual
                                              past performance, the nature of its                     balance, the relief provided above                    carrier cost data related to coverage
                                              business, or its size. We are equally                   should adequately address the nature of               needs. The Commission established the
                                              unpersuaded by a petitioner’s                           the concerns they raise. The approaches               amount of the MF–II budget by starting
                                              suggestion that because the Commission                  suggested by petitioners would add                    with the $483 million of current annual
                                              has not yet had to draw on any LOC in                   greater complexity and testing expenses               legacy high-cost support received by
                                              MF–I, it is unnecessary for us to require               for support recipients and would                      wireless providers, excluding Alaska. It
                                              one for MF–II. To the contrary, we find                 impose increased verification burdens                 multiplied that amount over the ten-
                                              that premise supports our conclusion                    on USAC without the corresponding                     year term of MF–II and then subtracted
                                              that an LOC requirement deters defaults                 benefit of significantly speeding the                 $300 million, representing the estimated
                                              and fulfills its intended purpose of                    completion of MF–II performance                       amount needed for the phase-down of
                                              protecting the public funds.                            requirements. Finally, we decline to                  competitive eligible
                                                 12. Similarly, we disagree with the                  adopt the request by a mobile provider                telecommunications carrier (CETC)
                                              assertion that the Commission should                    to accelerate the service milestones,                 support in areas already fully covered
                                              eliminate the LOC requirement and                       eliminate the LOC requirement, and pay                with unsubsidized 4G LTE, for a total
                                              instead ensure the security of program                  a recipient only after compliance with a              budget of $4.53 billion over ten years.
                                              funds by imposing a monetary forfeiture                 milestone has been verified. Such an                  The Commission reasoned that basing
                                              on the defaulting MF–II recipient or                    approach, like the other suggestions we               its budget upon this amount best
                                              using the threat of revocation or non-                  reject above, would require us to                     balanced its goal of preserving and
                                              renewal of its licenses as leverage to                  disburse universal service funds                      advancing mobile broadband service
                                              demand repayment of the funds. The                      without being able to recoup support                  with its obligation to be fiscally
                                              exercise of our forfeiture, revocation,                 from a recipient if the recipient                     responsible with limited universal
                                              and licensing authority requires                        subsequently defaulted on its remaining               service funds.
                                              additional procedures and standards                     performance requirements.                                16. We are not persuaded that we
                                              that are not well suited to the prompt                     14. In reviewing arguments regarding               should reconsider that decision and
                                              action required in enforcing our                        the costs of maintaining an LOC, we                   base the MF–II budget on carriers’
                                              milestones because, among other                         also emphasize that the Commission’s                  projected costs for deployment as some
                                              reasons, such authority does not                        LOC requirements already include an                   parties advocate. Phase II of the
                                              effectively address the regulatory                      incentive for a recipient to meet its final           Mobility Fund is a considerable
                                              purpose behind our adoption of the                      performance milestone as soon as                      departure from the prior method of
                                              LOC—making the Universal Service                        possible, because once it has been                    distributing CETC funding, and we
                                              Fund whole if a support recipient failed                verified that a support recipient has met             anticipate that a $4.53 billion budget,
                                              to fulfill its MF–II performance                        its final performance milestone, the                  distributed in a more efficient and
                                              requirements. Without an LOC, the                       recipient can further reduce costs by no              targeted manner, will lead to significant
                                              Commission has no security to protect                   longer maintaining that LOC. In this                  expansion and improvement in the
                                              itself against the risks of default.                    regard, we note that the Commission                   provision of mobile voice and
                                              Accordingly, we affirm the                              provided in the MF–II Report & Order                  broadband services to areas that would
                                              Commission’s prior conclusion that the                  that the LOC must remain in place until               otherwise be underserved or unserved
                                              LOC requirement is necessary to ensure                  it has been verified that an MF–II                    without support. After the Commission
                                              the recovery of a significant amount of                 participant has met its minimum                       has the opportunity to evaluate the
                                              MF–II support should such a need arise,                 coverage and service requirements at the              impact of the MF–II auction, it can
                                              and we find that, on balance, our                       end of the six-year milestone. We                     determine whether additional funding
                                              commitment to fiscal responsibility                     interpret this language to allow the MF–              (and if so, how much) is needed.
                                              supports the limited burden faced by                    II recipient to further reduce its costs by           Furthermore, while we believe that the
                                              support recipients.                                     no longer maintaining the LOC as soon                 total budget of $4.53 billion will be
                                                 13. We also decline to grant requests                as USAC, in coordination with the                     sufficient to address a more targeted set
                                              in the petitions for reconsideration to                 Commission, verifies that the recipient               of eligible areas, we reiterate that
                                              take further steps to modify our LOC                    has met the final performance milestone               MF–II is only one component of our
                                              requirements. In the MF–II Report &                     (i.e., we do not require that the LOC be              broader universal service reform efforts,
                                              Order, the Commission already took a                    maintained after its purpose is no longer             and we need not wait until the end of
                                              number of steps to help lessen LOC                      served). We anticipate that this                      the MF–II support term to determine if
                                              costs, including expanding the number                   clarification, together with the rule                 additional funding is necessary.
                                              and types of banks eligible to issue                    modification we adopt above, should                      17. Moreover, the proposal to base the
                                              LOCs so that winning bidders can                        provide MF–II recipients with                         MF–II budget on carriers’ projected
                                              obtain LOCs from banks with which                       additional relief from the burden of                  costs for providing service to all census
                                              they have existing relationships.                       maintaining an LOC.                                   blocks throughout the U.S. unserved by
                                              Although some entities may still find                                                                         4G LTE fails to address the
                                              that participating in the MF–II auction                 C. Mobility Fund Phase II Budget                      Commission’s long-standing
                                              is cost-prohibitive or that they are less                 15. We affirm the MF–II total budget                commitment to fiscal responsibility and
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                                              likely to place winning bids, we are not                amount of $4.53 billion that the                      would be inconsistent with extensive
                                              convinced that we should jeopardize                     Commission adopted in the MF–II                       4G LTE deployment through private
                                              our ability to recover a significant                    Report & Order, and we deny the                       investment in recent years. As a
                                              amount of support if such entities were                 petition seeking to increase it.                      responsible steward of the Universal
                                              to participate and later become unable                  Petitioners addressing the budget                     Service Fund, the Commission adopted
                                              to meet the MF–II performance                           contend that this amount is insufficient              a budget that reflected its priorities in
                                              milestone obligations and to repay the                  to achieve ubiquitous availability of                 allocating finite funds to areas of


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                                              17938            Federal Register / Vol. 83, No. 80 / Wednesday, April 25, 2018 / Rules and Regulations

                                              greatest need to maintain and expand                    current level of mobile CETC support,                 those targeted areas that warrant such
                                              critical mobile voice and broadband                     minus the phase-down amount needed                    funding. These actions also will ensure
                                              services. To increase the size of the                   for areas where support is not needed,                the budget is used to minimize service
                                              MF–II budget significantly above the                    and redirecting funding to areas                      disparities between rural and urban
                                              amount of legacy support currently                      unserved by qualified 4G LTE will                     areas, while continuing our obligation to
                                              provided to mobile CETCs would                          provide a significant improvement in                  be a fiscally responsible steward of
                                              improperly ignore the burden on those                   mobile coverage while not increasing                  universal service funding. Therefore, we
                                              paying for the fund, thereby abandoning                 the burden on those contributing to                   decline to revise the MF–II budget at
                                              one of the main concerns the                            universal service funding.                            this time.
                                              Commission sought to address through                       19. For similar reasons, we further
                                              universal service reform. Indeed, if the                conclude that the claim that the amount               D. Monthly Disbursement Schedule
                                              Commission were to adopt this                           of the MF–II budget is not supported by
                                              proposal, consumers and businesses                      data related to coverage needs is equally                21. We decline to alter the
                                              would shoulder the burden of                            flawed. While it is true that, for the                Commission’s monthly disbursement
                                              potentially increasing the MF–II budget                 reasons explained above, the                          schedule for MF–II. The Commission, in
                                              by tens of billions of dollars. This                    Commission did not base the amount of                 deciding to provide support in monthly
                                              increase would not be consistent with                   its MF–II budget upon carrier cost                    disbursements as it had adopted for the
                                              the Commission’s stated intention to                    deployment data, it did use data                      CAF program, including CAF–II,
                                              limit universal service expenditures in                 regarding the provision of service to                 reasoned that such an approach would
                                              light of extensive 4G LTE deployment in                 eligible areas when establishing the                  provide MF–II recipients with reliable
                                              recent years.                                           budget. Specifically, the Commission                  and predictable support payments that
                                                                                                      relied on a 2016 analysis by the                      conform to a variety of business cycles.
                                                 18. Recognizing that the Universal
                                                                                                      Wireless Telecommunications Bureau                    We are not persuaded that, instead of
                                              Service Fund is limited, the
                                                                                                      (Wireless Bureau) of mobile broadband                 monthly disbursements of MF–II
                                              Commission has consistently
                                                                                                      providers, which revealed that,                       support to winning bidders, the program
                                              determined the amount of the MF–II
                                                                                                      conservatively, three quarters of support
                                              budget by starting with the amount of                                                                         should provide larger installment
                                                                                                      currently distributed to mobile
                                              existing CETC support, subtracting the                                                                        payments early in the construction
                                                                                                      providers is being directed to areas
                                              support going to areas where support is                 where it is not needed. Moreover, the                 process that are more closely matched to
                                              not needed, and redirecting that amount                 Wireless Bureau’s analysis showed that,               some providers’ expected outlays.
                                              to the areas in need. By weighing the                   as of 2016, 1.4 million people in the                 Although the Commission recognized
                                              need to distribute support to areas that                U.S. have no LTE coverage and another                 that some MF–II support recipients
                                              would otherwise be unserved against                     1.7 million live in areas where LTE                   might incur higher up-front project
                                              the burden that consumers and                           coverage is provided only on a                        costs, it also observed that the timing of
                                              businesses must bear by contributing to                 subsidized basis, so that 3.1 million                 project expenses varies. Thus, it is
                                              the Universal Service Fund, the                         people (or approximately 1 percent of                 administratively burdensome, if not
                                              Commission has demonstrated a                           the U.S. population) live in areas with               impossible, for the Commission, USAC,
                                              commitment to fiscal responsibility                     no LTE or only subsidized LTE. Thus,                  and the winning bidders to try to match
                                              while acknowledging that its efforts are                staff analysis of data regarding the                  payments to expenses in a manner that
                                              needed to supplement private                            provision of service revealed that,                   would synchronize precisely with the
                                              investment. Taking this type of balanced                despite extensive private investment                  budgetary needs of all bidders. Further,
                                              approach has been previously upheld by                  spurring 4G LTE deployment generally,
                                              the Tenth Circuit Court of Appeals,                                                                           the Commission observed that, in
                                                                                                      certain areas remain unserved without                 Mobility Fund Phase I (MF–I), even
                                              which noted that, in challenging the                    government subsidies, which the
                                              sufficiency of the MF–II budget, the                                                                          with support payments based on
                                                                                                      Commission took into consideration                    deployment milestones, disbursements
                                              petitioners in In re FCC 11–161, 753                    when it chose to reallocate current
                                              F.3d 1015, 1098–100 (10th Cir. 2014),                                                                         were not tied to the timing of
                                                                                                      CETC support and derive greater
                                              had failed to discredit (i) the                                                                               expenditures, as petitioners request. A
                                                                                                      coverage from the limited amount of
                                              Commission’s reliance on its finding                                                                          shift to a front-loaded disbursement
                                                                                                      funding.
                                              that then-current CETC funding was                         20. In addition, to ensure that the                mechanism or a cost reimbursement
                                              being misallocated or (ii) the                          MF–II support is directed specifically to             process, as requested by petitioners,
                                              Commission’s predictive judgment that                   areas that lack unsubsidized qualifying               would place undue strains on the
                                              redirecting those funds would be                        4G LTE coverage, we have adopted a                    universal service budget, and would
                                              sufficient to sustain and expand mobile                 challenge process that is                             thereby undermine the ability of the
                                              broadband service. In the MF–II Report                  administratively efficient and fiscally               Commission to ensure continued
                                              & Order, the Commission similarly                       responsible, and will enable us to                    program compliance over the entire
                                              relied on staff analysis of data that                   resolve eligible area disputes quickly                10-year term. We note that the
                                              continued to reveal that current mobile                 and expeditiously, so that limited funds              Commission also purposefully aligned
                                              CETC funds remain misallocated, and it                  are focused on the areas that need it the             its disbursement schedule with the
                                              again exercised its predictive judgment                 most. As part of the challenge process,               schedule adopted for CAF–II, which
                                              in determining that an MF–II budget of                  we have also undertaken a new, one-                   established regular and predictable
                                              $4.53 billion, when distributed cost                    time collection of standardized, up-to-               monthly payments that would not
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                                              effectively, should make meaningful                     date 4G LTE coverage data from mobile                 exceed the budget in any one year of the
                                              progress in eliminating lingering                       wireless providers. These actions, taken              term. We believe that this approach best
                                              coverage gaps. The petitioners have                     together with the use of competitive                  balances the burdens on the
                                              failed to convince us that this decision                bidding to distribute support, will focus
                                                                                                                                                            Commission and USAC with the
                                              to apply a balanced approach in setting                 MF–II funds on areas that lack
                                                                                                                                                            budgetary needs of recipients.
                                              the MF–II budget is in error. We                        unsubsidized qualified 4G LTE service,
                                              continue to maintain that using the                     thereby providing additional funds for


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                                                               Federal Register / Vol. 83, No. 80 / Wednesday, April 25, 2018 / Rules and Regulations                                        17939

                                              E. Minimum Baseline Performance                         are already receiving download speeds                 of all required measurements must be at
                                              Requirements for Data Speeds and                        just below the 5 Mbps eligibility                     or below 100 ms round trip.
                                              Latency                                                 threshold because such areas could
                                                                                                                                                            F. Bidding Credits
                                                 22. We also decline to reconsider the                require very little investment to meet
                                                                                                      the lowered performance requirement                      25. We decline to reconsider the
                                              minimum baseline performance
                                                                                                      and would, accordingly, be more                       Commission’s decision not to adopt
                                              requirements for recipients of MF–II
                                                                                                      competitive at auction. Awarding funds                bidding preferences for the MF–II
                                              funding. In the MF–II Report & Order,
                                                                                                      to such areas increases the risk of only              auction. In the MF–II Report & Order,
                                              the Commission decided that a recipient
                                                                                                      marginally benefiting consumers in                    the Commission rejected the notion that
                                              of MF–II support must provide a                                                                               small and rural carriers needed targeted
                                              minimum level of service with a median                  those areas by not significantly
                                                                                                      improving the status quo download                     assistance to secure MF–II support
                                              data speed of 10 Mbps download speed                                                                          based, in part, on its observation that
                                              or greater and 1 Mbps upload speed or                   speeds for a decade. Further, a lowered
                                                                                                      performance requirement would reduce                  numerous smaller carriers had placed
                                              greater, with at least 90 percent of the                                                                      winning bids in the Mobility Fund
                                              required download speed measurements                    the final performance milestone for
                                                                                                      median data speeds in all areas, thereby              Phase I (MF–I) auction without the aid
                                              being not less than a certain threshold                                                                       of bidding credits. Contrary to
                                              speed to be specified as part of the pre-               increasing the likelihood that those
                                                                                                      areas will not receive service that is                petitioners’ assertions, the Commission
                                              auction process. In addition, an MF–II                                                                        specifically noted that commenters had
                                              support recipient must provide reports                  reasonably comparable to urban areas by
                                                                                                      the end of the support term, despite the              advocated for bidding preferences for
                                              of speed and latency demonstrating that                                                                       other entities, including rural carriers,
                                              at least 90 percent of the required                     distribution of potentially significant
                                                                                                      MF–II support. We therefore conclude                  for the MF–II auction. The Commission
                                              measurements have a data latency of                                                                           also reasoned that small business
                                              100 milliseconds (ms) or less round trip.               that reducing the performance
                                                                                                      benchmark to a median data speed of                   bidding credits would potentially
                                              The Commission determined that                                                                                decrease the reach of MF–II funding,
                                              recipients of MF–II support must                        only 5/1 Mbps would risk relegating
                                                                                                      rural areas with the greatest need to a               and thereby decrease additional
                                              provide service that meets the minimum                                                                        coverage expansion or preservation.
                                              baseline performance requirements of                    lower standard of service that is not
                                                                                                      comparable to urban 4G LTE service.                   This rationale is equally applicable to
                                              4G LTE or better, and concluded that                                                                          any type of bidding preference,
                                              these requirements will ensure that                        24. Similarly, with respect to latency,            including those for rural service
                                              finite universal service funds are used                 the Commission has noted that latency                 providers.
                                              efficiently to provide rural consumers                  is important for a variety of real-time,                 26. We reject petitioners’ claims that
                                              access to robust mobile broadband                       interactive applications, including                   the Commission has a statutory
                                              service at speeds reasonably comparable                 Voice over internet Protocol (VoIP),                  obligation under section 309(j) of the
                                              to the 4G LTE service being offered in                  video calling, and distance learning,                 Act to promote small business and rural
                                              urban areas.                                            which ‘‘may be effectively unusable                   carrier participation in the universal
                                                 23. We are not persuaded that the                    over high latency connections,                        service context. The Commission’s
                                              minimum baseline performance                            regardless of the download/upload                     authority to award universal service
                                              requirement for median data speeds                      speeds being offered.’’ Contrary to                   support through competitive bidding is
                                              should be reduced to 5⁄1 Mbps, as one                   petitioner’s assertion that the                       not derived from section 309(j), which
                                              provider urges. The Commission seeks                    Commission failed to account for the                  authorizes the use of competitive
                                              to ensure that the performance of                       inherent differences between wireless                 bidding for granting spectrum licenses
                                              broadband service in rural and high-cost                and wireline technologies in adopting                 or construction permits, not for reverse
                                              areas is reasonably comparable to that in               the 100 ms latency standard, the                      auctions to award universal service
                                              urban areas, and the Commission’s own                   Commission established the                            funding. Moreover, even in spectrum
                                              analysis at the time the MF–II Report &                 performance metrics, including latency,               auctions, where section 309(j) does
                                              Order was adopted indicated that                        to ensure reasonably comparable                       apply, the Commission does not always
                                              customers of nationwide carriers were                   service. According to petitioner’s own                provide bidding credits, and courts have
                                              receiving data at median speeds of                      data analysis, the majority                           held that the statutorily prescribed
                                              around 10/1 Mbps or faster.                             (approximately 75 percent) of existing                objectives in section 309(j)(3) are not
                                              Furthermore, in our more recent MF–II                   networks already meet the 100 ms                      mandatory. Additionally, the
                                              Order on Reconsideration, we explained                  standard with 90 percent probability in               Commission’s primary goal in using
                                              that, in contrast to the 5 Mbps eligibility             Metropolitan Statistical Areas (MSAs).                competitive bidding in MF–II is to
                                              benchmark in the challenge process,                     Further, technological improvements,                  maximize the impact of the funding to
                                              which serves to target support where it                 including newly available 600 MHz                     increase and preserve mobile coverage.
                                              is currently needed most, the 10 Mbps                   spectrum, will likely enable more                     Since bidding preferences for any
                                              minimum baseline performance                            carriers to exceed this performance                   entities (be they small businesses or
                                              requirement makes sure that service in                  requirement in the near future. Thus,                 rural service providers) would hamper
                                              eligible areas is reasonably comparable                 reducing the performance benchmark                    that goal by effectively decreasing the
                                              to future urban offerings.’’ This forward-              for data latency to 220 ms would risk                 number of eligible areas covered by the
                                              looking approach is consistent with past                relegating rural areas to a lower                     finite level of funding, the Commission
                                              Commission decisions in the universal                   standard of service that is not                       chose not to award bidding preferences
                                              service context and recognizes that                     comparable to urban 4G LTE service,                   in lieu of greater coverage. Accordingly,
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                                              consumer demand for faster mobile                       which includes support for advanced                   we are not persuaded that section 309(j)
                                              wireless services is growing. Moreover,                 mobile applications. Accordingly, in                  obligates us to overlook this concern
                                              MF–II funding provides on-going, long-                  light of the statutory mandate with                   and adopt bidding preferences for the
                                              term support over a 10-year period, and                 respect to reasonably comparable                      MF–II auction.
                                              reducing the performance requirement                    service, we affirm that the minimum                      27. Likewise, we reject petitioner’s
                                              to a 5 Mbps download speed increases                    baseline performance requirement for                  assertion that the Commission should
                                              the risk of directing funds to areas that               data latency is that at least 90 percent              not have factored into its decision for


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                                              17940            Federal Register / Vol. 83, No. 80 / Wednesday, April 25, 2018 / Rules and Regulations

                                              MF–II the fact that numerous small and                  conducting compliance reviews in order                through such testing, to be in
                                              rural carriers participated successfully                to ensure a cost-efficient process.                   compliance. Compliance reviews, like
                                              in the MF–I auction without bidding                       30. In the MF–II Report & Order, the                audits, are an essential tool for the
                                              credits. We find it reasonable, and                     Commission determined that it would                   Commission and USAC to ensure
                                              certainly useful, to consider past                      require MF–II support recipients to                   program integrity and to detect and
                                              auction participation in formulating our                submit data sufficient to demonstrate                 deter waste, fraud, and abuse. Therefore,
                                              policy concerning bidding preferences                   compliance with the MF–II coverage                    we will not limit USAC’s role in
                                              in future auctions. Moreover, even if we                requirements. Specifically, section                   verifying the data that recipients submit
                                              were to accept petitioner’s claim that                  54.1015 of our rules requires an MF–II                to demonstrate compliance with our
                                              MF–II is fundamentally different from                   support recipient to provide the data                 MF–II coverage requirements.
                                              MF–I because it involves ongoing                        necessary to support its certifications,
                                              support provided for more significant                   and that the submitted data must be in                IV. Procedural Matters
                                              projects, the petitioner has failed to                  compliance with the standards set forth               A. Paperwork Reduction Act Analysis
                                              demonstrate that small and rural                        in the applicable public notice. In our
                                                                                                      role as a responsible steward of public                  32. This Second Order on
                                              carriers would be less inclined, or able,
                                                                                                      funds, we are obligated to ensure that                Reconsideration contains new or
                                              to compete effectively in the auction
                                              absent bidding preferences. In the                      the funds disbursed through universal                 modified information collection
                                              absence of such a demonstration, and in                 service programs are used for the                     requirements subject to the Paperwork
                                              light of our concerns about the most                    purposes for which they were intended                 Reduction Act of 1995 (PRA), Public
                                              efficient use of limited universal service              and that the recipients of support have               Law 104–13. It will be submitted to the
                                              funds, we affirm the decision in the                    met the terms and conditions under                    Office of Management and Budget
                                              MF–II Report & Order not to provide                     which the funds were awarded.                         (OMB) for review under section 3507(d)
                                              bidding credits in the MF–II auction.                   Accordingly, in the USF/ICC                           of the PRA. OMB, the general public,
                                                                                                      Transformation Order or FNPRM,                        and other Federal agencies will be
                                              G. Equipment Exclusivity Arrangements                   adopted October 27, 2011, released                    invited to comment on the new or
                                                 28. We dismiss a provider’s request to               November 18, 2011, 76 FR 78384,                       modified information collection
                                              impose a new certification requirement                  December 16, 2011, the Commission                     requirements contained in this
                                              on all MF–II support recipients that they               directed USAC to test the accuracy of                 proceeding. In addition, the
                                              do not and will not participate in                      certifications made pursuant to the new               Commission notes that pursuant to the
                                              equipment exclusivity arrangements.                     reporting requirements, noting that any               Small Business Paperwork Relief Act of
                                              The petition relies on comments that the                oversight program to assess compliance                2002, Public Law 107–198, we
                                              provider filed in this proceeding in                    should be designed to ensure that                     previously sought specific comment on
                                              2014; however, those 2014 comments                      support recipients are reporting                      how the Commission might further
                                              make no reference to exclusivity                        accurately to the Commission. The                     reduce the information collection
                                              arrangements. Thus, to the extent that                  Commission specifically stated that                   burden for small business concerns with
                                              the provider raises this argument for the               such oversight should be designed to                  fewer than 25 employees.
                                              first time in its Petition, we dismiss it               test some of the underlying data that                    33. In this present document, we have
                                              as untimely. Further, in its 2012 Fourth                form the basis for a recipient’s                      assessed the effects of the modifications
                                              Order on Reconsideration in the MF–I                    certification of compliance with various              that the Commission is making to the
                                              proceeding, adopted and released July                   requirements.                                         letter of credit rule and the collocation
                                              18, 2012, 77 FR 48453, August 14, 2012,                   31. In the case of MF–I, USAC’s                     rule adopted by the Commission in the
                                              the Commission previously considered                    compliance reviews did not entail                     MF–II Report & Order regarding the
                                              and rejected this provider’s request for                duplication of a recipient’s drive tests as           information collection burdens on small
                                              adoption of a bar on equipment                          the petitioner contends, but rather                   business concerns. The Commission
                                              exclusivity arrangements. In the MF–II                  verification of data transmission rates               describes impacts that might affect
                                              Report & Order, the Commission again                    and transmission latency for a                        small businesses, which include most
                                              rejected proposals to restrict                          statistically valid random sample of a                businesses with fewer than 25
                                              participation in an MF–II auction                       small portion of the total road miles for             employees, in the Supplemental Final
                                              through additional eligibility                          which a recipient claimed it was                      Regulatory Flexibility Analysis (FRFA)
                                              requirements and confirmed its                          entitled to a support payment. Although               in Appendix B of the Second Order on
                                              intention to encourage participation by                 the petitioner argues that USAC’s role                Reconsideration.
                                              the widest range of applicants.                         was redundant because USAC’s drive
                                                                                                      tests ultimately validated the data the               B. Congressional Review Act
                                              Petitioner has identified no substantive
                                              basis upon which to reconsider the                      provider had already submitted for                      34. The Commission will send a copy
                                              Commission’s prior decisions not to                     MF–I, we are not persuaded by the                     of the Second Order on Reconsideration
                                              restrict participation in the Mobility                  petitioner’s claim that the benefits of               to Congress and the Government
                                              Fund by adopting additional                             USAC compliance review testing in the                 Accountability Office pursuant to the
                                              requirements, including a bar on                        context of MF–I were outweighed by the                Congressional Review Act.
                                              equipment exclusivity arrangements.                     time and expense spent conducting
                                                                                                                                                            C. Supplemental Final Regulatory
                                                                                                      such testing. We decline to draw a
                                              H. USAC’s Role in Testing Winning                                                                             Flexibility Analysis
                                                                                                      conclusion about the overall value of
                                              Bidder Buildout Performance                             USAC’s compliance testing based only                    35. As required by the Regulatory
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                                                29. We decline to limit USAC’s role                   on the experience of one MF–I                         Flexibility Act of 1980, as amended
                                              in testing winning bidders’ compliance                  participant. Further, we find it lacking              (RFA), the Commission prepared Initial
                                              with MF–II performance metrics, public                  in logic to argue that it serves no                   Regulatory Flexibility Analyses (IRFAs)
                                              interest obligations, or other program                  purpose to attempt to verify, even by                 in connection with the USF/ICC
                                              requirements as requested by a provider.                sampling, recipients’ compliance with                 Transformation FNPRM, the CAF
                                              We find no merit in contentions that we                 program requirements, merely because                  Further Notice, adopted April 23, 2014,
                                              should limit USAC’s responsibility for                  some recipients have been found,                      released June 10, 2014, 79 FR 39195,


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                                                               Federal Register / Vol. 83, No. 80 / Wednesday, April 25, 2018 / Rules and Regulations                                         17941

                                              July 9, 2014, and the MF–II FNPRM                       3. Response to Comments by the Chief                  others): ‘‘(1) The establishment of
                                              (collectively, MF–II FNPRMs). The                       Counsel for Advocacy of the Small                     differing compliance or reporting
                                              Commission sought written public                        Business Administration                               requirements or timetables that take into
                                              comment on the proposals in the MF–II                      38. Pursuant to the Small Business                 account the resources available to small
                                              FNPRMs including comments on the                        Jobs Act of 2010, which amended the                   entities; (2) the clarification,
                                              IRFAs and Supplemental IRFA. The                        RFA, the Commission is required to                    consolidation, or simplification of
                                              Commission included Final Regulatory                    respond to any comments filed by the                  compliance or reporting requirements
                                              Flexibility Analyses (FRFAs) in                         Chief Counsel for Advocacy of the Small               under the rule for small entities; (3) the
                                              connection with the CAF Report &                        Business Administration (SBA), and to                 use of performance, rather than design,
                                              Order, adopted April 23, 2014, released                 provide a detailed statement of any                   standards; and (4) and exemption from
                                              June 10, 2014, 79 FR 39163, July 9,                     change made to the proposed rules as a                coverage of the rule, or any part thereof,
                                              2014, the MF–II Report & Order, and the                 result of those comments.                             for small entities.’’
                                              MF–II Challenge Process Order                              39. The Chief Counsel did not file any                44. The Commission has taken steps
                                              (collectively, the MF–II Orders). This                  comments in response to the proposed                  which will minimize the economic
                                              Supplemental Final Regulatory                           rules in this proceeding.                             impact on small entity MF–II recipients
                                              Flexibility Analysis (Supplemental                                                                            because we recognize that the costs
                                                                                                      4. Description and Estimate of the                    associated with maintaining an LOC
                                              FRFA) supplements the FRFAs in the                      Number of Small Entities to Which the
                                              MF–II Orders to reflect the actions taken                                                                     may pose a greater financial burden on
                                                                                                      Procedures Will Apply                                 those bidders that lack the resources of
                                              in the Second Order on Reconsideration
                                                                                                         40. The RFA directs agencies to                    larger, more established companies.
                                              and conforms to the RFA.
                                                                                                      provide a description of and, where                   Such bidders may have to factor
                                              1. Need for, and Objectives of, the                     feasible, an estimate of the number of                relatively higher LOC-related costs into
                                              Second Order on Reconsideration                         small entities that may be affected by                their bids. One purpose of using
                                                                                                      the rules adopted herein. The RFA                     competitive bidding to select support
                                                 36. The Second Order on                              generally defines the term ‘‘small                    recipients however is that it promotes
                                              Reconsideration addresses the                           entity’’ as having the same meaning as                providing support to those parties that
                                              remaining issues raised by parties in                   the terms ‘‘small business,’’ ‘‘small                 can accomplish the MF–II program goals
                                              petitions for reconsideration of the                    organization,’’ and ‘‘small governmental              in the most cost-effective manner.
                                              Commission’s MF–II Report & Order                       jurisdiction.’’ In addition, the term                 Therefore, in the Second Order on
                                              that adopted the framework for the                      ‘‘small business’’ has the same meaning               Reconsideration we have made a modest
                                              Mobility Fund Phase II (MF–II) and the                  as the term ‘‘small business concern’’                reduction in the required value of the
                                              Tribal Mobility Fund Phase II. These                    under the Small Business Act.’’ A                     letter of credit for MF–II recipients that
                                              universal service funding mechanisms                    ‘‘small business concern’’ is one which:              have met the 80 percent service
                                              will provide on-going high-cost support                 (1) Is independently owned and                        milestone for the area(s) covered by the
                                              to extend mobile voice and broadband                    operated; (2) is not dominant in its field            LOC. Moreover, we clarify that small
                                              coverage to unserved and underserved                    of operation; and (3) satisfies any                   entity and other MF–II recipients may
                                              areas. In the Second Order on                           additional criteria established by the                further reduce their costs by no longer
                                              Reconsideration, the Commission                         SBA.                                                  maintaining the LOC as soon as USAC,
                                              amends the collocation rules adopted in                    41. As noted above, FRFAs were                     in coordination with the Commission,
                                              the MF–II Report & Order to apply the                   incorporated into the MF–II Orders. In                verifies that the recipient has met the
                                              collocation requirement for MF–II                       those analyses, we described in detail                final performance milestone (i.e., we do
                                              recipients to ‘‘all newly constructed’’                 the small entities that might be                      not require that the LOC be maintained
                                              towers and modifies the letter of credit                significantly affected. Accordingly, in               after its purpose is no longer served).
                                              (LOC) requirements to align our MF–II                   this Supplemental FRFA we hereby                      These steps should alleviate some of the
                                              rules with recent changes made in the                   incorporate by reference the                          economic impact for small entity MF–II
                                              CAF–II Order on Reconsideration. These                  descriptions and estimates of the                     recipients and aligns our MF–II
                                              LOC modifications should provide MF–                    number of small entities from the                     requirements with recent changes made
                                              II support recipients with some                         previous FRFAs in the MF–II Orders.                   to the CAF–II requirements.
                                              additional relief from the costs of                     5. Description of Projected Reporting,                7. Report to Congress
                                              maintaining an LOC. Moreover, by                        Recordkeeping, and Other Compliance
                                              resolving these petitions, the                                                                                   45. The Commission will send a copy
                                                                                                      Requirements for Small Entities                       of the Second Order on Reconsideration,
                                              Commission takes another significant
                                              step toward holding an MF–II auction in                    42. We expect the amended rules in                 including this Supplemental FRFA, in a
                                              which service providers will compete                    the Second Order on Reconsideration                   report to Congress pursuant to the
                                              for support to offer service meeting the                will not impose any new or additional                 Congressional Review Act. In addition,
                                              minimum baseline performance                            reporting or recordkeeping or other                   the Commission will send a copy of the
                                              requirements of 4G LTE or better in                     compliance obligations on small entities              Second Order on Reconsideration,
                                              primarily rural areas of the country that               and, as described below, will reduce                  including this Supplemental FRFA, to
                                              lack qualified unsubsidized 4G LTE                      their costs.                                          the Chief Counsel for Advocacy of the
                                                                                                                                                            SBA.
                                              service.                                                6. Steps Taken To Minimize the
                                                                                                      Significant Economic Impact on Small                  VI. Ordering Clauses
                                              2. Summary of Significant Issues Raised
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                                                                                                      Entities, and Significant Alternatives                  46. Accordingly, it is ordered,
                                              by Public Comments in Response to the                   Considered
                                              IRFAs                                                                                                         pursuant to the authority contained in
                                                                                                         43. The RFA requires an agency to                  sections 1, 2, 4(i), 5, 10, 201–206, 214,
                                                37. There were no comments filed                      describe any significant alternatives that            218–220, 251, 252, 254, 256, 303(r), 332,
                                              that specifically addressed the IRFAs                   it has considered in reaching its                     403, 405, and 503 of the
                                              that are relevant to the issues discussed               proposed approach, which may include                  Communications Act of 1934, as
                                              here.                                                   the following four alternatives (among                amended, and section 706 of the


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                                              17942            Federal Register / Vol. 83, No. 80 / Wednesday, April 25, 2018 / Rules and Regulations

                                              Telecommunications Act of 1996, 47                      PART 54—UNIVERSAL SERVICE                             Atmospheric Administration (NOAA),
                                              U.S.C. 151, 152, 154(i), 155, 160, 201–                                                                       Commerce.
                                              206, 214, 218–220, 251, 252, 254, 256,                  ■ 1. The authority citation for part 54               ACTION: Temporary rule; commercial
                                              303(r), 332, 403, 405, 503, 1302, and                   continues to read as follows:                         trip limit reduction.
                                              §§ 1.1, 1.427, and 1.429 of the                           Authority: 47 U.S.C. 151, 154(i), 155, 201,
                                              Commission’s rules, 47 CFR 1.1, 1.427,                  205, 214, 219, 220, 254, 303(r), 403, and 1302        SUMMARY:    NMFS issues this temporary
                                              and 1.429, that the Second Order on                     unless otherwise noted.                               rule to reduce the commercial trip limit
                                              Reconsideration is adopted.                                                                                   for vermilion snapper in or from the
                                                                                                      ■ 2. Amend § 54.1015 by revising                      exclusive economic zone (EEZ) of the
                                                 • The parameters set forth in the                    paragraph (f) to read as follows:
                                              Second Order on Reconsideration, along                                                                        South Atlantic to 500 lb (227 kg), gutted
                                              with all associated requirements also set               § 54.1015    Public interest obligations.             weight, 555 lb (252 kg), round weight.
                                              forth therein, go into effect May 25,                   *     *     *    *      *                             This trip limit reduction is necessary to
                                              2018, except for the new or modified                      (f) Collocation obligations. During the             protect the South Atlantic vermilion
                                              information collection requirements that                period when a recipient shall file                    snapper resource.
                                              require approval by the Office of                       annual reports pursuant to § 54.1019,                 DATES: This rule is effective 12:01 a.m.,
                                              Management and Budget (OMB). The                        the recipient shall allow for reasonable              local time, April 26, 2018, until 12:01
                                              Commission will publish a document in                   collocation by other providers of                     a.m., local time, July 1, 2018.
                                              the Federal Register announcing the                     services that would meet the                          FOR FURTHER INFORMATION CONTACT:
                                              approval of those information collection                technological requirements of Mobility                Mary Vara, NMFS Southeast Regional
                                              requirements and the date they will                     Fund Phase II on all newly constructed                Office, telephone: 727–824–5305, email:
                                              become operative.                                       towers it owns or manages in the area                 mary.vara@noaa.gov.
                                                 • The Petition for Reconsideration                   for which it receives support. In                     SUPPLEMENTARY INFORMATION: The
                                              and/or Clarification filed by Rural                     addition, during this period, the                     snapper-grouper fishery in the South
                                              Wireless Association, Inc. on April 12,                 recipient may not enter into facilities               Atlantic includes vermilion snapper and
                                              2017, is granted in part and denied in                  access arrangements that restrict any                 is managed under the Fishery
                                              part to the extent described herein.                    party to the arrangement from allowing                Management Plan for the Snapper-
                                                 • The Petition for Reconsideration                   others to collocate on the facilities.                Grouper Fishery of the South Atlantic
                                              filed by Blooston Rural Carriers on April               *     *     *    *      *                             Region (FMP). The South Atlantic
                                              27, 2017, is granted in part and denied                 ■ 3. Amend § 54.1016 by revising                      Fishery Management Council prepared
                                              in part to the extent described herein.                 paragraph (a)(1)(ii) to read as follows:              the FMP. The FMP is implemented by
                                                                                                                                                            NMFS under the authority of the
                                                 • The Petition for Reconsideration                   § 54.1016    Letter of credit.                        Magnuson-Stevens Fishery
                                              filed by Rural Wireless Carriers on April                                                                     Conservation and Management Act
                                              27, 2017, is granted in part and denied                   (a) * * *
                                                                                                        (1) * * *                                           (Magnuson-Stevens Act) by regulations
                                              in part to the extent described herein.                                                                       at 50 CFR part 622.
                                                                                                        (ii) Once the recipient has met its 80
                                                 • The Petition for Reconsideration                   percent service milestone as described                   The commercial ACL (commercial
                                              filed by T-Mobile USA, Inc. on April 27,                in § 54.1015(c) of this chapter, it may,              quota) for vermilion snapper in the
                                              2017, is denied to the extent described                 subject to the consent of the Universal               South Atlantic is divided among two
                                              herein.                                                 Service Administrative Company,                       6-month fishing seasons, January
                                                 • The Petition for Reconsideration                   obtain a new letter of credit or renew its            through June and July through
                                              filed by Buffalo-Lake Erie Wireless                     existing letter of credit so that it is               December. For the January 1 through
                                              Systems L.L.C. dba Blue Wireless on                     valued at a minimum at 60 percent of                  June 30, 2018, fishing season, the
                                              April 27, 2017, is granted in part and                  the total support amount already                      commercial quota is 388,703 lb (176,313
                                              denied in part to the extent described                  disbursed plus the amount that will be                kg), gutted weight, 431,460 lb (195,707
                                              herein.                                                 disbursed in the coming year.                         kg), round weight (50 CFR
                                                 • The Commission’s Consumer and                      *      *    *      *    *                             622.190(a)(4)(i)(D)).
                                              Governmental Affairs Bureau, Reference                  [FR Doc. 2018–08689 Filed 4–24–18; 8:45 am]              Under 50 CFR 622.191(a)(6)(ii), NMFS
                                              Information Center, shall send a copy of                BILLING CODE 6712–01–P
                                                                                                                                                            is required to reduce the commercial
                                              the Second Order on Reconsideration,                                                                          trip limit for vermilion snapper from
                                              including the Supplemental Final                                                                              1,000 lb (454 kg), gutted weight, 1,110
                                              Regulatory Flexibility Analysis, to the                                                                       lb (503 kg), round weight, to 500 lb (227
                                                                                                      DEPARTMENT OF COMMERCE                                kg), gutted weight, 555 lb (252 kg),
                                              Chief Counsel for Advocacy of the Small
                                              Business Administration.                                National Oceanic and Atmospheric                      round weight, when 75 percent of the
                                                                                                      Administration                                        applicable commercial quota is reached
                                              List of Subjects in 47 CFR Part 54                                                                            or projected to be reached, by filing a
                                                Communications common carriers,                       50 CFR Part 622                                       notification to that effect with the Office
                                              internet, Reporting and recordkeeping                                                                         of the Federal Register, as established by
                                              requirements, Telecommunications.                       [Docket No. 130312235–3658–02]                        Regulatory Amendment 18 to the FMP
                                                                                                                                                            (78 FR 47574; August 6, 2013). Based on
                                              Federal Communications Commission.                      RIN 0648–XG173                                        current information, NMFS has
                                              Marlene Dortch,                                                                                               determined that 75 percent of the
                                                                                                      Fisheries of the Caribbean, Gulf of
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                                              Secretary.                                                                                                    available commercial quota for the
                                                                                                      Mexico, and South Atlantic; Snapper-
                                              Final Rules                                             Grouper Resources of the South                        January 1 through June 30, 2018, fishing
                                                                                                      Atlantic; 2018 Commercial Trip Limit                  season for vermilion snapper will be
                                                For the reasons discussed in the                      Reduction                                             reached by April 26, 2018. Accordingly,
                                              preamble, the Federal Communications                                                                          NMFS is reducing the commercial trip
                                              Commission amends 47 CFR part 54 as                     AGENCY:  National Marine Fisheries                    limit for vermilion snapper to 500 lb
                                              follows:                                                Service (NMFS), National Oceanic and                  (227 kg), gutted weight, 555 lb (252 kg),


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Document Created: 2018-11-02 08:16:46
Document Modified: 2018-11-02 08:16:46
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionRules and Regulations
ActionFinal rule; petition for reconsideration.
DatesEffective May 25, 2018, except for the amendment to Sec. 54.1016 (a)(1)(ii), which contains information collection requirements that have not been approved by OMB. The Commission will publish a document in the Federal Register announcing the effective date.
ContactWireless Telecommunications Bureau, Auction and Spectrum Access Division, Audra Hale-Maddox, at (202) 418- 0660. For further information concerning the Paperwork Reduction Act information collection requirements contained in this document, contact Cathy Williams at (202) 418-2918 or via the internet at [email protected]
FR Citation83 FR 17934 
CFR AssociatedCommunications Common Carriers; Internet; Reporting and Recordkeeping Requirements and Telecommunications

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