§ 54.1017   Compliance for Mobility Fund Phase II.

   (a) Mobile eligible telecommunications carriers subject to defined
   build-out milestones in § 54.1015 must notify the Commission and USAC,
   and the relevant state, U.S. Territory, or Tribal government, if
   applicable, within ten (10) business days after the applicable deadline
   if they have failed to meet a build-out milestone.

   (1) Interim build-out milestones. Upon notification that a mobile
   eligible telecommunications carrier has defaulted on an interim
   build-out milestone after it has begun receiving Mobility Fund Phase II
   support, the Wireline Competition Bureau or Wireless Telecommunications
   Bureau will issue a letter evidencing the default. For purposes of
   determining whether a default has occurred, any service a mobile
   eligible telecommunications carrier offers must meet the performance
   obligations in § 54.1015(a)(1) and (2). The issuance of this letter
   shall initiate reporting obligations and withholding of a percentage of
   the mobile eligible telecommunication carrier's total monthly Mobility
   Fund Phase II support, if applicable, starting the month following the
   issuance of the letter:

   (i) Tier 1. If a mobile eligible telecommunications carrier has a
   compliance gap of at least five (5) percent but less than 15 percent of
   the eligible square miles that the mobile eligible telecommunications
   carrier is required to have covered by the relevant interim milestone
   at the state level, the Wireline Competition Bureau or Wireless
   Telecommunications Bureau will issue a letter to that effect. Starting
   three (3) months after the issuance of this letter, the mobile eligible
   telecommunications carrier will be required to file a report every
   three (3) months identifying the eligible square miles to which the
   mobile eligible telecommunications carrier has newly deployed
   facilities capable of meeting the requisite Mobility Fund Phase II
   requirements at the state level in the previous quarter. Mobile
   eligible telecommunications carriers that do not file these quarterly
   reports on time will be subject to support reductions as specified in
   § 54.1019(f). The mobile eligible telecommunications carrier must
   continue to file quarterly reports until the mobile eligible
   telecommunications carrier reports that it has reduced the compliance
   gap to less than five (5) percent of the eligible square miles for that
   interim milestone at the state level and the Wireline Competition
   Bureau or Wireless Telecommunications Bureau issues a letter to that
   effect.

   (ii) Tier 2. If a mobile eligible telecommunications carrier has a
   compliance gap of at least 15 percent but less than 25 percent of the
   eligible square miles that the mobile eligible telecommunications
   carrier is required to have covered by the interim milestone at the
   state level, USAC will withhold 15 percent of the mobile eligible
   telecommunications carrier's monthly support for that state and the
   mobile eligible telecommunications carrier will be required to file
   quarterly reports. Once the mobile eligible telecommunications carrier
   has reported that it has reduced the compliance gap to less than 15
   percent of the eligible square miles for that interim milestone at the
   state level, the Wireline Competition Bureau or Wireless
   Telecommunications Bureau will issue a letter to that effect, and the
   mobile eligible telecommunications carrier will then move to Tier 1
   status.

   (iii) Tier 3. If a mobile eligible telecommunications carrier has a
   compliance gap of at least 25 percent but less than 50 percent of the
   eligible square miles that the mobile eligible telecommunications
   carrier is required to have covered by the interim milestone at the
   state level, USAC will withhold 25 percent of the mobile eligible
   telecommunications carrier's monthly support for that state and the
   mobile eligible telecommunications carrier will be required to file
   quarterly reports. Once the mobile eligible telecommunications carrier
   has reported that it has reduced the compliance gap to less than 25
   percent of the eligible square miles for that interim milestone at the
   state level, the Wireline Competition Bureau or Wireless
   Telecommunications Bureau will issue a letter to that effect, and the
   mobile eligible telecommunications carrier will move to Tier 2 status.

   (iv) Tier 4. If a mobile eligible telecommunications carrier has a
   compliance gap of 50 percent or more of the eligible square miles that
   the mobile eligible telecommunications carrier is required to have
   covered by the interim milestone at the state level:

   (A) USAC will withhold 50 percent of the mobile eligible
   telecommunications carrier's monthly support for that state, and the
   mobile eligible telecommunications carrier will be required to file
   quarterly reports. As with the other tiers, as the mobile eligible
   telecommunications carrier reports that it has lessened the extent of
   its non-compliance, and the Wireline Competition Bureau or Wireless
   Telecommunications Bureau issues a letter to that effect, it will move
   down the tiers until it reaches Tier 1 (or no longer is out of
   compliance with the relevant interim milestone).

   (B) If, after having 50 percent of its support withheld for six (6)
   months, the mobile eligible telecommunications carrier has not reported
   that it has a compliance gap of less than 50 percent, USAC will
   withhold 100 percent of the mobile eligible telecommunications
   carrier's monthly support for the state and will commence a recovery
   action for a percentage of support that is equal to the mobile eligible
   telecommunications carrier's compliance gap plus 10 percent of the
   mobile eligible telecommunications carrier's support that has been
   disbursed to that date.

   (v) Restoration of full support. If at any point during the support
   term, the mobile eligible telecommunications carrier reports that it is
   eligible for Tier 1 status, it will have its support fully restored,
   USAC will repay any funds that were recovered or withheld, and it will
   move to Tier 1 status.

   (2) Final milestone. Upon notification that the mobile eligible
   telecommunications carrier has not met a final milestone, the mobile
   eligible telecommunications carrier will have twelve (12) months from
   the date of the final milestone deadline to come into full compliance
   with this milestone.

   (i) If the mobile eligible telecommunications carrier does not report
   that it has come into full compliance with this milestone within twelve
   (12) months because it fails to meet the 85 percent benchmark (even if
   it meets the 75 percent benchmark for some or all the census block
   group(s) or census tract(s)), the Wireline Competition Bureau or the
   Wireless Telecommunications Bureau will issue a letter, and USAC will
   recover disbursement(s) in an amount of support that is equal to 1.89
   multiplied by the average amount of support the mobile eligible
   telecommunications carrier received per eligible square mile in the
   state over the six year period multiplied by the number of square miles
   unserved in the mobile eligible telecommunications carrier's winning
   areas in the state that would be required to meet the 85 percent
   benchmark, plus 10 percent of the mobile eligible telecommunications
   carrier's total Mobility Fund Phase II support received in the state
   over the six-year period for deployment. After the mobile eligible
   telecommunications carrier has paid the calculated recovery amount for
   failure to comply with the final deployment milestone, the Bureaus will
   calculate a reduced support payment for the remaining support term
   based on the percentage of deployment coverage completed. The reduced
   ongoing annual support amount will be the total of the mobile eligible
   telecommunications carrier's original winning bid amounts for annual
   support in the state multiplied by the sum of the actual deployment
   percentage plus 15 percent (i.e., the difference between 100 percent
   coverage and the required 85 percent minimum coverage), or (annual
   support) * (percentage covered + 0.15). If at the end of six months the
   mobile eligible telecommunications carrier has not fully paid back the
   support for missing the relevant 85 percent benchmark, the mobile
   eligible telecommunications carrier shall be liable for repayment of
   all the support that has been disbursed to the mobile eligible
   telecommunications carrier for that state, the Wireline Competition
   Bureau or the Wireless Telecommunications Bureau will issue a letter to
   that effect, and USAC will draw on the letter(s) of credit to recover
   all the support that has been disbursed to the mobile eligible
   telecommunications carrier for that state.

   (ii) If the mobile eligible telecommunications carrier does not report
   that it has come into full compliance with this milestone within twelve
   (12) months because it fails to meet the 75 percent benchmark(s) for
   any census block group(s) or census tract(s) in the state at the final
   milestone (even if it meets the 85 percent statewide benchmark), the
   Wireline Competition Bureau or the Wireless Telecommunications Bureau
   will issue a letter for any such census block group(s) or census
   tract(s), and USAC will recover disbursement(s) in an amount of support
   that is equal to 1.89 multiplied by the average amount of support the
   mobile eligible telecommunications carrier received per eligible square
   mile in the census block group(s) or census tract(s) in the state over
   the six year period multiplied by the number of square miles unserved
   in each of the mobile eligible telecommunications carrier's winning
   census block group(s) or census tract(s) in the state that would be
   required to meet their respective 75 percent benchmarks, plus 10
   percent of the mobile eligible telecommunications carrier's total
   Mobility Fund Phase II support received in the relevant census block
   group(s) or census tract(s) over the six-year period for deployment.
   The mobile eligible telecommunications carrier will have six months to
   repay the support USAC seeks to recover. After the mobile eligible
   telecommunications carrier has paid the calculated recovery amount, the
   Bureaus will calculate a reduced support payment for the remaining
   support term. The reduced ongoing annual support amount will be the
   mobile eligible telecommunications carrier's original winning bid
   amount for annual support in any such census block group or census
   tract, multiplied by the sum of the actual deployment percentage plus
   25 percent (i.e., the difference between 100 percent coverage and the
   required 75 percent minimum coverage), or (annual support) *
   (percentage covered + 0.25). If at the end of six months the mobile
   eligible telecommunications carrier has not fully paid back the support
   for missing the relevant 75 percent benchmark(s), the mobile eligible
   telecommunications carrier shall be liable for repayment of all the
   support that has been disbursed to the mobile eligible
   telecommunications carrier for that state, the Wireline Competition
   Bureau or the Wireless Telecommunications Bureau will issue a letter to
   that effect, and USAC will draw on the letter(s) of credit to recover
   all the support that has been disbursed to the mobile eligible
   telecommunications carrier for that state. In the event that USAC draws
   on a letter of credit to recover all the support that has been
   disbursed to the mobile eligible telecommunications carrier for a
   state, the mobile eligible telecommunications carrier's participation
   in Mobility Fund Phase II in that state will immediately end and no
   further support will be paid.

   (3) Compliance reviews. If, subsequent to the mobile eligible
   telecommunications carrier's final milestone but during the remaining
   support term, USAC determines in the course of a compliance review that
   the mobile eligible telecommunications carrier does not have sufficient
   evidence to demonstrate that it is offering service to the required
   percentage of square miles by census block group or census tract, or
   state, USAC shall withhold support for a period not to exceed six
   months until the mobile eligible telecommunications carrier
   demonstrates that it is again providing the requisite service to the
   required percentage of square miles. Once the mobile eligible
   telecommunications carrier demonstrates that it is providing the
   requisite service to the required percentage of square miles and USAC
   has verified the demonstration, USAC will pay any withheld support and
   resume ongoing disbursements. If the mobile eligible telecommunications
   carrier does not provide a verifiable demonstration of coverage within
   the permitted six-month period, USAC shall recover an amount of support
   that is equal to 1.89 times the average amount of support per square
   mile received in the winning bid area over the six-year deployment
   period for the relevant number of square miles for which the mobile
   eligible telecommunications carrier has failed to produce sufficient
   evidence, plus 10 percent of the mobile eligible telecommunications
   carrier's total support received in that winning bid area over the
   six-year deployment time period, and will calculate a reduced ongoing
   annual support amount as set out in paragraphs (a)(2)(i) and (ii) of
   this section, as appropriate.

   (b) [Reserved]

   [ 82 FR 15450 , Mar. 28, 2017]

   Effective Date Note: At  82 FR 15450 , Mar. 28, 2017, § 54.1017 was added.
   This section contains information collection and recordkeeping
   requirements and will not become effective until approval has been
   given by the Office of Management and Budget.

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