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Proposed Rule

Federal-State Joint Board on Universal Service

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AGENCY:

Federal Communications Commission.

ACTION:

Notice of proposed rule.

SUMMARY:

In this document, the Commission seeks comment on the Recommended Decision of the Federal-State Joint Board on Universal Service (Joint Board) regarding a plan for reforming the rural universal service support mechanism submitted by the Rural Task Force.

DATES:

Comments are due on or before February 26, 2001 and reply comments are due on or before March 12, 2001. Written comments by the public on the proposed and/or modified information collections discussed in this Further Notice of Proposed Rulemaking are due on or before February 26, 2001. Written comments must be submitted by the Office of Management and Budget (OMB) on the proposed and/or modified information collections on or before March 27, 2001.

ADDRESSES:

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, commenters must submit two additional copies for each additional docket or rulemaking number. All filings must be sent to the Commission's Secretary, Magalie Roman Salas, Office of the Secretary, Federal Communications Commission, 445 12th Street, SW., Washington, DC 20554. In addition to filing comments with the Secretary, a copy of any comments on the information collection(s) contained herein should be submitted to Judy Boley, Federal Communications Commission, Room 1-C804, 445 12th Street, SW., Washington, DC 20554, or via the Internet to jboley@fcc.gov and to Edward C. Springer, OMB Desk Officer, 10236 NEOB, 725 17th Street, NW., Washington, DC 20503, or via the Internet to vhuth@omb.eop.gov. Parties should also send three paper copies of their filings to Sheryl Todd, Accounting Policy Division, Common Carrier Bureau, Federal Communications Commission, 445 Twelfth Street, SW., Room 5-B540, Washington, DC 20554. Parties who choose to file by paper should also submit their comments on diskette. These diskettes should be submitted to Sheryl Todd, Accounting Policy Division, Common Carrier Bureau, Federal Communications Commission, 445 Twelfth Street, SW., Room 5-B540, Washington, DC 20554. In addition, commenters must send diskette copies to the Commission's copy contractor, International Transcription Services, Inc., 1231 20th Street, NW., Washington, DC 20037.

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FOR FURTHER INFORMATION CONTACT:

Greg Guice, Attorney, Common Carrier Bureau, Accounting Policy Division, (202) 418-7400.

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SUPPLEMENTARY INFORMATION:

This is a summary of the Commission's Further Notice of Proposed Rulemaking in CC Docket No. 96-45 released on January 12, 2001. The full text of this document is available for public inspection during regular business hours in the FCC Reference Center, Room CY-A257, 445 Twelfth Street, SW., Washington, DC, 20554. This FNPRM 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 FPRM contains a proposed information collection. 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) contained in this NPRM, as required by the PRA, Public Law 104-13. Public and agency comments on the proposed and/or modified information collections discussed in this Notice of Start Printed Page 7868Proposed Rulemaking are due on or before February 26, 2001. Written comments must be submitted by the Office of Management and Budget (OMB) on the proposed and/or modified information collections on or before March 27, 2001.

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: None.

Title: Federal State Joint Board on Universal Service—Proposed Plan for Reforming the Rural Universal Service Support Mechanism, CC Docket No. 96-45.

Form No.: None.

Type of Review: Proposed New Collections.

Respondents: Business or other for-profit.

TitleNumber of respondentsEst. time per expenseTotal annual burden
1. Self-Certified Disaggregation Plan873.66 (40 minutes)576
2. Reporting of Working Loops at Cost-Zone Level8732 hrs1746
3. State Certification Letter513 hrs153

Total Annual Burden: 2475.

Cost to Respondents: $0.

Needs and Uses: The Rural Task Force proposes that rural carriers be given a choice of three different options for disaggregating and targeting per-line universal service support, including high-cost loop support, Long Term Support (LTS), and Local Switching Support (LSS), to wire center cost zones. Path 1 would be available to rural carriers that do not want to target high-cost support. Path 2 would be available to rural carriers that want state commission review and approval of a disaggregation plan. Path 3 would be available to rural carriers interested in self-certifying a method for disaggregating universal service support into a maximum of two cost zones per wire center. A disaggregation plan filed under Path 3 must use a rationale that is reasonably related to the cost of providing service for each cost zone within each disaggregation category (high-cost loop support, LSS, and LTS). If these proposals are adopted, rural carriers that elect to disaggregate and target per-line support would be required to report loops at the cost-zone level, as opposed to reporting loops at the study area level. We believe the burden associated with this proposed reporting requirement is appropriately balanced with the benefits reporting rural carriers would receive. The Rural Task Force also proposes extension of the section 254(e) certification process to rural carriers. Under this process, state regulatory commissions would provide the Commission with annual certifications indicating that the carriers in their states receiving federal universal service support will use the support “only for the provision, maintenance, and upgrading of facilities and services for which the support is intended.” This reporting requirement would provide states and carriers with access to federal universal service support in a way that ensures the integrity of the universal service fund. This is a nominal burden on rural carriers and is balanced against the high degree of federal universal service benefits rural carriers would receive. This proposed modification would ensure that receipt of the federal support is appropriate and being used in a manner consistent with section 254 of the Telecommunications Act of 1996. The goal of these proposals are to ensure that per-line high-cost universal service support more closely associates the cost of providing service and promotes efficient competitive entry.

Synopsis of NPRM

I. Introduction

1. In this Further Notice of Proposed Rulemaking (FNPRM), we seek comment on the Recommended Decision of the Federal-State Joint Board on Universal Service (Joint Board) regarding a plan for reforming the rural universal service support mechanism. The Joint Board sent to the Commission the Rural Task Force Recommendation as a good foundation for implementing a rural universal service plan that benefits consumers and provides a stable environment for rural carriers to invest in rural America. The Joint Board also identified specific issues for the Commission to address in implementing the Rural Task Force plan. The Joint Board's Recommended Decision, which incorporates the Rural Task Force plan as Appendix A, is attached as Appendix 1 to the FNPRM.

II. Issues for Comment

2. We seek comment on the Joint Board's conclusion that the Rural Task Force Recommendation is a good foundation for implementing a rural universal service plan for the next several years. Should we adopt the Rural Task Force plan as a means of providing stability to rural carriers over the next several years and encouraging investment in rural infrastructure? Does the Rural Task Force plan provide for universal service support that is sufficient for purposes of the Telecommunications Act of 1996? Parties should comment on the public policy implications of the Rural Task Force plan and/or particular aspects of the plan, including its potential effects on the competition and universal service goals of the 1996 Act, and whether and how it would promote consumer welfare. Parties also should address how small business entities, including small incumbent local exchange carriers and new entrants, will be affected by the Rural Task Force plan.

3. We also seek comment on specific implementation issues identified by the Joint Board, as well as any other issues related to implementation of the Rural Task Force Recommendation. First, we invite commenters to address the proposed safety valve mechanism for providing additional support to rural carriers that make meaningful post-transaction investments in acquired exchanges. How should safety valve support be distributed if the total amount of support for which rural carriers are eligible exceeds the proposed cap of five percent of the high-cost loop support fund? How should “meaningful investment” be defined for purposes of safety valve support? Should a carrier's safety valve support transfer to a different carrier as a result of a subsequent transfer of exchanges? Should safety valve support be fixed in competitive study areas in the same manner as other high-cost loop support, or would such an approach unduly dissuade investment? We invite commenters to address these and any Start Printed Page 7869other issues involved in implementing a safety valve mechanism.

4. Second, we invite commenters to address implementation of the Rural Task Force proposal to fix per-line support in competitive study areas. The Joint Board agreed with the Rural Task Force that the Commission should fix support when a competitor begins providing services in a given study area, but stated that “it is unclear how the high-cost loop fund cap would account for fixed rural carrier support.” We seek comment from interested parties, including the Rural Task Force, on the relationship of the cap on high-cost loop support to fixed per-line support in competitive study areas. We also seek comment on whether the proposed ability of incumbent LECs to adjust their fixed per-line support levels to recover costs associated with catastrophic events should be limited by the availability of support from other sources, such as insurance, Rural Utilities Service loans, and federal or state emergency management relief. Commenters are invited to address these and any other issues involved in implementing the provisions of the Rural Task Force plan for support in competitive study areas.

5. Third, we seek comment on the Rural Task Force proposal to make above-the-cap safety net additive support available in years in which the cap on high-cost loop support is triggered to rural carriers with over 14 percent growth in telecommunications plant in service. As proposed, would the safety net additive mechanism enable rural carriers to recover more than 100 percent reimbursement on their incremental loop investment? If so, how should the mechanism be modified? We invite commenters to address this and any other safety net additive implementation issues. Finally, we invite interested parties to comment on any other issues related to implementation of the Rural Task Force plan.

III. Procedural Issues

A. Ex Parte Presentations

6. This is a permit but disclose rulemaking proceeding. Ex parte presentations are permitted, except during the Sunshine Agenda period, provided that they are disclosed as provided in the Commission's rules.

B. Initial Regulatory Flexibility Analysis

7. As required by the Regulatory Flexibility Act (RFA), the Commission has prepared this Initial Regulatory Flexibility Analysis (IRFA) of the possible significant economic impact on small entities of the proposals in this FNPRM. Written public comments are requested on the IRFA. These comments must be filed in accordance with the filing deadlines, and should have a separate and distinct heading designating them as responses to the IRFA. The Commission will send a copy of the FNPRM, including this IRFA, to the Chief Counsel for Advocacy of the Small Business Administration (SBA) in accordance with the RFA. In addition, the FNPRM and IRFA (or summaries thereof) will be published in the Federal Register.

1. Need for, and Objectives of, the Proposed Rules

8. The 1996 Act requires the Commission to consult with the Joint Board in implementing section 254, which establishes a number of principles for the preservation and advancement of universal service in a competitive telecommunications environment. The Commission initiated this proceeding to consider the Recommended Decision of the Joint Board regarding a rural universal service plan developed by the Rural Task Force. The Rural Task Force plan is a proposal for the distribution of universal service support to rural carriers which is designed to be implemented immediately and to remain in place over a five-year period. The Joint Board found that the Rural Task Force sought to achieve the goals of the 1996 Act to preserve and advance universal service, facilitate competition in rural areas, and provide a predictable level of universal service support. The Joint Board stated that the Rural Task Force plan would provide rural carriers with stability for planning their investments over the next several years, while seeking to encourage competition in high-cost areas through a flexible system for disaggregating support to establish the portable per-line support amount available to all eligible telecommunications carriers. The Joint Board found that additional support under the plan is “generally designed to provide carriers serving rural areas with increased incentives to invest in new infrastructure and technologies.” In sum, the Joint Board recommended the Rural Task Force plan to the Commission as a good foundation for implementing a rural universal service plan that benefits consumers and provides a stable environment for rural carriers to invest in rural America.

2. Legal Basis

9. This rulemaking action is supported by sections 4(i), 4(j), 201, 205, 254, and 403 of the Communications Act of 1934, as amended.

3. Description and Estimate of the Number of Small Entities to Which the Notice Will Apply

10. 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 “small entity” as having the same meaning as the term “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, unless the Commission has developed one or more definitions that are appropriate to its activities. Under the Small Business Act, a “small business concern” is one that: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) meets any additional criteria established by the SBA.

11. We have included small incumbent carriers in this RFA analysis. 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 carriers are not dominant in their field of operation because any such dominance is not “national” in scope. We have therefore included small incumbent carriers in this RFA analysis, although we emphasize that this RFA action has no effect on the Commission's analyses and determinations in other, non-RFA contexts.

12. Local Exchange Carriers. Neither the Commission nor the SBA has developed a definition for small providers of local exchange services. The closest applicable definition under the SBA rules is for telephone communications companies other than radiotelephone (wireless) companies. According to the most recent Telecommunications Industry Revenue data, 1,348 incumbent carriers reported that they were engaged in the provision of local exchange services. We do not have data specifying the number of these carriers that are either dominant in their field of operations, are not independently owned and operated, or have more than 1,500 employees, and thus are unable at this time to estimate with greater precision the number of local exchange carriers that would Start Printed Page 7870qualify as small business concerns under the SBA's definition. Of the 1,348 incumbent carriers, 13 entities are price cap carriers that would not be subject to the rules, if adopted. Consequently, we estimate that fewer than 1,335 providers of local exchange service are small entities or small incumbent local exchange carriers that may be affected by the proposed Rural Task Force plan.

13. Competitive Access Providers. Neither the Commission nor the SBA has developed a definition of small entities specifically applicable to competitive access services providers (CAPs). The closest applicable definition under the SBA rules is for telephone communications companies other than except radiotelephone (wireless) companies. According to the most recent Trends in Telephone Service data, 212 CAPs/competitive local exchange carriers and 10 other local exchange carriers reported that they were engaged in the provision of competitive local exchange services. We do not have data specifying the number of these carriers that are not independently owned and operated, or have more than 1,500 employees, and thus are unable at this time to estimate with greater precision the number of CAPs that would qualify as small business concerns under the SBA's definition. Consequently, we estimate that there are less than 212 small entity CAPs and 10 other local exchange carriers that may be affected by the proposed Rural Task Force plan.

14. Cellular Licensees. Neither the Commission nor the SBA has developed a definition of small entities applicable to cellular licensees. Therefore, the applicable definition of small entity is the definition under the SBA rules applicable to radiotelephone (wireless) companies. This provides that a small entity is a radiotelephone company employing no more than 1,500 persons. According to the Bureau of the Census, only twelve radiotelephone firms from a total of 1,178 such firms which operated during 1992 had 1,000 or more employees. Therefore, even if all twelve of these firms were cellular telephone companies, nearly all cellular carriers were small businesses under the SBA's definition. In addition, we note that there are 1,758 cellular licenses; however, a cellular licensee may own several licenses. In addition, according to the most recent Telecommunications Industry Revenue data, 808 carriers reported that they were engaged in the provision of either cellular service or Personal Communications Service (PCS) services, which are placed together in the data. We do not have data specifying the number of these carriers that are not independently owned and operated or have more than 1,500 employees, and thus are unable at this time to estimate with greater precision the number of cellular service carriers that would qualify as small business concerns under the SBA's definition. Consequently, we estimate that there are fewer than 808 small cellular service carriers that may be affected by the proposed Rural Task Force plan.

15. Broadband Personal Communications Service (PCS). The broadband PCS spectrum is divided into six frequency blocks designated A through F, and the Commission has held auctions for each block. The Commission defined “small entity” for Blocks C and F as an entity that has average gross revenues of less than $40 million in the three previous calendar years. For Block F, an additional classification for “very small business” was added and is defined as an entity that, together with their affiliates, has average gross revenues of not more than $15 million for the preceding three calendar years. These regulations defining “small entity” in the context of broadband PCS auctions have been approved by the SBA. No small businesses within the SBA-approved definition 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% of the 1,479 licenses for Blocks D, E, and F. Based on this information, we conclude that the number of small broadband PCS licensees will include the 90 winning C Block bidders and the 93 qualifying bidders in the D, E, and F blocks, for a total of 183 small entity PCS providers as defined by the SBA and the Commission's auction rules.

16. Rural Radiotelephone Service. The Commission has not adopted a definition of small entity specific to the Rural Radiotelephone Service. A significant subset of the Rural Radiotelephone Service is the Basic Exchange Telephone Radio Systems (BETRS). We will use the SBA's definition applicable to radiotelephone companies, i.e., an entity employing no more than 1,500 persons. There are approximately 1,000 licensees in the Rural Radiotelephone Service, and we estimate that almost all of them qualify as small entities under the SBA's definition.

17. Specialized Mobile Radio (SMR). The Commission awards bidding credits in auctions for geographic area 800 MHz and 900 MHz SMR licenses to firms that had revenues of no more than $15 million in each of the three previous calendar years. In the context of 900 MHz SMR, this regulation defining “small entity” has been approved by the SBA; approval concerning 800 MHz SMR is being sought.

18. These fees apply to SMR providers in the 800 MHz and 900 MHz bands that either hold geographic area licenses or have obtained extended implementation authorizations. We do not know how many firms provide 800 MHz or 900 MHz geographic area SMR service pursuant to extended implementation authorizations, nor how many of these providers have annual revenues of no more than $15 million. One firm has over $15 million in revenues. We assume, for purposes of this IRFA, that all of the remaining existing extended implementation authorizations are held by small entities, as that term is defined by the SBA.

19. For geographic area licenses in the 900 MHz SMR band, there are 60 who qualified as small entities. For the 800 MHz SMR's, 38 are small or very small entities.

20. Fixed Microwave Services. Microwave services include common carrier, private-operational fixed, and broadcast auxiliary radio services. At present, there are approximately 22,015 common carrier fixed licensees and 61,670 private operational-fixed licensees and broadcast auxiliary radio licensees in the microwave services. The Commission has not yet defined a small business with respect to microwave services. For purposes of this IRFA, we will utilize the SBA's definition applicable to radiotelephone companies—i.e., an entity with no more than 1,500 persons. We estimate, for this purpose, that all of the Fixed Microwave licensees (excluding broadcast auxiliary licensees) would qualify as small entities under the SBA definition for radiotelephone companies.

21. 39 GHz Licensees. Neither the Commission nor the SBA has developed a definition of small entities applicable to 39 GHz licensees. Therefore, the applicable definition of small entity is the definition under the SBA rules applicable to radiotelephone (wireless) companies. This provides that a small entity is a radiotelephone company employing no more than 1,500 persons. For purposes of the 39 GHz license auction, the Commission defined “small entity” as an entity that has average gross revenues of less than $40 million in the three previous calendar years, and “very small entity” as an entity that has average gross revenues of not more that $15 million for the preceding three calendar years. The Commission has granted licenses to 29 service providers in the 39 GHz service. We do not have Start Printed Page 7871data specifying the number of these carriers that are not independently owned and operated or have more than 1,500 employees, and thus are unable at this time to estimate with greater precision the number of 39 GHz licensees that would qualify as small business concerns under the SBA's definition. Consequently, we estimate that there are no more than 29 39 GHz small business providers that may be affected by the proposed Rural Task Force plan.

4. Description of Projected Reporting, Recordkeeping, and Other Compliance Requirements

22. The Rural Task Force proposes that rural carriers be given a choice of three different options for disaggregating and targeting per-line universal service support, including high-cost loop support, Long Term Support (LTS), and Local Switching Support (LSS), to wire center cost zones. Path 1 would be available to rural carriers that do not want to target high-cost support. Path 2 would be available to rural carriers that want state commission review and approval of a disaggregation plan. Path 3 would be available to rural carriers interested in self-certifying a method for disaggregating universal service support into a maximum of two cost zones per wire center. A disaggregation plan filed under Path 3 must use a rationale that is reasonably related to the cost of providing service for each cost zone within each disaggregation category (high-cost loop support, LSS, and LTS). Rural carriers would be required to choose one of the paths within 270 days of the effective date of the proposed new rules. If these proposals are adopted, rural carriers that elect to disaggregate and target per-line support would be required to report loops at the cost-zone level, which would be a modification of the current requirement that carriers report loops at the study-area level. This change should require only minor increases to a carrier's reporting burdens, and predominantly only in the first year that the carrier revises its method of reporting. We estimate that the annual burden hours in the first year would be 60 hours. We estimate subsequent annual burden hours at 8 hours. We believe the burden associated with this proposed reporting requirement is appropriately balanced with the benefits reporting rural carriers would receive.

23. The Rural Task Force also proposes extension of the section 254(e) certification process to rural carriers. Under this process, state regulatory commissions would provide the Commission with annual certifications indicating that the carriers in their states receiving federal universal service support will use the support “only for the provision, maintenance, and upgrading of facilities and services for which the support is intended.” This reporting requirement would provide states and carriers with access to federal universal service support in a way that ensures the integrity of the universal service fund. We estimate that the annual burden hours associated with the section 254(e) certification process would be 12 hours per carrier. This is a nominal burden on rural carriers and is balanced against the high degree of federal universal service benefits rural carriers would receive.

5. Steps Taken To Minimize Significant Economic Impact on Small Entities, and Significant Alternatives Considered

24. The RFA requires an agency to describe any significant alternatives that it has considered in reaching its proposed 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.

25. The Rural Task Force Recommendation under consideration herein is the product of analysis of a number of options for distributing federal universal service support to rural carriers, including the continuation or modification of the current system of support, a system of support based on forward-looking cost models, competitive bidding approaches, rate buy-down mechanisms, and a melded approach combining aspects of both the current, embedded-cost system and a forward-looking support system. The results of the Rural Task Force's evaluation of these various options are set forth in the third and fourth White Papers prepared by the Rural Task Force. The Rural Task Force ultimately recommended the modified version of the current high-cost loop support mechanism based on carriers' embedded costs set forth in its Recommendation.

26. Alternatives to the proposed adoption of the Rural Task Force Recommendation include continuation of the current high-cost loop support mechanism for rural carriers, developing a new support mechanism based on forward-looking economic costs, or adopting specific aspects of the Rural Task Force Recommendation instead of adopting the Recommendation as a whole. We invite comment on how any of these alternatives, or any other alternatives discussed herein, would be likely to affect small businesses.

6. Federal Rules That May Duplicate, Overlap, or Conflict With the Proposed Rules

27. None.

IV. Comment Filing Procedures

28. Pursuant to §§ 1.415 and 1.419 of the Commission's rules, interested parties may file comments February 26, 2001, and reply comments March 12, 2001. Comments may be filed using the Commission's Electronic Comment Filing System (ECFS) or by filing paper copies.

29. 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 an electronic comment by Internet e-mail. To get 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.

V. Ordering Clauses

30. Pursuant to the authority contained in sections 4(i), 4(j), 201-205, 254, and 403 of the Communications Act of 1934, as amended, this Further Notice of Proposed Rulemaking is adopted.

31. The Commission's Consumer Information Bureau, Reference Information Center, shall send a copy of this Further Notice of Proposed Rulemaking, including the Initial Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration.

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List of Subjects

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Federal Communications Commission.

Magalie Roman Salas,

Secretary.

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[FR Doc. 01-2377 Filed 1-25-01; 8:45 am]

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