[Federal Register: December 8, 2003 (Volume 68, Number 235)]
[Proposed Rules]
[Page 68312-68319]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08de03-14]
=======================================================================
-----------------------------------------------------------------------
FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 64
[WC Docket No. 03-225; FCC 03-265]
Request To Update Default Compensation Rate for Dial-Around Calls
From Payphones
AGENCY: Federal Communications Commission.
ACTION: Notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: By this Notice of Proposed Rulemaking (NPRM), the Commission
commences a proceeding to consider a new default compensation rate for
dial-around calls from payphones. The NPRM seeks comment on whether to
modify the default rate of $0.24 per-call for dial-around payphone
calls established more than four years ago.
DATES: Comments are due on or before January 7, 2004. Written comments
by the public on the proposed information collections are due on or
before January 7, 2004. Reply comments are due on or before January 22,
2004. Written reply comments by the public on the proposed information
collections are due on or before January 22, 2004. Written comments
must be submitted by the Office of Management and Budget (OMB) on the
proposed information collection(s) on or before February 6, 2004.
ADDRESSES: All filings must be sent to the Commission's Secretary,
Marlene H. Dortch, Office of the Secretary, Federal Communications
Commission, Room TW-A325, 445 Twelfth Street SW., Washington, DC 20554.
In addition to filing comments with the Secretary, a copy of any
comments on the information collections contained herein must be
submitted to Judith Boley Herman, Federal Communications Commission,
Room 1-C804, 445 Twelfth Street SW., Washington, DC 20554, or via the Internet to Judith-B.Herman@fcc.gov, and to Kim A. Johnson, OMB Desk
Officer, Room 10236 NEOB, 725 17th Street NW., Washington, DC 20503, or via the Internet to Kim_A._Johnson@omb.eop.gov.
FOR FURTHER INFORMATION CONTACT: Jon Stover, Wireline Competition
Bureau, Pricing Policy Division, (202) 418-0390. For additional
information concerning the information collection(s) contained in this
document, contact Judith Boley Herman at 202-418-0214, or via the Internet at Judith-B.Herman@fcc.gov.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice
of Proposed Rulemaking (NPRM) in WC Docket No. 03-225, RM No. 10568,
adopted on October 28, 2003, and released on October 31, 2003. The
complete text of this NPRM is available for public inspection Monday
through Thursday from 8 a.m. to 4:30 p.m. and Friday from 8 a.m. to
11:30 a.m. in the Commission's Consumer and Governmental Affairs
Bureau, Reference Information Center, Room CY-A257, 445 Twelfth Street,
SW., Washington, DC 20554. The complete text is available also on the
Commission's Internet site at http://www.fcc.gov. Alternative formats
are available to persons with disabilities by contacting Brian Millin
at (202) 418-7426 or TTY (202) 418-7365. The complete text of the NPRM
may be purchased from the Commission's duplicating contractor, Qualex
International, Room CY-B402, 445 Twelfth Street, SW., Washington, DC
20554, telephone 202-863-2893, facsimile 202-863-2898, or e-mail at qualexint@aol.com.
Synopsis of Notice of Proposed Rulemaking
1. The NPRM grants petitions for rulemaking filed by the American
Public Communications Council (APCC)
[[Page 68313]]
and the RBOC Payphone Coalition (BellSouth Public Communications, Inc.,
SBC Communications, Inc., and the Verizon telephone companies). The
Commission asks whether the $0.24 rate still ensures that all payphone
service providers (PSPs) are fairly compensated for each and every
completed call as mandated by 47 U.S.C. 276, or whether a change in the
default rate is mandated.
2. According to cost studies submitted by APCC and the RBOC
Payphone Coalition, per-payphone costs have not changed dramatically
since 1998, but falling call volumes at payphones have caused a major
increase in per-call costs at marginal payphones. These two groups of
PSPs assert that the current dial-around compensation rate is no longer
adequate to ensure widespread deployment of payphones because $0.24 no
longer provides cost recovery for PSPs.
3. The petitions for rulemaking were opposed by six interexchange
carriers (IXCs) and the Attorney General of the State of Texas. While
they do not assert that IXCs can implement targeted call blocking at
this time, some IXCs contend that the Commission should not change the
default compensation rate because market forces by themselves are able
to determine the appropriate level of payphone deployment. These IXCs
will be afforded an opportunity to demonstrate how PSPs can be
effectively compensated in a fully deregulated market.
4. In finding it unnecessary to issue a Notice of Inquiry (NOI), as
requested by some IXCs, the Commission decided it is possible to
resolve certain methodological and factual issues, to the extent that
they are relevant to our ratesetting task, in the course of determining
what, if any, modifications the Commission should make to the dial-
around compensation rate.
5. The Commission invites comments both on the general issue of
whether to prescribe a different payphone compensation rate and on the
specific issue of the amount of the rate. The Commission seeks comment
on the cost studies presented in the petitions for rulemaking by APCC
and the RBOC Payphone Coalition (Coalition). The Commission seeks
comment on whether the methodologies reflected in those studies are
consistent with the rate methodology the Commission used in
Implementation of the Pay Telephone Reclassification and Compensation
Provisions of the Telecommunications Act of 1996, CC Docket No. 96-128,
Third Report and Order, 64 FR 13701, March 22, 1999. The Commission
also asks whether the cost information presented in those studies
accurately represents the costs currently incurred by payphone service
providers. The Commission further invites commenting parties to submit
additional studies that support or refute the information presented in
the APCC and Coalition studies.
6. In the NPRM, the Commission tentatively concludes that the
methodology the Commission adopted in the Third Report and Order is the
appropriate methodology to use in reevaluating the default dial-around
compensation rate. The decision to use that methodology was affirmed by
the United States Court of Appeals for the D.C. Circuit. The Commission
seeks comment on this tentative conclusion.
7. The Commission also invites comment on whether the methodology
should be modified in any way due to changes in the payphone industry
since its adoption. For example, some IXCs argue that, due to the
elasticity of the demand for dial-around calling, an increase in the
dial-around rate would suppress demand to such an extent as to reduce
total revenues, resulting in increased removal of payphones. APCC and
the Regional Bell Operating Companies (RBOCs), on the other hand, argue
that there is no reason to believe that dial-around calling is highly
price-elastic. In the Third Report and Order, the Commission considered
the issue of demand elasticity in determining the appropriate
allocation of overhead between dial-around calls and other calls, but
was unable to reach a firm conclusion. Thus, elasticity issues bear on
both the allocation of overhead and the potential for demand
suppression. The Commission seeks further comment on the issue of
demand elasticity, including the impact of recent increases in the coin
calling rate and the cross-elasticity of demand between payphones and
wireless telephone service. The Commission invites the submission of
any further data that may have become available on these questions.
Also, because monthly call volume is a key driver in determining the
per-call compensation rate, the Commission seeks comment on the
efficacy and merit of the use in the APCC and Coalition cost studies of
marginal payphone monthly call volumes of 233.9 and 219, respectively.
8. The Commission seeks comment on whether the particular inputs
the Commission adopted in the Third Report and Order for various cost
categories continue to be appropriate or whether there are changed
conditions that warrant modifications of the particular inputs used in
1999. For example, is the depreciation rate used in the Third Report
and Order still valid? As another example, WorldCom claims that, given
the declining payphone base, estimates of capital costs should be based
on the price of second-hand payphones. The Commission invites comment
on this and other aspects of the cost studies.
9. The Commission seeks comment on whether additional cost
categories are needed beyond those identified in the Third Report and
Order. Are there other cost categories that should be added or modified
beyond those on which the Commission relied in the Third Report and
Order? Specifically, the APCC and Coalition cost studies add an element
for collection costs specific to dial-around compensation, and the
Coalition study adds an element for uncollectibles. In the Third Report
and Order, the Commission declined to include these costs in setting
the dial-around rate, finding that the record in that docketed
proceeding contained insufficient information to determine the extent
to which administration costs vary when the number of coinless calls
increases relative to coin calls. AT&T and others argue that the Third
Report and Order methodology precludes the inclusion of an element for
bad debt. The Commission invites comment on whether there is now an
adequate record to justify such an element, and the appropriate amount
of such an element.
10. The Commission seeks comment on whether and how the Commission
should consider the revenues and costs associated with the provision of
additional services and activities in conjunction with payphones, such
as Internet access or rental of advertising space. Are these revenues
and costs relevant to the Commission's marginal payphone analysis, and,
if so, how? While APCC argues that such contribution is minimal, is
there evidence regarding the extent of the net contribution to payphone
cost recovery resulting from these activities? Is there any net
contribution? If so, the Commission invites parties to supply such
evidence with respect to payphones generally and to marginal payphones
in particular.
11. Sprint urges the Commission to reconsider adopting a ``caller-
pays'' compensation scheme, in which the caller would deposit coins or
other forms of advance payment before making a dial-around call. In the
Third Report and Order, the Commission noted that some economists would
argue that a caller-pays methodology forms the basis for the purest
market-based approach. The Commission rejected this approach based on
[[Page 68314]]
evidence that Congress disapproved of a caller-pays methodology. For
this reason, the Commission tentatively concluded in this NPRM that it
should not adopt a ``caller-pays'' methodology. The Commission seeks
comment on this tentative conclusion.
12. Nevertheless, the Commission seeks comment on whether
circumstances have changed such that it is now appropriate to
reconsider a caller-pays approach to payphone compensation. In fact, in
the Third Report and Order, the Commission concluded that it should
monitor the advance of call blocking technology and other marketplace
developments before reconsidering a caller-pays approach. As noted in
the NPRM, consumers using dial-around services from payphones may be
billed by their interexchange carriers at rates higher than both the
default compensation rate and the local coin call rate. Thus the
convenience of coinless calling may come at a high price to the
consumer. The Commission asks parties to provide information about what
service providers charge customers for dial-around and other coinless
payphone services. More generally, the Commission seeks comment on how
it should analyze the costs and benefits of the Commission policy of
prescribing a dial-around compensation rate to be paid by service
providers to payphone operators in lieu of a caller-pays system.
Finally, the Commission seeks comment on Commission authority to allow
advance consumer payment for use of payphones. In particular, does 47
U.S.C. 226(e) permit the Commission to conclude that the Commission
need not prescribe compensation apart from advance payment by the
consumer? Is so, what factual findings or policy goals would support
such a conclusion?
Initial Paperwork Reduction Act Analysis
13. This NPRM contains either proposed or modified information
collections. As part of its continuing effort to reduce paperwork
burdens, the Commission invites 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. Comments must be
identified as responses to the Initial Paperwork Reduction Act
Analysis. Public and agency comments are due at the same time as other
comments on this NPRM; OMB comments are due 60 days from the date of
publication of this NPRM in the Federal Register. 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.
Initial Regulatory Flexibility Act Analysis
14. As required by the Regulatory Flexibility Act (RFA), 5 U.S.C.
603, the Commission has prepared this Initial Regulatory Flexibility
Analysis (IRFA) of the possible significant economic impact on small
entities by the policies and rule(s) proposed in this Notice of
Proposed Rulemaking (NPRM). Written public comments are requested on
this IRFA. Comments must be identified as responses to the IRFA.
15. This present IRFA conforms to the RFA, as amended. See 5 U.S.C.
604. The RFA, 5 U.S.C. 601 et seq., has been amended by the Contract
with America Advancement Act of 1996, Public Law No. 104-121, 110 Stat.
847 (1996) (CWAA). Title II of the CWAA is the Small Business
Regulatory Enforcement Fairness Act of 1996 (SBREFA). The Commission
will send a copy of this NPRM, including this IRFA, to the Chief
Counsel for Advocacy of the Small Business Administration. See 5 U.S.C.
604(b).
Need for, and Objectives of, the Proposed Rules
16. In adopting section 276 in 1996, Public Law No. 104-104, 110
Stat. 56 (1996) (codified at 47 U.S.C. 276), Congress mandated inter
alia that the Commission ``establish a per call compensation plan to
ensure that all payphone service providers are fairly compensated for
each and every completed intrastate and interstate call using their
payphone * * * .'' In this NPRM, the Commission decided to reexamine
the default payphone compensation rate the Commission prescribed in
1999. The overall objective of this proceeding is to evaluate whether
changes are necessary to the current default rate of compensation for
dial-around calls originating at payphones, in order to ensure that
payphone service providers are fairly compensated, promote payphone
competition, and promote the widespread deployment of payphone
services. The NPRM seeks comment on specific issues related solely to
the level of dial-around compensation.
Legal Basis
17. The proposed action is supported by 47 U.S.C. 151, 152, 154(i)-
(j), 201, 226 and 276, as well as 47 CFR 1.1, 1.48, 1.411, 1.412,
1.415, 1.419, and 1.1200-1216.
Description and Estimate of the Number of Small Entities to Which
Proposed Rules Will Apply
18. The RFA directs agencies to provide a description of, and an
estimate of, the number of small entities that may be affected by the
rule(s) proposed herein, where feasible. 5 U.S.C. 604(a)(3). The RFA
generally defines ``small entity'' as having the same meaning as the
terms ``small business,'' ``small organization,'' and ``small
governmental jurisdiction.'' 5 U.S.C. 601(6). 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 more appropriate to its
activities. 5 U.S.C. 601(3) (incorporating by reference the definition
of ``small business concern'' in 5 U.S.C. 632). 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
Small Business Administration (SBA). 5 U.S.C. 632. Pursuant to 5 U.S.C.
601(3), the statutory definition of a small business applies ``unless
an agency after consultation with the Office of Advocacy of the Small
Business Administration and after opportunity for public comment,
establishes one or more definitions of such term which are appropriate
to the activities of the agency and publishes such definition in the
Federal Register.''
19. Small Incumbent Local Exchange Carriers. We have included small
incumbent local exchange carriers in this present RFA analysis. As
noted above, a ``small business'' under the RFA is one that, inter
alia, meets the pertinent small business size standard (e.g., a
telephone communications business having 1,500 or fewer employees), and
``is not dominant in its field of operation.'' 5 U.S.C. 601(3). The
SBA's Office of Advocacy contends that, for RFA purposes, small
incumbent LECs are not dominant in their field of operation because any
such dominance
[[Page 68315]]
is not ``national'' in scope.\1\ The Commission therefore included
small incumbent LECs in this RFA analysis, although the Commission
emphasizes that this RFA has no effect on the Commission's analyses and
determinations in other, non-RFA contexts.
---------------------------------------------------------------------------
\1\ Letter from Jere W.Glover, Chief Counsel of Advocacy, SBA,
to William E. Kennard, Chairman, FCC (May 27, 1999). The Small
Business Act contains a definition of ``small-business concern,''
which the RFA incorporates into its own definition of ``small
business.'' See 15 U.S.C. 601 (3) (RFA). SBA regulations interpret
``small business concern'' to include the concept of dominance on a
national basis. 13 CFR 121.102 (b).
---------------------------------------------------------------------------
20. Wired Telecommunications Carriers. The SBA has developed a
small business size standard for Wired Telecommunications Carriers,
which consists of all such companies having 1,500 or fewer employees.
13 CFR 121.201, NAICS code 717110. According to Census Bureau data for
1997, there were 2,225 firms in this category, total, that operated for
the entire year. U.S. Census Bureau, 1997 Economic Census, Subject
Series: Information, ``Establishment and Firm Size (Including Legal
Form of Organization),'' Table 5, NAICS code 513310 (issued October of
2000). Of this total, 2,201 firms had employment of 999 or fewer
employees, and an additional 24 firms had employment of 1,000 employees
or more. Id. The Commission notes that the census data do not provide a
more precise estimate of the number of firms that have employment of
1,500 or fewer employees; the largest category provided is ``Firms with
1,000 employees or more.'' Under the size standard of 1,500 or fewer
employees, the great majority of Wired Telecommunications Carriers can
be considered small.
21. Incumbent Local Exchange Carriers. Neither the Commission nor
the SBA has developed a size standard for small businesses specifically
applicable to incumbent local exchange services. The closest applicable
size standard under the SBA rules is for Wired Telecommunications
Carriers. Under that size standard, such a business is small if it has
1,500 or fewer employees. 13 CFR 121.201, North American Industry
Classification System (NAICS) code 517110. According to Commission
data, 1,329 carriers reported that they were engaged in the provision
of local exchange services. FCC, Wireline Competition Bureau, Industry
Analysis and Technology Division, Trends in Telephone Service (May
2002) (hereinafter Telephone Trends Report), Table 5.3. Of these 1,329
carriers, an estimated 1,024 have 1,500 or fewer employees and 305 have
more than 1,500 employees. Id. Consequently, the Commission estimates
that most providers of local exchange service are small businesses that
may be affected by the rule(s) and policies proposed herein.
22. Competitive Local Exchange Carriers (CLECs). Neither the
Commission nor the SBA has developed a size standard for small
businesses specifically applicable to providers of competitive local
exchange services or to competitive access providers (CAPs) or to
``Other Local Exchange Carriers,'' all of which are discrete categories
under which Telecommunications Relay Service (TRS) data are collected.
The closest applicable size standard under the SBA rules is for Wired
Telecommunications Carriers. Under that SBA size standard, such a
business is small if it has 1,500 or fewer employees. 13 CFR 121.201,
NAICS code 517110. According to Commission data, 532 companies reported
that they were engaged in the provision of either competitive access
provider services or competitive local exchange carrier services.
Telephone Trends Report, Table 5.3. Of these 532 companies, an
estimated 411 have 1,500 or fewer employees and 121 have more than
1,500 employees. Id. In addition, 55 carriers reported that they were
``Other Local Exchange Carriers.'' Id. Of the 55 ``Other Local Exchange
Carriers,'' an estimated 53 have 1,500 or fewer employees and two have
more than 1,500 employees. Id. Consequently, the Commission estimates
that most providers of competitive local exchange service, competitive
access providers, and ``Other Local Exchange Carriers'' are small
entities that may be affected by the rule(s) and policies proposed
herein.
23. Local Resellers. The SBA has developed a size standard for
small businesses within the category of Telecommunications Resellers.
Under that SBA size standard, such a business is small if it has 1,500
or fewer employees. 13 CFR 121.201, NAICS code 517310. According to the
Commission data, 134 companies reported that they were engaged in the
provision of local resale services. Telephone Trends Report, Table 5.3.
Of these 134 companies, an estimated 131 have 1,500 or fewer employees
and three have more than 1,500 employees. Id. Consequently, the
Commission estimates that the great majority of local resellers are
small entities that may be affected by the rules and policies proposed
herein.
24. Toll Resellers. The SBA has developed a size standard for small
businesses within the category of Telecommunications Resellers. Under
that SBA size standard, such a business is small if it has 1,500 or
fewer employees. 13 CFR 121.201, NAICS code 517310. According to the
Commission's most recent Telephone Trends Report data, 576 companies
reported that they were engaged in the provision of toll resale
services. Telephone Trends Report, Table 5.3. Of these 576 companies,
an estimated 538 have 1,500 or fewer employees and 38 have more than
1,500 employees. Id. Consequently, the Commission estimates that the
great majority of toll resellers are small entities that may be
affected by the rules and policies proposed herein.
25. Payphone Service Providers. Neither the Commission nor the SBA
has developed a size standard for small businesses specifically
applicable to payphone service providers (PSPs). The closest applicable
size standard under the SBA rules is for Wired Telecommunications
Carriers. Under that standard, such a business is small if it has 1,500
or fewer employees. 13 CFR 121.201, NAICS code 517110. According to the
Commission's most recent Telephone Trends Report data, 936 PSPs
reported that they were engaged in the provision of payphone services.
Telephone Trends Report, Table 5.3. Of these 936 PSPs, an estimated 933
have 1,500 or fewer employees and three have more than 1,500 employees.
Id. Consequently, the Commission estimates that the great majority of
PSPs are small entities that may be affected by the rules and policies
proposed herein.
26. Interexchange Carriers (IXCs). Neither the Commission nor the
SBA has developed a size standard for small businesses specifically
applicable to providers of interexchange services. The closest
applicable size standard under the SBA rules is for Wired
Telecommunications Carriers. Under that standard, such a business is
small if it has 1,500 or fewer employees. 13 CFR 121.201, NAICS code
517110. According to Commission data, 229 carriers reported that their
primary telecommunications service activity was the provision of
interexchange services. Telephone Trends Report, Table 5.3. Of these
229 companies, an estimated 181 have 1,500 or fewer employees and 48
have more than 1,500 employees. Id. Consequently, the Commission
estimates that the majority of interexchange carriers are small
entities that may be affected by the rules and policies proposed
herein.
[[Page 68316]]
27. Operator Service Providers. Neither the Commission nor the SBA
has developed a size standard for small businesses specifically
applicable to operator service providers. The closest applicable size
standard under the SBA rules is for Wired Telecommunications Carriers.
Under that standard, such a business is small if it has 1,500 or fewer
employees. 13 CFR 121.201, NAICS code 517110. According to Commission
data, 22 companies reported that they were engaged in the provision of
operator services. Telephone Trends Report, Table 5.3. Of these 22
companies, an estimated 20 have 1,500 or fewer employees and two have
more than 1,500 employees. Id. Consequently, the Commission estimates
that the great majority of operator service providers are small
entities that may be affected by the rules and policies proposed
herein.
28. Wired Telecommunication Resellers. The SBA has developed a size
standard for small businesses within the category of Telecommunications
Resellers including prepaid calling card providers. Under that SBA size
standard, such a business is small if it has 1,500 or fewer employees.
13 CFR 121.201, NAICS code 517310. According to Commission data, 32
companies reported that they were engaged in the provision of prepaid
calling cards. Telephone Trends Report, Table 5.3. Of these 32
companies, an estimated 31 have 1,500 or fewer employees and one has
more than 1,500 employees. Id. Consequently, the Commission estimates
that the great majority of prepaid calling card providers are small
entities that may be affected by the rules and policies proposed
herein.
29. Satellite Service Carriers. The SBA has developed a small
business size standard for Satellite Telecommunications, which consists
of all such firms having $12.5 million or less in annual receipts.(13
CFR 121.201, NAICS code 51741). According to Census Bureau data for
1997, in this category there was a total of 324 firms that operated for
the entire year (U.S. Census Bureau, 1997 Economic Census, Subject
Series: Information, ``Establishment and Firm Size {Including Legal
Form of Organization{time} ,'' Table 4, NAICS code 513340). Of this
total, 273 firms had annual receipts of under $10 million, and an
additional twenty-four firms had receipts of $10 million to
$24,999,999. Id. Thus, under this size standard, the majority of firms
can be considered small.
30. Other Toll Carriers. Neither the Commission nor the SBA has
developed a size standard for small businesses specifically applicable
to ``Other Toll Carriers.'' This category includes toll carriers that
do not fall within the categories of interexchange carriers, operator
service providers, prepaid calling card providers, satellite service
carriers, or toll resellers. The closest applicable size standard under
the SBA rules is for Wired Telecommunications Carriers. Under that
standard, such a business is small if it has 1,500 or fewer employees.
13 CFR 121.201, NAICS code 517110. According to Commission data, 42
companies reported that their primary telecommunications service
activity was the provision of ``Other Toll'' services. Telephone Trends
Report, Table 5.3. Of these 42 companies, an estimated 37 have 1,500 or
fewer employees and five have more than 1,500 employees. Id.
Consequently, the Commission estimates that most ``Other Toll
Carriers'' are small entities that may be affected by the rules and
policies proposed herein.
31. Paging. The SBA has developed a small business size standard
for paging firms. Under that SBA size standard, such a business is
small if it has 1,500 or fewer employees. 13 CFR 121.201, NAICS code
517211, and 13 CFR 121.201, NAICS code 517212, respectively.
32. Cellular and other Wireless Telecommunications. For the census
category of Paging, Census Bureau data for 1997 show that there were
1320 firms in this category, total, that operated for the entire year.
U.S. Census Bureau, 1997 Economic Census, Subject Series: Information,
``Employment Size of Firms Subject to Federal Income Tax: 1997,'' Table
5, NAICS code 513321 (issued October of 2000). Of this total, 1303
firms had employment of 999 or fewer employees, and an additional 17
firms had employment of 1,000 employees or more. Id. Thus, under this
category and associated small business size standard, the great
majority of or the census category of Cellular and Other Wireless
Telecommunications firms, Census Bureau data for 1997 show that there
were 977 firms in this category, total, that operated for the entire
year. U.S. Census Bureau, 1997 Economic Census, Subject Series:
Information, ``Employment Size of Firms Subject to Federal Income Tax:
1997,'' Table 5, NAICS code 513322. Of this total, 965 firms had
employment of 999 or fewer employees, and an additional 12 firms had
employment of 1,000 employees or more. Thus, under this second category
and size standard, the great majority of firms can, again, be
considered small. Consequently, the Commission estimates that most
wireless service providers are small entities that may be affected by
the rule(s) and policies proposed herein.
33. Broadband Personal Communications Service. The broadband
personal communications service (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 $40
million or less in the three previous calendar years. See Amendment of
Parts 20 and 24 of the Commission's Rules--Broadband PCS Competitive
Bidding and the Commercial Mobile Radio Service Spectrum Cap, WT Docket
No. 96-59, Report and Order, 61 FR 33859, July 1, 1996; see also 47 CFR
24.720(b). For Block F, an additional classification for ``very small
business'' was added and is defined as an entity that, together with
affiliates, has average gross revenues of not more than $15 million for
the preceding three calendar years. See Amendment of Parts 20 and 24 of
the Commission's Rules--Broadband PCS Competitive Bidding and the
Commercial Mobile Radio Service Spectrum Cap, WT Docket No. 96-59,
Report and Order, 61 FR 33859, July 1, 1996. These standards defining
``small entity'' in the context of broadband PCS auctions have been
approved by the SBA. See, e.g., Implementation of Section 309(j) of the
Communications Act--Competitive Bidding, PP Docket No. 93-253, Fifth
Report and Order, 59 FR 37566, July 22, 1994. No small businesses
within the SBA-approved small business size standards bid successfully
for licenses in Blocks A and B. There were 90 winning bidders that
qualified as small entities in the Block C auctions. A total of 93
small and very small business bidders won approximately 40 percent of
the 1,479 licenses for Blocks D, E, and F. FCC News, Broadband PCS, D,
E and F Block Auction Closes, No. 71744 (rel. Jan. 14, 1997); see also
Amendment of the Commission's Rules Regarding Installment Payment
Financing for Personal Communications Services (PCS) Licensees, WT
Docket No. 97-82, Second Report and Order, 62 FR 55348, October 24,
1997. On March 23, 1999, the Commission reauctioned 347 C, D, E, and F
Block licenses. There were 48 small business winning bidders. On
January 26, 2001, the Commission completed the auction of 422 C and F
Broadband PCS licenses in Auction No. 35.
34. Of the 35 winning bidders in this auction, 29 qualified as
``small'' or ``very small'' businesses. Based on this
[[Page 68317]]
information, the Commission concludes that the number of small
broadband PCS licensees will include the 90 winning C Block bidders,
the 93 qualifying bidders in the D, E, and F Block auctions, the 48
winning bidders in the 1999 re-auction, and the 29 winning bidders in
the 2001 re-auction, for a total of 260 small entity broadband PCS
providers, as defined by the SBA small business size standards and the
Commission's auction rules. Consequently, the Commission estimates that
260 broadband PCS providers are small entities that may be affected by
the rules and policies proposed herein.
35. 800 MHz and 900 MHz Specialized Mobile Radio Licensees. The
Commission awards ``small entity'' and ``very small entity'' bidding
credits in auctions for Specialized Mobile Radio (SMR) geographic area
licenses in the 800 MHz and 900 MHz bands to firms that had revenues of
no more than $15 million in each of the three previous calendar years,
or that had revenues of no more than $3 million in each of the three
previous calendar years, respectively. 47 CFR 90.814. In the context of
both the 800 MHz and 900 MHz SMR service, the definitions of ``small
entity'' and ``very small entity'' have been approved by the SBA. These
bidding credits apply to SMR providers in the 800 MHz and 900 MHz bands
that either hold geographic area licenses or have obtained extended
implementation authorizations. The Commission does 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. The Commission assumes, for its
purposes here, that all of the remaining existing extended
implementation authorizations are held by small entities, as that term
is defined by the SBA. The Commission has held auctions for geographic
area licenses in the 800 MHz and 900 MHz SMR bands. There were 60
winning bidders that qualified as small and very small entities in the
900 MHz auctions. Of the 1,020 licenses won in the 900 MHz auction,
bidders qualifying as small and very small entities won 263 licenses.
In the 800 MHz SMR auction, 38 of the 524 licenses won were won by
small and very small entities. Consequently, the Commission estimates
that there are 301 or fewer small entity SMR licensees in the 800 MHz
and 900 MHz bands that may be affected by the rules and policies
proposed herein.
36. Rural Radiotelephone Service. The Commission has not adopted a
size standard for small businesses specific to the Rural Radiotelephone
Service. The service is defined in 47 CFR 22.99. A significant subset
of the Rural Radiotelephone Service is the Basic Exchange Telephone
Radio Systems (BETRS). BETRS is defined in 47 CFR 22.757, 22.759. For
purposes of this IRFA, the Commission uses the SBA's size standard
applicable to Cellular and Other Wireless Telecommunications--an entity
employing no more than 1,500 persons. 13 CFR 121.201, NAICS code
517212. There are approximately 1,000 licensees in the Rural
Radiotelephone Service, and the Commission estimates that almost all of
them qualify as small entities under the SBA's size standard.
Consequently, the Commission estimates that there are 1,000 or fewer
small entity licensees in the Rural Radiotelphone Service that may be
affected by the rules and policies proposed herein.
37. Fixed Microwave Services. Microwave services include common
carrier, private-operational fixed, and broadcast auxiliary radio
services. For common carrier fixed microwave services (except
Multipoint Distribution Service), see 47 CFR part 101 (formerly 47 CFR
part 21). Persons eligible under parts 80 and 90 of the Commission's
rules can use Private Operational-Fixed Microwave services. See 47 CFR
parts 80, 90. Stations in this service are called operational-fixed to
distinguish them from common carrier and public fixed stations. Only
the licensee may use the operational-fixed station, and only for
communications related to the licensee's commercial, industrial, or
safety operations. Auxiliary Microwave Service is governed by 47 CFR
part 74. The Auxiliary Microwave Service is available to licensees of
broadcast stations and to broadcast and cable network entities.
Broadcast auxiliary microwave stations are used for relaying broadcast
television signals from the studio to the transmitter, or between two
points, such as, a main studio and an auxiliary studio. The service
also includes mobile TV pickups, which relay signals from a remote
location back to the studio.
38. For purposes of this IRFA, the Commission uses the SBA's size
standard for the category Cellular and Other Telecommunications, which
is 1,500 or fewer employees. 13 CFR 121.201, NAICS code d to 517212. 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
created a size standard for a small business specifically with respect
to microwave services. The Commission does not have data specifying the
number of these licensees that have more than 1,500 employees, and thus
is unable at this time to estimate with greater precision the number of
fixed microwave service licensees that would qualify as small business
concerns under the SBA's definition. Consequently, the Commission
estimates that there are 22,015 or fewer small common carrier fixed
microwave licensees and 61,670 or fewer small private operational-fixed
microwave licensees and small broadcast auxiliary radio licensees in
the microwave services that may be affected by the rules and policies
proposed herein. The Commission notes, however, that the common carrier
microwave fixed licensee category includes some large entities.
39. 39 GHz Licensees. The Commission has created a special small
business size standard for 39 GHz licenses--an entity that has average
gross revenues of $40 million or less in the three previous calendar
years. See Amendment of the Commission's Rules Regarding the 37.0-38.6
GHz and 38.6-40.0 GHz Bands, ET Docket No. 95-183, Report and Order, 63
FR 6079, February 6, 1998. An additional size standard for ``very small
business'' is: an entity that, together with affiliates, has average
gross revenues of not more than $15 million for the preceding three
calendar years. Id. The SBA has approved these size standards. See
Letter to Kathleen O'Brien Ham, Chief, Auctions and Industry Analysis
Division, Wireless Telecommunications Bureau, FCC, from Aida Alvarez,
Administrator, SBA (Feb. 4, 1998). The auction of the 2,173 39 GHz
licenses began on April 12, 2000 and closed on May 8, 2000. The 18
bidders who claimed small business status won 849 licenses.
Consequently, the Commission estimates that 18 or fewer 39 GHz
licensees are small entities that may be affected by the rules and
policies proposed herein.
Description of Projected Reporting, Recordkeeping, and Other Compliance
Requirements
40. The Commission does not intend that any proposal it may adopt
pursuant to this NPRM will increase existing reporting, recordkeeping
or other compliance requirements.
Steps Taken To Minimize Significant Economic Impact on Small Entities,
and Significant Alternatives Considered
41. The RFA requires an agency to describe any significant,
specifically small business, alternatives that it has considered in
reaching its proposed
[[Page 68318]]
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 performance, rather than design, standards;
and (4) an exemption from coverage of the rule, or any part thereof,
for small entities. 5 U.S.C. 603(c).
42. According to the Petitioners, the existing rate of $.24 does
not provide the statutory requirement of fair compensation. Thus, the
Commission is concerned that inadequate compensation may undermine the
statutory goals of promoting competition among payphone providers while
simultaneously ensuring the widespread deployment of payphones. 47
U.S.C. 276. The Commission is further concerned that inadequate
payphone compensation may have adverse economic impacts on smaller
entities that provide payphone service. The Commission, therefore, is
examining various options, including a proposed rule increasing the
default rate, to ensure the provision of fair compensation.
43. The Commission, however, recognizes that an alternative
approach to increasing the default rate has been proposed by parties
who contend that any increase in the default rate may further suppress
demand for payphone services. The Commission also recognizes that in
proposing this alternative approach, these parties contend that the
fully distributed cost methodology may be ripe for reexamination.
44. Another proposed rule under consideration may entail an
examination of the revenues generated by non-traditional payphone
services such as the provision of internet access. In the alternative,
services other than access to the internet, such as data transfer and
interactive functionalities may be taken into consideration.
Accordingly, the Commission will consider assessments of both the
impact of internet access and other new technology services.
45. Finally, the Commission requests comment on any small business
related concerns occasioned by proposed rules addressing the
reexamination of the default rate, the use of non-traditional payphone
services, and other alternatives that may impact small businesses.
Federal Rules That May Duplicate, Overlap, or Conflict With the
Proposed Rules
46. None.
Ex Parte Presentations
47. This matter shall be treated as a ``permit-but-disclose''
proceeding in accordance with the Commission's ex parte rules. 47 CFR
1.1200 et seq. Persons making oral ex parte presentations are reminded
that memoranda summarizing the presentations must contain summaries of
the substance of the presentations and not merely a listing of the
subjects discussed. More than a one or two-sentence description of the
views and arguments presented generally is required. Other requirements
pertaining to oral and written presentations are set forth in 47 CFR
1.1206(b).
Comment Filing Procedures
48. In order to facilitate review of comments and reply comments,
parties must include the name of the filing party and the date of the
filing on all comments and reply comments. Comments and reply comments
must clearly identify the specific portion of the NPRM to which a
particular comment or set of comments is responsive.
49. Comments may be filed by using the Commission's Electronic
Comment Filing System (ECFS). See Electronic Filing of Documents in
Rulemaking Proceedings, 63 FR 2421 (May 1, 1998). Comments filed
through the ECFS may 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. In completing the transmittal
screen, commenters must 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 must include the following words in the body of the
message, ``get form