[Federal Register: May 15, 2002 (Volume 67, Number 94)]
[Proposed Rules]               
[Page 34653-34665]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15my02-31]                         

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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[WC Docket No. 02-60; FCC 02-122]

 
Rural Health Care Support Mechanism

AGENCY: Federal Communications Commission.

ACTION: Proposed rulemaking.

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SUMMARY: In this document, the Commission seeks comment on proposed 
modifications to its rules and other changes governing the rural health 
care universal service support mechanism, which helps rural health care 
providers obtain access to modern telecommunications and information 
services for medical and health maintenance purposes. The NPRM asks for 
comment on ways to increase the number of health care providers that 
could benefit from the program's discounts, without modifying the 
existing funding cap, and to improve the overall operation of the 
program. Among other items, the NPRM seeks comment on how to treat 
entities that not only serve as rural health care providers, but also 
perform the functions outside the statutory definition of ``health care 
providers,'' whether to provide discounts on Internet access charges, 
and whether the calculation of discounted services should be changed.

DATES: Comments are due on or before July 1, 2002. Reply comments are 
due on or before July 29, 2002. Written comments by the public on the 
proposed information collections are due on or before June 14, 2002. 
Written comments must be submitted by the Office of Management and 
Budget (OMB) on the proposed information collections on or before July 
15, 2002.

ADDRESSES: Comments can be filed electronically or by paper. Electronic 
filers can access the Electronic Filing System via the Internet at 
www.fcc.gov/e-file/ecfs.html. Instructions for e-mail filing can be 
obtained by send an e-mail to ecfs@fcc.gov with the words get formyour 
email address> in the body of the e-mail. Parties choosing to file by 
paper must file an original and four copies with the Commission's 
Secretary, Marlene H. Dortch, Office of the Secretary, Federal 
Communications Commission, 445 12th Street, SW., Washington, DC 20554 
and file additional copies with parties as listed in the NPRM. See 
SUPPLEMENTARY INFORMATION Section for new filing procedures for all 
documents sent by hand-delivery and messenger to 445 12th Street, SW. A 
copy of any comments on the information collection(s) contained herein 
should also be submitted to Judith Boley Herman, Federal Communications 
Commission, Room 1-C804, 445 12th Street, SW., Washington, DC 20554, or 
to jboley@fcc.gov and to Jeanette Thornton, OMB Desk Officer, 10236 
NEOB, 725--17th Street, NW., Washington, DC 20503. All filers must send 
a copy of the comments to the Commission's copy contractor, Qualex 
International, Portals II, 445 12th Street, SW., Room CYB402, 
Washington, DC 20554.

FOR FURTHER INFORMATION CONTACT: Eric K. Johnson, Attorney, Wireline 
Competition Bureau, Telecommunications Access Policy Division, (202) 
418-2718. For further information concerning the information collection 
contained in this Notice of Proposed Rulemaking contact Judith Boley 
Herman, at 202-418-0214, or via the Internet to jboley@fcc.gov.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice 
of Proposed Rulemaking in WC Docket No. 02-60, FCC 02-122, released on 
April 19, 2002. The full text of this document is available for public 
inspection during regular business hours in the FCC Reference Center, 
Room CY-A257, 445 12th Street, SW., Washington, DC, 20554. The full 
document can also be viewed at http://hraunfoss.fcc.gov/edocs_public/
attachmatch/FCC-02-122A1.pdf>.
    This Notice of Proposed Rulemaking (NPRM) contains proposed 
information collection(s) subject to the Paperwork Reduction Act of 
1995 (PRA). It has been submitted to the Office of Management and 
Budget (OMB) for review under the PRA. OMB, the general public, and 
other Federal agencies are invited to comment on the proposed 
information collections contained in this proceeding.

Paperwork Reduction Act

    The NPRM contains discussion of information collections. The 
Commission, as part of its continuing effort to reduce paperwork 
burdens, invites the general public and OMB to comment on the 
information collection(s) discussed in this NPRM, as required by the 
PRA, Public Law 104-13. Public and agency comments on the information 
collections discussed in this NPRM are due on or before June 14, 2002. 
Written comments must be submitted by the OMB on the proposed 
information collections on or before July 15, 2002.
    Comments should address: (a) Whether the proposed collection of 
information is necessary for the proper performance of the functions of 
the Commission, including whether the information shall have practical 
utility; (b) the accuracy of the Commission's burden estimates; (c) 
ways to enhance the quality, utility, and clarity of the information 
collected; and (d) ways to minimize the burden of the collection of 
information on the respondents, including the use of automated 
collection techniques or other forms of information technology.
    OMB Control Number: 3060-0804.
    Title: Universal Service--Health Care Providers Universal Service 
Program.
    Form No.: FCC Forms 465, 466, 466-A, 467 and 468.
    Type of Review: Proposed revised collection.
    Respondents: Business or other for-profit, not-for-profit 
institutions, State, Local or Tribal Governments.

[[Page 34654]]



----------------------------------------------------------------------------------------------------------------
                                                                    No. of       Est. time  per    Total annual
                             Title                                respondents       response          burden
----------------------------------------------------------------------------------------------------------------
1. FCC Form 465--Description of Services Requested and                   8,300               2.5          20,750
 Certification................................................
2. FCC Form 466--Funding Request and Certification............           8,300               2            16,600
3. FCC Form 466 A Internet Toll Charge Discount Request.......           8,300               1             8,300
4. FCC Form 467--Connection Certification.....................           8,300               1.5          12,450
5. FCC Form 468--Telecommunications Carrier Support Form......           8,300               1.5          12,450
----------------------------------------------------------------------------------------------------------------

    Total Annual Burden: 70,550.
    Cost to Respondents: $0.
    Needs and Uses: In this NPRM the Commission has updated its data 
estimating the number of health care providers who could be 
respondents, to a total of approximately 8,300 rural health care 
providers. The Commission might further refine the burden estimates 
after receiving comment.
    The purpose of the NPRM is to explore modifications that would 
increase the number of eligible health care providers that would 
participate in the program. It is not possible to estimate the number 
of eligible health care providers that would take advantage of this 
program as the NPRM asks for comment about possible changes in 
interpretation of the eligibility criteria for both entities and 
services. Therefore, we have included the largest possible number of 
applicants the total estimated number of rural health care providers--
in the above burden estimates.

Synopsis of NPRM

I. Introduction

    1. In this NPRM, we seek comment on proposed modifications to our 
rules and other changes governing the rural health care universal 
service support mechanism. The Commission implemented the rural health 
care mechanism at the direction of Congress as provided in the 
Telecommunications Act of 1996 (1996 Act). In the first five years of 
its operation, the rural health care mechanism has provided discounts 
that have facilitated the ability of health care providers to provide 
critical access to modern telecommunications and information services 
for medical and health maintenance purposes to rural America. 
Participation in the rural health care universal service support 
mechanism, however, has not met the Commission's initial projections. 
After five years of experience with the mechanism and considering 
recent developments, we find it appropriate to assess whether our rules 
and policies require modification.
    2. In light of changes in technology and market conditions as well 
as recent national events, we find it appropriate to ask whether 
various aspects of the rural health care support mechanism can be 
streamlined and improved, in order to best effectuate the mandate of 
Congress. We seek comment on certain specific changes to the mechanism 
based on our past experience with the mechanism, and solicit input 
regarding other changes to improve efficiency, fairness, and overall 
operation of the mechanism. We believe certain changes to our rules 
affecting the rural health care support mechanism could significantly 
bolster the availability of telemedicine and telehealth, thereby 
enhancing critical diagnosis and communication support for isolated 
health centers throughout the rural United States in the event of a 
national public health emergency.
    3. Our goals in undertaking this proceeding, consistent with the 
statute, are four-fold: (1) To ensure that the benefits of the 
universal service support mechanism for rural health care providers 
continue to be distributed in a fair and equitable manner; (2) to 
examine current rules and, if necessary, implement changes to improve 
and streamline operation of the rural health care universal service 
support mechanism; (3) to maintain our effective oversight over 
operation of the mechanism to ensure the statutory goals of section 254 
of the Act are met without waste, fraud, or abuse; and (4) to 
strengthen the ability of rural health care providers to provide 
critical health care services, consistent with section 254, and thereby 
further our national homeland security.
    4. In this NPRM, we seek comment on several general categories of 
issues, including whether to: clarify how we should treat eligible 
entities that also perform functions that are outside the statutory 
definition of ``health care provider'; provide support for Internet 
access; and change the calculation of discounted services, including 
the calculation of urban and rural rates. In addition, we seek comment 
on other administrative changes to the rural health care mechanism, 
including whether and how to: streamline the application process; 
allocate funds if demand exceeds the annual cap; modify the current 
competitive bidding rules; and encourage partnerships with clinics at 
schools and libraries. We also seek comment on other measures to 
prevent waste, fraud, and abuse; and any other issues concerning the 
structure and operation of the rural health care universal service 
support mechanism.
    5. We seek comment on these specific proposals, and how such 
changes could be implemented. We also seek comment on the effect that 
any such changes may have on demand for support under the universal 
service mechanism as well as data to support any comments made. We 
welcome any alternative proposals that are consistent with the statute 
and that satisfy the expressed goals of this proceeding. We seek 
comment from state members of the Federal-State Joint Board on 
Universal Service on the matters raised in this proceeding.

II. Discussion

A. Eligible Health Care Providers

    6. Section 254(h)(1)(A) of the Act requires telecommunications 
carriers to provide discounted telecommunications service ``to any 
public or nonprofit health care provider that serves persons who reside 
in rural areas in that State.'' Section 254(h)(2)(A) directs the 
Commission to enhance access to ``advanced telecommunications and 
information services'' for, inter alia, ``public and non-profit . . . 
health care providers.'' The term ``health care provider'' as used in 
these sections is defined in section 254(h)(7)(B) as follows:
    For purposes of this subsection: * * * [t]he term ``health care 
provider'' means--
    (i) Post-secondary educational institutions offering health care 
instruction, teaching hospitals, and medical schools;
    (ii) Community health centers or health centers providing health 
care to migrants;
    (iii) Local health departments or agencies;
    (iv) Community mental health centers;
    (v) Not-for-profit hospitals;
    (vi) Rural health clinics; and
    (vii) Consortia of health care providers consisting of one or more 
entities described in clause (i) through (vi).
    7. The Commission initially addressed the scope of this statutory 
definition in the Universal Service

[[Page 34655]]

Order, 62 FR 32862, June 17, 1997, finding that the seven statutory 
categories adequately described the entities that Congress intended to 
qualify as health care providers. It declined to expand the definition 
of ``health care provider'' beyond the statutorily-enumerated 
categories, concluding that, had Congress intended any other entities 
to qualify, it would have included them in the list explicitly. On 
reconsideration of the Universal Service Order, the Commission rejected 
arguments that it had too narrowly defined the term ``health care 
provider'' and that it should expand the definition to include rural 
nursing homes, hospices, or other long-term care facilities, as well as 
emergency medical service facilities.
    8. The Commission concluded that a nursing home, in particular, 
would be ineligible even if it was part of an eligible rural health 
clinic. The Commission reasoned that an ineligible entity's 
relationship with an eligible entity is an insufficient basis for 
allowing an entity omitted from the list in the statute to qualify for 
the benefits of the universal service support mechanism and that there 
was ``no rational basis for distinguishing between a rural nursing home 
that is part of a not-for-profit * * * rural health clinic and a rural 
nursing home that is associated with any of the other categories of 
eligible entities listed in the statute.'' The Commission also rejected 
eligibility of nursing homes that were part of a rural health clinic 
because granting such eligibility ``would very likely result in a flood 
of other types of ineligible entities requesting similar treatment, and 
thus would render meaningless the limitations imposed by Congress in 
section 254(h)(7)(B).''
    9. In this NPRM, we again affirm that eligible health care 
providers are limited to the seven categories enumerated in the 
statutory definition of ``health care provider.'' In light of the very 
low utilization of the discounts provided pursuant to section 
254(h)(1)(A), however, we invite comment on whether we should revisit 
our prior interpretations of the terms ``health care provider'' and 
``rural health clinic'' to enable rural health care providers to be 
eligible for discounts even if they or their affiliates also function 
in capacities that do not fall under the statutory definition in 
section 254(b)(7)(B). In particular, if an entity allocates some of its 
resources acting as a ``rural health clinic'' or in another capacity 
that would qualify it as a ``health care provider'' under section 
254(b)(7)(B), should that entity be eligible for discounts irrespective 
of whether it (or an affiliate) also functions in a capacity--even on a 
primary basis--that would not qualify it as a ``health care provider'' 
under the Act? Such part-time or multipurpose providers may play a 
vital role in responding to public health crises affecting communities 
located in remote regions of our country. In some communities, for 
example, there are rural health clinics and emergency service 
facilities that are not currently eligible for support because they are 
operated by entities that also function as nursing homes, hospices, or 
other long-term care facilities. We seek comment on whether we can and 
should interpret the statute to enable such clinics and emergency 
service providers to receive discounted services supported under the 
rural health care mechanism. The number and importance of clinics with 
these or similar arrangements may be becoming--or may have already 
become--a critical part of the health care network in rural America.
    10. We also seek comment on how the rural health care mechanism 
would benefit entities that function both as covered health care 
providers and as entities that do not fall under section 254(b)(7)(B). 
In particular, we seek comment on whether it would be both practicable 
and consistent with the statute to prorate discounts. Such proration 
could ensure that the rural health care universal service support 
mechanism benefits such entities only to the extent that they operate 
as covered health care providers. We seek comment on the best way to 
implement such a proposal and how it would affect administrative costs. 
We also seek comment on what safeguards, if any, we should consider or 
adopt to ensure that discounted services provided to such multipurpose 
facilities are used consistent with the statute and our rules.

B. Eligible Services

1. Internet Access
    11. Under section 254(h)(1)(A) of the Act, a telecommunications 
carrier may receive reimbursement for providing telecommunications 
services to rural health care providers in a State at rates that are 
reasonably comparable to rates charged for similar services in urban 
areas of that State, with the amount of the reimbursement equal to the 
difference, if any, between the rural and urban rates. Under section 
254(h)(2)(A), the Commission is authorized to establish competitively 
neutral rules ``to enhance, to the extent technically feasible and 
economically reasonable, access to advanced telecommunications and 
information services for all public and non-profit elementary and 
secondary school classrooms, health care providers, and libraries * * * 
.'' Thus, the 1996 Act contemplates both support for telecommunications 
services provided to rural health care providers and enhancing access 
for health care providers to advanced telecommunications and 
information services.
    12. In the Universal Service Order, the Commission, relying on 
these provisions, authorized limited support for access to the Internet 
for health care providers. The Commission declined at that time to 
adopt any proposals for support of the Internet access provided by an 
ISP, due to the limited information available and the complexity of the 
proposals. The Commission did find, however, that rural health care 
providers incur large telecommunications toll charges and those charges 
were a major deterrent to full use of the Internet for health-related 
services. Therefore, acting pursuant to its authority under section of 
254(h)(2)(A), the Commission provided support for toll charges incurred 
by all health care providers that could not obtain toll-free access to 
an ISP. The support was limited to the lesser of $180.00 or 30 hours of 
usage per month, if a rural health care provider could not reach an ISP 
without incurring toll charges. The Commission determined that the 
dollar cap per provider was ``a specific, sufficient, and predictable 
mechanism, as required by section 254(b)(5) * * * because it limits the 
amount of support that each health care provider may receive per month 
to a reasonable level.'' The Commission recognized, however, that the 
proliferation of ISPs and the competitive marketplace ``soon should 
eliminate the need for such support.''
    13. We now seek comment on whether to alter our current framework 
for providing support for Internet access for rural health care 
providers. We note that the support for toll charges is presently 
unused by applicants because, as a result of the proliferation of ISPs, 
virtually all rural health care providers can now reach an ISP without 
incurring toll charges. We seek comment on whether we should eliminate 
support for toll charges to ISPs and instead provide support for any 
form of Internet access provided to rural health care providers.
    14. The Commission has previously concluded that we have statutory 
authority to implement a mechanism of universal service support for 
non-telecommunications services to enhance

[[Page 34656]]

access to advanced telecommunications and information services under 
section 254(h)(2)(A), as long as the mechanism is competitively 
neutral, technically feasible, and economically reasonable. Indeed, in 
the Universal Service Order, the Commission specifically rejected the 
notion ``that support for non-telecommunications services is * * * 
barred under * * * section 254(h)(2). Moreover, in the schools and 
libraries universal service support context, the Fifth Circuit affirmed 
the Commission's determination that 254(h)(2)(A) authorized direct 
support for Internet access to non-telecommunications service 
providers.
    15. We continue to believe that we have authority to support the 
services necessary to access the Internet under sections 254(h)(2)(A) 
and 154(i), and invite comment on this view. Given the rapid 
development of the Internet's capacities, the proliferation of 
applications available on the Internet, and the increase in the number 
of Internet users since the Universal Service Order was issued, it is 
time to reevaluate our previous policy decision not to support Internet 
access service provided by an ISP. Indeed, the Commission has 
previously recognized that the most efficient and cost-effective way to 
provide many telemedicine services may be via the Internet. In 
addition, health care information shared across the Internet may be an 
important benefit to enable rural health care providers to diagnose, 
treat, and contain possible outbreaks of disease or respond to health 
emergencies. We also wish to reduce isolation in rural communities by 
providing additional health care services to remote areas. We seek 
comment on the range of health care services and information that are 
available via the Internet, on the ability of the Internet to provide 
to rural communities the type of health care information that is 
available in urban areas, and, in general, on how health care providers 
can make use of the Internet to provide better health-related services. 
In light of these changes, the provision of support for Internet access 
could be beneficial in achieving the goal of section 254. We therefore 
seek comment on whether the rural health care support mechanism should 
now include discounts on Internet access, whether provided on a dial-up 
or high-speed broadband basis, and whether such support would be 
economically reasonable and technically feasible.
    16. We seek comment on how support to rural health care providers 
for Internet access could be implemented. In determining an appropriate 
method of implementation, we seek comment on the appropriate balance 
among various competing factors. If we were to adopt this proposal, we 
would want to provide an adequate level of support to enable health 
care providers to afford such access. We also would want not to deter 
health care providers from seeking service offerings appropriate to 
their individual needs. At the same time, we seek to ensure that any 
implementation of support includes measures to avoid waste and fraud 
without imposing unnecessary costs on the Administrator, and to ensure 
that support is used for the purposes that Congress intended. One 
possible solution could be a percentage discount on Internet access 
charges, analogous to the operation of the schools and libraries 
support mechanism. Alternatively, we seek comment on whether support 
for Internet access provided under section 254(h)(2)(A) should include 
a rural-urban rate comparison of the sort required under section 
254(h)(1)(A). We seek comment on the advantages and disadvantages of 
each proposal and how such proposals could be efficiently and 
effectively implemented. Further, we encourage commenters suggesting 
methods of implementation to address these competing concerns, to be 
specific as to the level of support that we should offer, and to 
provide us with the facts that they rely upon in advocating a level of 
support.
    17. If commenters believe that Internet access support should take 
the form of a percentage discount, we invite them to discuss whether we 
should adopt a single discount rate broadly applicable to all rural 
health care providers or apply different rates depending on a factor or 
factors. If commenters argue that the latter approach is preferential, 
they should specify the factors that we should rely upon in determining 
rates and, where possible, how rates will vary depending on variations 
in the applicable factors. In all cases, commenters should specify the 
facts on which they rely in proposing a particular rate or schedule of 
rates.
    18. Further, to accurately gauge the effect of such a proposal, we 
should understand how authorizing support for Internet access would 
increase the demand for support from rural health care providers. We 
therefore seek comment on the likely demand for Internet access, and 
from service providers on the cost of such services. We seek comment on 
whether demand for Internet access is likely to reach the $400 million 
cap on the amount of support to be provided by the rural health care 
mechanism, and how increased demand would affect the operation of the 
rural health care mechanism.
    19. We recognize that, in certain circumstances, offering support 
for Internet access to health care providers in rural areas may not 
adequately ensure that such providers have access to critical medical 
and public health resources, particularly in the event of a national 
security emergency. In particular, we lack an adequate record upon 
which to evaluate whether the non-rural institutions with such 
resources have the financial wherewithal or alternate public funding to 
make those medical resources available on networks used by rural health 
providers. Thus, we encourage interested parties to identify what, if 
any, new policies we should establish to enhance access to advanced 
telecommunications and information services for health care providers 
consistent with the scope of our authority under section 254(h)(2)(A).
    20. In general, we seek comment on the positive or negative effects 
that a decision to support Internet access will have on the rural 
health care support mechanism, from the perspective of the health care 
providers, the service providers, and the Administrator. In addition, 
we seek comment on how such implementation could be effectuated in 
keeping with the Commission's long standing universal service 
principles, specifically competitive neutrality and technological 
neutrality. We encourage parties to discuss any issues relevant to 
whether we should provide support for Internet access, which parties 
should be eligible for such support, what level of support to provide, 
the nature of the support, what restrictions we should place on such 
support, what administrative problems and concerns may arise if we 
provide such support, and the impact of such support on the mechanism's 
ability to support other services. We also seek comment on the effects 
on competition, if any, resulting from providing universal service 
support for Internet access under the rural health care mechanism. 
Specifically, we seek comment on whether such support would have 
positive or negative effects on facilities-based broadband deployment 
in rural areas.
2. Services Necessary for the Provision of Health Care
    21. Under section 254(h)(1)(A), rural health care providers may 
receive support only for ``telecommunications services which are 
necessary for the provision of health care services * * * including 
instruction relating to such services * * * '' In the Universal

[[Page 34657]]

Service Order, the Commission found that the phrase ``necessary for the 
provision of health care services * * * including instruction relating 
to such services'' meant reasonably related to the provision of health 
care services or instruction. The Commission further required that the 
health care provider certify that the requested service would be used 
exclusively for purposes reasonably related to the provision of health 
care services or instruction that the health care provider is legally 
authorized to provide under applicable state law, to help ensure that 
only eligible services are funded.
    22. We seek comment on whether we should adopt any additional 
measures to effectuate the statutory restriction in cases where a 
health care provider engages in both the provision of health care 
services and other activities. We could rely solely on the 
certification that none of the telecommunications services being 
supported will be used in connection with the non-health care related 
activities. However, if we decide to support services to entities 
engaged in a substantial amount of a non-health care related 
activities, the current certification procedure may not be adequate to 
avoid waste and fraud. We therefore seek comment on how best to avoid 
waste and fraud, specifically in situations where entities perform a 
significant amount of non-health related activities.

C. Calculation of Discounted Services

    23. Section 254(h)(1)(A) of the Act provides that ``[a] 
telecommunications carrier shall, upon receiving a bona fide request, 
provide telecommunications services which are necessary for the 
provision of health care services in a State, including instruction 
relating to such services, to any public or nonprofit health care 
provider that serves persons who reside in rural areas in that State at 
rates that are reasonably comparable to rates charged for similar 
services in urban areas in that State.'' Under our rules, the amount of 
support for an eligible service provided to a rural health care 
provider is the difference, if any, between the urban rate and the 
rural rate charged for the service.
    24. For service charges that are not distance-based, qualifying 
entities receive discounts for the difference in urban and rural rates. 
Pursuant to our rules, the Administrator determines the ``standard 
urban distance,'' (SUD) which is the average of the longest diameters 
of all cities in the state with a population of at least 50,000. The 
Administrator also calculates the Maximum Allowable Distance (MAD), 
which is the distance between the rural health care provider and the 
farthest point on the jurisdictional boundary of the nearest large city 
in the state with a population of at least 50,000. Under our rules, 
qualifying entities receive discounts on distance-based charges for 
services over any distance greater than the SUD but less than the MAD.
    25. As discussed below, we seek comment on whether the 
``similarity'' of urban and rural services should be determined on the 
basis of functionality from the perspective of the end-user, rather 
than on the basis of whether urban and rural services are technically 
similar. We also seek comment on whether, for purposes of determining 
the urban rate, the Administrator should allow comparison of rates in 
any urban area in the state, not just comparison with the rates in the 
nearest city with a population of over 50,000. In addition, we seek 
comment on whether to eliminate the MAD restriction, and seek comment 
on other alternatives. Furthermore, we seek comment on certain changes 
relating to the calculation of the urban rate in insular areas.
1. Interpretation of Similar Services
    26. As noted, section 254(h)(1)(A) of the Act provides that ``[a] 
telecommunications carrier shall, upon receiving a bona fide request, 
provide telecommunications services which are necessary for the 
provision of health care services in a State, including instruction 
relating to such services, to any public or nonprofit health care 
provider that serves persons who reside in rural areas in that State at 
rates that are reasonably comparable to rates charged for similar 
services in urban areas in that State.''
    27. However, our rules do not specify precisely how urban and rural 
services are to be compared for purposes of determining what are 
``similar.'' It has been our policy to base discounts on the difference 
in urban and rural rates between the same or similar services, such as 
comparing the rates for rural T-1 service with those of urban T-1 
service. Our current policy of comparing technically similar services 
may, however, inadvertently create inequities between urban and rural 
health care providers. Doing so does not take into account the fact 
that some less expensive urban services are unavailable at any price in 
rural areas, and health care providers are thus required to seek out 
more expensive services.
    28. We seek comment on changing our policy of comparing urban and 
rural rates for particular telecommunications services, such that the 
discounts would be calculated by comparing services based on 
functionality of the service from the perspective of the end user. In 
particular, we seek comment on whether comparisons should be made 
between or among different types of high-speed transport offered by 
telecommunications carriers that may be viewed as functionally 
equivalent by end-users. We also seek comment on whether this proposed 
policy change would better effectuate the statutory goals of section 
254.
    29. We seek comment on the fairest and most effective way to 
compare functionality between or among different types of 
telecommunications services. We seek comment on how a functionality-
based approach would affect discounts for all telecommunications 
services, including fractional T-1 lines, ISDN, Frame Relay services, 
and ATM services, and any other such telecommunications services for 
which the rural health care universal service support mechanism may 
offer discounts.
    30. We note that the discussion above presupposes that such 
functionality comparisons would be made between services provided as 
telecommunications services. If, however, the Commission rules that 
broadband Internet access services are information services, any such 
services would be eligible for support only under section 254(h)(2)(A), 
and not under section 254(h)(1)(A). As noted, we seek comment on 
whether any support for information services provided under section 
254(h)(2)(A) should include a rural/urban rate comparison of the sort 
required under section 254(h)(1)(A).
    31. We also seek comment on how this possible modification would 
affect health care providers seeking discounts for satellite services. 
Providers using satellite services have been particularly disadvantaged 
under the mechanism's current rules. In some areas throughout the 
United States and related territories, particularly remote and insular 
areas, satellite systems may provide the only viable means for a rural 
health care provider to receive telecommunications services. A rural 
provider using satellite services typically does not receive a discount 
under this mechanism because, under our current policies, the cost of 
rural satellite service would be compared to the cost of urban 
satellite service, and the price of satellite service does not vary by 
location. In some cases, satellite-based services can be more costly 
than traditional wireline services. Therefore, we recognize that 
widespread use of satellite-based services by rural health care 
providers that do have reasonably priced land-based

[[Page 34658]]

alternatives, if fully funded by the rural health care mechanism, may 
prove costly for the universal service support mechanism and offer an 
unnecessarily expensive service option for some applicants. We 
therefore seek comment on how to address this concern, which is similar 
to our concerns with respect to traditional wireline services.
    32. The Commission currently has before it a Petition for 
Reconsideration filed by Mobile Satellite Ventures Subsidiary (MSV), 
regarding the 1997 Universal Service Order, concerning, inter alia, the 
issue of discounts in the rural health care universal service support 
mechanism for satellite services. MSV, which offers satellite-based 
emergency medical communications, argues that because the cost of 
satellite systems is the same in rural and urban areas, providers of 
satellite-based services are at a disadvantage compared to terrestrial 
carriers, whose prices are distance sensitive. MSV proposes that the 
Commission establish ``that the urban services that are `similar' to 
MSV's rural [services] are the terrestrial mobile communications 
services typically used by ambulances and other emergency medical 
vehicles in a state's urban areas * * * [and that] support for rural 
health care providers that use MSV's services should be calculated on 
the basis of actual airtime usage rates that MSV charges for calls 
outside a customer's predefined talk-group.'' We seek comment on MSV's 
proposal as a way to make the functional comparison for mobile 
satellite services, and seek any other proposals for resolving this 
issue.
    33. We further seek comment on whether, and how, a functionality 
approach could be implemented consistent with current requirements 
concerning the Maximum Allowable Distance. If the MAD requirement is 
altered or eliminated as discussed below, we seek comment on how that 
change may interrelate with any proposed treatment of satellite 
services.
2. Urban Area
    34. Section 254(h)(1)(A) of the Act directs us to provide support 
for ``rates that are reasonably comparable to rates charged for similar 
services in urban areas in that State.'' Under our rules, as described, 
the urban rate is based on the rate for similar services in the 
``nearest large city,'' defined as ``the city located in the eligible 
health care provider's state, with a population of at least 50,000, 
that is nearest to the healthcare provider's location, measuring point 
to point, from the health care provider's location to the point on that 
city's jurisdictional boundary closest to the health care provider's 
location. In the Universal Service Order, the Commission chose to base 
the urban rate on the rate in the nearest city of at least 50,000 in 
the belief that such cities ``are large enough that telecommunications 
rates based on costs would likely reflect the economies of scale and 
scope that can reduce such rates in densely populated urban areas.'' In 
addition, the Commission stated that because the telecommunications 
services a rural health care provider would use would likely involve 
transmission facilities linked to the nearest large city, using that 
location would provide more accurate and realistic comparable rates 
than using rates from more distant cities. The Commission also noted 
that while every state has a city of at least 50,000, not every state 
has larger cities.
    35. Our experience with the rural health care universal service 
support mechanism leads us to consider reevaluating our previous 
conclusion. A number of applicants have suggested that the last several 
years of experience have demonstrated that rates and services available 
in small cities do not yet fully reflect the economies of scale and 
scope that are found in the most densely populated areas of the state. 
There is evidence that suggests the largest cities in a state have 
significantly lower rates and more service options than the city of at 
least 50,000 nearest the rural health care provider. In addition, our 
previous assumption that services used by rural health care providers 
would likely involve transmission links to the nearest city appears not 
always to be the case. There is increasing evidence that many rural 
health care providers choose to link their telemedicine networks to 
pockets of expertise located in larger cities in the state. We seek 
comment on whether to alter our rules to allow comparison with rates in 
any city in a state.
    36. We recognize allowing a comparison of urban rates with any city 
in a state may result in certain rural health care providers receiving 
lower rates, by virtue of this support mechanism, than those obtained 
in the nearest city of 50,000 or more. The Commission previously 
expressed concerns about such an outcome in the context of relying on 
average urban rates in a state. We also note that this change would 
obviate the Commission's previous concern that some states may not have 
cities much larger than 50,000, because the comparison would be based 
on any city in the state. We seek comment on whether this proposal is 
the best way to effectuate the statutory mandate. We also seek comment 
on the potential effect this change may have on demand for support 
under the rural health care mechanism.
    37. We further seek comment on any other changes involving the 
calculation of the urban and rural rate, in order to fulfill the goals 
and mandate of section 254.
3. Maximum Allowable Distance
    38. We seek comment on eliminating or revising the MAD restriction 
in our rules, which limits support for rural health care providers to 
distances less than the ``distance between the eligible health care 
provider's site and the farthest point from that site that is on the 
jurisdictional boundary of the nearest [city of at least 50,000].'' In 
establishing the MAD, the Commission determined that providing 
discounts only for distance-based charges for the distance between a 
rural health care provider and the nearest city of 50,000 or more was 
sufficient to connect the health care provider to adequate services, 
and would protect against health care providers requesting telemedicine 
connections to ``far flung areas in search of the real or imagined 
``expert'' in the field.'' However, our experience to date suggests 
that limiting rural heath care providers to discounts for connection to 
the nearest city of 50,000 or more may not be adequate for purposes of 
creating a comprehensive telemedicine network. We therefore seek 
comment on changes that would better effectuate the intent of the 
statute.
    39. Removing the MAD would offer rural health care providers 
greater flexibility in developing appropriate networks, which should 
improve the delivery of health care in rural areas. There are several 
legitimate reasons providers would seek connections to places farther 
away than the nearest city of 50,000. For example, in the case of large 
telemedicine networks, the circuit from a rural site may run to another 
rural site to link all sites in a consortium together. Similarly, a 
carrier may lay cable in a more complex route, but because the 
Administrator calculates the MAD on the basis of the shortest distance 
between points, a rural health care provider may lose discounts if the 
circuit exceeds the MAD. Rural health care providers may wish to 
connect with a health care facility with the appropriate expertise or 
other pockets of expertise located beyond the MAD.
    40. Eliminating the MAD should reduce the administrative costs 
because calculating the MAD requires labor-intensive and time-consuming 
efforts on the part of the Administrator. The RHCD estimates that for 
each application seeking support for telecommunications

[[Page 34659]]

service over a distance that exceeds the MAD, the Administrator must 
devote an average of three additional hours to the application in order 
to ascertain the proportion of the service for which the applicant is 
eligible. This process diverts important resources available for all 
applicants, which may not be cost-effective administratively. It also 
adds to the complexity of the rural health care universal health care 
mechanism for applicants. Eliminating the MAD restriction would 
therefore simplify the application process while reducing 
administrative overhead, thereby freeing up funds for discounts for 
other applicants. However, we recognize that eliminating the MAD may 
result in substantially increased demand if more entities seek support 
under the mechanism. We seek comment on whether to eliminate the MAD, 
including the benefits and impact on demand for support under the 
mechanism, and whether and how we may need to constrain increased costs 
resulting from changes to the MAD requirement.
    41. We seek comment on alternative proposals to address this issue, 
including whether, in lieu of eliminating the restriction, we should 
modify it or adopt another limitation, such as the greatest distance 
between the location of the rural health care provider and the furthest 
point on the border of the same state or the distance between the 
health care provider and the nearest point of so-called tertiary care. 
If we elect to provide discounts to the nearest point of tertiary care, 
what standard would be used to define this point, and should we codify 
that in our regulations? In the alternative, would the creation of a 
state-by-state matrix listing the longest diameter in each state as the 
MAD for such state be feasible? We seek comment on whether all of these 
proposed approaches are consistent with the statutory scheme. Further, 
if we were to adopt any of the stated proposals, we seek comment on 
whether it makes sense to retain our rule that support not be provided 
on telecommunications service over a distance shorter than the Standard 
Urban Distance (SUD).
4. Insular Areas
    42. Section 254(h)(1)(A) specifies that ``telecommunications 
carriers shall . . . provide telecommunications services which are 
necessary for the provision of health care services in a State . . . to 
any public or nonprofit health care provider that serves persons who 
reside in rural areas in that State. at rates that are reasonably 
comparable to rates charged for similar services in urban areas in that 
State.'' Consistent with this statutory language, the Commission's 
rules determine the ``urban rate'' for purposes of determining the 
amount of support by looking to the rates charged customers for a 
similar service in the nearest large city in the State. In the 
Universal Service Order, the Commission noted that using urban rates 
within a State as the benchmark for reasonable rates may be ill-suited 
to certain insular areas that are relatively rural all over, including 
areas of the Pacific Islands and the U.S. Virgin Islands. Following up 
on this concern, the Commission sought comment in the Unserved and 
Underserved Areas Further Notice, 64 FR 52738, September 30, 1999, on 
whether the calculation of support should be modified for these areas, 
and invited commenters to propose specific revisions.
    43. In response, certain commenters suggested that the Commission 
had authority under section 254(h)(2)(A) to designate an out-of-state 
urban locale as the relevant urban benchmark for insular areas such as 
Guam and the Northern Mariana Islands. We seek comment on whether 
section 254(h)(2)(A) gives us the authority to allow rural health care 
providers to receive discounts by comparing the rural rate to the 
nearest large city even outside of their ``State.'' We also seek 
comment on any alternative means for addressing the special problems of 
insular areas, consistent with section 254.

D. Other Changes to the Rural Health Care Support Mechanism

1. Streamlining the Application Process
    44. We seek comment on ways to streamline the application process 
to make it more accessible to rural health care providers. The 
Commission has recognized in the past that the application process, and 
the complicated nature of the forms involved, may sometimes be a 
barrier to applicants. We understand that this process may still 
provide unnecessary barriers to applicants. We believe the proposals in 
this NPRM could further simplify the operation of the rural health care 
universal service support mechanism. We seek comment in general on 
additional ways that the process of submitting, reviewing, and 
approving applications may be streamlined or otherwise improved to 
ensure timely, fair, and efficient decision-making.
    45. While we welcome comments on all aspects of the application 
process, we specifically seek comment on the following areas. We seek 
comment on any additional ways that the calculation of the urban-rural 
differential on the forms may be made easier. We further seek comment 
on ways to eliminate delays and lack of response from eligible 
telecommunications carriers in supplying the information necessary for 
rural health care providers to complete the process.
    46. We also seek comment on ways to ensure that rural health care 
providers are apprised of changes in deadlines for application filings 
and other material changes in the application and appeals process.
2. Pro-Rata Reductions If Annual Cap Exceeded
    47. We seek comment on whether to modify our current rules 
governing the allocation of funds under the rural health care universal 
service support mechanism if demand exceeds the annual cap. The annual 
cap on universal service support for health care providers is currently 
$400 million per funding year. Under our rules, if the total demand for 
support in a year exceeds the cap, the Administrator shall divide the 
total annual support available by the total amount requested in that 
year, then multiply that result, which is the pro-rata factor, by the 
amount requested by each applicant, in order to determine the amount 
each applicant shall receive.
    48. Discounts amounts requested under the rural health care 
universal service support mechanism, to date, have never exceeded the 
annual cap. However, it is possible that changes adopted in response to 
this NPRM could increase the level of discounts requested in a year 
such that discounts requested may, at some point in the future, exceed 
the cap. We therefore seek comment on whether this pro-rata 
distribution of funds for requested discounts is the most effective and 
equitable means of distributing limited funds in accordance with the 
goals and purposes of the statute, or whether an alternative approach 
should be adopted.
3. Preventing Waste, Fraud, and Abuse
a. Competitive Bidding
    49. We seek comment on the effectiveness of the rural health care 
universal service support mechanism's competitive bidding rules. Under 
current rules, applicants are required to participate in a competitive 
bidding process pursuant to Commission regulations and any additional 
applicable state, local, or other procurement requirements. Applicants 
are required to submit to the Administrator an FCC Form 465, in

[[Page 34660]]

which it solicits bids for services from telecommunications carriers, 
and makes various certifications relating to eligibility under the 
rural health care universal service support mechanism. The 
Administrator then posts the form on its website, notifying 
telecommunications carriers that may wish to bid for an applicant's 
services about the rural health care provider's request. An applicant's 
FCC Form 465 must be posted on the Administrator's website for at least 
28 days before the applicant may enter into a contract for services 
with a telecommunications carrier, in order to allow sufficient time 
for different carriers to bid on the requested services.
    50. After selecting a telecommunications carrier, the applicant 
must certify to the Administrator that it has selected the most cost-
effective method of providing the requested services, defined as ``the 
method that costs the least after consideration of the features, 
quality of transmission, reliability, and other factors that the health 
care provider deems relevant to choosing a method of providing the 
required health care services.'' Applicants must also submit to the 
Administrator paper copies of the responses or bids received.
    51. The purpose of the posting requirement for the FCC Form 465 is 
to provide a rapid and easy mechanism for notifying all potential 
bidders for services of rural health care providers' requests, in order 
to encourage competition among bids and enable applicants to secure the 
most cost-effective services. However, to the extent that some rural 
areas may have only one service provider, the requirement may result in 
needless delays for applicants in securing support. We seek comment on 
whether the requirement can and should be waived in certain 
circumstances (e.g., when applications are submitted by small 
entities), whether such a change is necessary or prudent, and how we 
may implement it with minimal administrative effort and expense, while 
fulfilling our obligations to reduce waste, fraud, and abuse and 
ensuring that universal service support is used ``wisely and 
efficiently.''
b. Ensuring the Selection of Cost-Effective Services
    52. We seek comment on whether there currently are adequate 
measures to ensure that rural health care providers buy the most cost-
effective services. As described, current rules require applicants to 
select the most cost-effective method of providing the requested 
services. However, there are no restrictions on the type of service 
offerings a rural health care provider may select. We seek comment on 
how best to ensure that applicants choose the most cost-effective 
services under the rural health care universal service support 
mechanism. We also seek comment on how such a change in our rules, if 
adopted, could be implemented most effectively and equitably, 
preventing waste and abuse without imposing undue burdens on rural 
health care providers. In addition, we seek comment on whether we 
should implement changes to encourage applicants to use lowest cost 
technology available, regardless of whether that technology involves 
wireline, coaxial cable, fiber, terrestrial wireless, satellite, or 
some other technology. If so, we seek comment on how those changes 
should be implemented.
c. Encouraging Partnerships With Clinics at Schools and Libraries
    53. We seek comment on ways in which the rules or policies of the 
rural health care universal service support mechanism might be altered 
to better encourage rural health providers to pool resources with other 
entities in order to limit costs for themselves and thereby utilize 
support more efficiently. Some parties have questioned the rural health 
care universal service support mechanism for denying school-based 
clinics support on the grounds that such clinics are only eligible for 
discounts under the schools and libraries universal service support 
mechanism, while the schools and libraries mechanism denies the clinics 
support for the reason that the clinics are only eligible under the 
rural health care universal service support mechanism. We seek comment 
on the extent to which such clinics are or should be eligible under 
either mechanism, and on whether our rules and policies may encourage 
rural health care providers to partner with clinics at schools and 
libraries in rural locations. We further seek comment on other ways in 
which the Commission might promote similar cost-sharing in order to 
maximize the appropriate and beneficial use of universal service funds 
while minimizing waste and abuse.
d. Other Measures to Prevent Waste, Fraud, and Abuse
    54. In keeping with our goal of preventing waste, fraud, and abuse, 
we seek comment on the effectiveness of our current rules regarding 
audits, and other procedures to ensure the appropriate use of funds 
available under the rural health care universal service support 
mechanism. Rural health care providers that receive support are 
currently subject to record-keeping and record production requirements, 
and random audits to ensure compliance. We seek comment on the 
effectiveness of these measures, and whether additional record-keeping 
or audit requirements are necessary. We further seek comment on any 
other rules that would help to combat potential waste, fraud, and abuse 
with respect to the rural health care universal service support 
mechanism.
4. Further Comments on Issues of Concern
    55. In initiating this inquiry, we seek comments on various 
alternatives to enhance our existing rural health care universal 
service support mechanism. We are cognizant that these proposals 
contain measures that may significantly spur demand for advanced 
telecommunications and information services as well as implement 
critical cost savings measures designed to improve the efficiency and 
effectiveness of the mechanism. Given these numerous proposals, we ask 
that interested parties, to the extent possible, separately identify in 
their comments what, if any, potential effect individual proposal may 
have on demand for rural health care support. We note that any such 
increase in demand for rural health care support will be constrained by 
the operation of the $400 million rural health care support cap, and 
thus we seek input from commenters on any assistance they may provide 
in identifying which specific proposals will be most beneficial to 
ensuring access to advanced telecommunications and information services 
for all eligible rural health care providers.

E. Effect on Demand for Support

    56. Lastly, we seek comment on the effect these proposals may have 
on demand for rural health care support. We note that any such increase 
in demand for rural health care support will be constrained by the 
operation of the $400 million rural health care support cap.

III. Procedural Matters

A. Initial Paperwork Reduction Analysis

    57. This NPRM contains a proposed information collection. As part 
of a continuing effort to reduce paperwork burdens, we invite the 
general public and the Office of Management and Budget (OMB) to take 
this opportunity to comment on the information collections contained in 
this NPRM, as required by the Paperwork Reduction Act of 1995, Public 
Law 104-13. Public

[[Page 34661]]

and agency comments are due at the same time as other comments on this 
NPRM; OMB comments are due July 15, 2002. Comments should address: (a) 
Whether the proposed collection of information is necessary for the 
proper performance of the functions of the Commission, including 
whether the information shall have practical utility; (b) the accuracy 
of the Commission's burden estimates; (c) ways to enhance the quality, 
utility, and clarity of the information collected; and (d) ways to 
minimize the burden of the collection of information on the 
respondents, including the use of automated collection techniques or 
other forms of information technology.

B. Initial Regulatory Flexibility Analysis

    58. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), the Commission has prepared this present Initial 
Regulatory Flexibility Analysis (IRFA) of the possible significant 
economic impact on a substantial number of small entities by the 
policies and rules proposed in this NPRM. 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 
provided. The Commission will send a copy of the NPRM, including this 
IRFA, to the Chief Counsel for Advocacy of the Small Business 
Administration (SBA). In addition, the NPRM and IRFA (or summaries 
thereof) will be published in the Federal Register.
1. Need for, and Objectives of, the Proposed Rules
    59. The Commission is required by section 254 of the Act to 
promulgate rules to implement the universal service provisions of 
section 254. On May 8, 1997, the Commission adopted rules that reformed 
its system of universal service support mechanisms so that universal 
service is preserved and advanced as markets move toward competition. 
Among other things, the Commission adopted a mechanism to provide 
discounted telecommunications services to public or non-profit health 
care providers that serve persons in rural areas. Over the last few 
years, important changes have occurred affecting the rural health 
universal service support mechanism. As discussed, several factors 
prompt us to review anew the rural health care universal service 
support mechanism, including the underutilization of the mechanism, 
changes in telecommunications technology and its use by the medical 
community, and the need to develop a broader and more fully integrated 
network of health care providers across the nation.
    60. In this NPRM, we seek comment on whether to: clarify how we 
should treat eligible entities that also perform functions that are 
outside the statutory definition of ``health care provider; provide 
support for Internet access; and modify the calculation of discounted 
services, including the calculation of urban and rural rates. We also 
seek comment on other administrative changes to the rural health care 
mechanism, including whether and how to streamline the application 
process; allocate funds if demand exceeds the annual cap; modify the 
current competitive bidding rules; encourage partnerships with clinics 
at schools and libraries. We also seek comment on other measures to 
prevent waste, fraud, and abuse; and any other issues concerning the 
structure and operation of the rural health care universal service 
support mechanism on which commenters wish to make recommendations. We 
seek further comment on these proposals and how such changes could be 
implemented. We also seek comment on the effect that any such changes 
may have on demand for support under the universal service mechanism as 
well as data to support any comments made.
2. Legal Basis
    61. The legal basis for this NPRM is contained in sections 151 
through 154, and 254 of the Communications Act of 1934, as amended.
3. Description and Estimate of the Number of Small Entities To Which 
Rules Will Apply
    62. 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, if adopted. The RFA generally defines 
the term ``small entity'' as having the same meaning as the terms 
``small business,'' ``small organization,'' and ``small governmental 
jurisdiction.'' In addition, the term ``small business'' has the same 
meaning as the term ``small business concern'' under the Small Business 
Act. 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 Small Business 
Administration (SBA).  
    63. A small organization is generally ``any not-for-profit 
enterprise which is independently owned and operated and is not 
dominant in its field.'' Nationwide, as of 1992, there were 
approximately 275,801 small organizations. The term ``small 
governmental jurisdiction'' is defined as ``governments of cities, 
counties, towns, townships, villages, school districts, or special 
districts, with a population of less than fifty thousand.'' As of 1997, 
there were approximately 87,453 government jurisdictions in the United 
States. This number includes 39,044 counties, municipal governments, 
and townships, of which 27,546 have populations of fewer than 50,000 
and 11,498 counties, municipal governments, and townships have 
populations of 50,000 or more. Thus, we estimate that the number of 
small government jurisdictions must be 75,955 or fewer. Small entities 
potentially affected by the proposals herein include small rural health 
care providers, small local health departments and agencies, and small 
eligible service providers offering discounted services to rural health 
care providers, including telecommunications carriers and ISPs.
a. Rural Health Care Providers
    64. Section 254(h)(5)(B) of the Act defines the term ``health care 
provider'' and sets forth seven categories of health care providers 
eligible to receive universal service support. Although SBA has not 
developed a specific size category for small, rural health care 
providers, recent data indicate that there are a total of 8,297 health 
care providers, consisting of: (1) 625 ``post-secondary educational 
institutions offering health care instruction, teaching hospitals, and 
medical schools''; (2) 866 ``community health centers or health centers 
providing health care to migrants''; (3) 1633 ``local health 
departments or agencies''; (4) 950 ``community mental health centers''; 
(5) 1951 ``not-for-profit hospitals''; and (6) 2,272 ``rural health 
clinics.'' We have no additional data specifying the numbers of these 
health care providers that are small entities. Consequently, using 
those numbers, we estimate that there are 8,297 or fewer small health 
care providers potentially affected by the actions proposed in this 
NPRM.
    65. As noted, non-profit businesses and small governmental units 
are considered ``small entities'' within the RFA. In addition, we note 
that census categories and associated generic SBA small business size 
categories provide the following descriptions of small entities. The 
broad category of Ambulatory Health Care Services consists of further 
categories and the following SBA small business size standards. The 
categories of providers with annual receipts of $6 million or less 
consists of: Offices of Dentists;

[[Page 34662]]

Offices of Chiropractors; Offices of Optometrists; Offices of Mental 
Health Practitioners (except Physicians); Offices of Physical, 
Occupational and Speech Therapists and Audiologists; Offices of 
Podiatrists; Offices of All Other Miscellaneous Health Practitioners; 
and Ambulance Services. The category of Ambulatory Health Care Services 
providers with $8.5 million or less in annual receipts consists of: 
Offices of Physicians; Family Planning Centers; Outpatient Mental 
Health and Substance Abuse Centers; Health Maintenance Organization 
Medical Centers; Freestanding Ambulatory Surgical and Emergency 
Centers; All Other Outpatient Care Centers, Blood and Organ Banks; and 
All Other Miscellaneous Ambulatory Health Care Services. The category 
of Ambulatory Health Care Services providers with $11.5 million or less 
in annual receipts consists of: Medical Laboratories; Diagnostic 
Imaging Centers; and Home Health Care Services. The category of 
Ambulatory Health Care Services providers with $29 million or less in 
annual receipts consists of Kidney Dialysis Centers. For all of these 
Ambulatory Health Care Service Providers, census data indicate that 
there is a combined total of 345,476 firms that operated in 1997. Of 
these, 339,911 had receipts for that year of less than $5 million. In 
addition, an additional 3414 firms had annual receipts of $5 million to 
$9.99 million; and additional 1475 firms had receipts of $10 million to 
$24.99 million; and an additional 401 had receipts of $25 million to 
$49.99 million. We therefore estimate that virtually all Ambulatory 
Health Care Services providers are small, given SBA's size categories. 
In addition, we have no data specifying the numbers of these health 
care providers that are rural and meet other criteria of the Act.
    66. The broad category of Hospitals consists of the following 
categories and the following small business providers with annual 
receipts of $29 million or less: General Medical and Surgical 
Hospitals, Psychiatric and Substance Abuse Hospitals; and Specialty 
Hospitals. For all of these health care providers, census data indicate 
that there is a combined total of 330 firms that operated in 1997, of 
which 237 or fewer had revenues of less than $25 million. An additional 
45 firms had annual receipts of $25 million to $49.99 million. We 
therefore estimate that most Hospitals are small, given SBA's size 
categories. In addition, we have no data specifying the numbers of 
these health care providers that are rural and meet other criteria of 
the Act.
    67. The broad category of Nursing and Residential Care Facilities 
consists of the following categories and the following small business 
size standards. The category of Nursing and Residential Care Facilities 
with annual receipts of $6 million or less consists of: Residential 
Mental Health and Substance Abuse Facilities; Homes for the Elderly; 
and Other Residential Care Facilities. The category of Nursing and 
Residential Care Facilities with annual receipts of $8.5 million or 
less consists of Residential Mental Retardation Facilities. The 
category of Nursing and Residential Care Facilities with annual 
receipts of less than $11.5 million consists of: Nursing Care 
Facilities; and Continuing Care Retirement Communities. For all of 
these health care providers, census data indicate that there is a 
combined total of 18,011 firms that operated in 1997. Of these, 16,165 
or fewer firms had annual receipts of below $5 million. In addition, 
1205 firms had annual receipts of $5 million to $9.99 million, and 450 
firms had receipts of $10 million to $24.99 million. We therefore 
estimate that a great majority of Nursing and Residential Care 
Facilities are small, given SBA's size categories. In addition, we have 
no data specifying the numbers of these health care providers that are 
rural and meet other criteria of the Act.
    68. The broad category of Social Assistance consists of the 
category of Emergency and Other Relief Services and small business size 
standard of annual receipts of $6 million or less. For all of these 
health care providers, census data indicate that there is a combined 
total of 37,778 firms that operated in 1997. Of these, 37,649 or fewer 
firms had annual receipts of below $5 million. An additional 73 firms 
had annual receipts of $5 million to $9.99 million. We therefore 
estimate that virtually all Social Assistance providers are small, 
given SBA's size categories. In addition, we have no data specifying 
the numbers of these health care providers that are rural and meet 
other criteria of the Act.
b. Providers of Telecommunications and Other Services
    69. We have included small incumbent local exchange carriers in 
this present RFA analysis. As noted, 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.'' 
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 any such dominance is not ``national'' in scope. 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.
    70. Total Number of Telephone Companies Affected. The United States 
Bureau of the Census (the ``Census Bureau'') reports that, at the end 
of 1997, there were 6,239 firms engaged in providing telephone 
services, as defined therein. This number contains a variety of 
different categories of carriers, including local exchange carriers, 
interexchange carriers, competitive access providers, cellular 
carriers, mobile service carriers, operator service providers, pay 
telephone operators, PCS providers, covered SMR providers, and 
resellers. It seems certain that some of those 6,239 telephone service 
firms may not qualify as small entities because they are not 
``independently owned and operated.'' For example, a PCS provider that 
is affiliated with an interexchange carrier having more than 1,500 
employees would not meet the definition of a small business. It seems 
reasonable to conclude, therefore, that 6,239 or fewer telephone 
service firms are small entity telephone service firms that may be 
affected by the decisions and rules adopted in this NPRM.
    71. Local Exchange Carriers, Interexchange Carriers, Competitive 
Access Providers, Operator Service Providers, Payphone Providers, and 
Resellers. Neither the Commission nor SBA has developed a definition 
particular to small local exchange carriers (LECs), interexchange 
carriers (IXCs), competitive access providers (CAPs), operator service 
providers (OSPs), payphone providers or resellers. The closest 
applicable definition for these carrier-types under SBA rules is for 
telephone communications companies other than radiotelephone (wireless) 
companies. The most reliable source of information regarding the number 
of these carriers nationwide of which we are aware appears to be the 
data that we collect annually on the Form 499-A. According to our most 
recent data, there are 1,335 incumbent LECs, 349 CAPs, 204 IXCs, 21 
OSPs, 758 payphone providers and 454 resellers. Although it seems 
certain that some of these carriers are not independently owned and 
operated, or have more than 1,500 employees, we are unable at this time 
to estimate with greater precision the number of these carriers that 
would

[[Page 34663]]

qualify as small business concerns under SBA's definition. 
Consequently, we estimate that there are fewer than 1,335 incumbent 
LECs, 349 CAPs, 204 IXCs, 21 OSPs, 758 payphone providers, and 541 
resellers that may be affected by the decisions and rules adopted in 
this NPRM.
    72. Internet Service Providers. Under the new NAICS codes, SBA has 
developed a small business size standard for ``On-line Information 
Services,'' NAICS Code 514191. According to SBA regulations, a small 
business under this category is one having annual receipts of $21 
million or less. According to SBA's most recent data, there are a total 
of 2,829 firms with annual receipts of $9,999,999 or less, and an 
additional 111 firms with annual receipts of $10,000,000 or more. Thus, 
the number of On-line Information Services firms that are small under 
the SBA's $21 million size standard is between 2,829 and 2,940. 
Further, some of these Internet Service Providers (ISPs) might not be 
independently owned and operated. Consequently, we estimate that there 
are fewer than 2,940 small entity ISPs that may be affected by the 
decisions and rules of the present action.
    73. Satellite Service Carriers. The SBA has developed a definition 
for small businesses within the category of Satellite 
Telecommunications. According to SBA regulations, a small business 
under the category of Satellite communications is one having annual 
receipts of $12.5 million or less. According to SBA's most recent data, 
there are a total of 371 firms with annual receipts of $9,999,999 or 
less, and an additional 69 firms with annual receipts of $10,000,000 or 
more. Thus, the number of Satellite Telecommunications firms that are 
small under the SBA's $12 million size standard is between 371 and 440. 
Further, some of these Satellite Service Carriers might not be 
independently owned and operated. Consequently, we estimate that there 
are fewer than 440 small entity ISPs that may be affected by the 
decisions and rules of the present action.
    74. Wireless Service Providers. The SBA has developed a definition 
for small businesses within the two separate categories of Cellular and 
Other Wireless Telecommunications or Paging. Under that SBA definition, 
such a business is small if it has 1,500 or fewer employees. According 
to the Commission's most recent Telephone Trends Report data, 1,495 
companies reported that they were engaged in the provision of wireless 
service. Of these 1,495 companies, 989 reported that they have 1,500 or 
fewer employees and 506 reported that, alone or in combination with 
affiliates, they have more than 1,500 employees. We do not have data 
specifying the number of these carriers that are not independently 
owned and operated, and thus are unable at this time to estimate with 
greater precision the number of wireless service providers that would 
qualify as small business concerns under the SBA's definition. 
Consequently, we estimate that there are 989 or fewer small wireless 
service providers that may be affected by the rules.
    75. Cable Systems. The Commission has developed, with SBA's 
approval, its own definition of small cable system operators. Under the 
Commission's rules, a ``small cable company'' is one serving fewer than 
400,000 subscribers nationwide. Based on our most recent information, 
we estimate that there were 1,439 cable operators that qualified as 
small cable companies at the end of 1995. Since then, some of those 
companies may have grown to serve over 400,000 subscribers, and others 
may have been involved in transactions that caused them to be combined 
with other cable operators. Consequently, we estimate that there are 
fewer than 1,439 small entity cable system operators that may be 
affected by the proposals.
    76. The Act also contains a definition of a small cable system 
operator, which is ``a cable operator that, directly or through an 
affiliate, serves in the aggregate fewer than 1% of all subscribers in 
the United States and is not affiliated with any entity or entities 
whose gross annual revenue in the aggregate exceeds $250,000,000.'' The 
Commission has determined that there are 67,700,000 subscribers in the 
United States. Therefore, we found that an operator serving fewer than 
677,000 subscribers shall be deemed a small operator, if its annual 
revenues, when combined with the total annual revenues of all of its 
affiliates, do not exceed $250 million in the aggregate. Based on 
available data, we find that the number of cable operators serving 
677,000 subscribers or less totals approximately 1,450. Although it 
seems certain that some of these cable system operators are affiliated 
with entities whose gross annual revenues exceed $250,000,000, we are 
unable at this time to estimate with greater precision the number of 
cable system operators that would qualify as small cable operators 
under the definition in the Act.
4. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements
    77. The NPRM seeks comment on changes that could modify the 
reporting and recordkeeping requirements imposed on entities covered by 
the universal service support mechanism for rural health care 
providers. Specifically, the NPRM proposes that the application process 
for universal service support for rural health care providers be 
streamlined. The NPRM, however, does not contain any concrete proposals 
for streamlining, but rather seeks comment on ways that the process of 
reviewing, submitting and approving applications can be improved and 
streamlined. This NPRM also asks for general comment on measures that 
could be taken to reduce fraud, waste, and abuse with respect to the 
rural health care universal service support mechanism, particularly 
with regards to competitive bidding, measures for ensuring the 
selection of cost-effective services, and school-library partnerships, 
but again there are no specific proposals or compliance requirements.
    78. In this NPRM, we also seek comment on whether it would be 
appropriate to prorate services for rural health care providers that 
provide other services. A change in this reporting requirement 
potentially could require the use of professional skills, including 
legal and accounting expertise. Without more data, however, we cannot 
accurately estimate the cost of compliance by small entities.
5. Steps Taken To Minimize Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered
    79. The RFA requires an agency to describe any significant 
alternatives that it has considered in reaching its proposed approach 
impacting small business, which may include the following four 
alternatives (among others): (1) The establishment of differing 
compliance and 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 part thereof, for small entities.
    80. In this NPRM, we make a number of proposals that could have an 
economic impact on small entities that participate in the universal 
service support mechanism for rural health care

[[Page 34664]]

providers. Specifically, we seek comment on: (1) Allowing discounts for 
Internet access by eligible rural health care providers; (2) expanding 
the number of entities eligible for discounts by changing the 
definition of ``urban area'' and the definition of eligible entities; 
and (3) other proposals that could change how those discounts are 
calculated. If adopted, these proposals could change the size of the 
overall pool of eligible applicants for universal service support for 
rural health care providers, as well as affect the amount of discounts 
that eligible entities may receive. In seeking to minimize the burdens 
imposed on small entities where doing so does not compromise the goals 
of the universal service mechanism, we have invited comment on how 
these proposals might be made less burdensome for small entities. We 
again invite commenters to discuss the benefits of such changes on 
small entities and whether these benefits are outweighed by resulting 
costs to rural health care providers that might also be small entities.
    81. We have also sought comment on how to address financial support 
of rural health care providers if demand exceeds the annual cap on 
universal support. Rural health care providers that received discounts 
in the past may be unable to obtain such support in the future should 
the demand increase significantly due to changes in eligibility and how 
discounts are calculated. As current demand has not exceeded the annual 
cap, however, we are unable to determine the net economic impact of 
changes to the current system to small entities as a whole. We 
therefore request that commenters, in proposing possible alterations to 
our proposed rules, discuss the economic impact that those changes will 
have on small entities.
6. Federal Rules That May Duplicate, Overlap, or Conflict With the 
Proposed Rules
    82. None.

C. Comment Due Dates and Filing Procedures

    83. We invite comment on the issues and questions set forth in the 
Notice of Proposed Rulemaking, Paperwork Reduction Analysis, and 
Initial Regulatory Flexibility Analysis contained herein. Pursuant to 
Secs. 1.415 and 1.419 of the Commission's rules, interested parties may 
file comments on or before July 1, 2002, and reply comment on or before 
July 29, 2002. Comments may be filed using the Commission's Electronic 
Comment Filing System (ECFS) or by filing paper copies. See Electronic 
Filing of Documents in Rulemaking Proceedings, 63 FR 24121, May 1, 
1998.
    84. Comments filed through the ECFS can be sent as an electronic 
file via the Internet to http://www.fcc.gov/e-file/ecfs.html>. 
Generally, only one copy of an electronic submission must be filed. If 
multiple docket or rulemaking numbers appear in the caption of this 
proceeding, however, commenters must transmit one electronic copy of 
the comments to each docket or rulemaking number referenced in the 
caption. In completing the transmittal screen, commenters should 
include their full name, Postal Service mailing address, and the 
applicable docket or rulemaking number. Parties may also submit 
electronic comments by Internet e-mail. To receive filing instructions 
for e-mail comments, commenters should send an e-mail to ecfs@fcc.gov, 
and should include the following words in the body of the message, 
``get form your e-mail address>.'' A sample form and directions will be 
sent in reply. Or you may obtain a copy of the ASCII Electronic 
Transmittal From (FORM-ET) at www.fcc.gov/e-file/email.html>.
    85. Parties who choose to file by paper must file an original and 
four copies of each filing. Filings can be sent by hand or messenger 
delivery, by commercial overnight courier, or by first-class or 
overnight U.S. Postal Service mail (although we continue to experience 
delays in receiving U.S. Postal Service mail). The Commission's 
contractor, Vistronix, Inc., will receive hand-delivered or messenger-
delivered paper filings for the Commission's Secretary at a new 
location in downtown Washington, DC. The address is 236 Massachusetts 
Avenue, NE, Suite 110, Washington, DC 20002. The filing hours at this 
location will be 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.
    86. 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. U.S. Postal Service first-class mail, 
Express Mail, and Priority Mail should be addressed to 445 12th Street, 
SW, Washington, DC 20554. All filings must be addressed to the 
Commission's Secretary, Office of the Secretary, Federal Communications 
Commission.

------------------------------------------------------------------------
 If you are sending this type of document    It should be addressed for
       or using this delivery method                 delivery to
------------------------------------------------------------------------
Hand-delivered or messenger-delivered       236 Massachusetts Avenue,
 paper filings for the Commission's          NE, Suite 110, Washington,
 Secretary.                                  DC 20002 (8:00 to 7:00
                                             p.m.)
Other messenger-delivered documents,        9300 East Hampton Drive,
 including documents sent by overnight       Capitol Heights, MD 20743
 mail (other than United States Postal       (8:00 a.m. to 5:30 p.m.)
 Service Express Mail and Priority Mail).
United States Postal Service first-class    445 12th Street, SW,
 mail, Express Mail, and Priority Mail.      Washington, DC 20554.
------------------------------------------------------------------------

    87. Parties who choose to file by paper should also submit their 
comments on diskette. These diskettes, plus one paper copy, should be 
submitted to: Sheryl Todd, Telecommunications Access Policy Division, 
Wireline Competition Bureau, at the filing window at 236 Massachusetts 
Avenue, NE, Suite 110, Washington, DC 20002. Such a submission should 
be on a 3.5-inch diskette formatted in an IBM compatible format using 
Word or compatible software. The diskette should be accompanied by a 
cover letter and should be submitted in ``read only'' mode. The 
diskette should be clearly labeled with the commenter's name, 
proceeding (including the docket number, in this case WC Docket No. 02-
60, type of pleading (comment or reply comment), date of submission, 
and the name of the electronic file on the diskette. The label should 
also include the following phrase ``Disk Copy--Not an Original.'' Each 
diskette should contain only one party's pleadings, preferably in a 
single electronic file. In addition, commenters must send diskette 
copies to the Commission's copy contractor, Qualex International, 
Portals II, 445 12st Street, SW., Room CYB402, Washington, DC 20554 
(see alternative addresses for delivery by hand or messenger).
    88. Regardless of whether parties choose to file electronically or 
by paper, parties should also file one copy of any documents filed in 
this docket with the Commission's copy contractor, Qualex 
International, Portals II, 445 12th Street SW., CY-B402, Washington, DC 
20554 (see alternative addresses for delivery by hand or messenger) 
(telephone 202-863-2893; facsimile 202-863-2898) or via e-mail at 
qualexint@aol.com.

[[Page 34665]]

    89. Written comments by the public on the proposed information 
collections pursuant to the Paperwork Reduction Act of 1995, Public Law 
No. 104-13, are due on or before July 1, 2002. Written comments must be 
submitted by the Office of Management and Budget (OMB) on the proposed 
information collections on or before July 15, 2002. In addition to 
filing comments with the Secretary, a copy of any comments on the 
information collections contained herein should be submitted to Judith 
Boley Herman, Federal Communications Commission, Room 1-C804, 445 12th 
Street, SW., Washington, DC 20554 (see alternative addresses for 
delivery by hand or messenger), or via the Internet to jboley@fcc.gov 
and to Jeanette Thornton, OMB Desk Officer, 10236 NEOB, 725--17th 
Street, NW., Washington, DC 20503.
    90. The full text of this document is available for public 
inspection and copying during regular business hours at the FCC 
Reference Information Center, Portals II, 445 12th Street, SW, Room CY-
A257, Washington, DC, 20554. This document may also be purchased from 
the Commission's duplicating contractor, Qualex International, Portals 
II, 445 12th Street, SW, Room CY-B402, Washington, DC, 20554, telephone 
202-863-2893, facsimile 202-863-2898, or via e-mail qualexint@aol.com. 
Alternative formats (computer diskette, large print, audio cassette and 
Braille) are available to persons with disabilities by contacting Brian 
Millin at (202) 418-7426, TTY (202) 418-7365, or at bmillin@fcc.gov.

IV. Ordering Clauses

    91. It is ordered that, pursuant to the authority contained in 
sections 151 through 154, and 254 of the Communications Act of 1934, as 
amended, this Notice of Proposed Rulemaking is adopted, as described 
herein.
    92. It is further ordered that the Commission's Consumer 
Information 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.

List of Subjects in 47 CFR Part 54

    Reporting and recordkeeping requirements, Telecommunications, 
Telephone.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 02-12096 Filed 5-14-02; 8:45 am]
BILLING CODE 6712-01-P