[Federal Register: March 24, 2004 (Volume 69, Number 57)]
[Proposed Rules]
[Page 13794-13803]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24mr04-21]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Parts 54, 61, and 69
[CC Docket Nos. 00-256 and 96-45; FCC 04-31]
Multi-Association Group (MAG) Plan for Regulation of Interstate
Services of Non-Price Cap Incumbent Local Exchange Carriers and
Interexchange Carriers; Federal-State Joint Board on Universal Service
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
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SUMMARY: By this Second Further Notice of Proposed Rulemaking (NPRM),
the Commission initiates an NPRM seeking comment on two specific plans
that propose establishing optional alternative regulation mechanisms
for rate-of-return carriers. In conjunction with the consideration of
those alternative regulation proposals, the Commission also seeks
comment on modifications that would permit a rate-of-return carrier to
adopt an alternative regulation plan for some study areas, while
retaining rate-of-return regulation for other of its study areas.
DATES: Comments are due on or before April 23, 2004. Written comments
by the public on the proposed information collections are due on or
before April 23, 2004. Reply comments are due on or before May 10,
2004. Written reply comments by the public on the proposed information
collections are due on or before May 10, 2004. Written comments must be
submitted by the Office of Management and Budget (OMB) on the proposed
information collection(s) on or before May 24, 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: Douglas Slotten, Wireline Competition
Bureau, Pricing Policy Division, 202-418-1572, or Ted Burmeister,
Wireline Competition Bureau, Telecommunications Access Policy Division,
202-418-7389. 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 Second
Further Notice of Proposed Rulemaking (NPRM) in CC Docket Nos. 96-45
and 00-256, adopted on February 12, 2004, and released on February 26,
2004. 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 also available 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 Commission seeks additional comment on incentive regulation
and on the all-or-nothing rule. CenturyTel, Inc. (CenturyTel) and a
group of carriers (ALLTEL Communications, Inc. (ALLTEL), Madison River
Communications, LLC (Madison River), and TDS Telecommunications
Corporation (TDS)) filed separate alternative regulation proposals as
ex parte filings in response to the 2001 notice. These two proposals
each contain a feature that would permit a rate-of-return carrier to
elect to move some, but not all, of its study areas to incentive
regulation.
2. CenturyTel proposes a five-year plan that would modify the
Commission's price cap rules to permit rate-of-return carriers to elect
a modified
[[Page 13795]]
form of price cap regulation on a study area basis. The plan would
eliminate the all-or-nothing rules contained in Sec. 61.41(c)(2) and
(3) so that rate-of-return carriers that acquire price cap exchanges
need not convert to price caps at the holding company level. CenturyTel
also proposes that the Commission eliminate Sec. 61.41(b) so that
rate-of-return carriers can elect price cap regulation on a study area
basis.
3. Under CenturyTel's proposal, average traffic-sensitive (ATS)
target rates would be established. These target traffic-sensitive rates
in electing study areas would depend on line density at the holding
company level, excluding lines acquired from mandatory price cap
carriers. The plan would set the target rates at the lesser of: (1)
$0.0125 per minute, or the actual rate for carriers with a line density
of less than 15 lines per square mile; or (2) $0.0095 per minute, or
the actual rate for carriers with a line density of at least 15, but
less than 19, lines per square mile; or (3) the current levels up to a
maximum ATS rate of $0.0095 per minute for carriers with a line density
higher than 19 lines per square mile for carriers newly electing the
plan. CenturyTel would have the Commission set the productivity factor,
or X-Factor, at GDP-PI for carriers electing price caps under this
plan. The plan would contain a low-end adjustment set at 10.25 percent
to ensure reasonable earnings opportunities. Finally, the CenturyTel
plan would permit a rate-of-return carrier to elect price caps for some
study areas and remove those study areas from the National Exchange
Carrier Association (NECA) pools, while leaving its other study areas
in the NECA pools subject to rate-of-return regulation. CenturyTel
proposes that rate-of-return carriers be able to choose alternative
regulation at any annual or semi-annual tariff filing to be effective
for the remainder of the five-year plan.
4. CenturyTel's plan would permit an electing rate-of-return
carrier to move its rate to a target rate on a revenue-neutral basis by
allowing a rate-of-return carrier to recover the difference between the
target rate and its existing revenue requirement through an ATS
additive to ICLS; the plan would freeze the ATS additive on a study
area basis for the duration of the plan. The plan would also freeze
Interstate Common Line Support (ICLS) and Long Term Support (LTS) on a
per-line basis for electing carriers for the plan's duration, as well
as freezing Local Switching Support (LSS) on a study area basis for the
plan's duration. The $650 million fund of interstate CALLS support
would not be available to the new price cap carriers. High-cost loop
support would be frozen on a per-line basis, subject to adjustment for
GDP-CPI.
5. The Rate-of-Return Carrier Tariff Option, filed by AllTel,
Madison River, and TDS, would extend the current Sec. 61.39 small
carrier tariff option to all rate-of-return carriers, not just those
serving 50,000 or fewer lines. Under this option, electing rate-of-
return carriers would file tariffs for a two-year period, with rates
based on historical costs and demand. Initial traffic-sensitive rates
would be established using costs and demand for the previous calendar
year, while rates for succeeding tariff periods would be based on the
actual costs and demand of the two preceding years. Thus, efficiencies
achieved during the two-year tariff period would not be reflected in
the form of rates until the next two-year tariff period. Electing rate-
of-return carriers would develop Subscriber Line Charges (SLCs) and
other end user charges based on historical costs, just as they do for
traffic-sensitive charges.
6. The Rate-of-Return Carrier Tariff Option would initially
establish per-line, common line support at the historical level of
costs recovered through universal service divided by the historical
level of access lines. Specifically, the historical interstate common
line revenue requirement, including line port and Transport
Interconnection Charge (TIC) reallocations, would be reduced by SLC
revenues, the Special Access Surcharge, the Line Port Costs in Excess
of Basic Analog Service, and universal service funding assessments
recovered from end users. The proposal would reassess the level of
support every two years, based on the cost and demand levels during the
previous two-year period. Finally, the proposal would not alter the
manner in which LSS and high-cost loop support is calculated or
obtained.
7. With the NPRM, the Commission takes a more focused look at the
issues surrounding alternative regulation plans for rate-of-return
carriers based on the two proposals presented to the Commission. In
conjunction with that review, the Commission addresses the issues
surrounding the retention or modification of the all-or-nothing rule as
it relates to the ability of rate-of-return carriers to elect to adopt
an alternative regulation plan for only some of its study areas. The
Commission builds upon the record of its earlier notice as it proceeds
with its evaluation of alternative regulation opportunities and the
all-or-nothing rule.
8. The two plans each are premised on a carriers ability to elect
alternative regulation on a study area basis, rather than at the
holding company level, and thus are dependent on modification of the
all-or-nothing rule. The Commission tentatively concludes that any
alternative regulation plan it adopts will be optional on the part of
the rate-of-return carrier and will permit a rate-of-return carrier to
elect participation in the alternative plan by study area. The
Commissions experience over the years in attempting to develop
incentive regulation for smaller companies has led it to the view that
it would not be possible to devise a plan suitable for mandatory
imposition on all rate-of-return carriers. Likewise, it appears that
most rate-of-return holding company groups are composed of very diverse
operating companies, and that such companies will not be able to elect
incentive regulation if they must do it on an all-or-nothing basis. The
Commission seeks comment on these tentative conclusions, but asks that
parties evaluate the plans as though they were going to be implemented
on a study-area basis.
9. The Commission invites parties to comment on the two alternative
regulation proposals in the record and asks whether one, both, or
neither of the plans should be available. Parties may propose
modifications to the two proposals. In doing so, they should be guided
by the general inquiries that the Commission made in the 2001 MAG NPRM
with respect to the evaluation of both alternative plans and the
modification of the all-or-nothing rule. The Commission also asks
parties to address the implications of CenturyTels proposed five-year
time frame on the resolution of long-term access issues raised in the
intercarrier compensation proceeding.
10. The CenturyTel plan essentially freezes access rates by
proposing a productivity factor equal to GDP-PI, while the Rate-of-
Return Carrier Tariff Option would adjust rates every two years to
reflect any efficiency gains. The Commission invites parties to comment
on whether these proposals would produce rates that would be just and
reasonable, as required by section 201(b) of the Act, and not
unreasonably discriminatory, as required by section 202(a) of the Act.
Parties are asked to address whether the CenturyTel plan should contain
a productivity factor other than GDP-PI. Parties proposing such
productivity factors are asked to explain in detail how such factors
can be accurately calculated for the diverse group of carriers
currently subject to rate-of-return regulation. The use of GDP-PI would
mean that lower traffic-sensitive rates resulting from traffic
[[Page 13796]]
growth would no longer occur as they would under rate-of-return
regulation. Parties should address whether, as an alternative approach
to an X-Factor, a G-factor should be used. A G-factor would adjust the
rate cap for rates of traffic-sensitive services based on the rate of
growth of the relevant traffic-sensitive measure, e.g., minutes. If so,
should it be set based on historical data, or based on projections for
the next tariff period? Alternatively, should the CenturyTel plan
include a sharing mechanism if a productivity factor higher than that
proposed, or a G-factor, is not adopted? Parties should address the
need for, and level of, a low-end adjustment factor and how its level
should be set in relation to any productivity factor, G-factor, or
sharing requirement that might be adopted. Finally, the Commission
invites parties to discuss the implications for the Commissions goals
if CenturyTel were the only carrier to elect its proposed form of
alternative regulation.
11. Parties are also invited to comment on the effect that each
plan will have on the incentives of electing rate-of-return carriers to
invest in, and maintain, their exchange access facilities and to ensure
that service quality is not degraded. The Commission asks parties to
evaluate the differences between the two plans on this score and to
address what additional steps, if any, would be necessary to ensure
that service quality does not decline in the face of any incentive to
increase profits. The Commission also asks parties to address the
effects that the option to elect by study area and at a time of the
rate-of-return carriers choosing would have on these investment and
service quality considerations.
12. Parties should also address the universal service aspects of
the two plans. To what extent is either the CenturyTel plan or the
Rate-of-Return Carrier Tariff Option likely to increase the size of the
universal service fund, and how would support levels change over time?
What effect, if any, would adoption of either plan have on the overall
sustainability of universal service? What incentives would be created
if, as CenturyTel proposes, high-cost loop support is fixed on a per-
line basis and grows by GDP-PI, without regard to investment in loop
facilities? With respect to either proposal, commenters should provide
a detailed explanation as to how support should be calculated and the
administrative burdens entailed. Commenters should also address how the
proposal would serve the principles of section 254 of the Act.
13. The Commission tentatively concludes that the opportunity to
elect alternative regulation on a study area basis should be available
only to holding company groups in which all non-average schedule
companies file their own cost-based tariffs. The Commission is
especially concerned about the ability of any NECA internal process, or
formula, to insulate the remaining pool members from the risk that may
be introduced by a carriers adoption of an alternative regulation plan.
It will also be important to consider the extent to which pool
participation makes cost shifting more difficult to detect. Parties
should also address what modifications in tariff cost support rules
and/or reporting requirements would be necessary under two scenarios:
(1) The Commission were to require holding companies electing
alternative regulation to remove all study areas from the NECA pools,
and (2) the Commission were to permit some or all study areas of rate-
of-return carriers electing alternative regulation to participate in
the NECA pools.
14. The Commission tentatively concludes that existing accounting
and regulatory processes should permit parties and the Commission to
detect cost shifting by the rate-of-return carriers that file cost-
based access tariffs. Interexchange carriers (IXCs) and competitors
argue that the incentive for rate-of-return carriers to shift costs
continues to exist and that existing processes are inadequate to check
such cost shifting. The Commission notes that this debate has been
joined in very general terms, with little in the way of specific
detail. The Commission asks parties to identify the most significant
means by which a rate-of-return carrier could shift costs from a study
area electing an alternative regulation plan to a study area subject to
rate-of-return regulation. Parties should also describe why existing
procedures will, or will not, permit the cost shift to be identified
and quantified. To the extent parties argue that existing processes are
inadequate, the Commission invites them to identify with specificity
what additional reporting or regulatory procedures would allow the
parties and the Commission to identify and quantify cost shifts.
15. The debate over incentive regulation is often clouded by
uncertainty as to whether the CALLS plan contemplated that additional
study areas would enter that plan during its five-year term. Three
years have passed and no rate-of-return carrier has sought entry. To
eliminate the uncertainty, the Commission tentatively concludes that
the CALLS plan was not designed to be open to new carriers or study
areas. The CALLS plan began as a voluntarily negotiated agreement among
price cap carriers and certain IXCs that addressed pricing and
universal service concerns as a package, without consideration of
possible participation by carriers that were then under rate-of-return
regulation. That CALLS was not intended to accommodate additional entry
is most clearly indicated by the fact that in adopting the plan, the
Commission made no provision for how the universal service component of
the CALLS plan would address future expansion to new carriers. The
Commission therefore believes the rules should be amended to clarify
that new carriers or carrier study areas may not elect this plan. The
Commission invites parties to comment on this tentative conclusion.
16. The Commission also tentatively concludes that, whatever final
rule it adopts with respect to the election of alternative regulation
on a study area basis, that rule should also apply when carriers under
different regulatory plans come together by merger or acquisition. This
would include those cases in which a price cap carrier acquired a rate-
of-return study area, but could not bring it into the CALLS plan, if
the Commission adopts its tentative conclusion in the previous
paragraph. Thus, if the Commission were to permit rate-of-return
carriers to elect alternative regulation by study area, the current
ALLTEL/Aliant, Verizon/PRTC, and Valor/Kerrville waivers of the all-or-
nothing rule would no longer be necessary. Under this tentative
conclusion, affected carriers would continue to receive universal
service support through the preexisting support mechanism(s). The
Commission seeks comment on this tentative conclusion. Parties opposing
this approach should indicate how they would harmonize the interrelated
considerations arising from mergers or acquisitions between carriers
subject to different regulatory regimes.
Procedural Matters
Ex Parte Requirements
17. This proceeding will continue to be governed by ``permit-but-
disclose'' ex parte procedures that are applicable to non-restricted
proceedings under 47 CFR 1.1206. Parties making oral ex parte
presentations are reminded that memoranda summarizing the presentation
must contain a summary of the substance of the presentation 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
[[Page 13797]]
required. See 47 CFR 1.1206(b)(2). Other rules pertaining to oral and
written presentations are set forth in Sec. 1.1206(b) as well.
Interested parties are to file any written ex parte presentations in
this proceeding with the Commission's Secretary, Marlene H. Dortch, 445
12th Street, SW., TW-B204, Washington, DC 20554, and serve with one
copy: Pricing Policy Division, Wireline Competition Bureau, 445 12th
Street, SW., Room 5-A452, Washington, DC 20554, Attn: Douglas Slotten.
Parties shall also serve with one copy: Qualex International, Portals
II, 445 12th Street, SW., Room CY-B402, Washington, DC 20554, (202)
863-2893, qualexint@aol.com.
Paperwork Reduction Act Analysis
18. The NPRM contains either a proposed or modified information
collection. As part of the continuing effort to reduce paperwork
burdens, the Commission invites the general public and the OMB to
comment on the information collections contained in this NPRM, as
required by the Paperwork Reduction Act of 1995, 44 U.S.C. 3501 et seq.
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: (1)
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; (2) the accuracy
of the Commission's burden estimates; (3) ways to enhance the quality,
utility, and clarity of the information collected; and (4) 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
19. The Regulatory Flexibility Act of 1980, as amended (RFA),
requires that an initial regulatory flexibility analysis be prepared
for notice-and-comment rule making proceedings, unless the agency
certifies that ``the rule will not, if promulgated, have a significant
economic impact on a substantial number of small entities.'' The RFA
generally defines the term ``small entity'' as having the same meaning
as the terms ``small business,'' ``small organization,'' and ``small
governmental jurisdiction.'' In addition, the term ``small business''
has the same meaning as the term ``small business concern'' under the
Small Business Act. A ``small business concern'' is one which: (1) Is
independently owned and operated; (2) is not dominant in its field of
operation; and (3) satisfies any additional criteria established by the
SBA.
20. As required by the RFA, the Commission has prepared this IRFA
of the possible significant economic impact on a substantial number of
small entities by the policies and rules proposed in this NPRM. Written
public comments are requested on this IRFA. Comments must be identified
as responses to the IRFA and must be filed by the deadlines for
comments on the NPRM.
Need for, and Objectives of, the Proposed Rules
21. The Commission continues to explore means of providing
incentives for smaller telephone companies to become more efficient and
innovative in ways that benefit both rate-of-return carriers and their
customers. The NPRM seeks additional comment on two alternative
incentive regulation proposals for all rate-of-return carriers, and on
the closely related all-or-nothing rule.
22. The alternative incentive regulation plans were filed by
CenturyTel (the CenturyTel Plan) and by ALLTEL, Madison River and TDS
(the Rate-of-Return Carrier Tariff Option). The CenturyTel Plan
proposes to lower traffic-sensitive charges, according to participation
on a study area-by-study area basis, to target rates based on specific
average traffic-sensitive target rates determined by line density. The
CenturyTel Plan would apply an X-Factor equal to GDP-PI. The CenturyTel
Plan would convert universal service support to per-line amounts, with
ICLS and LSS being frozen for the five-year duration of the proposed
plan and high-cost loop support being frozen subject to adjustment for
GDP-CPI. Finally, CenturyTel proposes that carriers should be allowed
to take certain study areas out of the NECA pools and into alternative
regulation, while leaving other study areas in the pools, subject to
rate-of-return regulation. The Rate-of-Return Carrier Tariff Option
would allow all rate-of-return carriers (not just those serving 50,000
or fewer lines) to elect to adopt a revised Sec. 61.39 approach under
which they would file access tariffs every two years based on the
previous two years' historical cost and demand data. The Rate-of-Return
Carrier Tariff Option would provide a participating company with a per-
line ICLS based on two years of historical data. Finally, both plans
would make participation in the alternative regulation plan optional,
and would allow election by study area.
23. The NPRM tentatively concludes that any alternative regulation
plan that the Commission may adopt should be optional on the part of
the rate-of-return carrier, with participation through election on a
study area basis. Additionally, such participation should be available
only to holding company groups in which all non-average schedule
companies file their own cost-based tariffs. Among the issues on which
the NPRM seeks comment are whether the two plans will produce rates
that are just and reasonable and not unreasonably discriminatory for
all entities, including small entities. The NPRM also asks whether the
CenturyTel Plan should contain a productivity factor other than GDP-PI,
whether a G-factor should be used as an alternative approach to an X-
factor, and whether it should be based on historical data or on
projections for the next tariff period. In addition, the NPRM asks
about the effect each plan will have on rate-of-return carriers'
investment and maintenance of their exchange access facilities, whether
service quality will be degraded, and whether the universal service
fund will be increased.
24. The NPRM also tentatively concludes that existing accounting
and regulatory processes should equip parties and the Commission to
detect cost-shifting by the rate-of-return carriers that file cost-
based access tariffs. Nonetheless, the Commission asks commenters to
identify the ways that a rate-of-return carrier could shift costs from
a study area electing an alternative regulation plan to a study area
subject to rate-of-return regulation. The Commission also asks
commenters to identify what additional reporting or regulatory
procedures would help detect and prevent such cost shifting. The NPRM
tentatively concludes that the rules should be amended to indicate that
new carriers or carrier study areas may not elect the CALLS plan
because it was not designed to be open to new carriers or study areas.
Finally, the Commission also tentatively concludes that the option to
elect alternative regulation on a study area basis, if adopted, should
also be available when carriers under different regulatory plans come
together by merger or acquisition.
Legal Basis
25. This rulemaking action is supported by sections 4(i), 4(j),
201-205, 254, and 403 of the Communications Act of 1934, as amended.
[[Page 13798]]
Description and Estimate of the Number of Small Entities to Which the
Notice Will Apply
26. 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 rules proposed herein. In this section, the Commission
further describes and estimates the number of small entity licensees
and regulatees that may also be directly affected by proposals
contained in this NPRM. The most reliable source of information
regarding the total numbers of certain common carrier and related
providers nationwide, as well as the number of commercial wireless
entities, appears to be the data that the Commission publishes in its
Trends in Telephone Service report. The SBA has developed small
business size standards for wireline and wireless small businesses
within the three commercial census categories of Wired
Telecommunications Carriers, Paging, and Cellular and Other Wireless
Telecommunications. Under these categories, a business is small if it
has 1,500 or fewer employees. Below, using the above size standards and
others, the commission discusses the total estimated numbers of small
businesses that might be affected by its actions.
27. The commission includes 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.'' 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. The Commission therefore
includes small incumbent LECs in this RFA analysis, although it
emphasizes that this RFA action has no effect on Commission analyses
and determinations in other, non-RFA contexts.
28. 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.
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. Thus, under this
size standard, the majority of firms can be considered small.
29. Incumbent Local Exchange Carriers (LECs). 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 SBA rules is for
Wired Telecommunications Carriers. Under that size standard, such a
business is small if it has 1,500 or fewer employees. According to
Commission data, 1,337 carriers reported that they were engaged in the
provision of local exchange services. Of these 1,337 carriers, an
estimated 1,032 have 1,500 or fewer employees and 305 have more than
1,500 employees. Consequently, the Commission estimates that most
providers of incumbent local exchange service are small businesses that
may be affected by the proposed rules and policies.
30. Competitive Local Exchange Carriers (CLECs), Competitive Access
Providers (CAPs), and ``Other Local Exchange Carriers.'' Neither the
Commission nor the SBA has developed a size standard for small
businesses specifically applicable to providers of competitive exchange
services or to competitive access providers or to ``Other Local
Exchange Carriers,'' all of which are discrete categories under which
TRS data are collected. 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.
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. Of these 609 companies,
an estimated 458 have 1,500 or fewer employees and 151 have more than
1,500 employees. In addition, 35 carriers reported that they were
``Other Local Service Providers.'' Of the 35 ``Other Local Service
Providers,'' an estimated 34 have 1,500 or fewer employees and one has
more than 1,500 employees. 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 proposed rules and policies.
31. Interexchange Carriers (IXCs). 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. According to Commission data, 261 companies reported
that their primary telecommunications service activity was the
provision of interexchange services. Of these 261 companies, an
estimated 223 have 1,500 or fewer employees and 38 have more than 1,500
employees. Consequently, the Commission estimates that the majority of
interexchange service providers are small entities that may be affected
by the proposed rules and policies.
32. Operator Service Providers (OSPs). 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 SBA rules is for Wired Telecommunications Carriers.
Under that size standard, such a business is small if it has 1,500 or
fewer employees. According to Commission data, 23 companies reported
that they were engaged in the provision of operator services. Of these
23 companies, an estimated 22 have 1,500 or fewer employees and one has
more than 1,500 employees. Consequently, the Commission estimates that
the majority of operator service providers are small entities that may
be affected by the proposed rules and policies.
33. Payphone Service Providers (PSPs). Neither the Commission nor
the SBA has developed a size standard for small businesses specifically
applicable to payphone service providers. 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. According to Commission data, 761 companies reported
that they were engaged in the provision of payphone services. Of these
761 companies, an estimated 757 have 1,500 or fewer employees and four
have more than 1,500 employees. Consequently, the Commission estimates
that the majority of payphone service providers are small entities that
may be affected by the proposed rules and policies.
34. Prepaid Calling Card Providers. The SBA has developed a size
standard for a small business within the category of Telecommunications
Resellers. Under that SBA size standard, such a business is small if it
has 1,500 or fewer employees. According to Commission data, 37
companies reported that they were engaged in the provision of prepaid
calling cards. Of these 37 companies, an estimated 36 have 1,500 or
fewer employees and one has more
[[Page 13799]]
than 1,500 employees. Consequently, the Commission estimates that the
majority of prepaid calling card providers are small entities that may
be affected by the proposed rules and policies.
35. 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
SBA rules is for Wired Telecommunications Carriers. Under that size
standard, such a business is small if it has 1,500 or fewer employees.
According to Commission's data, 92 companies reported that their
primary telecommunications service activity was the provision of other
toll carriage. Of these 92 companies, an estimated 82 have 1,500 or
fewer employees and ten have more than 1,500 employees. Consequently,
the Commission estimates that most ``Other Toll Carriers'' are small
entities that may be affected by the proposed rules and policies.
36. Paging. The SBA has developed a small business size standard
for Paging, which consists of all such firms having 1,500 or fewer
employees. According to Census Bureau data for 1997, in this category
there was a total of 1,320 firms that operated for the entire year. Of
this total, 1,303 firms had employment of 999 or fewer employees, and
an additional seventeen firms had employment of 1,000 employees or
more. Thus, under this size standard, the majority of firms can be
considered small.
37. Cellular and Other Wireless Telecommunications. The SBA has
developed a small business size standard for Cellular and Other
Wireless Telecommunication, which consists of all such firms having
1,500 or fewer employees. According to Census Bureau data for 1997, in
this category there was a total of 977 firms that operated for the
entire year. Of this total, 965 firms had employment of 999 or fewer
employees, and an additional twelve firms had employment of 1,000
employees or more. Thus, under this size standard, the majority of
firms can be considered small.
38. 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. For Block F, an
additional classification for ``very small business'' was added and is
defined as an entity that, together with its affiliates, has average
gross revenues of not more than $15 million for the preceding three
calendar years.'' These standards defining ``small entity'' in the
context of broadband PCS auctions have been approved by the SBA. 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. On March 23,
1999, the Commission re-auctioned 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. Of the 35 winning bidders in this auction, 29
qualified as ``small'' or ``very small'' businesses. Based on this
information, the Commission concludes that the number of small
broadband PCS licenses 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. The Commission notes that, as a general matter, the
number of winning bidders that qualify as small businesses at the close
of an auction does not necessarily represent the number of small
businesses currently in service. Also, the Commission does not
generally track subsequent business size unless, in the context of
assignments or transfers, unjust enrichment issues are implicated.
39. Narrowband Personal Communications Services. To date, two
auctions of narrowband personal communications services (PCS) licenses
have been conducted. For purposes of the two auctions that have already
been held, ``small businesses'' were entities with average gross
revenues for the prior three calendar years of $40 million or less.
Through these auctions, the Commission has awarded a total of 41
licenses, out of which 11 were obtained by small businesses. To ensure
meaningful participation of small business entities in future auctions,
the Commission has adopted a two-tiered small business size standard in
the Narrowband PCS Second Report and Order. A ``small business'' is an
entity that, together with affiliates and controlling interests, has
average gross revenues for the three preceding years of not more than
$40 million. A ``very small business'' is an entity that, together with
affiliates and controlling interests, has average gross revenues for
the three preceding years of not more than $15 million. The SBA has
approved these small business size standards. In the future, the
Commission will auction 459 licenses to serve Metropolitan Trading
Areas (MTAs) and 408 response channel licenses. There is also one
megahertz of narrowband PCS spectrum that has been held in reserve and
that the Commission has not yet decided to release for licensing. The
Commission cannot predict accurately the number of licenses that will
be awarded to small entities in future actions. However, four of the 16
winning bidders in the two previous narrowband PCS auctions were small
businesses, as that term was defined under the Commission's Rules. The
Commission assumes, for purposes of this analysis, that a large portion
of the remaining narrowband PCS licenses will be awarded to small
entities. The Commission also assumes that at least some small
businesses will acquire narrowband PCS licenses by means of the
Commission's partitioning and disaggregation rules.
40. 220 MHz Radio Service--Phase I Licensees. The 220 MHz service
has both Phase I and Phase II licenses. Phase I licensing was conducted
by lotteries in 1992 and 1993. There are approximately 1,515 such non-
nationwide licensees and four nationwide licensees currently authorized
to operate in the 220 MHz band. The Commission has not developed a
small business size standard for small entities specifically applicable
to such incumbent 220 MHz Phase I licensees. To estimate the number of
such licensees that are small businesses, the Commission applies the
small business size standard under the SBA rules applicable to
``Cellular and Other Wireless Telecommunications'' companies. This
standard provides that such a company is small if it employs no more
than 1,500 persons. According to Census Bureau data for 1997, there
were 977 firms in this category, that operated for the entire year. Of
this total, 965 firms had employment of 999 or fewer employees, and an
additional 12 firms had employment of 1,000
[[Page 13800]]
employees or more. If this general ratio continues in the context of
Phase I 220 MHz licensees, the Commission estimates that nearly all
such licensees are small businesses under the SBA's small business size
standard.
41. 220 MHz Radio Service--Phase II Licensees. The 220 MHz service
has both Phase I and Phase II licenses. The Phase II 220 MHz service is
a new service, and is subject to spectrum auctions. In the 220 MHz
Third Report and Order, the Commission adopted a small business size
standard for ``small'' and ``very small'' businesses for purposes of
determining their eligibility for special provisions such as bidding
credits and installment payments. This small business size standard
indicates that a ``small business'' is an entity that, together with
its affiliates and controlling principals, has average gross revenues
not exceeding $15 million for the preceding three years. A ``very small
business'' is an entity that, together with its affiliates and
controlling principals, has average gross revenues that do not exceed
$3 million for the preceding three years. The SBA has approved these
small business size standards. Auctions of Phase II licenses commenced
on September 15, 1998, and closed on October 22, 1998. In the first
auction, 908 licenses were auctioned in three different-sized
geographic areas: Three nationwide licenses, 30 Regional Economic Area
Group (EAG) Licenses, and 875 Economic Area (EA) Licenses. Of the 908
licenses auctioned, 693 were sold. Thirty-nine small businesses won
licenses in the first 220 MHz auction. The second auction included 225
licenses: 216 EA licenses and 9 EAG licenses. Fourteen companies
claiming small business status won 158 licenses.
42. 800 MHz and 900 MHz Specialized Mobile Radio Licenses. The
Commission awards ``small entity'' and ``very small entity'' bidding
credits in auctions for Specialized Mobile Radio (SMR) geographic area
licenses in the 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 previous
calendar years. The SBA has approved these size standards. 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 bands to firms that had revenues of no more
than $40 million in each of the three previous calendar years, or that
had revenues of no more than $15 million in each of the previous
calendar years. 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 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 or very small entities in the
900 MHz SMR auctions. Of the 1,020 licenses won in the 900 MHz auction,
bidders qualifying as small or very small entities won 263 licenses. In
the 800 MHz auction, 38 of the 524 licenses won were won by small and
very small entities. The Commission notes that, as a general matter,
the number of winning bidders that qualify as small businesses at the
close of an auction does not necessarily represent the number of small
businesses currently in service. Also, the Commission does not
generally track subsequent business size unless, in the context of
assignments or transfers, unjust enrichment issues are implicated.
43. Private and Common Carrier Paging. In the Paging Third Report
and Order, the Commission developed a small business size standard for
``small businesses'' and ``very small businesses'' for purposes of
determining their eligibility for special provisions such as bidding
credits and installment payments. A ``small business'' is an entity
that, together with its affiliates and controlling principals, has
average gross revenues not exceeding $15 million for the preceding
three years. Additionally, a ``very small business'' is an entity that,
together with its affiliates and controlling principals, has average
gross revenues that are not more than $3 million for the preceding
three years. The SBA has approved these size standards. An auction of
Metropolitan Economic Area licenses commenced on February 24, 2000, and
closed on March 2, 2000. Of the 985 licenses auctioned, 440 were sold.
Fifty-seven companies claiming small business status won. At present,
there are approximately 24,000 Private-Paging site-specific licenses
and 74,000 Common Carrier Paging licenses. According to the most recent
Trends in Telephone Service, 471 carriers reported that they were
engaged in the provision of either paging and messaging services or
other mobile services. Of those, the Commission estimates that 450 are
small, under the SBA business size standard specifying that firms are
small if they have 1,500 or fewer employees.
44. 700 MHz Guard Band Licensees. In the 700 MHz Guard Band Order,
the Commission adopted a small business size standard for ``small
businesses'' and ``very small businesses'' for purposes of determining
their eligibility for special provisions such as bidding credits and
installment payments. A ``small business'' as an entity that, together
with its affiliates and controlling principals, has average gross
revenues not exceeding $15 million for the preceding three years.
Additionally, a ``very small business'' is an entity that, together
with its affiliates and controlling principals, has average gross
revenues that are not more than $3 million for the preceding three
years. An auction of 52 Major Economic Area (MEA) licenses commenced on
September 6, 2000, and closed on September 21, 2000. Of the 104
licenses auctioned, 96 licenses were sold to nine bidders. Five of
these bidders were small businesses that won a total of 26 licenses. A
second auction of 700 MHz Guard Band licenses commenced on February 13,
2001 and closed on February 21, 2001. All eight of the licenses
auctioned were sold to three bidders. One of these bidders was a small
business that won a total of two licenses.
45. Rural Radiotelephone Service. The Commission has not adopted a
size standard for small businesses specific to the Rural Radiotelephone
Service. A significant subset of the Rural Radiotelephone Service is
the Basic Exchange Telephone Radio System (BETRS). The Commission uses
the SBA's small business size standard applicable to ``Cellular and
Other Wireless Telecommunications,'' i.e., an entity employing no more
than 1,500 persons. There are approximately 1,000 licensees in the
Rural Radiotelephone Service, and the Commission estimates that there
are 1,000 or fewer small entity licensees in the Rural Radiotelephone
Service that may be affected by the proposed rules and policies.
46. Air-Ground Radiotelephone Service. The Commission has not
adopted a small business size standard specific to the Air-Ground
Radiotelephone Service. The Commission will use SBA's small business
size standard applicable to ``Cellular and Other Wireless
Telecommunications,'' i.e., an entity employing no more than 1,500
persons.
[[Page 13801]]
There are approximately 100 licensees in the Air-Ground Radiotelephone
Service, and the Commission estimates that almost all of them qualify
as small under the SBA small business size standard.
47. Aviation and Marine Radio Services. Small businesses in the
aviation and marine radio services use a very high frequency (VHF)
marine or aircraft radio and, as appropriate, an emergency position-
indicating radio beacon (and/or radar) or an emergency locator
transmitter. The Commission has not developed a small business size
standard specifically applicable to these small businesses. For
purposes of this analysis, the Commission uses the SBA small business
size standard for the category ``Cellular and Other
Telecommunications,'' which is 1,500 or fewer employees. Most
applicants for recreational licenses are individuals. Approximately
581,000 ship station licensees and 131,000 aircraft station licensees
operate domestically and are not subject to the radio carriage
requirements of any statute or treaty. For purposes of its evaluations
in this analysis, the Commission estimates that there are up to
approximately 712,000 licensees that are small businesses (or
individuals) under the SBA standard. In addition, between December 3,
1998 and December 14, 1998, the Commission held an auction of 42 VHF
Public Coast licenses in the 157.1875-157.4500 MHz (ship transmit) and
161.775-162.0125 MHz (coast transmit) bands. For purposes of the
auction, the Commission defined a ``small'' business as an entity that,
together with controlling interests and affiliates, has average gross
revenues for the preceding three years not to exceed $15 million. In
addition, a ``very small'' business is one that, together with
controlling interests and affiliates, has average gross revenues for
the preceding three years not to exceed $3 million. There are
approximately 10,672 licensees in the Marine Coast Service, and the
Commission estimates that almost all of them qualify as ``small''
businesses under the above special small business size standards.
48. Fixed Microwave Services. Fixed 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 created a size standard for a small business
specifically with respect to fixed microwave services. For purposes of
this analysis, the Commission uses the SBA small business size standard
for the category ``Cellular and Other Telecommunications,'' which is
1,500 or fewer employees. 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 small business size standard.
Consequently, the Commission estimates that there are up to 22,015
common carrier fixed licensees and up to 61,670 private operational-
fixed licensees and broadcast auxiliary radio licensees in the
microwave services that may be small and may be affected by the
proposed rules and policies. The Commission notes, however, that the
common carrier microwave fixed licensee category includes some large
entities.
49. Offshore Radiotelephone Service. This service operates on
several UHF television broadcast channels that are not used for
television broadcasting in the coastal areas of states bordering the
Gulf of Mexico. There are presently approximately 55 licensees in this
service. The Commission is unable to estimate at this time the number
of licensees that would qualify as small under the SBA's small business
size standard for ``Cellular and Other Wireless Telecommunications''
services. Under that SBA small business size standard, a business is
small if it has 1,500 or fewer employees.
50. Wireless Communications Services. This service can be used for
fixed, mobile, radiolocation, and digital audio broadcasting satellite
uses. The Commission established small business size standards for the
wireless communications services (WCS) auction. A ``small business'' is
an entity with average gross revenues of $40 million for each of the
three preceding years, and a ``very small business'' is an entity with
average gross revenues of $15 million for each of the three preceding
years. The SBA has approved these small business size standards. The
Commission auctioned geographic area licenses in the WCS service. In
the auction, there were seven winning bidders that qualified as ``very
small business'' entities, and one that qualified as a ``small
business'' entity. The Commission concludes that the number of
geographic area WCS licensees affected by this analysis includes these
eight entities.
51. 39 GHz Service. The Commission 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.
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. The SBA has
approved these small business size standards. 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 proposed rules
and policies.
52. Multipoint Distribution Service, Multichannel Multipoint
Distribution Service, and ITFS. Multichannel Multipoint Distribution
Service (MMDS) systems, often referred to as ``wireless cable,''
transmit video programming to subscribers using the microwave
frequencies of the Multipoint Distribution Service (MDS) and
Instructional Television Fixed Service (ITFS). In connection with the
1996 MDS auction, the Commission established a small business size
standard as an entity that had annual average gross revenues of less
than $40 million in the previous three calendar years. The MDS auctions
resulted in 67 successful bidders obtaining licensing opportunities for
493 Basic Trading Areas (BTAs). Of the 67 auction winners, 61 met the
definition of a small business. MDS also includes licensees of stations
authorized prior to the auction. In addition, the SBA has developed a
small business size standard for Cable and Other Program Distribution,
which includes all such companies generating $12.5 million or less in
annual receipts. According to Census Bureau data for 1997, there were a
total of 1,311 firms in this category, total, that had operated for the
entire year. Of this total, 1,180 firms had annual receipts of under
$10 million and an additional 52 firms had receipts of $10 million or
more but less than $25 million. Consequently, the Commission estimates
that the majority of providers in this service category are small
businesses that may be affected by the proposed rules and policies.
This SBA small business size standard also appears applicable to ITFS.
There are presently 2,032 ITFS licensees. All but 100 of these licenses
are held by educational institutions. Educational institutions are
included in this analysis as small entities. Thus, the Commission
[[Page 13802]]
tentatively concludes that at least 1,932 licensees are small
businesses.
53. Local Multipoint Distribution Service. Local Multipoint
Distribution Service (LMDS) is a fixed broadband point-to-multipoint
microwave service that provides for two-way video telecommunications.
The auction of the 1,030 Local Multipoint Distribution Service (LMDS)
licenses began on February 18, 1998 and closed on March 25, 1998. The
Commission established a small business size standard for LMDS licenses
as an entity that has average gross revenues of less than $40 million
in the three previous calendar years. An additional small business size
standard for ``very small business'' was added as an entity that,
together with its affiliates, has average gross revenues of not more
than $15 million for the preceding three calendar years. The SBA has
approved these small business size standards in the context of LMDS
auctions. There were 93 winning bidders that qualified as small
entities in the LMDS auctions. A total of 93 small and very small
business bidders won approximately 277 A Block licenses and 387 B Block
licenses. On March 27, 1999, the Commission re-auctioned 161 licenses;
there were 40 winning bidders. Based on this information, the
Commission concludes that the number of small LMDS licenses consists of
the 93 winning bidders in the first auction and the 40 winning bidders
in the re-auction, for a total of 133 small entity LMDS providers.
54. 218-219 MHz Service. The first auction of 218-219 MHz spectrum
resulted in 170 entities winning licenses for 594 Metropolitan
Statistical Area licenses. Of the 594 licenses, 557 were won by
entities qualifying as a small business. For that auction, the small
business size standard was an entity that, together with its
affiliates, has no more than a $6 million net worth and, after federal
income taxes (excluding any carry over losses), has no more than $2
million in annual profits each year for the previous two years. In the
218-219 MHz Report and Order and Memorandum Opinion and Order, the
Commission established a small business size standard for a ``small
business'' as an entity that, together with its affiliates and persons
or entities that hold interests in such an entity and their affiliates,
has average annual gross revenues not to exceed $15 million for the
preceding three years. A ``very small business'' is defined as an
entity that, together with its affiliates and persons or entities that
hold interests in such an entity and its affiliates, has average annual
gross revenues not to exceed $3 million for the preceding three years.
The SBA has approved these size standards. The Commission cannot
estimate, however, the number of licenses that will be won by entities
qualifying as small or very small businesses under the Commission's
rules in future auctions of 218-219 MHz spectrum.
55. 24 GHz--Incumbent Licensees. This analysis may affect incumbent
licensees who were relocated to the 24 GHz band from the 18 GHz band,
and applicants who wish to provide services in the 24 GHz band. The
applicable SBA small business size standard is that of ``Cellular and
Other Wireless Telecommunications'' companies. This category provides
that such a company is small if it employs no more than 1,500 persons.
According to Census Bureau data for 1997, there were 977 firms in this
category that operated for the entire year. 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 size
standard, the great majority of firms can be considered small. These
broader census data notwithstanding, the Commission believes that there
are only two licensees in the 24 GHz band that were relocated from the
18 GHz band, Teligent and TRW, Inc. It is the Commission's
understanding that Teligent and its related companies have less than
1,500 employees, though this may change in the future. TRW is not a
small entity. Thus, only one incumbent licensee in the 24 GHz band is a
small business entity.
56. 24 GHz--Future Licensees. With respect to new applicants in the
24 GHz band, the small business size standard for ``small business'' is
an entity that, together with controlling interests and affiliates, has
average annual gross revenues for the three preceding years not in
excess of $15 million. ``Very small business'' in the 24 GHz band is an
entity that, together with controlling interests and affiliates, has
average gross revenues not exceeding $3 million for the preceding three
years. The SBA has approved these small business size standards. These
size standards will apply to the future auction, if held.
Description of Projected Reporting, Recordkeeping, and Other Compliance
Requirements
57. The NPRM explores options for developing an alternative
regulatory structure that would be available to those rate-of-return
carriers electing it. It considers the widely varying operating
circumstances of rate-of-return carriers, the implications of
competitive and intrastate regulatory conditions on the options
available, and the need to facilitate and ensure the deployment of
advanced services in rural America. If adopted, alternative regulation
may require additional recordkeeping. For example, during CenturyTel's
five-year plan, line density averages would have to be reported in
order to assess applicable ATS target rates. Furthermore, under the
Rate-of-Return Carrier Tariff Option, electing rate-of-return carriers
would file tariffs for a two-year period, with rates based on
historical costs and demand. The NPRM also addresses the continued need
for the Commission's all-or-nothing rule, seeking comment on whether
repeal or modification of the all-or-nothing rule could involve
additional reporting or regulatory procedures to prevent cost shifting.
Steps Taken To Minimize Significant Economic Impact on Small Entities,
and Significant Alternatives Considered
58. 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.
59. The two alternative incentive regulation proposals in the
Second NPRM could have varying positive or negative impacts on small
rate-of-return carriers. The proposals involve elective options, so
that a small entity should be able to assess the potential impacts as
part of its decision-making process. Nonetheless, public comments are
welcomed on any modifications to the proposals contained in the Second
NPRM that would reduce potential adverse impacts on small entities.
Specifically, suggestions are sought on different compliance or
reporting requirements that would take into account the resources of
small entities; and clarification, consolidation, or simplification of
compliance and reporting requirements for small entities that would be
subject to the rules. What are the relative merits between applying an
X-factor, based on GDP-PI or some other productivity factor, and a G-
factor, based on growth, as they relate to small entities under the
CenturyTel Plan? How can the Commission ensure that
[[Page 13803]]
adequate investment and service quality levels are maintained? How
would the adoption of an incentive regulation plan affect small
carriers, and how would a low-end adjustment affect such plan? How
would the adoption of either alternative regulation plan affect
universal service? If the Commission should repeal or modify the
Commission's all-or-nothing rule, how can it prevent the danger of cost
shifting for small carriers? How would the proposals impact NECA
pooling from the perspective of small carriers? Comments should be
supported by specific economic analysis.
Federal Rules That May Duplicate, Overlap, or Conflict With the
Proposed Rules
60. None.
Report to the Small Business Administration
61. The Commission will send a copy of the NPRM, including this
IRFA, to the Chief Counsel for Advocacy of the Small Business
Administration (SBA). In addition, the NPRM and IRFA (or summaries
thereof) will be published in the Federal Register.
Filing of Comments and Reply Comments
62. Pursuant to sections 1.415 and 1.419 of the Commission's rules,
47 CFR 1.415 and 1.419, interested parties may file comments on or
before 30 days and reply comments on or before 45 days of publication
of this NPRM in the Federal Register. 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 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, 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 your e-mail
address.'' A sample form and directions will be sent in reply.
Commenters also may obtain a copy of the ASCII Electronic Transmittal
Form (FORM-ET) at http://www.fcc.gov/e-file/email.html.
63. 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 this proceeding, commenters must submit
two additional copies for each additional docket or rulemaking number.
64. 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 the Commission continues 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.
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.
All filings must be addressed to the
Commission's Secretary, Office of the Secretary, Federal Communications
Commission.
65. Regardless of whether parties choose to file electronically or
by paper, parties should also file one copy of any documents filed in
this docket with the Commission's copy contractor, Qualex
International, Portals II, 445 12th Street SW., Washington, DC 20554
(telephone 202-863-2893; facsimile 202-863-2898) or via e-mail at
qualexint@aol.com. In addition, one copy of each submission must be
filed with the Chief, Pricing Policy Division, 445 12th Street SW.,
Washington, DC 20554. Documents filed in this proceeding will be
available for public inspection during regular business hours in the
Commission's Reference Information Center, 445 12th Street SW.,
Washington, DC 20554, and will be placed on the Commission's Internet
site. For further information, contact Douglas Slotten at (202) 418-
1572, or Ted Burmeister at (202) 418-7389.
66. Written comments by the public on the proposed and/or modified
information collections are due on the same day as comments on the
NPRM, i.e., on or before 30 days after publication of the NPRM in the
Federal Register. Written comments must be submitted by OMB on the
proposed and/or modified information collections on or before 60 days
after publication of the NPRM in the Federal Register. In addition to
filing comments with the Secretary, a copy of any comments on the
information collections contained herein should be submitted to Judith
B. Herman, Federal Communications Commission, 445 12th Street SW.,
Washington, DC 20554, or via the Internet to jbherman@fcc.gov, and to
Jeanette Thornton, OMB Desk Officer, Room 10236 NEOB, 725 17th Street
NW., Washington, DC 20503, or via the Internet to JThornto@omb.eop.gov.
67. Accessible formats (computer diskettes, large print, audio
recording and Braille) are available to persons with disabilities by
contacting the Consumer & Governmental Affairs Bureau, at (202) 418-
0531, TTY (202) 418-7365, or at fcc504@fcc.gov.
68. Pursuant to the authority contained in sections 4(i), 4(j),
201-205, 254, and 403 of the Communications Act of 1934, as amended, 47
U.S.C. 154(i), 154(j), 201-205, 254, and 403, this Second Further
Notice of Proposed Rulemaking is adopted.
69. The Commission's Consumer and Governmental Affairs Bureau,
Reference Information Center, shall send a copy of this Second Further
Notice of Proposed Rulemaking, including the Initial Regulatory
Flexibility Analysis, to the Chief Counsel for Advocacy of the Small
Business Administration.
List of Subjects
47 CFR Part 54
Communications common carriers, Telecommunications, Telephone.
47 CFR Parts 61 and 69
Communications common carriers, Telephone.
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 04-6560 Filed 3-23-04; 8:45 am]
BILLING CODE 6712-01-U