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F#F? ԃ  1yx dddhy  aE@#5\  P6QdP#News media information 202/4180500 FaxOnDemand 202/4182830 Internet: http://www.fcc.gov ftp.fcc.gov  Sz-#&a\  P6G;&P#`(# Released: October 6, 1997 ă  S-  ]"WTB INFORMATION BULLETINă i$UNIVERSAL SERVICE UPDATE: FREQUENTLY ASKED QUESTIONS  SH - BY WIRELESS SERVICE PROVIDERS ă   The following information is based on the Commission's May 8, 1997 Order in the universal service   proceeding ("May 8 Universal Service Order") (CC Docket No. 9645) and the Commission's July 18,   1997 Order and August 15, 1997 Order on Reconsideration in the Temporary Administration Governance   proceeding (CC Docket Nos. 9721 and 9645). Copies of those items as well as the Universal Service  d(#Worksheet (FCC Form 457), which is used for filing contributions to the universal service support mechanisms, are available on the FCC's website: http://www.fcc.gov/ccb/universal_service/.  SJ-  W!   Are wireless service providers eligible to receive funding from the universal service support  S-mechanisms?  S- XA wireless carrier will be eligible to receive funding from the high cost/low income universal  S~-service support mechanisms if: (#  S-` ` it is a common carrier, and  S-  Q` ` it offers the services supported by universal service support mechanisms throughout a   designated service area, through its own facilities or through a combination of its own   3facilities and resale of another carrier's services, and advertises the availability of those services. (#`  S-Services supported by universal service support mechanisms are:  SM- bX` ` 1.  voice grade access to the public switched telephone network, with the ability to place and receive calls;(#  S!-X` ` 2.  Dual Tone Multi-frequency (DTMF) signaling or its functional equivalent;(#  SN#-` ` 3.  singleparty service;(#`  S$- SX` ` 4.  access to emergency services, including 911 and Enhanced 911 (which identifies a caller's location);(#  SO'-X` ` 5.  access to operator services;(#  S(-X` ` 6.  access to interexchange services;(#(0*0*0*-e@d;[!,L|  '#  h   Ԍ S-ԙX` ` 7.  access to directory assistance; and(#  S-X` ` 8.  Lifeline and Link Up services for qualifying lowincome customers.(#  S4- XA wireless carrier will have to be designated an "eligible telecommunications carrier" by the State in order to receive high cost/low income support.(#  S- XSome wireless providers that will be contributing to the high cost/low income support mechanisms  will be unable to receive high cost/low income support. For example, most paging providers and  Nsome SMR and 220222 MHz providers will be ineligible for high cost/low income support since they do not meet the above criteria.(#  S - XThe Commission found that all telecommunications providers benefit from a ubiquitous  Otelecommunications network. For example, customers who receive pages would not be able to receive or respond to those pages absent use of the public switched telephone network.(#  S - RX©X` ` Other carriers will also contribute to high cost/low income universal service but not  S -  receive support e.g., data services, and private carriers. This is consistent with the  Sk-  Telecommunications Act of 1996, which states that all telecommunications carriers shall   2make an equitable and nondiscriminatory contribution to universal service, and that other   providers of interstate telecommunications may be required to contribute if doing so is in the public interest.(#`  Sl- XA wireless carrier will not have to be found to be an eligible telecommunications carrier by a  |State in order to receive funding under universal service programs for schools and libraries. To  1receive funding a wireless carrier need only provide supported services to eligible schools and libraries.(#  Sm-   Do wireless service providers have to contribute to the Federal universal service support  S:-mechanisms?  S- XAll interstate telecommunications carriers, payphone providers, and providers of interstate telecommunications to others for a fee will be required to contribute. (#  #XSpecifically mentioned by the Commission and the Joint Board as "examples of interstate telecommunications" (and thus required to contribute) are: (#  XX` ` "cellular telephone and paging services; mobile radio services; operator services; PCS;   access to interexchange service; special access; wide area telephone service (WATS); toll  free services; 900 services; MTS; private line; telex; telegraph; video services; satellite services; and resale services."(#`  S -  S!- {X Exceptions i.e., telecommunications providers that offer service for a fee but will nonetheless not have to contribute to the universal service support mechanisms:(#  S $- OX©X` ` Purely private providers that do not lease their excess capacity (e.g., a utility company  ~licensee that uses its frequencies strictly for its own internal communications needs) do   not have to contribute. If those providers decide to lease excess capacity, they will have to contribute.(#` "@'0*((+"Ԍ S- X©X` ` Public safety and local governmental entities licensed under Subpart B of Part 90 will  Cnot be required to contribute due to the restrictive eligibility requirements for these  Aservices and because of the important public welfare functions for which such services are  used. Similarly, if an entity exclusively provides interstate telecommunications to public   safety or government entities and does not offer services to others, that entity will not be required to contribute.(#`  Sh- ^X©X` ` Purely international carriers are explicitly excluded by the statute from contributing.  %The international revenues of carriers that also provide domestic interstate service, however, will be included in the calculation of those carriers' contributions.(#`  S -` ` Purely intrastate carriers are explicitly excluded by the statute.  S6 - X©X` ` Open video systems, direct broadcast satellite service and cable leased access are  S -explicitly exempted in the May 8 Universal Service Order .(#`  S - X©X` ` Providers falling under the  de minimis exemption , i.e., those whose annual contribution  Sk-would be less than $100, will not be required to contribute. (#`  S- v XOther providers of telecommunications that offer service for a fee and that do not fit one of the above exceptions must contribute regardless of whether they are common carriers. (#  Sl- Who will administer the Federal universal service support mechanisms?  S- v XUntil a permanent administrator is chosen, the National Exchange Carrier Association (NECA)  v 0will create an independently functioning, notforprofit subsidiary to be designated the Universal  v NService Administrative Company (USAC) to administer certain Federal universal service support  v mechanisms. Prior to the creation of USAC, NECA has been given authority to undertake some  v of the preliminary administrative functions related to implementation of the universal service  v _support mechanisms, such as distribution, receipt, and processing of the Universal Service Worksheet.(#  Sn- v XUSAC will be directly responsible for billing contributors, collecting contributions to the universal service support mechanisms, and disbursing universal service support funds.(#  S- v ?XThere will also be a High Cost and Low Income Committee, a Schools and Libraries Corporation,  v ^and a Rural Health Care Corporation. Each of these entities will perform all functions relating  v to administering the support mechanisms for their respective areas, except those directly related to billing and collecting contributions and disbursing support, which will be done by USAC. (#  S - v XThe USAC Board of Directors consists of 17 members that represent both contributors to and  S!- v beneficiaries of universal service support mechanisms. Thomas Wheeler, President, Cellular  v Telecommunications Industry Association, has been selected as the USAC Director to represent  v !commercial mobile radio service (CMRS) providers. Board members are appointed for twoyear terms. The USAC held its first meeting on September 22, 1997.(#  S%- "%0*((O)"  S-What are the universal service contributions based on?   S-XContributions will be based on a percentage of enduser telecommunications revenues. (#  Sg-  S4- v XFor purposes of calculating contributions, a different revenue base will be used for each group of universal service programs:(#  S- X©X` ` Rural, insular and high cost areas and low income consumers. Assessments of support  Si- bobligations to benefit this group will be determined based only on interstate and  S6-  Ainternational enduser telecommunications revenues. (Interstate and international revenues   include all revenues received for calls that do not originate and terminate in the same  state. Calls that originate and terminate in foreign countries are reportable, but are not included in the contribution base.)(#`  S - X©X` ` Schools, libraries and rural health care providers. Assessments of support obligations  S - 4to benefit this group will be determined based on both interstate, international, and  S -intrastate enduser telecommunications revenues.(#`  S- How will a carrier's enduser telecommunications revenues be determined?  S- v PXThe Universal Service Worksheet ("Worksheet") will be used to identify each contributing  v #carrier's identification information and information regarding enduser telecommunications  v revenues. (A copy of the worksheet, and the instructions, is available on the FCC's website.) The Worksheet shall be filed on a semiannual basis.(#  S-  4` ` The first Worksheets were due to be filed by September 2, 1997 with revenue data representing contributor operations for January 1 through June 30 of 1997.(#`  S-X©X` ` Subsequent filings will be due as follows:(#`  S-` ` X March 31 , containing data for the prior calendar year.(#  S<- z ` ` X September 1 , containing data for the six month period from January 1 through June 30 of the current calendar year.(#  S- v XContributors failing to file the Universal Service Worksheet or contributions in a timely fashion  v may be subject to the enforcement provisions of the Communications Act and any other applicable laws, including Commission rules.(#  S - v nXEach legal entity that "bills enduser telecommunications revenues" and provides interstate  v telecommunications service must file separately. Entities that have distinct articles of  v ~incorporation are separate legal entities. Each affiliate or subsidiary that "bills enduser  v ltelecommunications revenues" must file separately. Under the Communications Act, an "affiliate"  v is defined as a "person that (directly or indirectly) owns or controls, is owned or controlled by, or is under common ownership or control with, another person." (#  Sr&- v ]XRevenues consist of total revenues billed to customers during the filing period with no allowances for uncollectibles, such as fraud, or outofperiod adjustments.(#"?'0*((+"Ԍ S' xԙXContributors that cannot derive interstate revenues from their books of account or cannot derive  x8linebyline revenue breakdowns from their books of account may use good faith estimates for  xAthose figures. In the August 15 Order on Reconsideration in the Temporary Administration  xGovernance proceeding (para. 21), the Commission stated that contributors may derive their  x_estimates using a method that they, in good faith, believe will yield a reasonably accurate result.  xContributors must document how they calculated their estimates and make such information available to the Commission or Administrator upon request.(#  Sh' xXContributors may exclude revenues from service provided to resellers from their universal service  xcontribution funding base. A contributor should document procedures to ensure that it excludes  xlonly revenues from resellers that reasonably may be expected to contribute to support universal service.(#  Si ' xXEnhanced services, also known as information services, billing and collection, customer premises  xequipment, and nontelecommunications products and service revenues are not included in the universal service contribution base.(#  S '    Sj'How will universal service contributions be billed and collected?   S' xpXContributions to the universal service support mechanisms shall be based on contributors' enduser  x"telecommunications revenues and contribution factors determined quarterly by USAC. The actual contribution percentage has not yet been established.(#  S8' xXTo calculate an individual entity's quarterly contribution, USAC will multiply the entity's  xuniversal service contribution base (i.e., its interstate, intrastate, and international enduser  xItelecommunications revenues for the schools and libraries and rural health care providers universal  xlservice mechanism, or its interstate and international enduser telecommunications revenues for  xthe high cost and lowincome universal service support mechanisms) by the relevant universal  xservice contribution factor. USAC will then bill each contributor for the amount of its contribution. Contributors must remit all contributions to USAC by the contribution date.(#  S' xyXThe Commission will announce by Public Notice and on its website the manner of payment and  x dates by which payment must be made. All carriers, including wireless carriers, will begin contributions on January 1, 1998. (#  S' xIX De minimis contributions . A contributor that provides interstate telecommunications will be  xexempt from universal service contribution and filing requirements if that contributor's  xcontribution for the next four quarters is expected to be less than $100 based on calculations derived from the Worksheet. This calculation must be made every six months.(#  S ' Must CMRS providers contribute to State Universal Service support mechanisms?  So"' xX The May 8 Universal Service Order specifically finds that CMRS providers may be required to contribute to state universal service support mechanisms. (#  S$' xX Some parties had argued that Section 332(c)(3) prohibits states from requiring CMRS providers  xto contribute to state universal service support unless the CMRS provider's service is a substitute  xfor land line in a substantial portion of the state. The Commission and the Joint Board rejected  S=''that interpretation of Section 332(c).  (#"='0*((("Ԍ S'ԙ PENDING PROCEEDINGS   S' xX On July 3, 1997, Southwestern Bell Telephone Company, Pacific Bell, and Nevada Bell filed a  xjoint petition for stay of the May 8 Universal Service Order, or, in the alternative, the portions  xuthat (a) provide support for Internet access and internal connections for eligible schools; (b)  x+provide federal support for tollfree access to Internet access providers for rural and nonrural  xhealth care providers; (c) provide support to nontelecommunications carriers that provide  xNsupported services to eligible schools and libraries; (d) prohibit the disconnection of Lifeline  xcustomers from local service for unpaid intrastate toll charges; and (e) prohibit requiring Lifeline  xcustomers who elect toll blocking and who have unpaid intrastate toll charges to pay service  xdeposits to initiate local service. Comments on the petition have been filed, and the matter is pending before the Commission.(#  Si ' xX On July 17, 1997, 54 parties, including seven representing wireless service providers, filed  xpetitions for reconsideration of the May 8 Universal Service Order. Issues raised in the petitions related to wireless service include:(#  S ' ( ` ` How to calculate interstate and intrastate revenues for purposes of universal service support mechanisms.(#`  S' ( #` ` The extent that requirements for state universal service support mechanisms may differ from the requirements for the Federal program.(#`  Sk' ( #` ` Whether the Commission was correct in deciding that CMRS providers can be required to contribute to state universal service support mechanisms.(#`  S'` ` These petitions are still pending.  Sl' xX On July 17, 1997, 131 entities describing themselves as rural telephone companies filed a joint  xRpetition to stay portions of the May 8 Universal Service Order, including the portions that make  xcuniversal service support portable to competing local exchange carriers. Comments on the petition have been filed, and the matter is pending.(#  Sm' xXOn July 18, 1997, the Commission released a Further Notice of Proposed Rulemaking (FNPRM)  xconcerning the development of the mechanism for nonrural telephone companies to calculate the  S' xcost of providing the supported services in high cost areas . (A copy of the FNPRM, which sets  xout the various comments dates, is available on the FCC's website.) Issues raised in the FNPRM related to wireless service include:(#  S;' ( ` ` How to estimate the cost of providing the supported service in high cost areas through  ( wireless technologies. This issue is raised as part of the FNPRM's discussion on outside plant investment.(#`  So"' ( d` ` The level of local usage that should be included in the definition of universal service, and  ( ~thus must be provided for a carrier to receive funding from the universal service support mechanisms.(#` "%0*((=&"  S' ( ` ` This FNPRM has a staged comment cycle for the different components of a  ( WKXX` ` high cost mechanism for nonrural carriers. Comments regarding the cost of  ( Wproviding universal service through wireless technologies, along with the other  ( Wissues concerning outside plant investment, were due on September 24, 1997, and  ( WBreply comments were due on October 3, 1997. Comments regarding local usage are due on October 17, 1997, and reply comments are due on October 27, 1997. `  Sh' xqXOn August 1, 1997, the Commission released a Public Notice requesting nominations for  xmembership of the Universal Service Administrator Advisory Committee ("Advisory Committee").  xThe Advisory Committee will recommend a permanent, third party administrator of the universal service support mechanisms. Nominations were to be submitted by August 22, 1997.(#  Si ' xXIn the May 8 Universal Service Order, the Commission stated that it would issue a Further Notice  xof Proposed Rulemaking examining the use of competitive bidding to define universal service funding levels for high cost areas. That FNPRM has not yet been issued.(#  S ' xXOn September 17, 1997, the FederalState Joint Board on Universal Service announced the  xcreation of a Rural Task Force (RTF) to study the establishment of a forwardlooking economic  x'cost mechanism for rural telephone carriers. Specifically, the RTF will consider whether a  xpforwardlooking economic cost mechanism for rural carriers should have different platform design  x"features or input values than the mechanism adopted for nonrural carriers. The RTF will present  xa report to the Joint Board that makes specific recommendations on the rural forwardlooking  xNeconomic cost mechanism by June 15, 1998. The RTF will have 17 members representing  xvarious groups. Nominations for membership on the RTF must be submitted by October 15, 1997. (#  C#AuN   C#AuN   xFor further information, contact David Krech, Commercial Wireless Division, Wireless  !Telecommunications Bureau at (202) 4187240; or the Universal Service Branch, Common Carrier Bureau, at (202) 4187400.