[Federal Register: May 26, 2004 (Volume 69, Number 102)]
[Proposed Rules]
[Page 29913-29917]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26my04-24]
=======================================================================
-----------------------------------------------------------------------
FEDERAL COMMUNICATIONS COMMISSION
47 CFR Chapter I
[CC Docket No. 02-53, FCC 04-96]
Presubscribed Interexchange Carrier Charges
AGENCY: Federal Communications Commission.
ACTION: Further notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: This document seeks further comment on the Commission's
presubscribed interexchange carrier (PIC)-change charge policies. PIC-
change charges are federally-tariffed charges imposed by incumbent
local exchange carriers on end-user subscribers when these subscribers
change their presubscribed long distance carriers. In light of recent
cost information filed by BellSouth in support of an increase to its
PIC-change charge, the further notice of proposed rulemaking seeks
comment on creating separate PIC-change charges based on the method
used to process the request. The further notice of proposed rulemaking
also seeks comment on whether, to encourage interexchange carriers to
utilize electronic processing, the charge should be assessed on the
[[Page 29914]]
entity submitting the change request to the local exchange carrier,
either the end user or the interexchange carrier. The charge currently
is imposed on the end user.
DATES: Comments due June 15, 2004 and reply comments due June 25, 2004.
FOR FURTHER INFORMATION CONTACT: Jennifer McKee, Wireline Competition
Bureau, Pricing Policy Division, (202) 418-1530.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's
Further Notice of Proposed Rulemaking (NPRM) in CC Docket No. 02-53
released on April 23, 2004. The full text of this document is available
on the Commission's website Electronic Comment Filing System and for
public inspection during regular business hours in the FCC Reference
Center, Room CY-A257, 445 Twelfth Street, SW., Washington, DC 20554.
Background
In this Further Notice of Proposed Rulemaking, adopted April 14,
2004 and released April 23, 2004 in CC Docket No. 02-53, FCC 04-96, the
Commission is seeking to refresh the record and specifically to seek
comment on cost support information recently filed by BellSouth in
support of its PIC-change charge increase. On March 20, 2002, the
Commission released a Notice of Proposed Rulemaking, 67 FR 34665, May
15, 2002, in this proceeding seeking comment on the Commission's PIC-
change charge policies, and on the $5 PIC-change charge safe harbor. At
the time the Notice of Proposed Rulemaking was released, BellSouth
charged a PIC-change charge of $1.49, substantially below the $5 safe
harbor. BellSouth's $1.49 PIC-change charge was supported by a cost
study that had been filed in 1990. In the Notice of Proposed
Rulemaking, the Commission sought comment on whether BellSouth's $1.49
charge should be used in establishing a lower or upper bound on any
future PIC-change charge safe harbor. Comments on the Notice of
Proposed Rulemaking were due on June 14, 2002 and reply comments were
due on July 1, 2002. Since the record closed on the Notice of Proposed
Rulemaking, BellSouth has filed with the Commission a tariff revision,
with the requisite cost support, that increased its PIC-change charge
from $1.49 per change to $3.07 per change.
Discussion
BellSouth's tariff filing highlights the significant disparity in
costs for manual and electronic (mechanized) processing of PIC-change
charges. BellSouth's analysis submitted in support of its tariff filing
reflects that the percentage of manual processing has increased in
recent years. This filing raises questions about the incentives that
are created by a PIC-change charge that does not differentiate between
electronic and manual processing. Therefore, as set forth below, we
seek comment on BellSouth's filing, and whether and how we should take
account of the information in that filing in analyzing our PIC-change
charge policies and safe harbor. We also take this opportunity to
refresh the record in this proceeding.
BellSouth's recently filed cost study indicates that manually
processed PIC changes cost substantially more than mechanized PIC
changes. BellSouth's filing indicates that the costs of manual PIC
changes are cross-subsidized to some degree by the lower cost
mechanized PIC changes because end users pay a single rate regardless
of how the PIC-change request is submitted. Such subsidization will
reduce carriers' incentives to invest in the equipment necessary to
submit mechanized PIC change requests to the local exchange carriers
(LECs). We therefore seek comment on whether there should be a separate
PIC-change charge (and associated safe harbor) for orders that require
manual processing by a LEC and for orders that are submitted to a LEC
in a mechanized format. We also seek comment on whether manual versus
mechanized processing of PIC changes is the correct categorization for
any multiple safe harbors, or whether other classifications of PIC-
change charges should be adopted. We also seek comment on how small
entities may be affected by changes to our existing PIC-change charge
policies.
To date, the PIC-change charge has been assessed on end users. This
removes, to some extent, the incentive for interexchange carriers
(IXCs) to reduce the costs of PIC changes because the charge is passed
on to end users. Should the charge instead be assessed on the entity
that submits the order to the LEC, i.e., if an IXC submits the order,
the LEC would assess the charge on the IXC, and if an end user submits
the order to the LEC directly, the LEC would assess the charge on the
end user?
If there are separate charges for electronic and manual processing,
or if the charge or charges are assessed on the entity placing the
order, customers will need to be made aware of their options regarding
PIC changes and what they can do to pay a lower PIC-change charge. For
example, if an end-user customer calls a LEC requesting a PIC change,
the LEC will have to enter the request manually, possibly resulting in
a higher charge to the end user. If the end user instead requested the
change through an IXC, however, either the lower mechanized PIC-change
rate could potentially apply, or the customer could avoid paying a PIC-
change charge at all if the charge was instead assessed on the IXC. If
different PIC-change charge rates are adopted, how should end-user
customers be made aware of the different rates when they request a PIC
change? Would different PIC-change charge rates improve or hinder
consumers' ability to understand how charges are incurred? Would any
benefit from adopting separate charges for electronic and manual
processing outweigh potential consumer confusion over the charges to be
incurred when switching providers?
Consideration of separate charges raises the question of whether
all entities placing PIC-change orders will be able to submit orders
using a mechanized process. Can an end-user customer currently change
its PIC electronically through the LECs' Web sites, or must a PIC
change be processed by a LEC (manually) or through an IXC (manually or
mechanized)? Should carriers that do not make available to end-user
customers an option to submit PIC changes directly through a mechanized
system be precluded from assessing a higher manual charge on its end-
user customers?
Do separate charges for manual and electronic processing raise
anti-competitive issues that should be addressed if the LEC is also
providing long distance service? How much, if any, of the increase in
the manual-to-electronic processing ratio as set out in the BellSouth
filing may be attributed to the entrance of incumbent LECs in the long
distance market? How do incumbent LEC long distance entities handle
PIC-change requests? Are the requests processed by the long distance
entities, or are customers referred to the local exchange entities to
make the change? Will these processes change when incumbent LEC local
and long distance operations are integrated after the sunset of the
separate affiliate requirements of section 272 of the Act, 47 U.S.C.
272?
BellSouth's recent PIC-change charge tariff filing reflects
weighted costs of $2.45 for a manual PIC change and $0.48 for a
mechanized PIC change. These costs, multiplied by a common cost factor
of 1.0497, yield BellSouth's total PIC change cost of $3.07. Should we
adopt a PIC-change charge safe harbor (or harbors) based on the
BellSouth cost study? Is the cost information submitted by BellSouth in
[[Page 29915]]
its tariff filing typical for similarly situated carriers? If the
BellSouth cost study is used as a basis for setting a PIC-change charge
safe harbor (or harbors), should the study be revised in any way? For
example, customers are entitled to one initial free PIC preselection.
Therefore, is it appropriate to recover costs for new installations in
the PIC-change charge?
Some customers request a ``PIC freeze'' from their LEC. A PIC
freeze prevents a change in a subscriber's preferred carrier selection
unless the subscriber gives the carrier from whom the freeze was
requested his or her express written or oral consent. Should the
additional costs of processing PIC changes to customers with PIC
freezes be recovered through the PIC-change charge, or through a
separate PIC-freeze charge? What entity should be responsible for
paying any additional charges associated with changing PIC-freeze
customers' PICs?
Finally, given the passage of time since the record in this
proceeding closed, parties may refresh the record with any new
information or arguments that they believe to be relevant to deciding
the issues raised in this proceeding.
Procedural Matters
Ex Parte Requirements
This matter shall be treated as a ``permit-but-disclose''
proceeding i006n 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.
See 47 CFR 1.1206(b)(2). Other requirements pertaining to oral and
written presentations are set forth in section 1.1206(b) of the
Commission's rules, 47 CFR 1.1206(b).
Initial Regulatory Flexibility Act Analysis
As required by the Regulatory Flexibility Act of 1980, as amended
(RFA), 5 U.S.C. 603, the Commission has prepared this 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 FNPRM. The RFA, see 5 U.S.C. 601 et
seq., has been amended by the Small Business Regulatory Enforcement
Fairness Act of 1996 (SBREFA), Pub. L. 104-121, Title II, 110 Stat. 857
(1996). 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 FNPRM. The Commission will send a copy of
the FNPRM, including this IRFA, to the Chief Counsel for Advocacy of
the Small Business Administration (SBA). See 5 U.S.C. 603(a). In
addition, the FNPRM and IRFA (or summaries thereof) will be published
in the Federal Register.
Need for, and Objectives of, the Proposed Rules
In this FNPRM, the Commission seeks additional comment on its
policies for regulating PIC-change charges. Specifically, we seek
comment on whether there should be separate PIC-change charges for
manual and electronic processing of change requests, and on whether the
charge should be assessed on the entity that places the order. We also
seek comment on recent PIC-change charge cost information filed by
BellSouth. We seek comment on these issues, as well as any alternative
means of ensuring the reasonableness of PIC-change charges.
Legal Basis
This FNPRM is adopted pursuant to sections 1, 4(i), 4(j), 201-205,
and 303 of the Communications Act of 1934, as amended, 47 U.S.C. 151,
154(i), (j), 201-205, and 303.
Description and Estimate of the Number of Small Entities to Which the
Proposed Rules Will Apply
The RFA directs agencies to provide a description of, and, where
feasible, an estimate of the number of small entities that will be
affected by the proposed rules, if adopted. 5 U.S.C. 603(b)(3). The RFA
generally defines the term ``small entity'' as having the same meaning
as the terms ``small business,'' ``small organization,'' and ``small
governmental jurisdiction.'' 5 U.S.C. 601(6). For the purposes of this
NPRM, the RFA defines a ``small business'' to be the same as a ``small
business concern'' under the Small Business Act, 15 U.S.C. 632, unless
the Commission has developed one or more definitions that are
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 SBA. 15 U.S.C. 632.
We have included small incumbent LECs 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 wired
telecommunications carrier 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 is not ``national'' in scope. See Letter from Jere W. Glover,
Chief Counsel for Advocacy, SBA, to William E. Kennard, Chairman, FCC
(May 27, 1999). The Small Business Act contains a definition of ``small
business concern,'' which the RFA incorporates into its own definition
of ``small business.'' See 15 U.S.C. 632(a) (Small Business Act); 5
U.S.C. 601(3) (RFA). SBA regulations interpret ``small business
concern'' to include the concept of dominance on a national basis. 13
CFR 121.102(b). We have therefore included small incumbent LECs in this
RFA analysis, although we emphasize that this RFA action has no effect
on Commission analyses and determinations in other, non-RFA contexts.
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 513310 (changed to 517110 in October 2002).
According to Census Bureau data for 1997, there were 2,225 firms in
this category, total, that operated for the entire year. 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. 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.'' Thus, under this size
standard, the majority of firms can be considered small.
Local Exchange Carriers. Neither the Commission nor the SBA has
developed a size standard for small businesses specifically applicable
to local exchange services. The closest applicable size standard under
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, NAICS code 513310 (changed to 517110 in October 2002).
According to Commission data, 1,337 carriers reported that they were
incumbent local exchange service
[[Page 29916]]
providers. Trends in Telephone Service, Federal Communications
Commission, Wireline Competition Bureau, Industry Analysis and
Technology Division, Table 5.3 (Aug. 2003) (Trends in Telephone
Service). Of these 1,337 carriers, an estimated 1,032 have 1,500 or
fewer employees and 305 have more than 1,500 employees. Trends in
Telephone Service, Table 5.3. In addition, according to Commission
data, 609 companies reported that they were engaged in the provision of
either competitive access provider services or competitive local
exchange carrier services. Trends in Telephone Service, Table 5.3. Of
these 609 companies, an estimated 458 have 1,500 or fewer employees and
151 have more than 1,500 employees. Trends in Telephone Service, Table
5.3. In addition, 35 carriers reported that they were ``Other Local
Exchange Carriers.'' Trends in Telephone Service, Table 5.3. Of the 35
``Other Local Exchange Carriers,'' an estimated 34 have 1,500 or fewer
employees and one has more than 1,500 employees. Trends in Telephone
Service, Table 5.3. Consequently, the Commission estimates that most
providers of local exchange service, competitive local exchange
service, competitive access providers, and ``Other Local Exchange
Carriers'' are small entities that may be affected by the rules and
policies adopted herein.
Interexchange Carriers. Neither the Commission nor the SBA has
developed a size standard for small businesses specifically applicable
to interexchange services. The closest applicable size standard under
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, NAICS code 513310 (changed to 517110 in October 2002).
According to Commission data, 261 companies reported that they were
interexchange carriers. Trends in Telephone Service, Table 5.3. Of
these 261 companies, an estimated 223 have 1,500 or fewer employees and
38 have more than 1,500 employees. Trends in Telephone Service, Table
5.3. Consequently, the Commission estimates that the majority of
interexchange service providers are small entities that may be affected
by the rules and policies adopted herein.
Description of Projected Reporting, Recordkeeping and Other Compliance
Requirements
As described in the previous Initial Regulatory Flexibility
Analysis in this proceeding, 67 FR 34665, May 15, 2002, we are seeking
comment on whether we can rely on market forces to set reasonable PIC-
change charges, or whether these charges must be regulated. If we find
that the market reasonably sets these charges, there will be no
additional reporting or recordkeeping burden on incumbent LECs with
respect to these charges. If we determine that the market will not
successfully constrain PIC-change charges, we must determine whether to
establish a safe harbor below which PIC-change charges are to be deemed
reasonable, or whether these charges should be cost-based. If we adopt
a safe harbor, incumbent LECs will be in the same situation as under
the current rules, i.e., PIC-change charges tariffed at rates below the
safe harbor are deemed reasonable, and LECs have the option of charging
more if they can demonstrate that their costs for PIC changes exceed
that rate. If we decide not to adopt a safe harbor and require
incumbent LECs to set PIC-change charges at cost, incumbent LECs will
be required to file information demonstrating the costs of providing
PIC changes.
Steps Taken To Minimize Significant Economic Impact on Small Entities,
and Significant Alternatives Considered
The RFA requires an agency to describe any significant,
specifically small business, 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. 5 U.S.C.
603(c)(1)-(c)(4).
We are seeking comment on alternative methods of setting a PIC-
change charge, including whether market forces will successfully
constrain these charges, and whether to adopt a safe harbor below which
rates are presumed reasonable. These proposals would reduce the
reporting and recordkeeping burden on all incumbent LECs, including
small LECs. We also are seeking comment on whether to assess the PIC-
change charge on the entity making the change request, which could be
the IXC. We also are seeking comment on whether to create separate PIC-
change charges for manual and electronic processing of PIC changes.
This would allow IXCs to control whether they paid a higher manual
processing charge or a lower electronic processing charge based on how
they submit the order to the LEC. We also are seeking comment on how
small entities may be affected by changes to our existing PIC-change
charge policies.
Federal Rules That May Duplicate, Overlap, or Conflict With the
Proposed Rules
None.
Filing of Comments and Reply Comments
Pursuant to sections 1.415 and 1.419 of the Commission's rules, 47
CFR 1.415, 1.419, interested parties may file comments on or before
June 15, 2004, and reply comments on or before June 25, 2004. Comments
may be filed using the Commission's Electronic Comment Filing System
(ECFS) or by filing paper copies.
Comments filed through the ECFS can be sent as an electronic file
via the Internet to http://www.fcc.gov/cgb/ecfs/. Generally, only one
copy of an electronic submission must be filed. If multiple docket or
rulemaking numbers appear in the caption of a 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, U.S.
Postal Service mailing address, and the applicable docket or rulemaking
number. Parties may also submit an electronic comment by Internet e-
mail. To get filing instructions 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.'' A sample form and directions
will be sent in reply. 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 appear in the caption of a proceeding, commenters
must submit two additional copies for each additional docket or
rulemaking number.
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, Natek, Inc., will receive hand-
delivered or messenger-delivered paper filings for the Commission's
Secretary at 236 Massachusetts Avenue, NE., Suite 110, Washington, DC
20002.
[[Page 29917]]
--The filing hours at this location are 8 a.m. to 7 p.m.
--All hand deliveries must be held together with rubber bands or
fasteners.
--Any envelopes must be disposed of before entering the building.
--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.
Parties shall also serve one copy with Qualex International,
Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC 20554,
(202) 863-2893, or via e-mail to <qualexint@aol.com>.
Parties are strongly encouraged to file comments electronically
using the Commission's Electronic Comment Filing System (ECFS). Parties
are also requested to send a courtesy copy of their comments via e-mail
to jennifer.mckee@fcc.gov. If parties file paper copies, parties are
requested to send two (2) copies of the comments and reply comments to
Chief, Pricing Policy Division, Wireline Competition Bureau, Federal
Communications Commission, 445 12th Street, SW., Room 5-A221,
Washington, DC 20554.
Documents in CC Docket No. 02-53 are available for public
inspection and copying during business hours at the Federal
Communications Commission Reference Information Center, Portals II, 445
12th St. SW., Room CY-A257, Washington, DC 20554. The documents may
also be purchased from Qualex International, telephone (202) 863-2893,
facsimile (202) 863-2898.
Ordering Clauses
It is ordered that, pursuant to the authority contained in sections
1, 4(i), 4(j), 201-205, and 303 of the Communications Act of 1934, as
amended, 47 U.S.C. 151, 154(i), (j), 201-205, and 303, the further
notice of proposed rulemaking is adopted.
It is further ordered that 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.
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 04-11657 Filed 5-25-04; 8:45 am]
BILLING CODE 6712-01-P