Federal Communications CommissionFCC 11-161
Before theFederal Communications CommissionWashington, D.C. 20554
In the Matter of Connect America FundA National Broadband Plan for Our FutureEstablishing Just and Reasonable Rates for LocalExchange CarriersHigh-Cost Universal Service SupportDeveloping an Unified Intercarrier CompensationRegimeFederal-State Joint Board on Universal ServiceLifeline and Link-UpUniversal Service Reform –Mobility Fund
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WC Docket No. 10-90GN Docket No. 09-51WC Docket No. 07-135WC Docket No. 05-337CC Docket No. 01-92CC Docket No. 96-45WC Docket No. 03-109WT Docket No. 10-208
REPORT AND ORDER AND FURTHER NOTICE OF PROPOSED RULEMAKINGAdopted: October 27, 2011Released: November 18, 2011Comment Date on Sections XVII.A-K: January 18, 2012Reply Comment Date on Sections XVII.A-K: February 17, 2012Comment Date on Sections XVII.L-R: February 24, 2012Reply Comment Date on Sections XVII.L-R: March 30, 2012
By the Commission:Chairman Genachowski and Commissioners Copps and Clyburn issuing separatestatements; Commissioner McDowell approving in part, concurring in part and issuing a statement.
TABLE OF CONTENTS
HeadingParagraph #I.INTRODUCTION................................................................................................................................1II.EXECUTIVE SUMMARY.................................................................................................................17A.Universal Service Reform...................................................................................................................17B.Intercarrier Compensation Reform.....................................................................................................33III.ADOPTION OF A NEW PRINCIPLE FOR UNIVERSAL SERVICE.............................................43IV.GOALS...............................................................................................................................................46V.LEGAL AUTHORITY.......................................................................................................................60VI.PUBLIC INTEREST OBLIGATIONS...............................................................................................74A.Voice Service......................................................................................................................................76
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B.Broadband Service..............................................................................................................................861.Broadband Performance Metrics.................................................................................................902.Measuring and Reporting Broadband.......................................................................................1093.Reasonably Comparable Rates for Broadband Service.............................................................113VII.ESTABLISHING THE CONNECT AMERICA FUND..................................................................115A.Overview...........................................................................................................................................115B.The Budget........................................................................................................................................121C.Providing Support in Areas Served by Price Cap Carriers...............................................................1271.Immediate Steps To Begin Rationalizing Support Levels For Price Cap Carriers...................1282.New Framework for Ongoing Support in Price Cap Territories...............................................156D.Universal Service Support for Rate-of-Return Carriers....................................................................1941.Overview...................................................................................................................................1942.Public Interest Obligations of Rate-of-Return Carriers.............................................................2053.Limits on Reimbursable Capital and Operating Costs..............................................................2104.Corporate Operations Expense..................................................................................................2275.Reducing High Cost Loop Support for Artificially Low End-User Rates................................2346.Safety Net Additive...................................................................................................................2487.Local Switching Support...........................................................................................................2538.Other High-Cost Rule Changes.................................................................................................2589.Limits on Total per Line High-Cost Support............................................................................27210.Elimination of Support in Areas with 100 Percent Overlap......................................................28011.Impact of These Reforms on Rate-of-Return Carriers and the Communities They Serve........285E.Rationalizing Support for Mobility...................................................................................................2951.Mobility Fund Phase I...............................................................................................................3012.Service to Tribal Lands.............................................................................................................4793.Mobility Fund Phase II..............................................................................................................4934.Eliminating the Identical Support Rule.....................................................................................4985.Transition of Competitive ETC Support to CAF......................................................................512F.Connect America Fund in Remote Areas..........................................................................................533G.Petitions for Waiver..........................................................................................................................539H.Enforcing the Budget for Universal Service.....................................................................................5451.Creating New Flexibility To Manage Fluctuations in Demand................................................5472.Setting Quarterly Demand to Meet the $4.5 Billion Budget.....................................................5573.Drawing Down the
Corr Wireless
Reserve Account................................................................564VIII.ACCOUNTABILITY AND OVERSIGHT......................................................................................568A.Uniform Framework for ETC Oversight...........................................................................................5691.Need for Uniform Standards for Accountability and Oversight...............................................5702.Reporting Requirements............................................................................................................5763.Annual Section 254(e) Certifications........................................................................................607B.Consequences for Non-Compliance with Program Rules.................................................................615C.Record Retention...............................................................................................................................619D.USAC Oversight Process..................................................................................................................622E.Access to Cost and Revenue Data.....................................................................................................630IX.ADDITIONAL ISSUES....................................................................................................................636A.Tribal Engagement............................................................................................................................636B.Interstate Rate of Return Prescription...............................................................................................6381.Represcription...........................................................................................................................6392.Procedural Requirements..........................................................................................................641C.Pending Matters................................................................................................................................646D.Deletion of Obsolete Universal Service Rules and Conforming Changes to Existing Rules...........647X.OVERVIEW OF INTERCARRIER COMPENSATION.................................................................648
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XI.MEASURES TO ADDRESS ARBITRAGE....................................................................................656A.Rules To Reduce Access Stimulation...............................................................................................6561.Background...............................................................................................................................6612.Discussion.................................................................................................................................662B.Phantom Traffic................................................................................................................................7021.Background...............................................................................................................................7072.Revised Call Signaling Rules....................................................................................................7103.Prohibition of Altering or Stripping Call Information..............................................................7194.Exceptions.................................................................................................................................7215.Signaling / Billing Record Requirements..................................................................................724XII.COMPREHENSIVEINTERCARRIER COMPENSATION REFORM..........................................736A.Bill-and-Keep as the End Point for Reform......................................................................................7401.Bill-and-Keep Best Advances the Goals of Reform.................................................................7412.Legal Authority.........................................................................................................................7603.Other Proposals Considered......................................................................................................782B.Federal/State Roles in Implementing Bill-and-Keep........................................................................788C.Transition..........................................................................................................................................7981.Authority To Specify the Transition.........................................................................................8092.Implementation Issues...............................................................................................................8113.Other Rate Elements.................................................................................................................8174.Suspension or Modification Under Section 251(f)(2)...............................................................8225.The Duty To Negotiate Interconnection Agreements...............................................................825XIII.RECOVERY MECHANISM............................................................................................................847A.Introduction.......................................................................................................................................847B.Summary...........................................................................................................................................850C.Policy Approach to Recovery...........................................................................................................854D.Carriers Eligible To Participate in the Recovery Mechanism...........................................................862E.Determining Eligible Recovery.........................................................................................................8671.Establishing the Price Cap Baseline..........................................................................................8682.Calculating Eligible Recovery forPrice Cap Incumbent LECs................................................8793.Calculating Eligible Recovery for Rate-of-Return Incumbent LECs.......................................891F.Recovering Eligible Recovery..........................................................................................................9051.End User Recovery...................................................................................................................9062.CAF Recovery...........................................................................................................................9213.Monitoring Compliance with Recovery Mechanism................................................................921G.Requests for Additional Support.......................................................................................................924XIV.INTERCARRIER COMPENSATION FOR VOIP TRAFFIC.................................................933A.Background.......................................................................................................................................936B.Widespread Uncertainty and Disagreement Regarding Intercarrier Compensation for VoIP Traffic937C.Prospective Intercarrier Compensation Obligations for VoIP-PSTN Traffic...................................9401.Scope of VoIP-PSTN Traffic....................................................................................................9402.Intercarrier Compensation Charges for VoIP-PSTN Traffic....................................................943XV.INTERCARRIER COMPENSATION FOR WIRELESS TRAFFIC...............................................976A.Introduction.......................................................................................................................................976B.Background.......................................................................................................................................980C.LEC-CMRS Non-Access Traffic......................................................................................................988D.IntraMTA Rule................................................................................................................................1003XVI.INTERCONNECTION...........................................................................................................1009XVII.FURTHER NOTICE OF PROPOSED RULEMAKING........................................................1028A.Broadband Public Interest Obligations...........................................................................................1028
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