FCC Adopts High-Cost Administrative Changes

The Federal Communications Commission (“FCC”) has made a number of changes to rules and procedures relating to the administration of the Universal Service high-cost fund, specifically (1) annual reporting and certification; (2) process for mergers between rate-of-return (“ROR”) local exchange carriers (“LECs”); (3) allocation of support for exchanges acquired by Broadband Loop Support (“BLS”) recipients; (4) process for mergers involving commonly-owned study areas; (5) schedule of filings by BLS recipients; and (6) process for relinquishing the eligible telecommunications carrier (“ETC”) status of high-cost support recipients. Brief highlights of these changes are listed below. Please contact Robin Tuttle at [email protected] or Dee Herman at [email protected] if you would like more information about any of these changes.

Revisions to Annual Report and Certification Requirements for High-Cost Support Recipients

Revised Rule Section 54.313(j) to require that filings be made only with the Universal Service Administrative Company (“USAC”), eliminating filings with the FCC, state commissions, U.S. Territories, and Tribal governments;
Revised Rule Section 54.314 to require annual reports filed by states that designate ETCs and ETCs not subject to state jurisdiction to file annual reports with USAC only, eliminating filing with FCC’s Office of the Secretary;
Revised rules to reduce support in the month immediately following notice of support reduction to an ETC from USAC, or as soon thereafter as feasible;
Modified reporting requirements for performance testing to require all high-cost support recipients serving fixed locations to report and certify testing results on a quarterly basis, rather than annually;
Revised rules to create a consistent, one-time grace period for all compliance filings with grace periods, specifically within four business days of the relevant date;
Revised rules to adopt uniform deployment, certification, and location reporting deadlines for all CAF Phase II auction support recipients;
Clarified that the reporting period for the voice and broadband rate certifications in any annual Form 481 are for the prior calendar year ending the last day of December; and
Revised Rule Section 54.316(a) to clarify that high-cost recipients are permitted to report and certify locations that should have been reported for a prior reporting year, even after the reporting deadline, in a future deployment report, and counting the locations (late-reported locations) toward the defined deployment obligation.

Revisions to Streamline Rate-of-Return Local Exchange Carrier Mergers

Revised rules to provide a simpler process for ROR LECs seeking to merge, consolidate, or acquire one or more ROR study areas to calculate the new entity’s Access Recovery Charge, Connect America Fund Intercarrier Compensation (“CAF ICC”), and reciprocal compensation and switched access rate caps
Revised Rule Section 51.917 in a way that obviates the need for a waiver to reset the applicable Base Period Revenue associated with study areas merged or acquired by clarifying that when two or more entire ROR study areas are merged, the LEC shall combine the Base Period Revenue and interstate revenue requirements of the merging study areas for purposes of calculating Eligible Recovery; and
Revised Rule Section 51.909 to establish a procedure for setting new rates caps for merging ROR LECs, specifically a two-percent threshold for carriers participating in the NECA traffic-sensitive tariff, eliminating the need for a waiver where the CAF ICC increase is at or below two percent.

Revision for Acquisition of Exchanges by CAF BLS Recipients

Revised Rule Section 54.902(a) to provide that only transferred exchanges that are already eligible for CAF BLS are eligible for CAF BLS after the transfers; and
Revised Rule Section 54.902(b) to provide that any acquired exchanges subject to this rule continue to be subject to support obligations in place at the time the exchange is acquired, including obligations associated with frozen and auction-based support.

Revision Relating to Study Area Boundary Waivers

Modified study area boundary process to require waivers using a streamlined process for all study area boundary changes.

Revision to Quarterly Line Count Updates for CAF BLS Recipients

Eliminated the optional quarterly line count reporting for CAF BLS support recipients, leaving only the mandatory annual line count reporting.

Revision to Relinquishment of ETC Designation

Revised Rule Section 54.205 to require ETCs, including Lifeline-only ETCs, designated by a state authority and seeking to relinquish that designation to provide advance notice to the FCC and to file the state order with the FCC in WC Docket No. 09-197 within 10 days of issuance.