Federal Communications Commission DA 19-1050 Before the FEDERAL COMMUNICATIONS COMMISSION WASHINGTON, D.C. 20554 In the Matter of Telecommunications Carriers Eligible for Universal Service Support Connect America Fund ) ) ) ) ) ) ) WC Docket No. 09-197 WC Docket No. 10-90 ORDER Adopted: October 18, 2019 Released: October 18, 2019 By the Chief, Wireline Competition Bureau: I. INTRODUCTION 1. In this Order, the Wireline Competition Bureau (Bureau) designates Mid-Hudson Data Corp. (Mid-Hudson) as an eligible telecommunications carrier (ETC) in eligible high-cost areas within the state of New York. See Petition for Eligible Telecommunications Carrier Designation, WC Docket No. 09-197 (filed Oct. 22, 2018) (Mid-Hudson Petition). Designation is conditioned upon and limited to Mid-Hudson’s authorization to receive Connect America Fund support awarded in coordination with New York’s New NY Broadband Program (New York Program). See Wireline Competition Bureau Announces FCC Deadlines for New York Broadband Program Winning Bidders, WC Docket No. 10-90, Public Notice, 33 FCC Rcd 4922, 4923, App. A (2018) (New York Long-Form Public Notice); Phase 3 Awards, https://nysbroadband.ny.gov/new-ny-broadband-program/phase-3-awards (announcing carriers selected to receive support pursuant to the New York Program in areas eligible for Connect America Fund support); see also Connect America Fund, et al., Order, 32 FCC Rcd 968 (2017) (New York Auction Waiver Order). In making this designation, the Bureau finds that Mid-Hudson meets the eligibility requirements to receive universal service support, as set forth in section 214(e)(6) of the Communications Act of 1934, as amended (Act), and related Commission rules. 47 U.S.C. § 214(e)(6); 47 CFR § 54.202. The Bureau will release separate public notices regarding Auction 903 funding authorizations. II. BACKGROUND A. CAF Support Awarded in Coordination with the New York Program 2. The Connect America Fund (CAF) Phase II auction (Auction 903) is one part of a multi-step process to comprehensively reform and modernize the high-cost component of the Universal Service Fund (USF). Connect America Fund et al., WC Docket Nos. 10-90 et al., Report and Order and Further Notice of Proposed Rulemaking, 26 FCC Rcd 17663, 17725, para. 156 (2011), aff’d sub nom., In re: FCC 11-161, 753 F.3d 1015 (10th Cir. 2014). In 2017, New York sought waiver of certain Auction 903 rules and requirements so that, through its New York Program, it could allocate certain CAF support (that otherwise would have been included in Auction 903) to CAF-eligible areas. See New York Auction Waiver Order, 32 FCC Rcd at 970-71, para. 9. Specifically, New York sought to distribute the $170.4 million in model-based support previously declined by Verizon in New York. See id. at 969, 970-71, paras. 3, 9. The Commission granted this waiver request conditional on participants’ compliance, including Mid-Hudson’s, with certain terms and conditions consistent with those imposed on Auction 903 winning bidders. Id. at 990, para. 60. See 47 CFR § 54.315. The Commission also emphasized that like all high-cost support recipients, New York Program participants selected to receive CAF support would only be eligible to receive CAF support if designated an ETC in their CAF-eligible areas, and required winning bidders to complete an application designed to ensure that winning participant are technically and financially qualified to offer supported services and have met all regulatory prerequisites and conditions for receiving USF support. New York Auction Waiver Order, 32 FCC Rcd at 990, paras. 60-65. As part of this application, the Commission required New York Program participants to submit proof of their ETC designations within 180 days of the announcement of their support awards. Id. at 990, para. 59. On May 18, 2018, the Commission released a public notice acknowledging New York’s allocation of CAF support to certain participants. New York Long-Form Public Notice, 33 FCC Rcd at 4922. B. Requirements for FCC ETC Designation 3. Section 254(e) of the Act provides that “only an eligible telecommunications carrier designated under section 214(e) shall be eligible to receive specific federal universal service support.” 47 U.S.C. § 254(e). Congress gives primary authority for ETC designations to state commissions. Id. § 214(e)(2). The FCC has authority only when “a common carrier [is] providing telephone exchange service and exchange access that is not subject to the jurisdiction of a State commission.” Id. § 214(e)(6). The petitioning carrier must demonstrate that the FCC has jurisdiction and may do so by submitting an “affirmative statement from the state commission or a court of competent jurisdiction that the carrier is not subject to the state commission’s jurisdiction.” See Federal-State Joint Board on Universal Service et al., CC Docket No. 96-45, Twelfth Report and Order, Memorandum Opinion and Order, and Further Notice of Proposed Rulemaking, 15 FCC Rcd 12208, 12267, para. 120 (2000) (2000 Tribal Order); 47 U.S.C. § 214(e)(6). The Commission has delegated authority to the Bureau to consider appropriate ETC designation requests. See Procedures for FCC Designation of Eligible Telecommunications Carriers Pursuant to Section 214(e)(6) of the Communications Act, CC Docket No. 96-45, Public Notice, 12 FCC Rcd 22947, 22948 (1997). 4. A petition for ETC designation by the FCC must include: (1) a certification that the petitioner offers or intends to offer all services designated for support by the Commission pursuant to section 254(c) of the Act; (2) a certification that the petitioner offers or intends to offer the supported services either using its own facilities or a combination of its own facilities and resale of another carrier’s services; 47 U.S.C. § 214(e)(1); 47 CFR § 54.201(d)(1). (3) a description of how the petitioner advertises the availability of the supported services and the charges therefor using media of general distribution; 47 U.S.C. § 214(e)(1); 47 CFR § 54.201(d)(2). (4) a detailed description of the geographic service area for which the petitioner requests to be designated as an ETC; An ETC’s “service area” is set by the designating authority and is the geographic area within which an ETC has universal service obligations and may receive universal service support. 47 U.S.C. § 214(e)(5); 47 CFR § 54.207(a). Although section 214(e)(5) of the Act, 47 U.S.C. § 214(e)(5), requires conformance of a competitive ETC’s service area and an incumbent rural telephone company’s service area, the Commission has separately forborne from imposing such requirements on Auction 903 support recipients. See Phase II Auction Order, 31 FCC Rcd at 6006-6009, paras. 159-168. and (5) a certification that neither the petitioner, nor any party to the application, is subject to a denial of federal benefits pursuant to the Anti-Drug Abuse Act of 1988. 21 U.S.C. § 862; 47 CFR § 1.2002(a)–(b). 5. In addition, petitioners must demonstrate their ability to meet certain service standards. A petitioner seeking an ETC designation for purposes of becoming eligible to receive high-cost support must: (1) certify that it will comply with the service requirements applicable to the support that it receives; (2) submit a five-year service plan (applicable only to high cost areas); (3) demonstrate its ability to remain functional in emergency situations; and (4) demonstrate its ability to satisfy applicable consumer protection and service quality standards. See 47 CFR § 54.202(a). 6. For petitioners seeking ETC designation for the purpose of becoming authorized to receive Auction 903 support, the Bureau waived the requirements that the petitioners submit a five-year service plan and proof of compliance with consumer protection and service quality standards, finding that the need for such requirements is obviated by specific service quality standards applicable to Auction 903 support recipients and specific reporting obligations relating to such standards. WCB Reminds Connect America Fund Phase II Auction Applicants of the Process for Obtaining a Federal Designation as an Eligible Telecommunications Carrier, WC Docket Nos. 09-197 and 10-90, Public Notice, 33 FCC Rcd 6696, 6699-6700 (WCB 2019). Because the authorization of CAF support for participants in the New York program is conditioned on meeting terms and conditions consistent with those applicable to Auction 903 winning bidders, New York Auction Waiver Order, 32 FCC Rcd at 990, para. 60. we interpret this waiver as equally applicable to New York Program participants. 7. In addition, prior to designating a carrier as an ETC pursuant to section 214(e)(6) of the Act, the Commission must determine whether such designation is in the public interest. 47 U.S.C. § 214(e)(6); 47 CFR § 54.202(b). When making a public interest determination, the Commission historically has considered the benefits of increased consumer choice and the unique advantages and disadvantages of the applicant’s service offering. See, e.g., Virgin Mobile ETC Designation Order in the States of Alabama, Connecticut, Delaware, New Hampshire and the District of Columbia, WC Docket 09-197, Order, 25 FCC Rcd 17797, 17799, para. 6 (WCB 2010). In the Auction 903 ETC Public Notice, the Bureau found that recipients of Phase II Auction support demonstrated their ability to offer service efficiently through the competitive bidding process and their ability to meet public interest obligations through their short- and long-form applications and thus, need not submit additional support in their petitions. WCB Reminds Connect America Fund Phase II Auction Applicants of the Process for Obtaining a Federal Designation as an Eligible Telecommunications Carrier, WC Docket Nos. 09-197 and 10-90, Public Notice, 33 FCC Rcd 6696, 6699-6700 (WCB 2018) (Auction 903 ETC Public Notice). C. Petition for ETC Designation 8. Mid-Hudson seeks an ETC designation to become eligible to receive CAF support in coordination with the New York Program for all CAF-eligible census blocks covered by its awards. In the Attachment to this Order, the Bureau has provided the CAF-eligible census blocks included in the award. The Bureau has released a public notice soliciting comments on Mid-Hudson’s petition. Wireline Competition Bureau Seeks Comment on Mid-Hudson Data Corporation’s Petition for Designation as an Eligible Telecommunications Carrier in the State of New York, Docket No. 09-197, Public Notice, 33 FCC Rcd 10964 (WCB 2018). No comments addressing Mid-Hudson’s petition were filed. III. DISCUSSION 9. We find that Mid-Hudson satisfies the Commission’s requirements for ETC designation and, therefore, designate Mid-Hudson as a high-cost ETC in New York, conditioned upon and limited to the high-cost areas where it is authorized to receive CAF Phase II support and effective only upon such authorization. In these areas, Mid-Hudson must meet CAF Phase II requirements, Lifeline requirements, and other service obligations attendant to its high-cost designation, as specified in the Act and the Commission’s rules. 47 CFR § 54.202(a)(1)(i); id. § 54.101(d); Lifeline and Link Up Reform and Modernization et al., WC Docket No. 11-42 et al., Third Report and Order, Further Report and Order, and Order on Reconsideration, 31 FCC Rcd 3962, 3974, 4074-75, paras. 35, 311-12 (2016) (requiring all high-cost recipients to meet Lifeline obligations in all areas where they deploy a network pursuant to a broadband service obligation and are commercially offering qualifying service). A. Commission Authority 10. Mid-Hudson demonstrates that the Commission has the requisite authority to designate it as an ETC pursuant to section 214(e)(6) of the Act. Mid-Hudson submitted correspondence from the New York State Public Service Commission stating that it does not exercise jurisdiction for determinations of competitive eligible telecommunications carrier designation over Mid-Hudson, a provider of broadband services. Mid-Hudson Petition at Attach. A. On this basis and consistent with our past decisions, we find that Mid-Hudson has demonstrated FCC authority to decide its petition. See Auction 903 ETC Public Notice, 33 FCC Rcd at 6697 (“If a state law expressly articulates that it does not have jurisdiction over a relevant type of technology, Commission staff would consider such a statute relevant in its determination of Commission jurisdiction.”); Telecommunications Eligible for Universal Service Support, WC Docket Nos. 09-197, 10-90, Order, 34 FCC Rcd 1966, 1970 (WCB 2019) (finding, on an independent basis, that certain CAF Phase II Auction bidders (including those winning support in Tennessee or Virginia) demonstrated FCC jurisdiction to decide their ETC petitions by citing the relevant state statutes). B. Eligibility Requirements 11. Designated Service Area. Mid-Hudson describes a designated service area based on all CAF-eligible census blocks covered by its CAF Phase II award (as listed in the Attachment to this Order). Mid-Hudson Petition at Ex. A; 47 U.S.C. § 214(e); 47 CFR § 54.201(d). 12. Offering the Services Supported by the Universal Service Support Mechanisms. We find that Mid-Hudson establishes through the required certifications and related filings that it will offer the services supported by the federal universal service support mechanisms. Mid-Hudson Petition at 4-5; 47 U.S.C. § 214(e)(1)(A); 47 CFR § 54.201(d)(1). 13. Compliance with the Service Requirements Applicable to CAF Phase II Support Awarded through the New York Program. We find that Mid-Hudson establishes its ability to comply with service requirements applicable to the support that it receives. Mid-Hudson Petition at 5; 47 CFR §§ 54.101(d), 54.202(a)(1)(i). This determination takes into account that, prior to being authorized to receive support, Mid-Hudson must certify and demonstrate, as part of their FCC applications, the technical and financial ability to provide voice and broadband services meeting or exceeding CAF Phase II standards, 47 CFR §§ 54.310(e)(1); 54.315(b)(2)(ii), (b)(2)(iv). certify its commitment to meeting relevant public interest obligations, 47 CFR § 54.315(b)(2)(iii). and certify its compliance with all statutory and regulatory requirements for receiving the universal service support. Id. § 54.315(b)(2)(v). Moreover, once authorized, Mid-Hudson must satisfy certain reporting obligations to ensure that the support received is being used efficiently and appropriately and that service requirements are being met. Id. § 54.313 (requiring annual report); id. § 54.310(c) (requiring build-out milestone reporting); see also New York Auction Waiver Order, 32 FCC Rcd at 993-94, paras. 68-70 (extending reporting obligations to New York recipients to monitor progress in meeting benchmarks). 14. Compliance with Service Requirements Applicable to Lifeline Services. Mid-Hudson commits to offering Lifeline discounts to qualifying low-income consumers, consistent with the Commission’s rules, in all high-cost areas where it is authorized to receive support. Mid-Hudson Petition at 5. 15. Offering the Supported Services Using a Carrier’s Own Facilities. Mid-Hudson certifies that it is a facilities-based provider of broadband and voice services. Id.; 47 U.S.C. § 214(e)(1)(A); 47 CFR § 54.201(d)(1). 16. Advertising Supported Services. Mid-Hudson commits to advertising the availability of the supported services and related charges using media of general distribution. Mid-Hudson Petition at 6; 47 U.S.C. § 214(e)(1)(B); 47 CFR § 54.201(d)(2). We emphasize that, as part of this commitment, Mid-Hudson must advertise the availability of its services and charges in a manner reasonably designed to reach Lifeline-eligible consumers. 47 CFR § 54.405. 17. Ability to Remain Functional in Emergency Situations. Mid-Hudson states that it can remain functional in emergency situations. Mid-Hudson states that it has sufficient back-up power to ensure functionality in the designated service area without an external power source, can re-route traffic around damaged facilities, and can manage traffic spikes resulting from emergency situations. Mid-Hudson Petition at 7; 47 CFR § 54.202(a)(2). 18. Anti-Drug Abuse Act Certification. Mid-Hudson submits a certification that satisfies the requirements of the Anti-Drug Abuse Act of 1988, as codified in sections 1.2001-1.2003 of the Commission’s rules. Mid-Hudson Petition at 8; 47 CFR § 1.2002. C. Public Interest Analysis 19. We conclude that Mid-Hudson’s participation in universal service programs would be in the public interest and would provide numerous benefits to consumers. As noted above, ETC designations in areas where a petitioner is authorized to receive CAF Phase II Auction support serves the public interest. Through participation in the New York Program and application processes, Mid-Hudson demonstrates that it can offer voice and broadband services in high-cost areas efficiently and at a price and quality comparable to the service offerings in more competitive areas. See New York Auction Waiver Order, 33 FCC Rcd at 991, paras. 61-62. Moreover, granting Mid-Hudson’s petition will serve the interests of low-income consumers by ensuring the availability of new, facilities-based Lifeline services at competitive prices in areas eligible for high-cost support. See Auction 903 ETC Public Notice, 33 FCC Rcd at 6700-6701. 20. Accordingly, based on the information, representations, and certifications in its petition, we find that Mid-Hudson has met all applicable conditions and prerequisites for ETC designation and conditionally grant its petition. D. Regulatory Oversight 21. Under section 254(e) of the Act, Mid-Hudson must use universal service support “only for the provision, maintenance, and upgrading of facilities and services for which the support is intended.” 47 U.S.C. § 254(e). Under section 214(e) of the Act, Mid-Hudson must provide supported services throughout its service area. Id. § 214(e). When authorized to receive high-cost support, Mid-Hudson must file an annual certification that all federal high-cost support received was used in the preceding calendar year and will be used in the coming calendar year only for the provision, maintenance, and upgrading of facilities and services for which the support is intended. 47 CFR § 54.314(b). The Commission conditions future support awarded through the high-cost program on the filing of such certification. Id. 22. An ETC receiving Lifeline support uses that support as intended when it reduces the price of its telecommunications services by the amount of the support for the eligible consumer. See Petition of TracFone Wireless, Inc. for Forbearance from 47 U.S.C. § 214(e)(1)(A) and 47 C.F.R. § 54.201(i), CC Docket No. 96-45, Order, 20 FCC Rcd 15095, 15105-06, para. 26 (2005). In addition, the ETC must file annual reports that include, among other things, a certification of compliance with applicable minimum service standards, service quality standards, and consumer protection rules. 47 CFR § 54.422(b)(3); see also id. §§ 54.416, 54.422 (requiring an officer of the company to certify that the ETC has policies and procedures in place to ensure that its Lifeline subscribers are eligible to receive Lifeline services and that will comply with all federal Lifeline certification procedures). 23. We find that reliance on Mid-Hudson’s commitments to meet these and other regulatory requirements, as well as representations and commitments made in its petition, is reasonable and consistent with the public interest and the Act. We conclude that fulfillment of these additional reporting requirements will further the Commission's goal of ensuring that Mid-Hudson satisfies its obligation under section 214(e) of the Act to provide supported services throughout its respective designated service areas. 24. The Commission may initiate an inquiry on its own motion to examine any ETC’s records and documentation to ensure that the universal service support the ETC receives is being used “only for the provision, maintenance, and upgrading of facilities and services” in the areas in which it is designated as an ETC. 47 U.S.C. §§ 220, 403. Mid-Hudson must provide such records and documentation to the Commission and USAC upon request. 47 CFR § 54.417. If Mid-Hudson fails to fulfill the requirements of the Act, the Commission’s rules, and the terms of this Order after it begins receiving universal service support, the Commission has authority to revoke Mid-Hudson’s ETC designation. Id. § 54.320(c); Federal-State Joint Board on Universal Service; Western Wireless Corp. Petition for Preemption of an Order of the South Dakota Public Utilities Commission, CC Docket No. 96-45, Declaratory Ruling, 15 FCC Rcd 15168, 15174, para. 15 (2000). The Commission also may assess forfeitures for violations of Commission rules and orders. See 47 U.S.C. § 503(b). E. Waiver of Deadline for Submitting Proof of ETC Designation 25. The Commission required participants to certify that they are ETCs in the New York Program and to submit appropriate documentation supporting such certification no later than November 14, 2018. New York Long-Form Public Notice, 33 FCC Rcd at 4922. The Bureau finds, on its own motion, good cause to waive this deadline for Mid-Hudson. The Commission has delegated to the Bureau the authority to grant waivers of the filing deadline. See Phase II Auction Order, 31 FCC Rcd at 603, n.315; see also 47 CFR §§ 0.91(p) (functions of the Wireline Competition Bureau), 0.291 (delegation of authority to the Wireline Competition Bureau). The Commission has found that waiver of this deadline is appropriate when an ETC designation proceeding is not yet complete by the deadline despite the good faith efforts of the applicant. See Petitions for Designation as an Eligible Telecommunications Carrier in the State of New York et al., WC Docket No. 09-197 et al., Order, 34 FCC Rcd 2796 (WCB 2019); Auction 903 Closing Public Notice, 33 FCC Rcd at 8268, para. 35 (citing Phase II Auction Order, 31 FCC Rcd at 6002-03, paras. 152-53). The Commission may waive its policies or rules upon a showing of good cause and may take into account, on an individual basis, considerations of hardship, equity, or more effective implementation of overall policy. See WAIT Radio v. FCC, 418 F.2d 1153, 1159 (D.C. Cir. 1969); see also NE Cellular Tel. Co. v. FCC, 897 F.2d 1164, 1166 (D.C. Cir. 1990). Waiver of the Commission’s policies or rules is appropriate only if both: (i) special circumstances warrant a deviation from the general rule; and (ii) such deviation will serve the public interest. See Network IP, LLC v. FCC, 548 F.3d 116, 127 (D.C. Cir. 2008). Deadlines can only be waived under “unusual or compelling circumstances.” Id. at 126 (citation omitted). The Commission has explained that it would presume such good faith efforts when the petitioner submitted its petition to the relevant authority by the deadline provided by the Public Notice. See Auction 903 Closing Public Notice, 33 FCC Rcd at 8268-69, para. 35. Mid-Hudson filed its petition prior to the deadline, thus demonstrating due diligence in meeting its filing deadline. IV. ORDERING CLAUSES 26. Accordingly, IT IS ORDERED, pursuant to the authority contained in section 214(e)(6) of the Communications Act of 1934, as amended, 47 U.S.C. § 214(e)(6), and the authority delegated in sections 0.91 and 0.291 of the Commission’s rules, 47 CFR §§ 0.91, 0.291, that MID-HUDSON IS CONDITIONALLY DESIGNATED AN ELIGIBLE TELECOMMUNICATIONS CARRIER IN ALL CENSUS BLOCKS IN THE STATE OF NEW YORK FOR WHICH IT IS ELIGIBLE TO RECEIVE SUPPORT AWARDED THROUGH THE NEW YORK BROADBAND PROGRAM. These designations are contingent upon Mid-Hudson becoming authorized to receive such support, is limited to those areas where support is authorized, and is effective only upon authorization. 27. IT IS FURTHER ORDERED that pursuant to section 1.3 of the Commission’s rules, 47 CFR § 1.3, and pursuant to the authority delegated under sections 0.91, and 0.291 of the Commission’s rules, 47 CFR §§ 0.91, 0.291, the deadline specified in the Commission’s rules, 47 CFR § 54.315(b)(5), IS WAIVED to the extent described above. 28. IT IS FURTHER ORDERED that a copy of this Order SHALL BE TRANSMITTED to the New York Public Utilities Commission and to the Universal Service Administrative Company. 29. IT IS FURTHER ORDERED that, pursuant to section 1.102(b)(1) of the Commission’s rules, 47 CFR § 1.102(b)(1), this order SHALL BE effective upon release. FEDERAL COMMUNICATIONS COMMISSION Kris Anne Monteith Chief Wireline Competition Bureau 8 ATTACHMENT MID-HUDSON DATA CORP. CENSUS BLOCKS Petitioner Census Blocks Covered by Selected Bid Locations Covered by Selected Bid Total Estimated CAF Award Mid-Hudson Data Corp. 73 459 $640,296 360010148031027 360390802013051 360390810004033 360010148031030 360390802013060 360390811011061 360010148031048 360390802013066 360390811011062 360210006002042 360390802013067 360390811011075 360210007001054 360390802013068 360390811011080 360210007002027 360390805011006 360390811011082 360210007002031 360390805011015 360390811013000 360210007002035 360390805011033 360390811013002 360210007002041 360390805011034 360390811013004 360210007002048 360390805012004 360390811013005 360210007002070 360390805012006 360390811013007 360210007003065 360390805012012 360390811013022 360210010003002 360390805012020 360390811013023 360210010004074 360390805012053 360390811013031 360210010006003 360390805012054 360390811013034 360210010006034 360390805012061 360390811013078 360210011001011 360390805012065 360390811013082 360390802011027 360390805012066 360390811013083 360390802011031 360390805012084 360390811023028 360390802011041 360390805024031 360390811023063 360390802013004 360390806002015 360390811023068 360390802013005 360390806002029 360390811023119 360390802013015 360390806002077 360390811023120 360390802013023 360390806002081 360390802013044 360390809001006