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We  {O-note that although some portions of the Local Competition Order were overturned on appeal, the sections relating to wireless telecommunications providers were upheld. We seek comment on whether the originating call assumption discussed above adequately addresses the concerns identified by CTIA.  X-x31. ` ` Terminating point of a call. In addition to the originating point of a call, the terminating point of a call must be identified in order to determine the jurisdictional nature of the call. We seek comment on whether a cellular or broadband PCS provider should assume">0*%%ZZ" that a call terminates in the state that corresponds to the area code to which the call was  X-placed.`?X yOb-ԍ Such a test would not be useful to determine the originating point of a wireless call, because an area code is assigned to each wireless handset, and thus all calls from a particular handset would be recorded as being from the same area code, regardless of the location from which the call was actually placed.` Because we have received no evidence indicating otherwise, we assume that this would be a reasonable approach for determining the terminating point of a call. We seek comment on our assumption that determining the terminating point of a cellular or broadband PCS call in this manner is reasonable and does not pose substantial difficulties for providers. x  Xv-x32. ` ` Calls originating and terminating in a Major Trading Area. Because many wireless telecommunications providers operate without regard to state boundaries, we seek  XJ-comment on whether the Commission should consider using MTA boundaries as the basis on which CMRS providers might estimate the level of interstate wireless traffic for universal service reporting purposes. Specifically, we seek comment on whether CMRS traffic that originates and terminates within an MTA should be classified as intrastate and all other calls classified as interstate for purposes of the Worksheet. Because a single MTA can occupy more than one state, this approach would result in some calls that cross state boundaries being classified as intrastate. At the same time, because some states have more than one MTA, a call could be classified as interstate under this approach, even though the call originates and terminates in the same state. We seek comment on the significance of these observations. Because different types of wireless telecommunications providers use different Commissionauthorized licensed territories, we also seek comment on whether we should use the  XM-boundaries of other types of wireless licensed territories (e.g., Metropolitan Statistical Areas or Rural Service Areas) to differentiate between interstate and intrastate traffic.  X -x 33. ` ` Roaming revenues.  We seek comment on how "roaming" revenues obtained by broadband PCS and cellular providers should be classified. "Roaming" occurs when customers located outside the scope of their provider's network use a different provider's network to place and receive calls. CTIA and AirTouch assert that when a customer is "roaming" on the system of another provider (the "serving provider"), the customer's principal provider, which is responsible for billing the customer, receives limited information about the  X-calls made by the customer.j@ yO-ԍ CTIA July 17 petition at 1718; AirTouch Feb. 11 ex parte at 2. j In determining how a principal provider should account for revenues generated while its customer "roams" on a serving provider's system, AirTouch suggests that the principal provider apply an established percentage to such revenues to  X=-approximate the level of interstate usage by "roaming" customers.IA=x yOf#-ԍ AirTouch Feb. 11 ex parte at 2.I We seek comment on AirTouch's proposal, and, assuming we adopt AirTouch's proposal, the appropriate fixed"&A0*%%ZZz" percentage that should be applied to such revenues. AirTouch explains that this option would eliminate the need for extensive information exchanges between the customer's principal  X-provider and the serving provider.IB yOK-ԍ AirTouch Feb. 11 ex parte at 2.I AirTouch further notes that this approach would address the situation in which, because CMRS providers price airtime usage differently, the identical  X-levels of usage do not generate uniform levels of revenues.rCZX yO-ԍ AirTouch Feb. 11 ex parte at 2. AirTouch suggests that the principal provider, as part of its competitive marketing strategy, may assess, based on the bill from the serving carrier showing the customer's usage,  {O= -"roaming" charges for that customer at a rate lower than that of the serving carrier. Id.r We seek comment on these assertions. x  X_-x!34. ` ` With regard to how "roaming" traffic should be treated for purposes of distinguishing interstate and intrastate revenues, CTIA notes that, some of its members have  X1-concluded that the principal provider should treat all roaming traffic as interstate.D1z {O\-ԍ Letter from Randall S. Coleman, CTIA, to Jeanine Poltronieri, FCC, dated August 21, 1997 (CTIA Aug.  {O&-21 letter) at 45. CTIA further states that some of its members have taken the position that calls forwarded from the customer's principal provider to a serving provider in the area where the customer is located  X -should be treated as interstate calls.CE  yOs-ԍ CTIA Aug. 21 letter at 5.C We seek comment on these proposed simplifying assumptions.  X -x` `  ii.hhPaging providers  X-  Xy-x"35. ` ` Due to the technical design of a paging system, Airtouch claims that the  Xb-information necessary to assess the jurisdictional nature of a paging call is unavailable.IFbf  yOy-ԍ AirTouch Feb. 11 ex parte at 1.I AirTouch explains that a paging network terminates communications simultaneously at all locations in its service area, because the paging network cannot identify the location of the  X-paging unit.IG  yO-ԍ AirTouch Feb. 11 ex parte at 2.I Thus, the paging network cannot identify the area code of the location where  X-the customer actually receives the page.IH  yO="-ԍ AirTouch Feb. 11 ex parte at 2.I In light of these difficulties, we seek comment on any simplifying assumptions that paging carriers may adopt in determining the percentage of interstate paging revenues that they should report on the Worksheet. For example, we seek comment on whether paging providers should estimate their level of interstate traffic based, at"H0*%%ZZ" least in part, on the percentage of customers whose service package includes tollfree number  X-capabilities (e.g., 888, 800, and 877numbers), with the assumption that these customers are more likely to receive interstate pages. If a paging provider is capable of distinguishing between the paging revenues derived from its customers who subscribe to local service and those who subscribe to nationwide service, we seek comment on whether paging carriers should assume that its nationwide customers generate more interstate traffic than the local customers. If we were to direct wireless carriers to use a Commissionestablished percentage of interstate wireless telecommunications revenues, we seek comment on whether we should establish two percentages, one for traffic to local paging customers and one for traffic to national paging customers.  X -  X -x` `  iii.hhSMR providers  X -  X -x#36. ` ` Analog SMR service provides land mobile communications and consists of at least one base station transmitter and antenna, as well as a mobile radio unit. Analog SMR service may be interconnected with the public switched telephone network, which allows mobile radio units to function essentially as a mobile telephone, or through a dispatch system, which allows twoway, overtheair, voice communications only between two mobile radio units. We seek comment on an appropriate estimation of the percentage of interstate telecommunications revenues generated by analog SMR providers and on whether there are appropriate simplifying assumptions to estimate the percentage of analog SMR providers' interstate analog SMR revenues. AMTA states that some of the dispatch systems provide  X-service exclusively within a state and others provide service across state boundaries.PI yO-ԍ AMTA Report to Congress comments at 1.P AMTA states that, in a recent survey of its members, 63 percent of the respondents reported that their coverage areas are intrastate, while the remaining 37 percent reported the use of systems  X-crossing state boundaries.JXX yO-ԍ AMTA Feb. 20 ex parte at 2. AMTA notes that its survey results do not include responses from NEXTEL. NEXTEL uses digital SMR technologies that allow it to compete in the mobile telecommunications market. AMTA also reports that 90 percent of the survey respondents  X-claimed to derive between zero and two percent of their revenues from interstate service.<KXx yO-ԍ AMTA states that seven percent of the respondents derive between three and five percent of their revenues from interstate service, and three percent of the respondents derive between six and ten percent of their revenues from interstate service. AMTA Feb. 20 ex parte at 2.< AMTA further notes that 97 percent of the respondents maintain that they are exempt under"K0*%%ZZ"  X-the de minimis standard from contributing to the universal service support mechanisms.LF {Oy-ԍ AMTA Feb. 20 ex parte at 3. In the Fourth Order on Reconsideration, the Commission found that if a contributor's annual contribution would be less than $10,000, it will not be required to contribute to universal  yO -service. FederalState Joint Board on Universal Service, Access Charge Reform, Price Cap Performance Review for Local Exchange Carriers, Transport Rate Structure and Pricing, End User Common Line Charge, CC Docket  {O-Nos. 9645, 96262, 941, 91213, 9572, Fourth Order on Reconsideration, 13 FCC Rcd 5318 (1997), as corrected by Federal-State Joint Board on Universal Service, Errata, CC Docket Nos. 96-45, 96-262, 94-1, 91-213, 95-72, DA 98-158 (rel. Jan 29, 1998), appeal pending in Alenco Communications, Inc., et al. v. FCC  {O-and USA, No. 98-60213 (5th Cir. 1998) (Fourth Order on Reconsideration), para. 297. AMTA contends that "the survey results to date certainly indicate that SMR and related services bear little resemblance to massmarket mobile telephony such as broadband PCS and  X-cellular."FM yOD -ԍ AMTA Feb. 20 ex parte at 3. F We seek comment on whether, and how, AMTA's survey results may be used to help determine an appropriate percentage of analog SMR providers' interstate analog SMR revenues. We also seek comment on other ways to arrive at such an estimation.  Xa-x` `  iv.hhPointtopoint wireless providers  X3-x$37. ` ` Unlike mobile service, which transmits a signal that may be received by any of the mobile units within a certain area, the signal that is transmitted as part of fixed, pointtopoint wireless service is sent directly to a fixed location. We seek comment on whether any pointtopoint wireless providers experience difficulty in reporting their percentage of  X -interstate telecommunications revenues.DNZ f  yO-ԍ We note that, pursuant to section 36.154(a) of the Commission's rules, if over 10 percent of the traffic carried on a private or WATS line is interstate, the revenues generated by the entire line are classified as  {O~-interstate. See 47 C.F.R.  36.154(a).D If so, we seek comment on ways to estimate such carriers' level of interstate telecommunications revenues derived from the provision of fixed, pointtopoint service and on whether any simplifying assumptions should be applied to this type of provider. Because the service offered by entities that provide wireless telecommunications on a fixed, pointtopoint basis is not mobile in nature, such entities' contribution compliance concerns may differ from those of broadband PCS and cellular providers.  X-x` `  d. AirTouch's Methodology  X-x%38. ` ` AirTouch states that its jurisdictional tracking system is able to determine, with  X-a reasonable degree of accuracy, whether a particular cellular call is interstate or intrastate.IO  yO$-ԍ AirTouch Feb. 11 ex parte at 1.I "O0*%%ZZr"  X-AirTouch explains that its tracking system initially was developed for state tax purposes.P" yOy-ԍ AirTouch Feb. 11 ex parte at 1. AirTouch billing systems rely on the jurisdictional nature of a call in determining whether to impose certain taxes. For example, AirTouch explains, the California universal service surcharge is a "separately identified charge calculated by imposing a set percentage on the total amount of in {O-state services listed in the bill."  Id.ij According to AirTouch, this tracking system forwards data received from the originating switch to databases used for billing. The databases compiled from this data enable AirTouch to compare the originating switch location with the terminating area code. AirTouch uses this capability to estimate the percentage of interstate airtime usage and then applies this percentage to an estimated level of total enduser revenues, which yields the amount of  Xv-interstate revenues.IQv yO -ԍ AirTouch Feb. 11 ex parte at 2.I AirTouch explains that the totalrevenues estimate includes charges for airtime revenues and monthly access charges, less nontelecommunications revenues. Revenues from longdistance resale, AirTouch further explains, are then included for purposes  X1-of determining the total interstate revenues figure reported on the Worksheet.IR1B yO$-ԍ AirTouch Feb. 11 ex parte at 2.I We seek comment on the extent to which wireless telecommunications and other providers are capable of distinguishing their interstate and intrastate revenues using the method employed by AirTouch or could, without substantial difficulty, adopt such a method. We seek comment on whether wireless telecommunications carriers that use a method similar to that described by AirTouch to identify their interstate revenues should be allowed to do so, in the event that the Commission adopts, for universal service reporting purposes, a Commissionestablished percentage. In addition, we seek comment on whether, for purposes of assessing certain charges, such as state universal service charges or state taxes, wireless providers are already required to distinguish their revenues in a way that could be applied to their federal universal service reporting obligations.  X-x&39. ` ` AirTouch notes that its tracking system may yield inaccurate information to the extent that the interstate portion of a call is not recorded when the call originates as intrastate  X-but terminates as interstate due to the customer crossing a state boundary.IS yOr-ԍ AirTouch Feb. 11 ex parte at 2.I Similarly, we note that a tracking system like the one employed by AirTouch also may yield inaccurate results when a call originates as interstate and terminates as intrastate due to the customer crossing a state boundary. We seek comment on whether the potential inaccuracies that may arise from these two scenarios would, when taken together, tend to cancel each other out and thus have no measurable effect.  Xe-  XN-x ` `  "Nb S0*%%ZZ"  X-x` ` e. Other Issues Surrounding Universal Service Reporting  X-x` `  Requirements  X-x'40. ` ` We seek comment on whether wireless telecommunications providers experience difficulty in complying with any universal service reporting requirements other than identifying their interstate and intrastate revenues, as described above. We also seek comment on any other actions that the Commission might take to ensure that wireless telecommunications providers are treated in an equitable and nondiscriminatory manner with respect to the universal service reporting and contribution obligations.  X -x` `  f.Providers other than wireless telecommunications providers  X -x(41. ` ` In the previous sections, we discuss possible mechanisms that wireless telecommunications providers could use in allocating their wireless telecommunications revenues between the interstate and intrastate jurisdictions for universal service reporting purposes. We also seek comment whether there are other types of providers, such as satellite providers, that may not be able to derive easily from their books of account their percentage  Xy-of interstate and intrastate telecommunications revenues.sT\y {O-ԍ We note that in the Fourth Order on Reconsideration, the Commission concluded that satellite providers are not required to contribute to universal service on the basis of revenues derived from the lease of bare  {O-transponder capacity. Fourth Order on Reconsideration, 13 FCC Rcd at 5479, para. 290.s Parties are invited to address whether the proposals discussed in this Further Notice, such as the simplifying assumptions discussed in section III.A.2.c., might benefit other telecommunications providers that cannot readily distinguish their interstate and intrastate revenues for universal service reporting purposes.  X-x B.` ` Competitive Neutrality  X- x` ` 1. B ackground  X-x)42.  ` ` In the Universal Service Order the Commission adopted the Joint Board's recommendation to establish competitive neutrality as an additional principle upon which to  Xg-base policies for the preservation and advancement of universal service.UzZg {O -ԍ Universal Service Order, 12 FCC Rcd at 8801, para. 46. Consistent with the Joint Board's recommendation, the Commission adopted the following definition of competitive neutrality: XxCOMPETITIVE NEUTRALITY Universal service support mechanisms and rules (# Xxshould be competitively neutral. In this context, competitive neutrality means that(# Xxuniversal service support mechanisms and rules neither unfairly advantage nor(# Xxdisadvantage one provider over another, and neither unfairly favor nor disfavor(#"$T0*%%$"ԌXxone technology over another.(#  {O -Universal Service Order, 12 FCC Rcd at 8801, para. 47. While the"gU0*%%ZZ" Commission recognized that strict competitive neutrality would be extremely difficult to achieve, it noted that competitively neutral rules would ensure that "no entity receives an unfair competitive advantage that may skew the marketplace or inhibit competition by limiting  X-the available quantity of services or restricting the entry of potential service providers."lV {OV-ԍ Universal Service Order, 12 FCC Rcd at 8802, para. 48.l The Commission also noted that the principle of competitive neutrality would promote emerging  X-technologies that may provide competitive alternatives for rural consumers.fW| {O -ԍ Universal Service Order, 12 FCC Rcd at 8803, para. 50.f The  Xv-Commission agreed with the Joint Board that the principle of competitive neutrality is consistent with the 1996 Act's underlying goal of promoting competition and with the  XH-requirements of section 254(b)(7)..XZH {O-ԍ Universal Service Order, 12 FCC Rcd at 8803, para. 51 (concluding that the principle of competitive neutrality is "`necessary and appropriate for the protection of the public interest' and is `consistent with this Act" as required by section 254(b)(7)). .  X -x*43. ` ` In the Universal Service Order, the Commission also concurred in the Joint Board's recommendation that the principle of competitive neutrality, in the context of  X -universal service, should include technological neutrality.fY 0  {O-ԍ Universal Service Order, 12 FCC Rcd at 8802, para. 49.f The Commission anticipated that a policy of technological neutrality "will foster the development of competition and benefit certain providers, including wireless, cable, and small businesses, that may have been excluded from participation in universal service mechanisms if we had interpreted universal  X-service eligibility criteria so as to favor particular technologies."lZ  {O-ԍ Universal Service Order, 12 FCC Rcd at 8802, para. 49.l The Commission also agreed with the Joint Board's recommendation that competitive neutrality and technological neutrality should be considered when devising universal service policies "relating to each and every recipient and contributor to the universal service support mechanisms, regardless of  X6-size, status, or geographic location."f[6T  {O;!-ԍ Universal Service Order, 12 FCC Rcd at 8802, para. 49.f In meetings with representatives of the wireless  X-telecommunications industry,E\ {O#-ԍ See supra at para. 9.E the Commission's Wireless Telecommunications Bureau and Common Carrier Bureau sought to determine whether the Commission's rules effectively"x\0*%%ZZ(" achieve the goal of competitive neutrality.  X-x ` ` 2. Issues for Comment  X-x+44. ` ` As noted above, in the Universal Service Order the Commission sought to adopt rules that would facilitate the entry of new providers and promote competition in the  Xx-context of universal service.g]x {O-ԍ Universal Service Order, 12 FCC Rcd at 880106. g The Commission also sought to establish universal service rules that are competitively and technologically neutral. We seek comment here on the success of that goal. Specifically, we seek comment on the extent to which our rules, in application, are accomplishing that goal. We seek comment on the extent to which our rules facilitate the provision of services eligible for universal service support by providers, such as wireless telecommunications providers and cable operators, that historically have not supplied such services. We also seek comment on the extent to which such providers are supplying the services supported by the federal universal service support mechanisms to eligible beneficiaries. For example, we seek comment on the extent to which wireless service providers are supplying supported services to eligible schools and libraries. Similarly, we seek comment on the extent to which cable and other service providers are supplying supported services to entities eligible for universal service support.  XM-x,45. ` ` We also seek comment on whether, in practice, any of our universal service rules discourage wireless service providers or cable service providers from offering supported services to lowincome subscribers and rural, insular, and high cost subscribers. We also seek comment on whether, in practice, our universal service rules may favor unfairly one technology over another. If parties answer these statements affirmatively, we seek specific suggestions on how those rules could be amended, consistent with the Act, to facilitate the provision of services eligible for universal service support by all eligible providers.  X-   xC.` ` Definition of Basic Service Packages to be Provided by Eligible  X~-x` ` Telecommunications Carriers (#`  Xg-x  XP-x` ` 1. Background  X"-x-46.` ` In order to be designated as an "eligible telecommunications carrier" or "ETC" that is able to receive universal service support pursuant to section 254, a carrier must, among other things, offer throughout its service area "the services that are supported by Federal  X-universal service support mechanisms under section 254(c) . . ."E^Z yO#-ԍ 47 U.S.C.  214(e)(1)(A).E In the Universal Service  X -Order, the Commission agreed with the Joint Board that eligible telecommunications carriers" ^0*%%ZZ" should provide some minimum amount of local usage as part of the "basic service" package  X-of supported services.f_ {Ob-ԍ Universal Service Order, 12 FCC Rcd at 8813, para. 67.f The Commission also agreed with the Joint Board that the Commission should determine the level of local usage to be supported by federal universal  X-service mechanisms.%`\Z {O-ԍ Universal Service Order, 12 FCC Rcd at 8812, para. 65. The Commission also agreed with the Joint Board that the states should determine the local usage component for purposes of state universal service  {OX-mechanisms. Id.% The Commission stated in the Universal Service Order that it would subsequently quantify the amount of local usage that carriers receiving universal service support will be required to provide. In a Further Notice of Proposed Rulemaking, the  Xx-Commission asked for comment on local usage requirements.ax~ yO -ԍ FederalState Joint Board on Universal Service ForwardLooking Mechanism for High Cost Support for NonRural LECs, CC Dockets No. 9645 and 97160, FCC 97256 (rel. July 18, 1997). In this Further Notice, we seek additional comment on how much, if any, local usage we should require eligible telecommunications carriers to provide to customers as part of a "basic service" package if they desire to be eligible for universal service support for providing basic telecommunications service.  X -x.47.` ` The Commission previously concluded that setting an appropriate minimum level of usage for local service is essential in order to uphold the principle of competitive  X -neutrality.b  {OG-ԍ Universal Service Order, 12 FCC Rcd at 8814, para. 69. CTIA comments at 67, filed Oct. 17, 1997. Different technologies have different cost and rate structures, and, in particular, wireline and wireless carriers will be affected differently by the level of flatrated local usage  X-that a carrier must provide in order to be eligible to receive universal service support.^cZh  yO-ԍ We note, however, that some wireline carriers do not offer any flatrated local usage in their basic service  {Os-packages. See, e.g., Vermont PSC Tariff No. 1,  4.13 at p. 21 (effective July 7, 1998). Thus, this issue is not exclusively one of concern for wireless providers.^ For wireline providers, a significant portion of the cost of local service is the cost of installing the dedicated transmission line (local loop) between a customer and the telephone company  XM-central office.[dM  yO-ԍ BellSouth comments at 1112, filed Oct. 17, 1997.[ Moreover, that loop cost is a particularly large portion of the total cost of local service in the most rural areas, where population densities are lowest and the longest  X-local loops are required.e yO"-ԍ In some cases the loop costs are so high that carriers require subscribers to pay a portion of that cost in addition to the regular tariffed basic service rate. Once the loop is installed and activated, however, the incremental cost of using it for additional calls beyond the first is relatively insignificant. Thus, basic service packages offered by wireline carriers often include an option of unlimited local calling at no additional charge."re0*''ZZ"Ԍ X-ԙx/48.` ` Fixed wireless service providers may have cost structures similar to wireline carriers, because they may need to install relatively expensive equipment on a subscriber's  X-residence to serve as a network interface device (NID).f yOK-ԍ A network interface device (NID) is the hardware at the end point of the network connection to an end-user customer. While the carrier is responsible for maintaining the network on its side of the NID, the customer is responsible for maintaining any inside wiring on the customer side of the NID, as well as the customer premises equipment (CPE), such as the telephone itself.Ю Thus, dedicated facilities would represent a significant portion of the carrier's cost of providing local service. For mobile wireless providers, however, the dedicated costs of providing local service appear to be only a small portion of the total cost of providing service. The largest portion of the cost of providing mobile wireless service appears to be the cost of shared facilities, such as towers.  XH-x049.` ` The Joint Board determined that, "in order for consumers in rural, insular, and high cost areas to realize the full benefits of affordable voice grade access, usage of, and not  X -merely access to, the local network should be supported."eg x {OC-ԍ Universal Service Order, 12 FCC Rcd at 8812, para. 65.e The Commission stated in the  X -Universal Service Order that, absent a requirement to provide some specified amount of local usage, a carrier might be able to receive universal service support, which is designed to promote affordable use of the network, without in turn reducing its perminute rates. We are cognizant, however, that a local usage requirement has the potential to affect different types  X -of carriers differently. Setting an unreasonably high or low level of local usage can significantly affect competition among different technologies. In general, establishing a very high level of local usage would give a competitive advantage to wireline carriers, and establishing a very low level of local usage would give a competitive advantage to mobile wireless carriers.  X-x ` ` 2. Issues for Comment  X-  X-x150. ` ` We seek comment on whether some amount of minimum local usage should be included in the basic service packages, and if so, how to determine that local usage requirement. In light of the cost characteristics of mobile wireless service, we seek comment on how to define a basic service package with a local usage requirement that presents a realistic option to wireless customers. For example, the obligation to provide some local usage would be rendered meaningless if a wireless carrier could satisfy that obligation by offering, among other service options, a basic service package containing local usage that was priced hundreds of dollars higher than options offered by that wireless carrier or competing carriers, so that no one selected it. Thus we seek comment on how to ensure that a local usage requirement is included as part of an option that represents a viable choice for"" g0*%%ZZ\" consumers. We seek comment on whether carriers should only be eligible to receive universal service support with respect to subscribers who select a basic service package that includes a certain amount of local usage without additional charge. Alternatively, we seek comment on whether carriers should only be eligible to receive universal service support if a certain percentage of their subscribers subscribe to a basic service package that includes a certain amount of flatrated local usage, because that would indicate that such package presented a viable option to customers.  XH-x251.` ` We also seek comment on whether we should require eligible telecommunications carriers to include some fixed number of minutes of use per month as part of the basic universal service package, or whether we should require some minimum number of calls. We note that the cost of a call for wireless carriers may vary depending on its duration and on whether it is made during peak calling hours. These factors may be less significant for wireline carriers. Therefore, we seek comment on whether we should establish different requirements for different types of carriers, and whether we should give carriers the option of offering either a minimum number of minutes or a minimum number of calls in their basic service package.  Xb-x352.` ` We seek comment on how much, if any, local usage to require carriers to offer  XK-in such a basic service package in order to be eligible for universal service support.hzK yO-ԍ Data submitted to us indicate that the average level of minutes of usage for customers purchasing flatrate local service varies from state to state, but ranges from about 500 to 750 minutes per month, and the average for message rate customers is about 150 to 300. These figures are based on responses to Data Request in CC Docket No. 9645, DA 971433 (released July 9, 1997). The range shown is the mean of 616 minutes plus or  {O-minus one standard deviation (134), i.e., 616+134=750 to 616134=482 (approximately 500). Meanwhile, data for message rate customers indicates a range of 152 to 310 minutes with a mean of 231 plus or minus one standard deviation (79).  According to the Statistics of Common Carriers, telephone customers make, on average, 135  X-local calls per month per access line.i  yO-ԍ Federal Communications Commission, Statistics of Communications Common Carriers (1996/1997 edition). Table 2.6 notes that the national total of local calls reported by all reporting companies was 504 billion. Dividing that by the 155 million access lines indicated by Table 2.5 for the same companies and dividing by 12 to convert from annual to monthly figures yields 270 local calls per access line per month. Since this includes both originating and terminating calls, it counts each call twice, indicating a nationwide average of 135 originating local calls per line per month. This includes both business and residential lines. This average varies from 52 local calls per month in  X-Maine to 210 local calls per month in Louisiana.jj  yO9"-ԍ  FCC, CCB, Industry Analysis Division, internal statistics.j Other sources report that cellular customers average 150 minutes of use per month, and broadband PCS customers average 250"j0*%%ZZ"  X-minutes of use per month.k yOy-ԍ These are baseline assumptions used by Donaldson, Lufkin & Jenrette, "Wireless Communications Industry" (Spring 1998) survey at pages 20 and 24 (Tables 5, 6). The cellular and broadband PCS numbers are expected to  X-increase in the future.3l  {O-ԍ  Id.3 We seek comment on whether we should base the amount of local usage that a carrier must offer, at least in part, on average usage rates. Commenters that argue that no level of local usage should be required should explain why such a requirement would not be necessary to meet the goals of universal service. We encourage such commenters to suggest alternative approaches that will promote universal service goals. x  X_-x453. We also seek comment on how we should determine what constitutes local usage. We note that wireless and wireline carriers may treat different sets of calls as  X1-"local."Rm1 yO-ԍ TDS comments at 16, filed Oct. 17, 1997.R The boundaries of the local calling areas for wireline carriers and service areas for eligible telecommunications carriers are set by the states, and the value of a particular local usage requirement will depend in part on the size of the area encompassed by the local calling  X -area, which may vary from state to state.\n B {O-ԍ Cf. GTE comments at 40, filed Oct. 17, 1997.\ We seek comment on whether, and how, to account for differences in the size of local calling areas. We seek comment on whether we should vary the amount of local usage that carriers must offer depending on the size of their local calling areas. We note that the California PUC suggested in the initial rulemaking that  X-we include a minimum of three dollars worth of local usage.\o yO-ԍ California PUC comments at 4, filed Oct. 17, 1997.\ We seek guidance from the states on the level of local usage that we should require from eligible carriers serving their residents, given the size of the local calling areas and the basic service packages that they have established, recognizing that local calling areas may be different for customers of wireline and wireless carriers. We further seek comment on whether the local usage  X-requirement we establish should be the same for business and residential users.PpXd  yO2-ԍ We note that, in the initial rulemaking proceeding, the California PUC advocated that business users not be allowed any local usage as part of the basic package, because business users can recover their costs through the price of their goods. California PUC comments at 5, filed Oct. 17, 1997.P  X- IV. xPROCEDURAL MATTERS AND ORDERING CLAUSES Đ  X< xA.` ` Ex Parte Presentations (#` " p0*%%ZZ"Ԍ X-x554. ` ` This is a permitbutdisclose notice-and-comment rulemaking proceeding. Ex  X-parte presentations are permitted, except during the Sunshine Agenda period, provided that  X-they are disclosed as provided in the Commission's rules.hq {OO-ԍ See generally 47 C.F.R.  1.1202, 1.1203, 1.1206.h  X- xB.` ` Initial Regulatory Flexibility Analysis (#`  Xz-x655. ` ` As required by the Regulatory Flexibility Act (RFA),^rZzZ {O -ԍ See 5 U.S.C.  603. The RFA, see 5 U.S.C.  601 et seq., has been amended by the Contract With America Advancement Act of 1996, Pub. L. No. 104121, 110 Stat. 847 (1996) (CWAAA). Title II of the CWAAA is the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA).^ the Commission has prepared this Initial Regulatory Flexibility Analysis (IRFA) of the possible significant economic impact on small entities by the policies and rules proposed in this Order and Further Notice. Written public comments are requested on the IRFA. These comments must be filed in accordance with the same filing deadlines as comments on the rest of this Further Notice, and should have a separate and distinct heading designating them as responses to the IRFA. The Commission will send a copy of this Further Notice, including the IRFA, to the Chief Counsel for Advocacy of the Small Business Administration (SBA) in accordance with the RFA. See 5 U.S.C.  603(a). In addition, the Order and Further Notice and IRFA (or summaries thereof) will be published in the Federal Register.  X}-x756.` ` Need for and Objectives of the Proposed Rules. In light of the concerns raised by wireless telecommunications providers regarding the difficulties associated with distinguishing their interstate and intrastate revenues for universal service reporting purposes,  X:-the Commission tentatively concludes that it should provide such providers with specific guidance on how to separate their interstate and intrastate revenues. Therefore, the Commission seeks comment in this Further Notice on how wireless telecommunications providers should separate their interstate and intrastate revenues for purposes of universal service reporting. The Commission sets forth and seeks comment on proposed methodologies and simplifying assumptions that could be used by wireless telecommunications providers to distinguish between their interstate and intrastate revenues. Until we issue final rules regarding the mechanisms that wireless telecommunications providers should use in allocating their revenues between the interstate and intrastate jurisdictions, we provide such providers with interim guidelines for reporting on the Worksheet their percentage of interstate telecommunications revenues. The Commission also seeks comment on whether, from the perspective of wireless providers, which historically have not supplied services eligible for universal service support, our universal service rules are competitively neutral, especially with regard to the schools and libraries program. Finally, we seek comment on the definition of the basic service packages that carriers must offer in order to be eligible to receive universal"|r0*%%ZZ" service support.  X-x857.` ` Legal Basis. The proposed action is supported by sections 4(i), 4(j), 201205, 254, and 403 of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 154(j), 201205, 254, and 403.  Xx-x958.` ` Description and Estimate of the Number of Small Entities to which the Further  Vc-Notice will Apply.   X5-x :59. ` ` Radiotelephone (Wireless) Carriers. The SBA has developed a definition of small entities for radiotelephone (wireless) companies. According to the SBA's definition, a  X -small business radiotelephone company is one employing fewer than 1,500 persons.ws  yO -ԍ 13 C.F.R.  121.201, Standard Industrial Classification (SIC) Code 4812. w The Census Bureau reports that there were 1,176 such companies in operation for at least one year  X -at the end of 1992.Ut X {O-ԍ 1992 Census at Firm Size1-123.U The Census Bureau also reported that 1,164 of those radiotelephone companies had fewer than 1,000 employees. Thus, even if all of the remaining 12 companies had more than 1,500 employees, there would still be 1,164 radiotelephone companies that might qualify as small entities if they are independently owned and operated. We do not have information on the number of carriers that are not independently owned and operated, and thus are unable at this time to estimate with greater precision the number of radiotelephone carriers and service providers that would qualify as small business concerns under the SBA's definition. Consequently, we estimate that there are fewer than 1,164 small entity radiotelephone companies that may be affected by the proposals included in this Further Notice.   X-x;60. ` ` Cellular Service Carriers. Neither the Commission nor the SBA has developed a definition of small entities specifically applicable to providers of cellular services. The closest applicable definition under the SBA rules is for radiotelephone (wireless) companies (SIC 4812). The most reliable source of information regarding the number of cellular service carriers nationwide of which we are aware is the data that the Commission collects annually  Xi-in connection with the TRS Worksheet. According to the most recent data, 792 companies  XT-reported that they were engaged in the provision of cellular services.HuT {O -ԍ TRS Worksheet at Tbl. 1.H We have no information on the number of carriers that are not independently owned and operated, nor on those that have more than 1,500 employees, and thus are unable at this time to estimate with greater precision the number of cellular service carriers that would qualify as small business concerns under the SBA's definition. Consequently, we estimate that there are fewer than 792" |u0*%%ZZ<" small entity cellular service carriers that may be affected by the proposals included in this Further Notice.  X-x<61. ` ` Paging Providers. The Commission has proposed a two-tier definition of small businesses in the context of auctioning geographic area paging licenses in the Common Carrier Paging and exclusive Private Carrier Paging services. Under the proposal, a small business will be defined as either (1) an entity that, together with its affiliates and controlling principals, has average gross revenues for the three preceding years of not more than $3 million; or (2) an entity that, together with affiliates and controlling principals, has average gross revenues for the three preceding calendar years of not more than $15 million. Since the SBA has not yet approved this definition for paging services, the Commission will utilize the  X -SBA definition applicable to radiotelephone companies, i.e., an entity employing no more than 1,500 persons. At present, there are approximately 24,000 Private Paging licenses and  X -74,000 Common Carrier Paging licenses. According to Telecommunications Industry Revenue data, there were 172 "paging and other mobile" carriers reporting that they engage in these  X -services.v  yO$-ԍxFCC, Telecommunications Industry Revenue: TRS Fund Worksheet Data, Figure 2 (Number of Carriers Paying Into the TRS Fund by Type of Carrier) (Nov. 1997). Consequently, the Commission estimates that there are fewer than 172 small paging carriers. The Commission estimates that the majority of private and common carrier paging providers would qualify as small entities under the SBA definition.  XO-x=62. ` ` Broadband PCS Licensees. The broadband PCS spectrum is divided into six frequency blocks designated A through F. The Commission has defined "small entity" in the auctions for Blocks C and F as a firm that had average gross revenues of less than $40  X -million in the three previous calendar years.Ww   {O-ԍxSee 47 C.F.R.  24.720(b)(1).W This definition of "small entity" in the context  X-of broadband PCS auctions has been approved by the SBA.x {OV-ԍxSee Implementation of Section 309(j) of the Communications Act Competitive Bidding, PP Docket  {O -No. 93253, Fifth Report and Order, 9 FCC Rcd 5532, 558184 (1994). The Commission has auctioned broadband PCS licenses in blocks A through F. Of the qualified bidders in the C and F block auctions, all were entrepreneurs. Entrepreneurs was defined for these auctions as entities, together with affiliates, having gross revenues of less than $125 million and total assets of less than $500 million at the time the FCC Form 175 application was filed. Ninety bidders, including C block reauction winners, won 493 C block licenses and 88 bidders won 491 F block licenses. For purposes of this IRFA, the Commission assumes that all of the 90 C block broadband PCS licensees and 88 F block broadband PCS licensees, a total of 178 licensees, are small entities. "$!x0*%%ZZz"Ԍ X-x>63. ` ` Narrowband PCS Licensees. The Commission has auctioned nationwide and regional licenses for narrowband PCS. There are 11 nationwide and 30 regional licensees for narrowband PCS. The Commission does not have sufficient information to determine whether any of these licensees are small businesses within the SBA-approved definition for radiotelephone companies. At present, there have been no auctions held for the MTA and BTA narrowband PCS licenses. The Commission anticipates a total of 561 MTA licenses and 2,958 BTA licenses will be awarded in the auctions. Given that nearly all radiotelephone companies have no more than 1,500 employees, and that no reliable estimate of the number of prospective MTA and BTA narrowband licensees can be made, the Commission assumes, for purposes of this IRFA, that all of the licenses will be awarded to small entities, as that term is defined by the SBA.  X -x?64. ` ` 220 MHz radio services. Since the Commission has not yet defined a small business with respect to 220 MHz radio services, it will utilize the SBA definition applicable  X -to radiotelephone companies, i.e., an entity employing no more than 1,500 persons. With respect to the 220 MHz services, the Commission has proposed a two-tiered definition of small business for purposes of auctions: (1) for Economic Area (EA) licensees, a firm with average annual gross revenues of not more than $6 million for the preceding three years; and (2) for regional and nationwide licensees, a firm with average annual gross revenues of not more than $15 million for the preceding three years. Given that nearly all radiotelephone companies employ no more than 1,500 employees, for purposes of this IRFA the Commission will consider the approximately 3,800 incumbent licensees as small businesses under the SBA definition.  X-x@65. ` ` Rural Radiotelephone Service. The Commission has not adopted a definition of small business specific to the Rural Radiotelephone Service, which is defined in Section  X-22.99 of the Commission's Rules.?y yO%-ԍ 47 C.F.R.  22.99.? A subset of the Rural Radiotelephone Service is BETRS,  X-or Basic Exchange Telephone Radio Systems.WzX {O-ԍ See 47 C.F.R.  22.757 22.759.W Accordingly, we will use the SBA's  X~-definition applicable to radiotelephone companies, i.e., an entity employing fewer than 1,500 persons. There are approximately 1,000 licensees in the Rural Radiotelephone Service, and we estimate that almost all of them qualify as small under the SBA's definition of a small  X;-business.K{; yO!-ԍ 13 C.F.R.  121.201, SIC 4812.K x  X -xA66. ` ` Specialized Mobile Radio (SMR) Licensees. Pursuant to 47 C.F.R.  90.814(b)(1), the Commission has defined "small entity" in auctions for geographic area 800""z{0*%%ZZ<" MHz and 900 MHz SMR licenses as a firm that had average annual gross revenues of less than $15 million in the three previous calendar years. This definition of a "small entity" in  X-the context of 800 MHz and 900 MHz SMR has been approved by the SBA.| {OK-ԍ See Amendment of Parts 2 and 90 of the Commission's Rules to Provide for the Use of 200 Channels Outside the Designated Filing Areas in the 896901 MHz and the 935940 MHz Bands Allotted to the  {O-Specialized Mobile Radio Pool, Second Order on Reconsideration and Seventh Report and Order, 11 FCC Rcd  yO-2639, 2693702 (1995); Amendment of Part 90 of the Commission's Rules to Facilitate Future Development of  {Oo-SMR Systems in the 800 MHz Frequency Band, First Report and Order, Eighth Report and Order, and Second  {O9-Further Notice of Proposed Rulemaking, 11 FCC Rcd 1463 (1995). The proposals included in this Further Notice may apply to SMR providers in the 800 MHz and 900 MHz bands that either hold geographic area licenses or have obtained extended implementation authorizations. We do not know how many firms provide 800 MHz or 900 MHz geographic area SMR service pursuant to extended implementation authorizations, nor how many of these providers have annual revenues of less than $15 million. x  X1-xB67. ` ` The Commission has held auctions for geographic area licenses in the 800 MHz and 900 MHz SMR band. There were 60 winning bidders who qualified as small entities in the 900 MHz auction. Based on this information, we conclude that the number of geographic area SMR licensees affected by the rule adopted in this Order includes these 60 small entities. In the 800 MHz SMR auction, there were 524 licenses won by winning bidders, of which 38 licenses were won by small or very small entities.  X-xC68. ` ` Wireless Communications Services (WCS). WCS is a wireless service, which can be used for fixed, mobile, radiolocation, and digital audio broadcasting satellite uses. The Commission defined "small business" for the WCS auction as an entity with average gross  XK-revenues of $40 million for each of the three preceding years.}KH {OD-ԍxSee Amendment of the Commission's Rules to Establish Part 27, the Wireless Communications Service  {O-("WCS"), GN Docket 96228, Report and Order, 12 FCC Rcd 10785 (1997). The Commission auctioned geographic area licenses in the WCS service. There were seven winning bidders who qualified as very small business entities and one small business entity in the WCS auction. Based on this information, the Commission concludes that the number of geographic area  X-WCS licensees affected include these eight entities. x  X-xD69.` ` Description of Projected Reporting, Record keeping, and Other Compliance  X-Requirements. Section 254(d) states "that all telecommunications carriers that provide interstate telecommunications services shall make equitable and nondiscriminatory contributions" toward the preservation and advancement of universal service. Under the Commission's rules, all telecommunications carriers that provide interstate telecommunications services and some providers of interstate telecommunications are required to contribute to the universal service support mechanisms. Contributions for support for programs for high cost";#}0*%%ZZ{" areas and lowincome consumers are assessed on the basis of interstate and international enduser telecommunications revenues. Contributions for support for programs for schools, libraries, and rural health care providers are assessed on the basis of interstate, intrastate, and international enduser telecommunications revenues. Contributors are required to submit information on the Universal Service Worksheet regarding their enduser telecommunications revenues. Contributors are required to distinguish between their interstate and intrastate revenues. In the Order, we provide interim safe harbor percentages that carriers may use in reporting their interstate telecommunications revenues. Under our interim guidance, those carriers that choose not to report the safe harbor percentage may be required to perform reporting and record keeping assignments in order to use a different percentage. This task may require some administrative, accounting, and legal skills.  X -xE70.` ` Steps Taken to Minimize Significant Economic Impact on Small Entities and  X -Significant Alternatives Considered.  Throughout this Further Notice, we seek comment on alternatives that will reduce the impact on entities affected by these proposals. We tentatively conclude that we should adopt a surrogate percentage that would represent the percentage of interstate telecommunications revenues reported by certain carriers. We believe that this tentative conclusion greatly minimizes the administrative burden on those small carriers that experience difficulty in identifying their interstate and intrastate revenues. We also seek comment on a number of other simplifying assumptions that certain carriers would apply in estimating their percentage of interstate telecommunications revenues. Some of these proposals may impose more administrative burdens on certain carriers than others. We therefore seek comment on the level of administrative burden that these proposals would impose and, in the event that such proposals were adopted, on ways in which to reduce the level of administrative burden that they may impose. We particularly encourage parties to submit proposals that will reduce the administrative burden on carriers in separating their interstate and intrastate revenues.  X-xF71.` ` Federal Rules That May Overlap, Duplicate or Conflict with the Proposed  Xk-Rule.  None.   X?-xG72. ` ` It is FURTHER ORDERED that the Commission's Office of Public Affairs, Reference Operations Division, SHALL SEND a copy of this Memorandum Opinion and Order and Further Notice of Proposed Rulemaking, including the Initial Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration.  X -x C.` ` Initial Paperwork Reduction Act Analysis  X"-xH73.` ` This Further Notice contains a proposed information collection. As part of its continuing effort to reduce paperwork burdens, we invite the general public and the Office of Management and Budget (OMB) to take this opportunity to comment on the information"p$$}0*%%ZZ(#" collections contained in this Further Notice, as required by the Paperwork Reduction Act of  X-1995, Pub. L. No. 10413.<~X yOb-ԍ A supporting statement, prepared in accordance with the Paperwork Reduction Act, that details the Commission's estimates with respect to the burdens imposed by the proposals in this Further Notice is available from the Commission or from the Office of Management and Budget.< Public and agency comments are due at the same time as other comments on this Further Notice; OMB comments are due 60 days from date of publication of this Further Notice in the Federal Register. Comments should address: (a) whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; (b)the accuracy of the Commission's burden estimates; (c)ways to enhance the quality, utility, and clarity of the information collected; and (d)ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other form of information technology.  X -x D.` ` Deadlines and Instructions for Filing Comments(#`  X -x  X -xI74. ` ` Pursuant to Sections 1.415 and 1.419 of the Commission's rules, 47 C.F.R.  1.415, 1.419, interested parties may file comments on or before 30 days from the Federal Register publication date, and reply comments on or before 45 days from the Federal Register publication date. Comments may be filed using the Commission's Electronic Comment Filing  Xy-System (ECFS) or by filing paper copies. See Electronic Filing of Documents in Rulemaking  Xb-Proceedings, 63 Fed. Reg. 24,121 (1998).  X4-xJ75. ` ` Comments filed through the ECFS can be sent as an electronic file via the  X-Internet to . Generally, only one copy of an electronic submission must be filed. If multiple docket or rulemaking numbers appear in the caption of this proceeding, however, commenters must transmit one electronic copy of the comments to each docket or rulemaking number referenced in the caption. In completing the transmittal screen, commenters should include their full name, Postal Service mailing address, and the applicable docket or rulemaking number. Parties may also submit an electronic comment by Internet email. To get filing instructions for email comments, commenters should send an email to ecfs@fcc.gov, and should include the following words in the body of the message, "get form