Federal Communications Commission FCC 10-155  
Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of
High-Cost Universal Service Support
Federal-State Joint Board on Universal Service
Request for Review of Decision of Universal 
Service Administrator by Corr Wireless 
Communications, LLC
)
)
)
)
)
)
)
)
)
WC Docket No. 05-337
CC Docket No. 96-45
ORDER AND NOTICE OF PROPOSED RULEMAKING
Adopted:  August 31, 2010 Released:  September 3, 2010 
Comment Date: 21 days after date of publication in the Federal Register
Reply Comment Date: 35 days after date of publication in the Federal Register
By the Commission: Chairman Genachowski and Commissioner Copps issuing separate statements. 
I. INTRODUCTION
1. In this order and notice of proposed rulemaking (NPRM), we undertake important steps 
for fiscally responsible universal service fund reform.  Verizon Wireless and Sprint Nextel, in separate 
transactions in 2008, each committed to surrender their high-cost universal service support over five 
years, but those commitments have yet to be implemented.1 Corr Wireless Communications, LLC (Corr 
Wireless) has asked that any support reclaimed from Verizon Wireless and Sprint Nextel be redistributed 
to other competitive eligible telecommunications carriers (ETCs).2 In this order we (a) provide clear 
instructions for implementing Verizon Wireless’s and Sprint Nextel’s commitments; (b) hold that the 
  
1 Applications of Cellco Partnership d/b/a Verizon Wireless and Atlantis Holdings LLC for Consent to Transfer 
Control of Licenses, Authorizations, and Spectrum Manager and De Facto Transfer Leasing Arrangements and 
Petition for Declaratory Ruling That the Transaction Is Consistent with Section 310(b)(4) of the Communications 
Act, WT Docket No. 08-95, Memorandum Opinion and Order and Declaratory Ruling, 23 FCC Rcd 17444 (2008) 
(Verizon Wireless Merger Order); Sprint Nextel Corporation and Clearwire Corporation Applications for Consent 
to Transfer Control of Licenses, Leases, and Authorizations, WT Docket No. 08-94, Memorandum Opinion and 
Order and Declaratory Ruling, 23 FCC Rcd 17570 (2008) (Sprint Nextel Merger Order).  For purposes of this order, 
“Verizon Wireless” refers to Cellco Partnership d/b/a Verizon Wireless, as well as any subsidiaries or affiliates 
subject to the universal service commitments of the Verizon Wireless Merger Order.  It does not refer to service 
territories divested by Verizon Wireless pursuant to the Verizon Wireless Merger Order. Similarly, “Sprint Nextel” 
refers to Sprint Nextel Corporation, as well as any subsidiaries or affiliates subject to the universal service 
commitments of the Sprint Nextel Merger Order.  
2 See Request for Review By Corr Wireless Communications, LLC of Decision of Universal Service Administrator, 
CC Docket No. 96-45, WC Docket No. 05-337 (filed Mar. 11, 2009) (Corr Wireless Request for Review).  To be 
eligible to receive high-cost universal service support, a carrier must be designated an “eligible telecommunications 
carrier” (ETC) for a specific service territory by the relevant state regulator or the Commission.  Wireless carriers 
(such as Verizon Wireless and Sprint Nextel) are known as “competitive ETCs,” while incumbent local exchange 
carriers are known as “ETCs.”  
Federal Communications Commission FCC 10-155  
2
surrendered support need not be redistributed to other competitive ETCs in all cases; and (c) direct that 
the surrendered support be reserved as a potential down payment on proposed broadband universal 
service reforms as recommended by the National Broadband Plan, including to index the E-rate funding 
cap to inflation to enhance broadband opportunities for children, teachers, schools, and libraries; support a 
Mobility Fund to provide wireless broadband service in areas that lack coverage; improve utilization of 
the Rural Health Care program to advance telemedicine in rural areas across the country, including Tribal 
lands; and, in the long term, directly support broadband Internet services for all Americans.3 In addition 
to accelerating universal access to broadband, this approach to implementing Verizon Wireless’s and 
Sprint Nextel’s commitments also reduces payments that support potentially duplicative legacy voice 
services and stabilizes consumer contributions to the universal service fund.
2. In the NPRM that accompanies this order, we seek comment on permanently amending 
our rules to facilitate efficient use of reclaimed excess high-cost support.  In addition, we seek comment 
on a proposal to modify our rules to reclaim legacy support surrendered by a competitive ETC when it 
relinquishes ETC status in a particular state.  
II. BACKGROUND
3. In the May 1, 2008 Interim Cap Order, the Commission adopted a cap on high-cost 
universal service support for competitive ETCs.  Such support had been growing rapidly over the 
preceding years, increasing the universal service contribution burden on consumers.4 Specifically, the 
Commission capped total annual competitive ETC support for each state at the level of support that 
competitive ETCs in the state were eligible to receive during March 2008, on an annualized basis.5 Under 
the interim cap, the Universal Service Administrative Company (USAC)6 continues to calculate support 
for competitive ETCs using the Commission’s existing identical support rule, which enables a 
competitive ETC to receive the same per-line support amount received by the incumbent carrier in its 
service area.7 If, however, the total support calculated for competitive ETCs in a state exceeds the interim 
cap amount for that state, USAC proportionally reduces the support for each competitive ETC serving the 
state.8 In the event that additional competitive ETCs are designated in a state, the Interim Cap Order
provides that their support also counts toward the interim cap amount for that state, and the cap amount 
will not be increased to reflect the new competitive ETCs’ high-cost support demands.9
4. In the Verizon Wireless Merger Order, released November 4, 2008, the Commission 
approved, with conditions, the transfer of control of licenses and other authorizations held by subsidiaries 
  
3 Federal Communications Commission, Connecting America: The National Broadband Plan, 145-46, 215-16, 238 
(rel. March 16, 2010) (National Broadband Plan).
4 High -Cost Universal Service Support; Federal-State Joint Board on Universal Service, WC Docket No. 05-337, 
CC Docket No. 96-45, Order, 23 FCC Rcd 8834, 8837-50, paras. 6-39 (2008) (Interim Cap Order). 
5 Id. at 8846, para. 26.
6 USAC is a public non-profit corporation established by the Commission for the purpose of administering universal 
service programs.  It collects contributions to the universal service fund and distributes universal service support in 
accordance with the Commission’s rules and under the Commission’s oversight.
7 Interim Cap Order, 23 FCC Rcd at 8846, paras. 27-28; see also 47 C.F.R. §§ 54.307 (portability of support to 
competitive ETCs), 54.807 (calculation of Interstate Access Support for competitive ETCs), 54.901(b) (calculation 
of Interstate Common Line Support for competitive ETCs).
8 Interim Cap Order, 23 FCC Rcd at 8846, paras. 27-28.  
9 Id. at 8846, 8850, paras. 26, 39.
Federal Communications Commission FCC 10-155  
3
and partnerships of ALLTEL from Atlantis Holdings LLC to Verizon Wireless.10 On that same day, in 
the Sprint Nextel Merger Order, the Commission also approved, with conditions, the transfer of control of 
licenses held by Sprint Nextel Corporation and Clearwire Corporation to New Clearwire Corporation, 
which is majority owned by Sprint Nextel.11  Among other things, the Commission conditioned its 
approval of those transactions on those carriers’ voluntary commitments to surrender their high-cost 
universal service support—estimated as approximately $530 million in 200812—in equal 20 percent 
increments over a period of five years from the closing date of the transactions.13 The Commission 
provided no specific direction regarding how these commitments should be implemented—i.e., how the 
20 percent reductions should be calculated and the effect of the reductions, if any, on high-cost payments 
to other competitive ETCs.  The Commission did note, however, Verizon Wireless’s stated understanding 
that the reduction in payments to Verizon Wireless would not result in an increase in high-cost payments 
to other competitive ETCs.14
5. Following the adoption of the merger orders, USAC developed a proposal for 
implementing the companies’ commitments.  In a letter dated February 25, 2009, USAC confirmed to 
Corr Wireless that Verizon Wireless’s phased-out support would not be available for redistribution to 
other competitive ETCs.15 According to USAC, “all Verizon Wireless and Alltel High Cost support 
payments subject to the reduction provisions included in the [Verizon Wireless Merger Order] are 
effectively removed from the CETC interim cap and do not ‘free up’ additional dollars for other CETCs 
in any jurisdiction.”16
6. In response, Corr Wireless filed a request for review, asking the Commission to direct 
USAC to count all support received or formerly received by Verizon Wireless and Alltel in the interim 
cap amount and make the support available to other competitive ETCs in a manner consistent with the 
Interim Cap Order.17  Corr Wireless also asked that the same treatment be applied to any other reclaimed 
or relinquished high-cost universal service support, including any support reclaimed pursuant to the 
Sprint Nextel Merger Order.18 Corr Wireless noted that the Commission in the Interim Cap Order
specifically stated that the designation of new competitive ETCs would not affect the size of the interim 
cap and would only affect how the capped high-cost universal service support would be divided.19 Corr 
Wireless argued that “the necessary corollary is that when existing participants leave the pool, the number 
of participants goes down and each participant’s share should go up.”20 Corr Wireless further argued that 
USAC has taken “an Order applicable solely to two particular entities and used that language to override 
  
10 See generally Verizon Wireless Merger Order, 23 FCC Rcd 17444.
11 See generally Sprint Nextel Merger Order, 23 FCC Rcd 17570.
12 National Broadband Plan at 147. 
13 Verizon Wireless Merger Order, 23 FCC Rcd at 17529-32, paras. 192-97; Sprint Nextel Merger Order, 23 FCC 
Rcd at 17611-12, paras. 106-08. 
14 Verizon Wireless Merger Order, 23 FCC Rcd at 17531-32, para. 196.
15 Letter from Karen Majcher, Universal Service Administrative Company, to Donald Evans, Counsel to Corr 
Wireless (dated Feb. 25, 2009) (attached as an exhibit to the Corr Wireless Request for Review) (USAC February 25 
Letter).
16 Id.
17 Corr Wireless Request for Review at 6.
18 Id.
19 Id. at 4.
20 Id.
Federal Communications Commission FCC 10-155  
4
the formally adopted policy of the full Commission with respect to the cap formula.”21 On April 9, 2009, 
the Wireline Competition Bureau sought comment on Corr Wireless’s request for review and twelve 
entities filed comments.22 Pending further guidance from the Commission on implementation of the 
merger commitments, USAC has continued to make high-cost universal service disbursements to Verizon 
Wireless and Sprint Nextel in accordance with the current rules.
III. ORDER
7. In this order, we first grant in part and deny in part Corr Wireless’s request that high-cost 
universal service support reclaimed from Verizon Wireless and Sprint Nextel pursuant to their merger 
order commitments be made available to other competitive ETCs.  As discussed below, we agree with 
Corr Wireless that USAC cannot modify the interim cap amount by removing Verizon Wireless’s and 
Sprint Nextel’s support, but we disagree that all support surrendered or relinquished by Verizon Wireless 
and Sprint Nextel must necessarily be distributed to other competitive ETCs.  We then provide further 
guidance regarding the implementation of the universal service merger order commitments, particularly 
with respect to the terms of the Interim Cap Order.
A. Corr Wireless Request for Review
8. We agree with Corr Wireless that, to the extent that USAC interpreted the merger order 
conditions to modify the rules adopted in the Interim Cap Order, that interpretation was incorrect.  The 
interim cap is a Commission “rule” pursuant to the Administrative Procedure Act (APA); i.e., it is an 
“agency statement of general or particular applicability and future effect designed to implement, interpret, 
or prescribe law or policy.”23 As such, any amendment or repeal of the interim cap would require a 
rulemaking proceeding.24 Because the merger orders in which the Commission approved commitments 
by Verizon Wireless and Sprint Nextel were adjudicatory-type orders rather than rulemaking 
proceedings,25 those orders could not have properly modified the interim cap rule, which was adopted by 
notice-and-comment rulemaking.26 Moreover, we find no indication that the Commission intended to 
modify the interim cap in the merger orders; to the contrary, the Commission stated in those orders that 
the interim cap would remain in place until the Commission adopts comprehensive high-cost universal 
service reform.27
  
21 Id. at 6.
22 Comment Sought on Corr Wireless Communications, LLC, Request for Review of a Competitive Eligible 
Telecommunications Carrier High-Cost Support Decision of the Universal Service Administrative Company, WC 
Docket No. 05-337, CC Docket No. 96-45, Public Notice, 24 FCC Rcd 4177 (Wireline Comp. Bur. 2009).  A list of 
parties filing comments is contained in Appendix A.
23 5 U.S.C. § 551(4).
24 See, e.g., Am. Fed’n of Gov’t Employees v. FLRA, 777 F.2d 751, 759 (D.C. Cir. 1985) (“[A]n agency seeking to 
repeal or modify a legislative rule promulgated by means of notice and comment rulemaking is obligated to 
undertake similar procedures to accomplish such modification or repeal . . . .”); Consumer Energy Council of Am. v. 
FERC, 673 F.2d 425, 446 (D.C. Cir. 1982) (“[T]he APA expressly contemplates that notice and an opportunity to 
comment will be provided prior to agency decisions to repeal a rule.”). 
25 See Rural Cellular Ass’n v. FCC, 588 F.3d 1095, 1100 (D.C. Cir. 2009) (referring to Commission orders deciding 
requests from carriers seeking license transfers as “adjudicatory orders” and finding that the orders did not impose 
any obligations or restrictions on parties other than those directly involved in the mergers).
26 See id. (finding that the Interim Cap Order complied with the APA’s rulemaking requirements).
27 Verizon Wireless Merger Order, 23 FCC Rcd at 17530; Sprint Nextel Merger Order, 23 FCC Rcd at 17611. 
Federal Communications Commission FCC 10-155  
5
9. We find that any implementation of Verizon Wireless’s and Sprint Nextel’s universal 
service commitments must be consistent with the interim cap rule, including the size of each state’s cap.  
USAC proposes removing Verizon Wireless’s and Sprint Nextel’s high-cost universal service support 
from the interim cap baselines and consequently revising the total support calculated for each state.28 We 
agree with Corr Wireless and other commenters that allowing USAC to change the methodology for 
calculating each state’s interim cap amount from the one established in the Interim Cap Order would 
constitute an amendment of the Commission’s rules without the opportunity for notice and comment.29  
Sprint Nextel argues that if Verizon Wireless’s and Sprint Nextel’s support amounts were removed from 
both the numerator (i.e., the interim cap amount for a state) and the denominator (i.e., the total uncapped 
support for the state, which would be distributed in the absence of the interim cap) of the ratio that 
determines the interim cap reduction factor (used to proportionally reduce each competitive ETC’s 
support), other competitive ETCs would be left in substantially the same position as they had been.30  
Even if this assertion were correct, such an action would still amount to an amendment of the interim cap 
rule without a notice-and-comment rulemaking.31 Below, in the NPRM that follows this order, we seek 
comment on amending the interim cap rule so that the cap amount would be adjusted if a competitive 
ETC relinquishes its ETC status.
10. At the same time, nothing in the Interim Cap Order requires the Commission to 
redistribute to other competitive ETCs the high-cost universal service support reclaimed from Verizon 
Wireless and Sprint Nextel.  As long as they continue to be competitive ETCs in a particular state, 
Verizon Wireless and Sprint Nextel remain eligible for high-cost support, even though they have agreed 
to surrender such support.  And as long as Verizon Wireless and Sprint Nextel remain eligible for a given 
level of support—regardless of whether they actually receive that support—that support will be included 
when USAC calculates proportional payments to competitive ETCs under the interim cap.  Given our 
stated goal in the Interim Cap Order of reining in high-cost universal service support disbursements, we 
decline to redistribute the reclaimed high-cost support and conclude that the public interest will be better 
served by distributing support to other competitive ETCs in the same manner that it would have been 
distributed in the absence of the merger commitments.  
11. Moreover, we note that additional support would not necessarily result in the expansion 
of service to currently unserved territories.  As the D.C. Circuit recognized in its review of the Interim 
Cap Order, the Commission may appropriately balance the need for sufficient support against the need 
  
28 See USAC February 25 Letter.
29 Corr Wireless Request for Review at 6; see also Cellcom Companies Comments at 3-6; Rural Cellular 
Association Comments at 8-10; Rural Telecommunications Group Comments at 4; SouthernLINC Comments at 7-
10; USA Coalition Comments at 3-6.
30 Sprint Nextel Opposition at 4; Sprint Nextel Reply Comments at 2-3.
31 In fact, Sprint Nextel’s assertion is not correct, as there are scenarios in which competitive ETCs would be worse 
off if we removed the support that would be due to Sprint Nextel and Verizon Wireless—but for the merger 
conditions—in calculating the support owed to other competitive ETCs.  For example, assume a hypothetical state in 
which competitive ETCs A and B have identical characteristics and were each eligible for $500,000 in annualized 
high-cost support as of March 2008, establishing an interim cap for the state of $1 million per year.  If provider C, 
identical to A and B, were later designated as an ETC, under the interim cap rules the reduction factor would be .67 
(i.e., $1 million/($500,000 + $500,000 + $500,000)), and B and C would each receive approximately $333,333, even 
if A surrendered some or all of its support.  However, if A’s high-cost support is removed from both the interim cap 
amount and the total uncapped demand for ETC funding as a result of a phase-out commitment, the reduction factor 
would be .5 (i.e., $500,000/($500,000 + $500,000)) and B and C would receive only $250,000.  As a consequence, 
the removal of A’s support from the calculation would reduce B’s support by $83,333.  Thus, if a new competitive 
ETC were designated by a state, it would take its share of capped support from all competitive ETCs except Verizon 
Wireless and Sprint Nextel under Sprint Nextel’s proposal.  
Federal Communications Commission FCC 10-155  
6
for a sustainable high-cost support mechanism.32 Thus, we find that declining to redistribute Verizon 
Wireless’s and Sprint Nextel’s surrendered high-cost support strikes an appropriate balance by reining in 
the high-cost support mechanism without modifying support provided to other competitive ETCs.  
Therefore, where Verizon Wireless and Sprint Nextel remain ETCs within a state but surrender high-cost 
universal service support to which they would otherwise be entitled, the surrendered support will not be 
redistributed to other competitive ETCs in the state as high-cost support.  USAC shall make the required 
support calculations under the identical support rule; apply a reduction factor to all competitive ETCs 
serving a state, including Verizon Wireless and Sprint Nextel, as required by the interim cap rules; and 
then apply any Verizon Wireless- or Sprint Nextel-specific reductions, to the extent necessary to 
effectuate those carriers’ merger commitments, via one of the methods described below.33  
12. On the other hand, we agree with Corr Wireless that if Verizon Wireless or Sprint Nextel 
complies with its merger commitments by relinquishing its ETC status in one or more service areas, the 
total amount of support available to competitive ETCs in those areas under the Interim Cap Order would 
remain the same.  When a carrier relinquishes its ETC status, it no longer has any claim to support within 
that service area.  It therefore has no support that may be surrendered.  As a result, removing from the 
interim cap amount the support formerly associated with a carrier that has relinquished its ETC status 
would effectively change the interim cap amount.  Because the size of the interim cap amount is set by the 
Interim Cap Order, it cannot be changed except through further notice-and-comment rulemaking.  In the 
NPRM that follows this order, we seek comment on adjusting the interim cap when a carrier has 
relinquished its ETC status.
13. Finally, we disagree with Verizon Wireless’s contention that Corr Wireless’s request for 
review is an untimely collateral attack on the merger orders and the Interim Cap Order.34 Regardless of 
Verizon Wireless’s contention that “[i]t should have been apparent to Corr that the reduced CETC support
would not be flowing to it or other carriers,” we find that Corr Wireless could not have known the precise 
mechanics of how USAC planned to implement the merger orders until it was so informed by USAC.35  
Moreover, as described above, it is not necessary for us to reconsider any element of the Interim Cap 
Order or the merger orders to address the issues raised by Corr Wireless.  
B. Implementation of the Merger Orders
14. We recognize that the orders did not provide guidance on how Sprint Nextel, Verizon 
Wireless, and USAC should implement the universal service provisions of the Verizon Wireless Merger 
  
32 Rural Cellular Ass’n v. FCC, 588 F.3d 1095, 1102-03 (D. C. Cir. 2009) (“The agency seeks to strike an 
appropriate balance between the interests of widely dispersed consumers with small stakes and a concentrated 
interest group seeking to increase its already large stake.”). 
33 On May 7, 2010, the Alliance of Rural CMRS Carriers (ARC) filed an ex parte letter outlining its proposal for 
implementing the Verizon Wireless and Sprint Nextel merger conditions.  Letter from David LaFuria, Counsel to the 
Alliance of Rural CMRS Carriers, to Marlene Dortch, FCC, WC Docket No. 05-337 (filed May 7, 2010).  We have 
considered its proposals and, for the reasons described above, find that they are not required by our rules and do not 
serve the public interest as well as the approach we adopt here.  In addition, we reject ARC’s argument that the 
merger cap should apply to service areas that Verizon Wireless has divested consistent with the Verizon Wireless 
Merger Order.  The operating entities for these services areas were managed by a trust separate from Verizon 
Wireless pending their final sale, and all high-cost support they received since the closing of the Verizon Wireless-
ALLTEL transaction primarily benefited the trust.  Because the service areas have now been divested, depriving 
these entities of high-cost universal service support would effectively extend Verizon Wireless’s merger 
commitments to the acquiring parties, who were not parties to the merger order commitments.
34 Verizon Wireless Opposition at 7-8.
35 Id. at 7.
Federal Communications Commission FCC 10-155  
7
Order and the Sprint Nextel Merger Order.  Accordingly, we now provide such guidance.  We first 
describe Verizon Wireless’s and Sprint Nextel’s options for electing a baseline against which to measure 
the phase-out of their high-cost universal service support.  Regardless of the option they choose, 
implementation of these options will not have an impact on other competitive ETCs.  We then provide 
instruction to USAC regarding the implementation of the additional reductions in a manner that, 
consistent with our discussion above, does not affect the application of the Interim Cap Order to other 
competitive ETCs that were not parties to the merger orders.  
1. Election of a Baseline
15. The merger orders provide that Verizon Wireless and Sprint Nextel have made voluntary 
commitments to phase out their high-cost universal service support over five years in “equal 20 percent 
increments.”36 The orders are silent regarding the baseline of support against which the 20 percent 
increments should be applied, and Verizon Wireless’s and Sprint Nextel’s total potential high-cost 
support (in the absence of their merger commitments) will vary over the 2008 to 2013 period.  Because 
the baseline of support is unclear, we find that Verizon Wireless and Sprint Nextel may each choose 
between two options to determine which baseline shall be used to achieve its respective merger order 
commitments.37 Verizon Wireless and Sprint Nextel must each elect an option within 30 days of the 
release of this order.  Whatever election is made will be binding and will apply for the entire five-year 
phase-down period.
16. Option A:  Capped as a Percentage of 2008 or 2009 Support. For Sprint Nextel, the total 
annual high-cost universal service support the carrier will receive would be capped at no more than 80 
percent of its 2008 high-cost support in 2009, 60 percent of its 2008 high-cost support in 2010, 40 percent 
of its 2008 high-cost support in 2011, 20 percent of its 2008 high-cost support in 2012, and no support in 
2013.  For Verizon Wireless, the same method will apply but it would use the amount of support the 
carrier received in January 2009, annualized, as a baseline.38 USAC will calculate a quarterly cap amount 
by dividing the annual cap amount by four.  USAC then will apply the appropriate carrier-specific 
reduction factor (having first applied the state-specific reduction factor prescribed by the interim cap 
rules) to reduce the carrier’s quarterly support to its quarterly capped amount.39
  
36 Verizon Wireless Merger Order, 23 FCC Rcd at 17529-32, paras. 192-97; Sprint Nextel Merger Order, 23 FCC 
Rcd at 17611-12, paras. 106-08.  As discussed in a recent order approving AT&T’s acquisition of wireless 
properties divested by Verizon Wireless, the phase-down commitments in the Verizon Wireless Merger Order do 
not apply to after-acquired properties.  Applications of AT&T Inc. and Cellco Partnership d/b/a Verizon Wireless for 
Consent to Assign or Transfer Control of Licenses and Authorizations and Modify a Spectrum Leasing 
Arrangement, WT Docket No. 09-104, Memorandum Opinion and Order, FCC 10-116, para. 86, n 282 (rel. June 22, 
2010).
37 The choices we offer Verizon Wireless and Sprint Nextel here are based on the particular circumstances before us 
and do not bind the Commission in any other context in which a phase-down of high-cost universal service support 
might occur. 
38 We understand that, due to 2008 divestments by Verizon Wireless and Alltel, it would be administratively 
difficult to determine the appropriate 2008 baseline amounts for Verizon Wireless.  Similarly, we understand that 
there would be administrative difficulties associated with making Verizon Wireless’s voluntary commitments 
effective in the middle of a month.  Verizon Wireless’s 20 percent reduction shall therefore be implemented on 
February 1, 2009 (the first day of the first month following the consummation of the transaction).  Verizon 
Wireless’s 40 percent reduction shall be implemented on January 1, 2010, with additional reductions annually 
thereafter.
39 This reduction factor will vary depending on how much support Verizon Wireless or Sprint would otherwise 
receive.  Line loss, relinquishment of ETC status, or other circumstances would, by reducing the amount of support 
for which the carrier is eligible, minimize or eliminate the need for further reductions to meet the cap.  For example, 
(continued....)
Federal Communications Commission FCC 10-155  
8
17. Option B:  Fixed Percentage of Available Support. The carrier’s high-cost universal 
service support will be recalculated each quarter based on current data for that quarter, including the 
general reduction factor applied to all competitive ETCs under the interim cap rules.  USAC will then 
apply a carrier-specific reduction factor in addition to the general reduction factor applied to all 
competitive ETCs under the interim cap.  In 2009, an 80 percent reduction factor will be applied; in 2010, 
a 60 percent reduction factor; in 2011, a 40 percent reduction factor; in 2012, a 20 percent reduction 
factor; and in 2013, the carriers will not receive universal service high-cost support for any service areas 
subject to the merger commitments.40
2. USAC’s Obligations
18. As soon as it is administratively feasible, USAC shall reconcile the support amounts 
provided to Verizon Wireless, Sprint Nextel, and other competitive ETCs since the effective dates of 
Verizon Wireless’s and Sprint Nextel’s merger commitments with the amounts they should have received 
consistent with this order.  USAC shall also reduce, on a going-forward basis, disbursements to Verizon 
Wireless and Sprint Nextel and disburse support to other competitive ETCs as appropriate.41
19. For the sake of clarity, we summarize USAC’s administrative duties in implementing 
these instructions.  First, USAC must, in consultation with Verizon Wireless and Sprint Nextel, determine 
the appropriate baselines against which the reductions will be applied.42 Second, USAC must, each 
quarter, determine the uncapped support amounts for all competitive ETCs, including Verizon Wireless 
and Sprint Nextel, consistent with the Commission’s legacy high-cost universal service support rules.  
Third, USAC must, each quarter, apply a reduction factor to all competitive ETCs’ support, as necessary 
to comply with the Interim Cap Order.  Fourth, USAC must apply an additional reduction factor to 
Verizon Wireless’s and Sprint Nextel’s support as necessary, consistent with either Option A or B, to 
reclaim each carrier’s high-cost universal service support.  Finally, it may be necessary for USAC to 
  
(...continued from previous page)
if a carrier elects Option A and its nationwide annual high-cost universal service support baseline is $100 million, its 
nationwide quarterly support would be capped at $20 million in 2009, $15 million in 2010, $10 million in 2011, and 
$5 million in 2012.  If, due to line loss, relinquishment of ETC status, or any other reason, the carrier were eligible 
for only $22.5 million in the third quarter of 2009 (without regard to its merger commitment), then USAC would 
need to apply a reduction factor to reduce the carrier’s quarterly support by another $2.5 million.  If by the first 
quarter of 2011 the carrier were eligible for only $9 million for that quarter, then no reduction factor would be 
necessary.
40 For example, if a carrier elects Option B, and it was eligible to receive $10 million nationwide in the third quarter 
of 2009 (without regard to its merger commitment), USAC would apply an 80 percent reduction factor, resulting in 
a final support amount of $8 million for that quarter.  If, due to line growth or other reasons, the carrier is otherwise 
eligible for $20 million in the first quarter of 2011, then USAC will apply a 40 percent reduction factor, resulting in 
a final support amount of $8 million for the quarter.
41 For these purposes, we anticipate that the recovery of funds will occur through offsets to future universal service 
support, but USAC may require Verizon Wireless and Sprint Nextel to make an actual payment to USAC if future 
offsets will not be sufficient to accomplish the full recovery.  As noted above, support surrendered by Sprint or 
Verizon Wireless by relinquishing competitive ETC status in one or more states may be available for redistribution 
to other competitive ETCs, absent a change to the cap adopted through a notice-and-comment rulemaking.  See
supra para. 12.
42 If Option A is elected, then USAC must determine the 2008 or January 2009 baseline amount.  If Option B is 
elected, the baseline for a given quarter will not be known until after the identical support and interim cap rules have 
been applied for that quarter.
Federal Communications Commission FCC 10-155  
9
revisit each quarter’s support payment, consistent with the existing true-up processes for the local 
switching support and interstate common line support mechanisms.43
20. We further direct USAC to reserve any reclaimed funds as a fiscally responsible down 
payment on proposed broadband universal service reforms, as recommended in the National Broadband 
Plan, including to: index the E-rate funding cap to inflation to enhance broadband opportunities for 
children, teachers, schools, and libraries; support a Mobility Fund to improve 3G wireless broadband 
service in states with the worst coverage today; improve utilization of the Rural Health Care program to 
advance telemedicine in rural areas across the country, including Tribal lands; and, in the long term, 
directly support broadband Internet services for all Americans.44 For example, we expect to propose a 
Mobility Fund by the fourth quarter of this year, which could be implemented beginning in the second 
half of 2011.  Reserving funds now, rather than collecting them through a higher contribution factor at a 
later time, will ensure that we have funds on hand to rapidly implement the Mobility Fund if adopted, 
while minimizing unnecessary volatility in the contribution factor, which would otherwise decline and 
then increase as the universal service fund transitions to support broadband.  The reclaimed funds will 
also provide a continuing benefit to the universal service fund by earning interest until they are disbursed. 
21. To reserve these funds we find that two additional actions are required.  First, we instruct 
USAC to continue projecting that competitive ETC support will be disbursed at the interim cap amount, 
independent of the merger commitments and the projected disbursements for individual competitive 
ETCs.  For example, if a state has a quarterly interim cap amount of $20 million, USAC should project 
demand for that state at $20 million, even if disbursements based on the Commission’s rules and Verizon 
Wireless’s and Sprint Nextel’s merger commitments are projected to be only $15 million.  Any reclaimed 
support will be placed in reserve as discussed above. 
22. Second, on an interim basis, we waive section 54.709(b), which requires that USAC 
account for any difference between its projected revenue requirements and its actual revenue 
requirements as a prior period adjustment in the next quarterly demand filing.45 We find that there is 
good cause to waive section 54.709(b) on an interim basis.46 Specifically, we find that the public interest 
is served by temporarily reserving these funds as a down payment for broadband universal service 
programs, as described above.47 Such action will minimize unnecessary volatility in the contribution 
factor and enable us to take the fiscally responsible step of accumulating reserves for broadband universal 
  
43 Under the interstate common line support and local switching support mechanisms, support payments are initially 
made using projected data, but are adjusted (“trued up”) at a later date when actual cost, revenue, and line count data 
are available.  See 47 C.F.R. §§ 54.303, 54.903(a)(3).
44 National Broadband Plan at 145-148.  We note that the Commission recently launched proceedings to reform the 
universal service program as recommended by the National Broadband Plan, including by seeking comment on a 
proposal to transition all legacy competitive ETC high-cost support for voice-grade service to new universal service 
programs for broadband and the impact of such a proposal on the Verizon Wireless and Sprint Nextel merger 
commitments.  Connect America Fund, A National Broadband Plan for Our Future, High-Cost Universal Service 
Support, WC Docket No. 10-90, GN Docket No. 09-51, WC Docket No. 05-337, Notice of Inquiry and Notice of 
Proposed Rulemaking, FCC 10-58, paras. 60-61 (rel. Apr. 21, 2010) (Universal Service Reform NOI and NPRM).
45 47 C.F.R. § 54.709(b). The precise terms of the rule require that USAC carry forward any “excess payments” 
from contributors to the next quarter.  In this instance, the excess payments would be due to the reduction in 
disbursements to Sprint Nextel and Verizon Wireless.  The “next quarter” refers to USAC’s next quarterly demand 
filing.  The effect of this rule is to reduce the contribution factor in the subsequent quarter.
46 Pursuant to section 1.3 of the Commission’s rules, “any provision of the rules may be waived by the Commission 
on its own motion . . . if good cause therefor is shown.”  47 C.F.R. § 1.3.
47 See supra para. 20.
Federal Communications Commission FCC 10-155  
10
service reform, as we consider the National Broadband Plan.48 To ensure appropriate and timely use of 
these funds, we waive section 54.709(b) for a period of only 18 months from the adoption of this order, 
unless the Commission earlier modifies section 54.709(b) as proposed in the NPRM, below.
IV. NOTICE OF PROPOSED RULEMAKING
23. In this NPRM, we seek comment on modifying our rules to better enable the Commission 
to reclaim certain high-cost support, and to use that support to help fund broadband universal service 
programs, consistent with the recommendations of the National Broadband Plan described above.  First, 
we seek comment on amending the interim cap rule so that a state’s interim cap amount would be 
adjusted if a competitive ETC serving the state relinquishes its ETC status.  In the Interim Cap Order, the 
Commission capped high-cost support for voice service provided to competitive ETCs serving each state 
at the level of support such carriers were eligible to receive in March 2008, on an annualized basis.49 This 
cap amount does not change even if the number of competitive ETCs serving the state changes.50 We 
propose amending the interim cap rule so that, if a competitive ETC relinquishes its ETC status in a state, 
the cap amount for that state is reduced by the amount of support that the competitive ETC was eligible to 
receive in its final month of eligibility, annualized.  
24. As discussed above, the goal of the Interim Cap Order was to rein in high-cost universal 
service disbursements, and additional support would not necessarily result in future deployment of 
expanded service.51 Reducing the total amount of support available to competitive ETCs in a state when a 
competitive ETC relinquishes its ETC status in that state will not reduce support flowing to any 
individual competitive ETC.  Reducing the pool of support in a state also would enable excess funds from 
the legacy high-cost program to be used more effectively to advance universal service broadband 
programs, as recommended by the National Broadband Plan.  We invite comment on this proposal.52
25. Second, we seek comment on amending section 54.709(b) to permit the Commission to 
provide USAC alternate instructions for implementing prior period adjustments.53 In the order above, we 
adopt an interim waiver of section 54.709(b) to enable us to direct USAC to reserve reclaimed funds as 
we consider broadband universal service reform.  Amending the rule as proposed would serve this same 
purpose, on a permanent basis.  In addition, it would enable the Commission to provide USAC with 
alternate instructions regarding future excess funds in other situations without having to adopt a rule 
waiver.
26. We seek comment on how to develop a streamlined, administratively workable process 
for providing such instruction to USAC, if we amended section 54.709(b).  We seek comment regarding 
the form that the instructions must take, including whether the instructions must be provided in an order, 
  
48 Without this waiver, we expect that the contribution factor would experience (1) in the first quarter of 2011, a 
sudden decrease associated with the one-time collection of excess support from Verizon Wireless and Sprint Nextel; 
(2) a plateau at an intermediate level as future reductions are applied on a going-forward basis to Verizon Wireless’s 
and Sprint Nextel’s support; (3) a spike as one-time support associated with the Mobility Fund or other non-
recurring support for broadband universal service is implemented; and (4) a return to the current level as universal 
service is reformed to support recurring broadband programs.  We find that it would be prudent to avoid these 
fluctuations and instead help stabilize the contribution factor.
49 Interim Cap Order, 23 FCC Rcd at 8846, 8850, paras. 26, 39.
50 See supra para. 9.
51 See supra para. 10.
52 We do not propose a draft rule because the existing interim cap rule is not codified.
53 A proposed rule is attached as Appendix B.
Federal Communications Commission FCC 10-155  
11
public notice, or other form.  We also seek comment on a process by which the Wireline Competition 
Bureau or Office of the Managing Director would issue a public notice providing instruction to USAC 
that would become effective absent action by the Commission within fourteen days.  We note that, for the 
purpose of calculating the contribution factor, the Commission already has the authority to set demand 
and administrative expenses at levels other than those shown in USAC’s quarterly demand projections.54  
The modification we propose here would permit the Commission, or the Wireline Competition Bureau or 
Office of the Managing Director on delegated authority, to instruct USAC to modify the prior period 
adjustments in the quarterly demand projections.  We request comment on this proposal.
V. PROCEDURAL MATTERS
A. Paperwork Reduction Act
27. This notice of proposed rulemaking does not contain new, modified, or proposed 
information collections subject to the Paperwork Reduction Act of 1995.55 In addition, therefore, it does 
not contain any new, modified, or proposed “information collection burden for small business concerns 
with fewer than 25 employees” pursuant to the Small Business Paperwork Relief Act of 2002.56
B. Initial Regulatory Flexibility Analysis
28. As required by the Regulatory Flexibility Act of 1980, as amended, see 5 U.S.C. § 
603,the Commission has prepared an Initial Regulatory Flexibility Analysis (IRFA) for this NPRM, of the 
possible significant economic impact on a substantial number of small entities by the policies and rules 
proposed in this NPRM. The IRFA is in Appendix C. Written public comments are requested on this 
IRFA. Comments must be identified as responses to the IRFA and must be filed by the deadlines for
comments on the NPRM. The Commission will send a copy of the NPRM, including this IRFA, to the 
Chief Counsel for Advocacy of the SBA.57  In addition, the NPRM and IRFA (or summaries thereof) will 
be published in the Federal Register.58
C. Ex Parte Presentations
29. This proceeding shall be treated as a “permit-but-disclose” proceeding in accordance with 
the Commission's ex parte rules.59 Persons making oral ex parte presentations are reminded that 
memoranda summarizing the presentations must contain summaries of the substance of the presentations 
and not merely a listing of the subjects discussed.  More than a one or two sentence description of the 
views and arguments presented is generally required.60 Other requirements pertaining to oral and written 
presentations are set forth in section 1.1206(b) of the Commission's rules.61
  
54 See 47 C.F.R. § 54.709(a)(3) (“The Commission reserves the right to set projections of demand and administrative 
expenses at amounts the Commission determines will serve the public interest at any time within the fourteen-day 
period following release of the Commission’s public notice.”).
55 Paperwork Reduction Act of 1995, Pub. L. No. 104-13, 109 Stat. 163 (1995).
56 Small Business Paperwork Relief Act of 2002, Pub. L. No. 107-198, 116 Stat. 729 (2002); 44 U.S.C. § 3506(c)(4).
57 See 5 U.S.C. § 603(a).
58 Id.
59 47 C.F.R. §§ 1.1200-1.1216.
60 47 C.F.R. § 1.1206(b)(2). 
61 47 C.F.R. § 1.1206(b).
Federal Communications Commission FCC 10-155  
12
D. Comment Filing Procedures
30. Pursuant to sections 1.415 and 1.419 of the Commission's rules,62 interested parties may 
file comments and reply comments on or before the dates indicated on the first page of this document.  
Comments may be filed using:  (1) the Commission's Electronic Comment Filing System (ECFS); (2) the 
Federal Government's eRulemaking Portal; or (3) by filing paper copies.63
· Electronic Filers:  Comments may be filed electronically using the Internet by accessing the 
ECFS: http://www.fcc.gov/cgb/ecfs/ or the Federal eRulemaking Portal: 
http://www.regulations.gov.  Filers should follow the instructions provided on the website for 
submitting comments.
o For ECFS filers, if multiple docket or rulemaking numbers appear in the caption of this 
proceeding, filers must transmit one electronic copy of the comments for each docket or 
rulemaking number referenced in the caption.  In completing the transmittal screen, filers 
should include their full name, U.S. Postal Service mailing address, and the applicable 
docket or rulemaking number.  Parties may also submit an electronic comment by 
Internet e-mail.  To get filing instructions, filers should send an e-mail to ecfs@fcc.gov, 
and include the following words in the body of the message, “get form.”  A sample form 
and directions will be sent in response. 
· Paper Filers: Parties who choose to file by paper must file an original and four copies of each 
filing.  If more than one docket or rulemaking number appears in the caption of this proceeding, 
filers must submit two additional copies for each additional docket or rulemaking number. 
o All hand-delivered or messenger-delivered paper filings for the Commission’s Secretary 
must be delivered to FCC Headquarters at 445 12th St., SW, Room TW-A325, 
Washington, DC 20554.  All filings must be addressed to the Commission's Secretary, 
Office of the Secretary, Federal Communications Commission. 
o The Commission's contractor will receive hand-delivered or messenger-delivered paper 
filings for the Commission's Secretary at 236 Massachusetts Avenue, NE, Suite 110, 
Washington, DC 20002.  The filing hours at this location are 8:00 a.m. to 7:00 p.m.  All 
hand deliveries must be held together with rubber bands or fasteners. Any envelopes 
must be disposed of before entering the building. 
o Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority 
Mail) must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743.
o U.S. Postal Service first-class, Express, and Priority mail should be addressed to 445 12th 
Street, SW, Washington, DC 20554. 
31. In addition, one copy of each pleading must be sent to the Commission's duplicating 
contractor, Best Copy and Printing, Inc, 445 12th Street, SW, Room CY-B402, Washington, DC 20554; 
website:  www.bcpiweb.com; phone: 1-800-378-3160.  Furthermore, three copies of each pleading must 
be sent to Charles Tyler, Telecommunications Access Policy Division, Wireline Competition Bureau, 445 
12th Street, SW, Room 5-A452, Washington, DC 20554; e-mail: charles.tyler@fcc.gov.
32. Filings and comments are also available for public inspection and copying during regular 
business hours at the FCC Reference Information Center, Portals II, 445 12th Street, S.W., Room CY-
A257, Washington, D.C., 20554.  Copies may also be purchased from the Commission's duplicating 
contractor, BCPI, 445 12th Street, S.W., Room CY-B402, Washington, D.C. 20554.  Customers may 
contact BCPI through its website: www.bcpiweb.com, by e-mail at fcc@bcpiweb.com, by telephone at 
(202) 488-5300 or (800) 378-3160 (voice), (202) 488-5562 (tty), or by facsimile at (202) 488-5563.
  
62 47 C.F.R. §§ 1.415, 1.419.
63 See Electronic Filing of Documents in Rulemaking Proceedings, GC Docket No. 97-115, Report and Order, 13 
FCC Rcd 11322 (1998).
Federal Communications Commission FCC 10-155  
13
33. To request materials in accessible formats for people with disabilities (Braille, large print, 
electronic files, audio format), send an e-mail to fcc504@fcc.gov or call the Consumer & Governmental 
Affairs Bureau at (202) 418-0530 (voice) or (202) 418-0432 (TTY).  Contact the FCC to request 
reasonable accommodations for filing comments (accessible format documents, sign language 
interpreters, CART, etc.) by e-mail: FCC504@fcc.gov; phone: (202) 418-0530 or TTY: (202) 418-0432.
34. For further information regarding this proceeding, contact Ted Burmeister, Attorney 
Advisor, Telecommunications Access Policy Division, Wireline Competition Bureau at (202) 418-7389, 
or theodore.burmeister@fcc.gov.
VI. ORDERING CLAUSES
35. Accordingly, it is ORDERED that, pursuant to the authority contained in sections 1, 2, 
4(i), 4(j), 201-205, 214, 220, and 254 of the Communications Act of 1934, as amended, 47 U.S.C. §§ 151, 
152, 154(i), 154(j), 201-205, 214, 220, and 254, the request for review of a decision of the Universal 
Service Administrator filed by Corr Wireless Communications, LLC IS GRANTED IN PART AND 
DENIED IN PART as discussed herein.
36. IT IS FURTHER ORDERED that, pursuant to sections 1.103(a) and 1.4(b)(2) of the 
Commission’s rules, 47 C.F.R. §§1.103(a) and 1.4(b)(2), this order SHALL BE EFFECTIVE upon 
release.
37. IT IS FURTHER ORDERED that, pursuant to the authority contained in sections 1, 2, 
4(i), 4(j), 201-205, , 214, 220, and 254 of the Communications Act of 1934, as amended, 47 U.S.C. §§ 
151, 152, 154(i), 154(j), 201-205, 214, 220, and 254, this notice of proposed rulemaking IS ADOPTED.
38. IT IS FURTHER ORDERED that the Commission's Consumer and Governmental 
Affairs Bureau, Reference Information Center, SHALL SEND a copy of this notice of proposed 
rulemaking, including the Initial Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of 
the Small Business Administration.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary
Federal Communications Commission FCC 10-155  
14
APPENDIX A
List of Commenters
Comments
Commenter Abbreviation
Pine Belt Cellular, Inc. Pine Belt
Rural Cellular Association RCA
Rural Telecommunications Group, Inc. RTG
Southern Communications Services, Inc. SouthernLINC Wireless
d/b/a/ SouthernLINC Wireless
Sprint Nextel Corporation Sprint Nextel
Universal Service for America Coalition USA Coalition
Verizon/Alltel Management Trust Trust
Verizon Wireless Verizon Wireless
Wisconsin RSA #4 Limited Partnership, et al. Cellcom Companies
Reply Comments
Commenter Abbreviation
Corr Wireless Communications, LLC Corr
Rural Cellular Association RCA
Sprint Nexel Corporation Sprint Nextel
Public Utility Commission of Oregon Oregon Commission
United States Telecom Association USTelecom
Universal Service for America Coalition USA Coalition
Verizon Wireless Verizon Wireless
Federal Communications Commission FCC 10-155  
15
APPENDIX B
Proposed Rules
PART 54 – UNIVERSAL SERVICE
1. The authority citation for Part 54 continues to read as follows:
AUTHORITY: 47 U.S.C. 151, 154(i), 201, 205, 214,
and 254 unless otherwise noted.
Subpart H – Administration
2. Amend Section 54.709 by amending the first sentence of paragraph (b) to read as follows:
(b) If the contributions received by the Administrator in a quarter exceed the amount of universal service 
support program contributions and administrative costs for that quarter, the excess payments will be 
carried forward to the following quarter, unless otherwise instructed by the Commission. * * *
Federal Communications Commission FCC 10-155  
16
APPENDIX C
Initial Regulatory Flexibility Analysis
As required by the Regulatory Flexibility Act (“RFA”),1 the Commission prepared this Initial 
Regulatory Flexibility Analysis (“IRFA”) of the possible significant economic impact on small entities by 
the policies and rules proposed in this Notice of Proposed Rulemaking (NPRM).  The Commission 
requests written public comments on this IRFA.  Comments must be identified as responses to the IRFA 
and must be filed on or before the dates indicated on the first page of this NPRM.  The Commission will 
send a copy of the NPRM, including this IRFA, to the Chief Counsel for Advocacy of the Small Business 
Administration (SBA).2 In addition, the NPRM and IRFA (or summaries thereof) will be published in the 
Federal Register.3
I. Need for, and Objectives of, the Notice:  
1. In the NPRM, the Commission seeks comment on a proposal to modify its interim cap on 
support for competitive eligible telecommunications carriers (ETCs) so that if a competitive ETC 
relinquishes its ETC status, the amount of support it receives would be removed from the cap amount.  
The Commission is considering this action so that support removed from the cap may be reserved as a 
potential down payment on proposed broadband universal service reforms as recommended by the 
National Broadband Plan, including to index the E-rate funding cap to inflation to enhance broadband 
opportunities for children, teachers, schools, and libraries; support a Mobility Fund to provide wireless 
broadband service in areas that lack coverage; improve utilization of the Rural Health Care program to 
advance telemedicine in rural areas across the country, including Tribal lands; and, in the long term, 
directly support broadband Internet services for all Americans.
2. The Commission also seeks comment on a proposal to modify its rules governing the 
calculation of the universal service fund contribution factor.4 Specifically, we seek comment on 
amending section 54.709(b) to enable the Commission to provide USAC with alternate direction 
regarding the application of excess contributions from prior quarters.  The current rule requires that 
excess contributions be applied in the next quarter, effectively reducing the contribution factor in that 
quarter.  In the associated Order, the Commission waives the rule on an interim basis and directs USAC 
to reserve reclaimed funds as a potential down payment on proposed broadband universal service reforms.  
In the NPRM, the Commission seeks comment on amending the rule to permit it to do so permanently.  In 
addition, amending the rule as proposed would enable the Commission to provide USAC with alternate 
instructions regarding future excess funds in other situations without having to adopt a rule waiver.
II. Legal Basis:
3. This legal basis for any action that may be taken pursuant to the NPRM is contained in 
sections 1, 2, 4(i), 4(j), 201-205, 214, 220, and 254 of the Communications Act of 1934, as amended, 47 
U.S.C. §§ 151, 152, 154(i), 154(j), 201-205, 214, 220, and 254 and section 1.411 of the Commission’s 
rules, 47 C.F.R. § 1.411.
III. Description and Estimate of the Number of Small Entities to which the Rules Will Apply:
  
1 5 U.S.C. § 603. The RFA, 5 U.S.C. §§ 601-612, has been amended by the Small Business Regulatory Enforcement 
Fairness Act of 1996 (SBREFA), Public Law No. 104-121, Title II, 110 Stat. 857 (1996).
2 5 U.S.C. § 603(a).
3 Id.
4 Telecommunications carriers make contributions to the universal service fund based a percentage of their interstate 
and international telecommunications revenues.  This percentage is the contribution factor.  Carriers pass these 
contributions through to their customers as a line item on their bills.
Federal Communications Commission FCC 10-155  
17
4. The RFA directs agencies to provide a description of, and where feasible, an estimate of 
the number of small entities that may be affected by the proposed rules and policies, if adopted.5 The 
RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” 
“small organization,” and “small governmental jurisdiction.”6 In addition, the term “small business” has 
the same meaning as the term “small business concern” under the Small Business Act.7 A “small 
business concern” is one which: (1) is independently owned and operated; (2) is not dominant in its field 
of operation; and (3) satisfies any additional criteria established by the SBA.8
5. Small Businesses. Nationwide, there are a total of approximately 29.6 million small 
businesses, according to the SBA.9  
6. Small Organizations.  Nationwide, as of 2002, there are approximately 1.6 million small 
organizations.10 A “small organization” is generally “any not-for-profit enterprise which is independently 
owned and operated and is not dominant in its field.”11
7. Small Governmental Jurisdictions.  The term “small governmental jurisdiction” is 
defined generally as “governments of cities, towns, townships, villages, school districts, or special 
districts, with a population of less than fifty thousand.”12 Census Bureau data for 2002 indicate that there 
were 87,525 local governmental jurisdictions in the United States.13 We estimate that, of this total, 
84,377 entities were “small governmental jurisdictions.”14 Thus, we estimate that most governmental 
jurisdictions are small.  
8. We have included small incumbent local exchange carriers in this present RFA analysis.  
As noted above, a “small business” under the RFA is one that, inter alia, meets the pertinent small 
business size standard (e.g., a telephone communications business having 1,500 or fewer employees), and 
“is not dominant in its field of operation.”15 The SBA’s Office of Advocacy contends that, for RFA 
purposes, small incumbent local exchange carriers are not dominant in their field of operation because 
  
5 5 U.S.C. § 603(b)(3).
6 5 U.S.C. § 601(6).
7 5 U.S.C. § 601(3) (incorporating by reference the definition of “small-business concern” in the Small Business 
Act, 15 U.S.C. § 632).  Pursuant to 5 U.S.C. § 601(3), the statutory definition of a small business applies “unless an 
agency, after consultation with the Office of Advocacy of the Small Business Administration and after opportunity 
for public comment, establishes one or more definitions of such term which are appropriate to the activities of the 
agency and publishes such definition(s) in the Federal Register.”
8 15 U.S.C. § 632.
9  See SBA, Office of Advocacy, “Frequently Asked Questions,” http://web.sba.gov/faqs (accessed Apr. 2010).
10 Independent Sector, The New Nonprofit Almanac & Desk Reference (2002).
11 5 U.S.C. § 601(4).
12 5 U.S.C. § 601(5). 
13 U.S. Census Bureau, Statistical Abstract of the United States: 2006, Section 8, p. 272, Table 415. 
14 We assume that the villages, school districts, and special districts are small, and total 48,558.  See U.S. Census 
Bureau, Statistical Abstract of the United States:  2006, section 8, p. 273, Table 417.  For 2002, Census Bureau data 
indicate that the total number of county, municipal, and township governments nationwide was 38,967, of which 
35,819 were small.  Id.
15 15 U.S. C. § 632.
Federal Communications Commission FCC 10-155  
18
any such dominance is not “national” in scope.16 We have therefore included small incumbent local 
exchange carriers in this RFA analysis, although we emphasize that this RFA action has no effect on 
Commission analyses and determinations in other, non-RFA contexts.
9. Competitive Local Exchange Carriers (“CLECs”), Competitive Access Providers 
(“CAPs”), “Shared-Tenant Service Providers,” and “Other Local Service Providers.” Neither the 
Commission nor the SBA has developed a small business size standard specifically for these service 
providers.  The appropriate size standard under SBA rules is for the category Wired Telecommunications 
Carriers.  Under that size standard, such a business is small if it has 1,500 or fewer employees.17  
According to Commission data,18 1005 carriers have reported that they are engaged in the provision of 
either competitive access provider services or competitive local exchange carrier services.  Of these 1005 
carriers, an estimated 918 have 1,500 or fewer employees and 87 have more than 1,500 employees.  In 
addition, 16 carriers have reported that they are “Shared-Tenant Service Providers,” and all 16 are 
estimated to have 1,500 or fewer employees.  In addition, 89 carriers have reported that they are “Other 
Local Service Providers.”  Of the 89, all have 1,500 or fewer employees.  Consequently, the Commission 
estimates that most providers of competitive local exchange service, competitive access providers, 
“Shared-Tenant Service Providers,” and “Other Local Service Providers” are small entities that may be 
affected by our action.
10. Wireless Telecommunications Carriers (except Satellite).  Since 2007, the Census 
Bureau has placed wireless firms within this new, broad, economic census category.19 Prior to that time, 
such firms were within the now-superseded categories of “Paging” and “Cellular and Other Wireless 
Telecommunications.”20 Under the present and prior categories, the SBA has deemed a wireless business 
to be small if it has 1,500 or fewer employees.21 Because Census Bureau data are not yet available for the 
new category, we will estimate small business prevalence using the prior categories and associated data.  
For the category of Paging, data for 2002 show that there were 807 firms that operated for the entire 
year.22 Of this total, 804 firms had employment of 999 or fewer employees, and three firms had 
employment of 1,000 employees or more.23 For the category of Cellular and Other Wireless 
  
16 Letter from Jere W. Glover, Chief Counsel for Advocacy, SBA, to William E. Kennard, Chairman, FCC (May 27, 
1999).  The Small Business Act contains a definition of “small-business concern,” which the RFA incorporates into 
its own definition of “small business.”  See 15 U.S.C. § 632(a) (“Small Business Act”); 5 U.S.C. § 601(3) (“RFA”).  
SBA regulations interpret “small business concern” to include the concept of dominance on a national basis.  See 13 
C.F.R. § 121.102(b).
17 13 C.F.R. § 121.201, NAICS code 517110.
18 FCC, Wireline Competition Bureau, Industry Analysis and Technology Division, “Trends in Telephone Service” 
at Table 5.3, page 5-5 (Aug. 2008).  This source uses data that are current as of November 1, 2006.
19 U.S. Census Bureau, 2007 NAICS Definitions, “517210 Wireless Telecommunications Categories (Except 
Satellite)”; http://www.census.gov/naics/2007/def/ND517210.HTM#N517210.
20 U.S. Census Bureau, 2002 NAICS Definitions, “517211 Paging”; 
http://www.census.gov/epcd/naics02/def/NDEF517.HTM.; U.S. Census Bureau, 2002 NAICS Definitions, “517212 
Cellular and Other Wireless Telecommunications”; http://www.census.gov/epcd/naics02/def/NDEF517.HTM.
21 13 C.F.R. § 121.201, NAICS code 517210 (2007 NAICS).  The now-superseded, pre-2007 C.F.R. citations were 
13 C.F.R. § 121.201, NAICS codes 517211 and 517212 (referring to the 2002 NAICS).
22 U.S. Census Bureau, 2002 Economic Census, Subject Series:  Information, “Establishment and Firm Size 
(Including Legal Form of Organization,” Table 5, NAICS code 517211 (issued Nov. 2005).
23  Id. The census data do not provide a more precise estimate of the number of firms that have employment of 
1,500 or fewer employees; the largest category provided is for firms with “1000 employees or more.”
Federal Communications Commission FCC 10-155  
19
Telecommunications, data for 2002 show that there were 1,397 firms that operated for the entire year.24  
Of this total, 1,378 firms had employment of 999 or fewer employees, and 19 firms had employment of 
1,000 employees or more.25 Thus, we estimate that the majority of wireless firms are small.
11. 2.3 GHz Wireless Communications Services.  This service can be used for fixed, 
mobile, radiolocation, and digital audio broadcasting satellite uses.  The Commission defined “small 
business” for the wireless communications services (“WCS”) auction as an entity with average gross 
revenues of $40 million for each of the three preceding years, and a “very small business” as an entity 
with average gross revenues of $15 million for each of the three preceding years.26 The SBA has 
approved these definitions.27 The Commission auctioned geographic area licenses in the WCS service.  In 
the auction, which was conducted in 1997, there were seven bidders that won 31 licenses that qualified as 
very small business entities, and one bidder that won one license that qualified as a small business entity.  
12. 1670-1675 MHz Services.  An auction for one license in the 1670-1675 MHz band was 
conducted in 2003.  One license was awarded.  The winning bidder was not a small entity.
13. Wireless Telephony.  Wireless telephony includes cellular, personal communications 
services, and specialized mobile radio telephony carriers.  As noted, the SBA has developed a small 
business size standard for Wireless Telecommunications Carriers (except Satellite).28 Under the SBA 
small business size standard, a business is small if it has 1,500 or fewer employees.29 According to 
Trends in Telephone Service data, 434 carriers reported that they were engaged in wireless telephony.30  
Of these, an estimated 222 have 1,500 or fewer employees and 212 have more than 1,500 employees.31  
We have estimated that 222 of these are small under the SBA small business size standard.
14. Broadband Personal Communications Service.  The broadband personal 
communications services (“PCS”) spectrum is divided into six frequency blocks designated A through F, 
and the Commission has held auctions for each block.  The Commission has created a small business size 
standard for Blocks C and F as an entity that has average gross revenues of less than $40 million in the 
three previous calendar years.32 For Block F, an additional small business size standard for “very small 
business” was added and is defined as an entity that, together with its affiliates, has average gross 
revenues of not more than $15 million for the preceding three calendar years.33 These small business size 
standards, in the context of broadband PCS auctions, have been approved by the SBA.34 No small 
  
24 U.S. Census Bureau, 2002 Economic Census, Subject Series:  Information, “Establishment and Firm Size 
(Including Legal Form of Organization,” Table 5, NAICS code 517212 (issued Nov. 2005).
25  Id. The census data do not provide a more precise estimate of the number of firms that have employment of 
1,500 or fewer employees; the largest category provided is for firms with “1000 employees or more.”
26 Amendment of the Commission’s Rules to Establish Part 27, the Wireless Communications Service (WCS), Report 
and Order, 12 FCC Rcd 10785, 10879, para. 194 (1997).
27 See Alvarez Letter 1998.
28 13 C.F.R. § 121.201, NAICS code 517210.
29 Id.
30 “Trends in Telephone Service” at Table 5.3.
31 “Trends in Telephone Service” at Table 5.3.
32 See Amendment of Parts 20 and 24 of the Commission’s Rules – Broadband PCS Competitive Bidding and the 
Commercial Mobile Radio Service Spectrum Cap, Report and Order, 11 FCC Rcd 7824, 7850-7852, paras. 57-60 
(1996) (“PCS Report and Order”); see also 47 C.F.R. § 24.720(b).
33 See PCS Report and Order, 11 FCC Rcd at 7852, para. 60.
34 See Alvarez Letter 1998.
Federal Communications Commission FCC 10-155  
20
businesses within the SBA-approved small business size standards bid successfully for licenses in Blocks 
A and B.  There were 90 winning bidders that qualified as small entities in the Block C auctions.  A total 
of 93 “small” and “very small” business bidders won approximately 40 percent of the 1,479 licenses for 
Blocks D, E, and F.35 In 1999, the Commission reauctioned 155 C, D, E, and F Block licenses; there 
were 113 small business winning bidders.36
15. In 2001, the Commission completed the auction of 422 C and F Broadband PCS licenses 
in Auction 35.  Of the 35 winning bidders in this auction, 29 qualified as “small” or “very small” 
businesses.37 Subsequent events, concerning Auction 35, including judicial and agency determinations, 
resulted in a total of 163 C and F Block licenses being available for grant.  In 2005, the Commission 
completed an auction of 188 C block licenses and 21 F block licenses in Auction 58.  There were 24 
winning bidders for 217 licenses.38 Of the 24 winning bidders, 16 claimed small business status and won 
156 licenses.  In 2007, the Commission completed an auction of 33 licenses in the A, C, and F Blocks in 
Auction 71.39 Of the 14 winning bidders, six were designated entities.40 In 2008, the Commission 
completed an auction of 20 Broadband PCS licenses in the C, D, E and F block licenses in Auction 78.41
16. Advanced Wireless Services.  In 2008, the Commission conducted the auction of 
Advanced Wireless Services (“AWS”) licenses.42 This auction, which as designated as Auction 78, 
offered 35 licenses in the AWS 1710-1755 MHz and 2110-2155 MHz bands (“AWS-1”).  The AWS-1 
licenses were licenses for which there were no winning bids in Auction 66.  That same year, the 
Commission completed Auction 78.  A bidder with attributed average annual gross revenues that 
exceeded $15 million and did not exceed $40 million for the preceding three years (“small business”) 
received a 15 percent discount on its winning bid.  A bidder with attributed average annual gross revenues 
that did not exceed $15 million for the preceding three years (“very small business”) received a 25 
percent discount on its winning bid.  A bidder that had combined total assets of less than $500 million and 
combined gross revenues of less than $125 million in each of the last two years qualified for entrepreneur
status.43 Four winning bidders that identified themselves as very small businesses won 17 licenses.44  
Three of the winning bidders that identified themselves as a small business won five licenses.  
Additionally, one other winning bidder that qualified for entrepreneur status won 2 licenses.  
  
35 FCC News, “Broadband PCS, D, E and F Block Auction Closes,” No. 71744 (rel. Jan. 14, 1997).
36 See “C, D, E, and F Block Broadband PCS Auction Closes,” Public Notice, 14 FCC Rcd 6688 (WTB 1999).
37 See “C and F Block Broadband PCS Auction Closes; Winning Bidders Announced,” Public Notice, 16 FCC Rcd 
2339 (2001).
38 See “Broadband PCS Spectrum Auction Closes; Winning Bidders Announced for Auction No. 58,” Public Notice, 
20 FCC Rcd 3703 (2005).
39 See “Auction of Broadband PCS Spectrum Licenses Closes; Winning Bidders Announced for Auction No. 71,” 
Public Notice, 22 FCC Rcd 9247 (2007).
40 Id. 
41 See Auction of AWS-1 and Broadband PCS Licenses Rescheduled For August 13, 3008, Notice of Filing 
Requirements, Minimum Opening Bids, Upfront Payments and Other Procedures For Auction 78, Public Notice, 23 
FCC Rcd 7496 (2008) (“AWS-1 and Broadband PCS Procedures Public Notice”).
42 See AWS-1 and Broadband PCS Procedures Public Notice, 23 FCC Rcd 7496.  Auction 78 also included an 
auction of Broadband PCS licenses.
43 Id. at 23 FCC Rcd at 7521-22.
44 See “Auction of AWS-1 and Broadband PCS Licenses Closes, Winning Bidders Announced for Auction 78, 
Down Payments Due September 9, 2008, FCC Forms 601 and 602 Due September 9, 2008, Final Payments Due 
September 23, 2008, Ten-Day Petition to Deny Period”, Public Notice, 23 FCC Rcd 12749-65 (2008).
Federal Communications Commission FCC 10-155  
21
17. 700 MHz Band Licenses.   The Commission previously adopted criteria for defining 
three groups of small businesses for purposes of determining their eligibility for special provisions such 
as bidding credits.45 The Commission defined a “small business” as an entity that, together with its 
affiliates and controlling principals, has average gross revenues not exceeding $40 million for the 
preceding three years.46 A “very small business” is defined as an entity that, together with its affiliates 
and controlling principals, has average gross revenues that are not more than $15 million for the 
preceding three years.47 Additionally, the lower 700 MHz Service had a third category of small business 
status for Metropolitan/Rural Service Area (“MSA/RSA”) licenses.  The third category is “entrepreneur,” 
which is defined as an entity that, together with its affiliates and controlling principals, has average gross 
revenues that are not more than $3 million for the preceding three years.48 The SBA approved these small 
size standards.49 The Commission conducted an auction in 2002 of 740 licenses (one license in each of 
the 734 MSAs/RSAs and one license in each of the six Economic Area Groupings (EAGs)).  Of the 740 
licenses available for auction, 484 licenses were sold to 102 winning bidders.  Seventy-two of the 
winning bidders claimed small business, very small business or entrepreneur status and won a total of 329 
licenses. 50 The Commission conducted a second auction in 2003 that included 256 licenses:  5 EAG 
licenses and 476 Cellular Market Area licenses.51 Seventeen winning bidders claimed small or very small 
business status and won 60 licenses, and nine winning bidders claimed entrepreneur status and won 154 
licenses.52 In 2005, the Commission completed an auction of 5 licenses in the lower 700 MHz band 
(Auction 60).  There were three winning bidders for five licenses.  All three winning bidders claimed 
small business status.
18. In 2007, the Commission adopted the 700 MHz Second Report and Order.53 The Order 
revised the band plan for the commercial (including Guard Band) and public safety spectrum, adopted 
services rules, including stringent build-out requirements, an open platform requirement on the C Block, 
and a requirement on the D Block licensee to construct and operate a nationwide, interoperable wireless 
broadband network for public safety users.  In 2008, the Commission commenced Auction 73 which 
offered all available, commercial 700 MHz Band licenses (1,099 licenses) for bidding using the 
Commission’s standard simultaneous multiple-round (“SMR”) auction format for the A, B, D, and E 
  
45  See Reallocation and Service Rules for the 698-746 MHz Spectrum Band (Television Channels 52-59), Report and 
Order, 17 FCC Rcd 1022 (2002) (“Channels 52-59 Report and Order”).
46  See Channels 52-59 Report and Order, 17 FCC Rcd at 1087-88, ¶ 172.
47  See id.
48  See id, 17 FCC Rcd at 1088, ¶ 173.
49 See Letter from Aida Alvarez, Administrator, SBA, to Thomas Sugrue, Chief, WTB, FCC (Aug. 10, 1999) 
(“Alvarez Letter 1999”).
50 See “Lower 700 MHz Band Auction Closes,” Public Notice, 17 FCC Rcd 17272 (WTB 2002).
51  See “Lower 700 MHz Band Auction Closes,” Public Notice, 18 FCC Rcd 11873 (WTB 2003).
52  See id.
53 Service Rules for the 698-746, 747-762 and 777-792 MHz Band, WT Docket No. 06-150, Revision of the 
Commission’s Rules to Ensure Compatibility with Enhanced 911 Emergency Calling Systems, CC Docket No. 94-
102, Section 68.4(a) of the Commission’s Rules Governing Hearing Aid-Compatible Telephone, WT Docket No. 01-
309, Biennial Regulatory Review – Amendment of Parts 1, 22, 24, 27, and 90 to Streamline and Harmonize Various 
Rules Affecting Wireless Radio Services, WT Docket No. 03-264, Former Nextel Communications, Inc. Upper700 
MHz Guard Band Licenses and Revisions to Part 27 of the Commission’s Rules, WT Docket No. 06-169, 
Implementing a Nationwide, Broadband Interoperable Public Safety Network in the 700 MHz Band, PS Docket No. 
06-229, Development of Operational, Technical and Spectrum Requirements for Meeting Federal, State, and Local 
Public Safety Communications Requirements Through the Year 2010, WT Docket No. 96-86, Second Report and 
Order, FCC 07-132 (2007) (“700 MHz Second Report and Order”), 22 FCC Rcd 15289 (2007).
Federal Communications Commission FCC 10-155  
22
block licenses and an SMR auction design with hierarchical package bidding (“HPB”) for the C Block 
licenses.  Later in 2008, the Commission concluded Auction 73.54 A bidder with attributed average 
annual gross revenues that did not exceed $15 million for the preceding three years (very small business) 
qualified for a 25 percent discount on its winning bids.  A bidder with attributed average annual gross 
revenues that exceeded $15 million, but did not exceed $40 million for the preceding three years, 
qualified for a 15 percent discount on its winning bids.  There were 36 winning bidders (who won 330 of 
the 1,090 licenses won) that identified themselves as very small businesses.  There were 20 winning 
bidders that identified themselves as a small business that won 49 of the 1,090 licenses won.55 The 
provisionally winning bids for the A, B, C, and E Block licenses exceeded the aggregate reserve prices for 
those blocks.  However, the provisionally winning bid for the D Block license did not meet the applicable 
reserve price and thus did not become a winning bid.56
19. 700 MHz Guard Band Licenses.  In the 700 MHz Guard Band Order, the Commission 
adopted size standards for “small businesses” and “very small businesses” for purposes of determining 
their eligibility for special provisions such as bidding credits and installment payments.57 A small 
business in this service is an entity that, together with its affiliates and controlling principals, has average 
gross revenues not exceeding $40 million for the preceding three years.58 Additionally, a very small 
business is an entity that, together with its affiliates and controlling principals, has average gross revenues 
that are not more than $15 million for the preceding three years.59 SBA approval of these definitions is 
not required.60 In 2000, the Commission conducted an auction of 52 Major Economic Area (“MEA”) 
licenses.61 Of the 104 licenses auctioned, 96 licenses were sold to nine bidders.  Five of these bidders 
were small businesses that won a total of 26 licenses.  A second auction of 700 MHz Guard Band licenses 
commenced and closed in 2001.  All eight of the licenses auctioned were sold to three bidders.  One of 
these bidders was a small business that won a total of two licenses.62
20. Specialized Mobile Radio.  The Commission awards “small entity” bidding credits in 
auctions for Specialized Mobile Radio (SMR) geographic area licenses in the 800 MHz and 900 MHz 
bands to firms that had revenues of no more than $15 million in each of the three previous calendar years.
63 The Commission awards “very small entity” bidding credits to firms that had revenues of no more than 
$3 million in each of the three previous calendar years.64 The SBA has approved these small business 
  
54 Auction of 700 MHz Band Licenses Closes, Winning Bidders Announced for Auction 73, Down Payments Due 
April 3, 2008, FCC Forms 601 and 602 April 3, 2008, Final Payment Due April 17, 2008, Ten-Day Petition to Deny 
Period, Public Notice, 23 FCC Rcd 4572 (2008).
55 Id. 23 FCC Rcd at 4572-73.
56 Id.
57  See Service Rules for the 746-764 MHz Bands, and Revisions to Part 27 of the Commission’s Rules, Second 
Report and Order, 15 FCC Rcd 5299 (2000) (“746-764 MHz Band Second Report and Order”).
58 See 746-764 MHz Band Second Report and Order, 15 FCC Rcd at 5343, para. 108.
59 See id.
60  See id., 15 FCC Rcd 5299, 5343, para. 108 n.246 (for the 746-764 MHz and 776-794 MHz bands, the 
Commission is exempt from 15 U.S.C. § 632, which requires Federal agencies to obtain SBA approval before 
adopting small business size standards).
61 See “700 MHz Guard Bands Auction Closes:  Winning Bidders Announced,” Public Notice, 15 FCC Rcd 18026 
(2000).
62 See “700 MHz Guard Bands Auction Closes: Winning Bidders Announced,” Public Notice, 16 FCC Rcd 4590 
(WTB 2001).
63 47 C.F.R. § 90.814(b)(1).
64  47 C.F.R. § 90.814(b)(1).
Federal Communications Commission FCC 10-155  
23
size standards for the 900 MHz Service.65 The Commission has held auctions for geographic area 
licenses in the 800 MHz and 900 MHz bands.  The 900 MHz SMR auction was completed in 1996.  Sixty 
bidders claiming that they qualified as small businesses under the $15 million size standard won 263 
geographic area licenses in the 900 MHz SMR band.  The 800 MHz SMR auction for the upper 200 
channels was conducted in 1997.  Ten bidders claiming that they qualified as small businesses under the 
$15 million size standard won 38 geographic area licenses for the upper 200 channels in the 800 MHz 
SMR band.66 A second auction for the 800 MHz band was conducted in 2002 and included 23 BEA 
licenses.  One bidder claiming small business status won five licenses.67
21. The auction of the 1,053 800 MHz SMR geographic area licenses for the General 
Category channels was conducted in 2000.  Eleven bidders won 108 geographic area licenses for the 
General Category channels in the 800 MHz SMR band qualified as small businesses under the $15 
million size standard.68 In an auction completed in 2000, a total of 2,800 Economic Area licenses in the 
lower 80 channels of the 800 MHz SMR service were awarded.69 Of the 22 winning bidders, 19 claimed 
small business status and won 129 licenses.  Thus, combining all three auctions, 40 winning bidders for 
geographic licenses in the 800 MHz SMR band claimed status as small business.
22. In addition, there are numerous incumbent site-by-site SMR licensees and licensees with 
extended implementation authorizations in the 800 and 900 MHz bands.  We do not know how many 
firms provide 800 MHz or 900 MHz geographic area SMR pursuant to extended implementation 
authorizations, nor how many of these providers have annual revenues of no more than $15 million.  One 
firm has over $15 million in revenues.  In addition, we do not know how many of these firms have 1500 
or fewer employees.70 We assume, for purposes of this analysis, that all of the remaining existing 
extended implementation authorizations are held by small entities, as that small business size standard is 
approved by the SBA.
23. Cellular Radiotelephone Service.  Auction 77 was held to resolve one group of 
mutually exclusive applications for Cellular Radiotelephone Service licenses for unserved areas in New 
Mexico.71 Bidding credits for designated entities were not available in Auction 77.72 In 2008, the 
Commission completed the closed auction of one unserved service area in the Cellular Radiotelephone 
Service, designated as Auction 77.  Auction 77 concluded with one provisionally winning bid for the 
unserved area totaling $25,002.73
  
65 See Alvarez Letter 1999.  
66 See “Correction to Public Notice DA 96-586 ‘FCC Announces Winning Bidders in the Auction of 1020 Licenses 
to Provide 900 MHz SMR in Major Trading Areas,’” Public Notice, 18 FCC Rcd 18367 (WTB 1996).
67 See “Multi-Radio Service Auction Closes,” Public Notice, 17 FCC Rcd 1446 (WTB 2002).
68 See “800 MHz Specialized Mobile Radio (SMR) Service General Category (851-854 MHz) and Upper Band 
(861-865 MHz) Auction Closes; Winning Bidders Announced,” Public Notice, 15 FCC Rcd 17162 (2000).
69 See, “800 MHz SMR Service Lower 80 Channels Auction Closes; Winning Bidders Announced,” Public Notice, 
16 FCC Rcd 1736 (2000).
70 See generally 13 C.F.R. § 121.201, NAICS code 517210.
71 See Closed Auction of Licenses for Cellular Unserved Service Area Scheduled for June 17, 2008, Notice and 
Filing Requirements, Minimum Opening Bids, Upfront Payments, and Other Procedures for Auction 77, Public 
Notice, 23 FCC Rcd 6670 (2008).
72 Id. at 6685.
73 See Auction of Cellular Unserved Service Area License Closes, Winning Bidder Announced for Auction 77, 
Down Payment due July 2, 2008, Final Payment due July 17, 2008, Public Notice, 23 FCC Rcd 9501 (2008). 
Federal Communications Commission FCC 10-155  
24
24. Private Land Mobile Radio (“PLMR”).  PLMR systems serve an essential role in a 
range of industrial, business, land transportation, and public safety activities.  These radios are used by 
companies of all sizes operating in all U.S. business categories, and are often used in support of the 
licensee’s primary (non-telecommunications) business operations.  For the purpose of determining 
whether a licensee of a PLMR system is a small business as defined by the SBA, we use the broad census 
category, Wireless Telecommunications Carriers (except Satellite).  This definition provides that a small 
entity is any such entity employing no more than 1,500 persons.74 The Commission does not require 
PLMR licensees to disclose information about number of employees, so the Commission does not have 
information that could be used to determine how many PLMR licensees constitute small entities under 
this definition.  We note that PLMR licensees generally use the licensed facilities in support of other 
business activities, and therefore, it would also be helpful to assess PLMR licensees under the standards 
applied to the particular industry subsector to which the licensee belongs.75
25. As of March 2010, there were 424,162 PLMR licensees operating 921,909 transmitters in 
the PLMR bands below 512 MHz.  We note that any entity engaged in a commercial activity is eligible to 
hold a PLMR license, and that any revised rules in this context could therefore potentially impact small 
entities covering a great variety of industries.
26. Rural Radiotelephone Service.  The Commission has not adopted a size standard for 
small businesses specific to the Rural Radiotelephone Service.76 A significant subset of the Rural 
Radiotelephone Service is the Basic Exchange Telephone Radio System (“BETRS”).77 In the present 
context, we will use the SBA’s small business size standard applicable to Wireless Telecommunications 
Carriers (except Satellite), i.e., an entity employing no more than 1,500 persons.78 There are 
approximately 1,000 licensees in the Rural Radiotelephone Service, and the Commission estimates that 
there are 1,000 or fewer small entity licensees in the Rural Radiotelephone Service that may be affected 
by the rules and policies proposed herein.
27. 1.4 GHz Band Licensees.  The Commission conducted an auction of 64 1.4 GHz band 
licenses 79 in 2007.80 In that auction, the Commission defined “small business” as an entity that, together 
with its affiliates and controlling interests, had average gross revenues that exceed $15 million but do not 
exceed $40 million for the preceding three years, and a “very small business” as an entity that, together 
with its affiliates and controlling interests, has had average annual gross revenues not exceeding $15 
million for the preceding three years.81 Neither of the two winning bidders sought such designated entity 
status.82
IV. Description of Projected Reporting, Recordkeeping and Other Compliance Requirements:
  
74 See 13 C.F.R. § 121.201, NAICS code 517210.
75 See generally 13 C.F.R. § 121.201.
76 The service is defined in § 22.99 of the Commission’s Rules, 47 C.F.R. § 22.99.
77 BETRS is defined in §§ 22.757 and 22.759 of the Commission’s Rules, 47 C.F.R. §§ 22.757 and 22.759.
78 13 C.F.R. § 121.201, NAICS code 517210.
79 See “Auction of 1.4 GHz Bands Licenses Scheduled for February 7, 2007,” Public Notice, 21 FCC Rcd 12393 
(WTB 2006).
80 See “Auction of 1.4 GHz Band Licenses Closes; Winning Bidders Announced for Auction No. 69,” Public Notice, 
22 FCC Rcd 4714 (2007) (“Auction No. 69 Closing PN”).
81 Auction No. 69 Closing PN, Attachment C.
82 See Auction No. 69 Closing PN.
Federal Communications Commission FCC 10-155  
25
28. The NPRM does not propose any reporting, recordkeeping, or other compliance 
requirements.  
V. Steps Taken to Minimize Significant Economic Impact on Small Entities, and Significant 
Alternatives Considered:
29. The RFA requires an agency to describe any significant alternatives that it has considered 
in reaching its approach, which may include the following four alternatives, among others: (1) the 
establishment of differing compliance or reporting requirements or timetables that take into account the 
resources available to small entities; (2) the clarification, consolidation, or simplification of compliance or 
reporting requirements under the rule for small entities; (3) the use of performance, rather than design, 
standards; and (4) an exemption from coverage of the rule, or any part thereof, for small entities.83  
30. The NPRM proposes reducing the size of the interim cap on competitive ETC support 
when any competitive ETC relinquishes its ETC designation.  Under certain circumstances, this may have 
a significant economic impact on other competitive ETCs that are small entities.  For example, as 
described in footnote 31 of the Order, the reduction in size of a state interim cap amount could negatively 
affect a competitive ETC that is a small entity if another competitive ETC is later designated and receives 
a share of the smaller interim cap amount.  While the designation of another competitive ETC would have 
an impact on the support received by the small entity even without the adoption of the proposed rule, the 
proposed rule could magnify that impact.  The Commission is seeking comment on this rule, in part to 
consider its necessity and any alternatives.  Because, however, the purpose of the proposed rule is to 
reduce the amount of high-cost universal service support received by competitive ETCs, it is not likely 
that a significant alternative could be chosen that would minimize the effect of the proposed rule if it is, in 
fact, adopted.
31. The NPRM also seeks comment on a proposed rule that would give the Commission the 
ability to provide the universal service administrator alternate instructions with regard to the use of extra 
or unused funds.  The current rules require that the administrator use such funds to reduce the need for 
universal service contributions in the next quarter.  The proposed rule would permit the Commission to 
instruct the administrator to reserve the funds for later use.  Because the later use of the funds would also 
require universal service contributions, the overall effect of this proposed rule would be to shift the time 
of the contributions’ collection, not to change the long-term amount contributed.  Accordingly, we do not 
believe there is a significant economic impact, on small entities or otherwise, associated with this 
proposed rule.
VI. Federal Rules that May Duplicate, Overlap, or Conflict with the Proposed Rules:
32. None.
  
83 5 U.S.C. § 603.
Federal Communications Commission FCC 10-155  
26
STATEMENT OF
CHAIRMAN JULIUS GENACHOWSKI
Re: High-Cost Universal Service Support, Federal-State Joint Board on Universal Service, Request 
for Review of Decision of Universal Service Administrator by Corr Wireless Communications, 
LLC, WC Docket No. 05-337, CC Docket No. 96-45.
Today, the Commission takes another step in implementing the National Broadband Plan and 
reforming the Universal Service Fund (USF). To help broadband become our 21st century engine for 
economic growth and job creation, and to ensure that the benefits of high-speed Internet extend to all 
Americans, it is vital that we transform USF from a program that helped achieve universal telephone 
service to one that will deliver universal broadband. And it is vital that we do so in a financially 
responsible manner, protecting consumers as we do the work of reform.
Today’s decision ensures that USF support for mobile voice that Verizon Wireless and Sprint had 
previously agreed to relinquish will be used as a down payment on broadband universal service reform. 
Transformation of USF won’t be easy, but it’s underway, with important enhancements of USF’s 
E-rate program scheduled for a vote later this month. This will expand broadband opportunities for 
schools and libraries, providing more access and flexibility for these anchor institutions to empower 
teachers, and serve children and their communities. Our rural Health Connect initiative will improve 
patient care and reduce medical costs through greater broadband investment for medically underserved 
communities. Our Mobility Fund will fill in gaps in 3G and 4G wireless coverage. Reformed Lifeline and 
Link-Up programs will more efficiently connect more Americans to broadband. And our Connect 
America Fund will catalyze private investment in broadband in rural areas of the country.  
An essential part of reform will be driving greater and greater efficiency through USF, ensuring 
that the funds are spent wisely, and continuing to employ caps and other incentive structures to maximize 
the return on USF’s investment and limit the financial burden on consumers. Today’s action is one step to 
help ensure the Fund will have the needed resources without increasing its rate of growth. I look forward 
to building on today’s action as we move forward with comprehensive, fiscally sensible universal service 
reform.
Federal Communications Commission FCC 10-155  
27
STATEMENT OF
COMMISSIONER MICHAEL J. COPPS
Re: High-Cost Universal Service Support, Federal-State Joint Board on Universal Service, Request 
for Review of Decision of Universal Service Administrator by Corr Wireless Communications, 
LLC, WC Docket No. 05-337, CC Docket No. 96-45.
I welcome the Commission’s effort to finalize the long-outstanding question of what to do with 
the competitive eligible telecommunications carrier (CETC) support surrendered by Verizon Wireless and 
Sprint Nextel pursuant to commitments made in separate transactions in 2008. And I find it laudable that 
today’s Order seeks to redistribute the surrendered support in ways that will meet the goals of the 
National Broadband Plan.
It is regrettable, however, that the Commission confronts this matter under less-than-desirable 
circumstances. In particular, the Commission in 2008 had the opportunity to reform Universal Service 
and put America back in the vanguard of advanced telecommunications. Instead, the Commission 
adopted an illusory band-aid—an “interim, emergency cap” on CETC support—intended to contain the 
High Cost program. Contrary to the strictures of the Telecommunications Act, the cap was not 
technology-neutral, and it had the perhaps unintended effect of hindering the deployment of wireless 
voice service to areas of the United States that need it most. Just as dismally, adoption of the cap put real 
reform of Universal Service on the back-burner when it should have been on the front and on high. So 
today, even after prolonged Commission deliberations over how to implement the interim cap, we still 
find ourselves agonizing over related issues, such as the situation addressed in the instant order. This all 
could have been avoided. Bygones.
My concern is to encourage that the surrendered support goes to deploying services where they 
are needed, and fast. I strongly support using this funding to index the cap on E-Rate to inflation. E-rate 
is, I believe, one of the best and most successful programs in FCC history, connecting schools and 
libraries to the Internet and generations of people to the enabling technologies of the Twenty-first 
century. But, as a far-reaching program that is nonetheless capped, E-Rate demand consistently outpaces 
available support. The adjustment to inflation, as proposed in the May NPRM on E-rate, can help 
significantly. It will not be enough to meet demand, to be sure, but it will have a prompt and direct 
impact on meeting the telecommunications needs of schools and libraries across the country. 
That said, I am not totally pleased with today’s outcome. I am concerned about how and when 
the remainder of the surrendered funding will be distributed. These funds are needed in circulation now.
Wireless broadband deployment hinges on more funding. So do jobs. Yet Universal Service reform is 
still, at best, many months off. We still need to create the CAF and a Mobility Fund for wireless and also 
expand the Rural Health Care program. Right now we lack the needed mechanisms for the timely and 
efficient deployment of these newly-available funds.
I genuinely dislike holding on to ratepayers’ contributions when those funds could and should be 
distributed immediately for services in areas that urgently need them. I understand we are boxed in 
because of the circumstances outlined above, but this predicament shows us once again the costs we 
pay for previous wrong-headed decisions and delay. Again, I have high hopes that the Commission will 
move forward with plans for the Mobility Fund and the Rural Health Care program, as well as undertake 
the comprehensive Universal Service reform proposed in the National Broadband Plan. High-speed 
broadband with high-speed decision-making is the need of the hour. Now that we have, after many long 
years, a National Broadband Plan, I look forward to working with the Chairman and all my colleagues to 
make good things happen.