[Federal Register: July 10, 2006 (Volume 71, Number 131)]
[Proposed Rules]               
[Page 38832-38841]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10jy06-16]                         

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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 54

[WC Docket No. 06-122; FCC 06-94]

 
Universal Service Contribution Methodology

AGENCY: Federal Communications Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Federal Communications Commission (Commission), in a 
companion Final Rule, proposes to amend the existing approach for 
assessing contributions to the federal universal service fund (USF or 
Fund) by raising the interim wireless safe harbor to 37.1 percent and 
by establishing universal service contribution obligations for 
providers of interconnected voice over Internet Protocol (VoIP) 
service. The Commission issues this Notice of Proposed Rulemaking to 
determine what additional steps, if any, it should take to ensure the 
sufficiency and stability of the Fund.

DATES: Comments are due on or before August 9, 2006, and reply comments 
are due on or before September 8, 2006.

ADDRESSES: You may submit comments, identified by WC Docket No. 06-122, 
by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 

Follow the instructions for submitting comments.
     Agency Web Site: http://www.fcc.gov. Follow the instructions for 

submitting comments on http://www.fcc.gov/cgb/ecfs/.     E-mail: ecfs@fcc.gov, and include the following words in 

the body of the message, ``get form.'' A sample form and directions 
will be sent in response.
     Mail: Federal Communications Commission, 445 12th Street, 
SW., Washington, DC 20554.
     Hand Delivery/Courier: 236 Massachusetts Avenue, NE., 
Suite 110, Washington, DC 20002.
    Instructions: All submissions received must include the agency name 
and docket number for this rulemaking, WC Docket No. 06-122. All 
comments received will be posted without change to http://www.fcc.gov/cgb/ecfs/
, including any personal information provided. For detailed 

instructions on submitting comments and additional information on the 
rulemaking process, see the ``Public Participation'' heading of the 
SUPPLEMENTARY INFORMATION section of this document.
    Docket: For access to the docket to read background documents or 
comments received, go to http://www.fcc.gov/cgb/ecfs/.


FOR FURTHER INFORMATION CONTACT: Amy Bender, Wireline Competition 
Bureau, (202) 418-1469, or via e-mail at Amy.Bender@fcc.gov.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice 
of Proposed Rulemaking in WC Docket No. 06-122, FCC 06-94, adopted June 
21, 2006, and released June 27, 2006. The complete text of this 
document is available for inspection and copying during normal business 
hours in the FCC Reference Information Center, Portals II, 445 12th 
Street, SW., Room CY-A257, Washington, DC 20554. This document may also 
be purchased from the Commission's duplicating contractor, Best Copy 
and Printing, Inc., 445 12th Street, SW., Room CY-B402, Washington, DC 
20554, telephone (800) 378-3160 or (202) 863-2893, facsimile (202) 863-
2898, or via e-mail at http://www.bcpiweb.com. It is also available on the 

Commission's Web site at http://www.fcc.gov.


Public Participation

    Comments may be filed using (1) the Commission's Electronic Comment 
Filing System (ECFS), (2) the Federal Government's eRulemaking Portal, 
or (3) by filing paper copies. See Electronic Filing of Documents in 
Rulemaking Proceedings, 63 FR 24121 (May 1, 1998).
     Electronic Filers: Comments may be filed electronically 
using the Internet by accessing the ECFS: http://www.fcc.gov/cgb/ecfs/ or the Federal eRulemaking Portal: http://www.regulations.gov. Filers 

should follow the instructions provided on the website for submitting 
comments.
     For ECFS filers, if multiple docket or rulemaking numbers 
appear in the caption of this proceeding, filers must transmit one 
electronic copy of the comments for each docket or rulemaking number 
referenced in the caption. In completing the transmittal screen, filers 
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, 
filers should send an e-mail to ecfs@fcc.gov, and include the following 
words in the body of the message, ``get form.'' A sample form and 
directions will be sent in response.
     Paper Filers: Parties who choose to file by paper must 
file an original and four copies of each filing. If more than one 
docket or rulemaking number appears in the caption of this proceeding, 
filers 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). All filings must be addressed to the Commission's 
Secretary, Office of the Secretary, Federal Communications Commission.
     The Commission's contractor will receive hand-delivered or 
messenger-delivered paper filings for the Commission's Secretary at 236

[[Page 38833]]

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.
     U.S. Postal Service first-class, Express, and Priority 
mail should be addressed to 445 12th Street, SW., Washington, DC 20554.
    All filings must be addressed to the Commission's Secretary, 
Marlene H. Dortch, Office of the Secretary, Federal Communications 
Commission, 445 12th Street, SW., Washington, DC 20554. Parties must 
also send a courtesy copy of their filing to Antoinette Stevens, 
Telecommunications Access Policy Division, Wireline Competition Bureau, 
Federal Communications Commission, 445 12th Street, SW., Room 5-B540, 
Washington, DC 20554. Antoinette Stevens's e-mail address is 
Antoinette.Stevens@fcc.gov and telephone number is (202) 418-7387.


Synopsis of the Notice of Proposed Rulemaking (NPRM)

    1. In this NPRM, we seek to further refine the record concerning 
the interim requirements established in the companion Order published 
elsewhere in this issue of the Federal Register for mobile wireless 
providers and for interconnected VoIP providers, while we continue to 
examine more fundamental contribution methodology reform. In the Order, 
we increased the interim wireless safe harbor from 28.5 percent to 37.1 
percent to reflect more accurately actual wireless interstate usage. We 
also require providers of interconnected VoIP service to contribute to 
the Fund, by reporting their actual interstate revenues, by using a 
traffic study (if approved by the Commission), or by using a safe 
harbor of 64.9 percent.
    2. First, we seek comment on whether to eliminate or raise the 
interim wireless safe harbor. Wireless providers may base contributions 
on actual interstate and international revenues or on traffic studies 
conducted to approximate these revenues. In light of these options, we 
seek comment on whether we should eliminate the interim wireless safe 
harbor or whether there remains a need to perpetuate a wireless safe 
harbor. We seek comment on whether mobile wireless providers can, or 
should be able to, determine their actual interstate and international 
end-user revenues. If we decide to eliminate the wireless safe harbor, 
we seek comment on how mobile wireless providers would determine their 
actual usage and whether we should continue to permit wireless 
providers to use traffic studies. For example, the study relied on in 
the Order utilized originating and terminating Numbering Plan Areas 
(NPAs), or area codes, to identify interstate revenues. We seek comment 
on whether originating and terminating NPAs reflect whether a call is 
interstate or international. We also seek comment on whether 
originating and terminating cell sites could be used to determine the 
jurisdictional nature of a call. Are there other methods of determining 
jurisdiction? We ask commenters to address associated difficulties and 
costs of implementation. We also seek comment on whether there are 
unique difficulties associated with analyzing either outgoing or 
incoming calls, and whether it is necessary to analyze both types of 
calls or would, for example, out-bound calls reasonably approximate all 
interstate and international usage.
    3. If we decide to retain a wireless safe harbor, we seek comment 
on whether a safe harbor of 37.1 percent for interstate and 
international end-user revenue is appropriate or whether the safe 
harbor should be raised. Given that mobile wireless providers retain 
the option of reporting their actual interstate end-user 
telecommunications revenues, we have found that setting the interim 
safe harbor at the high end of the market for interstate and 
international end-user revenue is a reasonable approach. If 37.1 
percent does not reflect the high end of the market, what percentage 
does? Since 1998, we have increased the interim wireless safe harbor 
twice to reflect more accurately wireless interstate end-user revenue. 
We are mindful that these increases in the safe harbor percentage 
lagged market conditions, resulting in collecting fewer Fund 
contributions than market conditions would have supported. We seek 
comment on how to determine the safe harbor percentage to better 
reflect market conditions on an ongoing basis. For example, should we 
periodically (e.g., annually, quarterly) adjust the interim safe harbor 
percentage to reflect wireless interstate end-user revenue trends? If 
so, how would we establish these trends?
    4. Second, we seek comment on the USF obligations we have 
established in this Order for interconnected VoIP providers. We 
encourage commenters to describe possible ways in which our new 
requirements for interconnected VoIP providers could be improved. We 
welcome suggestions for a permanent approach to USF contributions from 
interconnected VoIP providers.
    5. In particular, we seek comment on whether to eliminate or change 
the interim safe harbor for providers of interconnected VoIP service. 
We ask commenters to address whether a safe harbor continues to be 
appropriate for providers of interconnected VoIP service. Can providers 
of interconnected VoIP service identify the amount of actual interstate 
and international, as opposed to intrastate, telecommunications they 
provide? If so, should we require that these providers report based on 
actual data? If not, is 64.9 percent the most appropriate level, or 
should we adjust the interim interconnected VoIP safe harbor? We ask 
that commenters advocating a change to the safe harbor explain the 
basis of their proposed revised safe harbor and how the safe harbor 
should be calculated.
    6. New Docket. In this NPRM, we open a new docket--WC Docket No. 
06-122. All filings made in response to this NPRM and those addressing 
the Commission's universal service contribution methodology rules 
generally, should be filed in WC Docket No. 06-122. Although we urge 
parties that previously filed in CC Docket Nos. 96-45, 98-171, 90-571, 
92-237/NSD File No. L-00-72, 99-200, 95-116, 98-170, or WC Docket No. 
04-36 on the universal service contribution methodology to re-file in 
new WC Docket No. 06-122, such filings nevertheless will be considered 
in this proceeding. CC Docket Nos. 96-45, 98-171, 90-571, 92-237/NSD 
File No. L-00-72, 99-200, 95-116, 98-170, and WC Docket No. 04-36 will 
remain open for other non-universal service contribution methodology 
related filings.

Initial Regulatory Flexibility Analysis

    7. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), the Commission has prepared the present Initial 
Regulatory Flexibility Analysis (IRFA) of the possible significant 
economic impact on small entities that might result from this Notice of 
Proposed Rulemaking (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 provided above. 
The Commission will send a copy of the NPRM, including this IRFA, to 
the Chief Counsel for Advocacy of the Small Business Administration. In 
addition, the NPRM and IRFA (or summaries thereof) will be published in 
the Federal Register.

[[Page 38834]]

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

    8. In the NPRM, we seek to further refine the record concerning the 
interim requirements established in the accompanying Order for mobile 
wireless providers and for interconnected VoIP providers, while we 
continue to examine more fundamental contribution methodology reform. 
In the Order, we increased the interim wireless safe harbor from 28.5 
percent to 37.1 percent to reflect more accurately actual wireless 
interstate usage. We also require providers of interconnected VoIP 
service to contribute to the Universal Service Fund (USF or Fund). 
These actions are necessary to ensure the stability and sufficiency of 
the Fund. The objective of the NPRM is to explore whether the 
Commission should take additional action to meet these goals.

2. Legal Basis

    9. The legal basis for any action that may be taken pursuant to the 
NPRM is contained in sections 1, 2, 4(i), 4(j), 201, 202, 218-220, 254, 
and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C. 
151, 152, 154(i)-(j), 201, 202, 218-220, 254, and 303(r), and sections 
1.1, 1.48, 1.411, 1.412, 1.415, 1.419, and 1.1200-1.1216, of the 
Commission's rules, 47 CFR 1.1, 1.48, 1.411, 1.412, 1.415, 1.419, 
1.1200-1.1216.

3. Description and Estimate of the Number of Small Entities to Which 
the Proposed Rules May Apply

    10. The RFA directs agencies to provide a description of and, where 
feasible, an estimate of the number of small entities that may be 
affected by the proposed rules. 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 Small Business 
Administration (SBA). The present NPRM might, in theory, reach a 
variety of industries; out of an abundance of caution, we have 
attempted to cast a wide net in describing categories of potentially 
affected small entities. We would appreciate any comment on the extent 
to which the various entities might be directly affected by our action.
    11. Small Businesses. Nationwide, there are a total of 
approximately 22.4 million small businesses, according to SBA data.
    12. Small Organizations. Nationwide, there are approximately 1.6 
million small organizations.
    13. Small Governmental Jurisdictions. The term ``small governmental 
jurisdiction'' is defined generally as ``governments of cities, towns, 
townships, villages, school districts, or special districts, with a 
population of less than fifty thousand.'' Census Bureau data for 2002 
indicate that there were 87,525 local governmental jurisdictions in the 
United States. We estimate that, of this total, 84,377 entities were 
``small governmental jurisdictions.'' Thus, we estimate that most 
governmental jurisdictions are small.
a. Wireline Carriers and Service Providers
    14. We have included small incumbent local exchange carriers in 
this present RFA analysis. As noted above, a ``small business'' under 
the RFA is one that, inter alia, meets the pertinent small business 
size standard (e.g., a telephone communications business having 1,500 
or fewer employees), and ``is not dominant in its field of operation.'' 
The SBA's Office of Advocacy contends that, for RFA purposes, small 
incumbent local exchange carriers are not dominant in their field of 
operation because any such dominance is not ``national'' in scope. We 
have therefore included small incumbent local exchange carriers in this 
RFA analysis, although we emphasize that this RFA action has no effect 
on Commission analyses and determinations in other, non-RFA contexts.
    15. Incumbent Local Exchange Carriers (LECs). Neither the 
Commission nor the SBA has developed a small business size standard 
specifically for incumbent local exchange services. The appropriate 
size standard under SBA rules is for the category Wired 
Telecommunications Carriers. Under that size standard, such a business 
is small if it has 1,500 or fewer employees. According to Commission 
data, 1,303 carriers have reported that they are engaged in the 
provision of incumbent local exchange services. Of these 1,303 
carriers, an estimated 1,020 have 1,500 or fewer employees and 283 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 our action.
    16. Competitive Local Exchange Carriers (CLECs), Competitive Access 
Providers (CAPs), ``Shared-Tenant Service Providers,'' and ``Other 
Local Service Providers.'' Neither the Commission nor the SBA has 
developed a small business size standard specifically for these service 
providers. The appropriate size standard under SBA rules is for the 
category Wired Telecommunications Carriers. Under that size standard, 
such a business is small if it has 1,500 or fewer employees. According 
to Commission data, 769 carriers have reported that they are engaged in 
the provision of either competitive access provider services or 
competitive local exchange carrier services. Of these 769 carriers, an 
estimated 676 have 1,500 or fewer employees and 93 have more than 1,500 
employees. In addition, 12 carriers have reported that they are 
``Shared-Tenant Service Providers,'' and all 12 are estimated to have 
1,500 or fewer employees. In addition, 37 carriers have reported that 
they are ``Other Local Service Providers.'' Of the 39, an estimated 38 
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, 
``Shared-Tenant Service Providers,'' and ``Other Local Service 
Providers'' are small entities that may be affected by our action.
    17. Local Resellers. The SBA has developed a small business size 
standard for the category of Telecommunications Resellers. Under that 
size standard, such a business is small if it has 1,500 or fewer 
employees. According to Commission data, 143 carriers have reported 
that they are engaged in the provision of local resale services. Of 
these, an estimated 141 have 1,500 or fewer employees and two have more 
than 1,500 employees. Consequently, the Commission estimates that the 
majority of local resellers are small entities that may be affected by 
our action.
    18. Toll Resellers. The SBA has developed a small business size 
standard for the category of Telecommunications Resellers. Under that 
size standard, such a business is small if it has 1,500 or fewer 
employees. According to Commission data, 770 carriers have reported 
that they are engaged in the provision of toll resale services. Of 
these, an estimated 747 have 1,500 or fewer employees and 23 have more 
than 1,500 employees. Consequently, the Commission estimates that the 
majority of toll

[[Page 38835]]

resellers are small entities that may be affected by our action.
    19. Payphone Service Providers (PSPs). Neither the Commission nor 
the SBA has developed a small business size standard specifically for 
payphone services providers. The appropriate size standard under SBA 
rules is for the category Wired Telecommunications Carriers. Under that 
size standard, such a business is small if it has 1,500 or fewer 
employees. According to Commission data, 654 carriers have reported 
that they are engaged in the provision of payphone services. Of these, 
an estimated 652 have 1,500 or fewer employees and two 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 our action.
    20. Interexchange Carriers (IXCs). Neither the Commission nor the 
SBA has developed a small business size standard specifically for 
providers of interexchange services. The appropriate size standard 
under SBA rules is for the category Wired Telecommunications Carriers. 
Under that size standard, such a business is small if it has 1,500 or 
fewer employees. According to Commission data, 316 carriers have 
reported that they are engaged in the provision of interexchange 
service. Of these, an estimated 292 have 1,500 or fewer employees and 
24 have more than 1,500 employees. Consequently, the Commission 
estimates that the majority of IXCs are small entities that may be 
affected by our action.
    21. Operator Service Providers (OSPs). Neither the Commission nor 
the SBA has developed a small business size standard specifically for 
operator service providers. The appropriate size standard under SBA 
rules is for the category 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 carriers have reported that 
they are engaged in the provision of operator services. Of these, an 
estimated 20 have 1,500 or fewer employees and three have more than 
1,500 employees. Consequently, the Commission estimates that the 
majority of OSPs are small entities that may be affected by our action.
    22. Prepaid Calling Card Providers. Neither the Commission nor the 
SBA has developed a small business size standard specifically for 
prepaid calling card providers. The appropriate size standard under SBA 
rules is for the category Telecommunications Resellers. Under that size 
standard, such a business is small if it has 1,500 or fewer employees. 
According to Commission data, 89 carriers have reported that they are 
engaged in the provision of prepaid calling cards. Of these, an 
estimated 88 have 1,500 or fewer employees and one has more than 1,500 
employees. Consequently, the Commission estimates that the majority of 
prepaid calling card providers are small entities that may be affected 
by our action.
    23. 800 and 800-Like Service Subscribers. Neither the Commission 
nor the SBA has developed a small business size standard specifically 
for 800 and 800-like service (``toll free'') subscribers. The 
appropriate size standard under SBA rules is for the category 
Telecommunications Resellers. Under that size standard, such a business 
is small if it has 1,500 or fewer employees. The most reliable source 
of information regarding the number of these service subscribers 
appears to be data the Commission collects on the 800, 888, and 877 
numbers in use. According to our data, at the beginning of January 
2005, the number of 800 numbers assigned was 7,540,453; the number of 
888 numbers assigned was 5,947,789 and the number of 877 numbers 
assigned was 4,805,568. We do not have data specifying the number of 
these subscribers that are not independently owned and operated or have 
more than 1,500 employees, and thus are unable at this time to estimate 
with greater precision the number of toll free subscribers that would 
qualify as small businesses under the SBA size standard. Consequently, 
we estimate that there are 7,540,453 or fewer small entity 800 
subscribers; 5,947,789 or fewer small entity 888 subscribers; and 
4,805,568 or fewer small entity 877 subscribers.
b. International Service Providers
    24. Satellite Telecommunications and Other Telecommunications. 
There is no small business size standard developed specifically for 
providers of international service. The appropriate size standards 
under SBA rules are for the two broad census categories of ``Satellite 
Telecommunications'' and ``Other Telecommunications.'' Under both 
categories, such a business is small if it has $13.5 million or less in 
average annual receipts.
    25. The first category of Satellite Telecommunications ``comprises 
establishments primarily engaged in providing point-to-point 
telecommunications services to other establishments in the 
telecommunications and broadcasting industries by forwarding and 
receiving communications signals via a system of satellites or 
reselling satellite telecommunications.'' For this category, Census 
Bureau data for 2002 show that there were a total of 371 firms that 
operated for the entire year. Of this total, 307 firms had annual 
receipts of under $10 million, and 26 firms had receipts of $10 million 
to $24,999,999. Consequently, we estimate that the majority of 
Satellite Telecommunications firms are small entities that might be 
affected by our action.
    26. The second category of Other Telecommunications ``comprises 
establishments primarily engaged in (1) providing specialized 
telecommunications applications, such as satellite tracking, 
communications telemetry, and radar station operations; or (2) 
providing satellite terminal stations and associated facilities 
operationally connected with one or more terrestrial communications 
systems and capable of transmitting telecommunications to or receiving 
telecommunications from satellite systems.'' For this category, Census 
Bureau data for 2002 show that there were a total of 332 firms that 
operated for the entire year. Of this total, 259 firms had annual 
receipts of under $10 million and 15 firms had annual receipts of $10 
million to $24,999,999. Consequently, we estimate that the majority of 
Other Telecommunications firms are small entities that might be 
affected by our action.
c. Wireless Telecommunications Service Providers
    27. Below, for those services subject to auctions, we note 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.
    28. Wireless Service Providers. The SBA has developed a small 
business size standard for wireless firms within the two broad economic 
census categories of ``Paging'' and ``Cellular and Other Wireless 
Telecommunications.'' Under both categories, the SBA deems a wireless 
business to be small if it has 1,500 or fewer employees. For the census 
category of Paging, Census Bureau data for 2002 show that there were 
807 firms in this category that operated for the entire year. Of this 
total, 804 firms had employment of 999 or fewer employees, and three 
firms had employment of 1,000 employees or more. Thus, under this 
category and associated small business size standard,

[[Page 38836]]

the majority of firms can be considered small. For the census category 
of Cellular and Other Wireless Telecommunications, Census Bureau data 
for 2002 show that there were 1,397 firms in this category that 
operated for the entire year. Of this total, 1,378 firms had employment 
of 999 or fewer employees, and 19 firms had employment of 1,000 
employees or more. Thus, under this second category and size standard, 
the majority of firms can, again, be considered small.
    29. Cellular Licensees. The SBA has developed a small business size 
standard for wireless firms within the broad economic census category 
``Cellular and Other Wireless Telecommunications.'' Under this SBA 
category, a wireless business is small if it has 1,500 or fewer 
employees. According to Commission data, 437 carriers reported that 
they were engaged in the provision of cellular service, Personal 
Communications Service (PCS), or Specialized Mobile Radio (SMR) 
Telephony services, which are placed together in the data. We have 
estimated that 260 of these are small, under the SBA small business 
size standard. Thus, under this category and size standard, the 
majority of firms can be considered small.
    30. Common Carrier Paging. The SBA has developed a small business 
size standard for Paging, under which a business is small if it has 
1,500 or fewer employees. According to Commission data, 375 carriers 
have reported that they are engaged in Paging or Messaging Service. Of 
these, an estimated 370 have 1,500 or fewer employees, and 5 have more 
than 1,500 employees. Consequently, the Commission estimates that the 
majority of paging providers are small entities that may be affected by 
our action. In addition, in the Paging Third Report and Order, we 
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 small business 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.
    31. 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, held in April 1997, there were seven winning bidders that 
qualified as ``very small business'' entities, and one that qualified 
as a ``small business'' entity.
    32. Wireless Telephony. Wireless telephony includes cellular, 
personal communications services (PCS), and specialized mobile radio 
(SMR) telephony carriers. As noted earlier, the SBA has developed a 
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. 
According to Commission data, 437 carriers reported that they were 
engaged in the provision of wireless telephony. We have estimated that 
260 of these are small under the SBA small business size standard.
    33. Broadband Personal Communications Service. The broadband 
Personal Communications Service (PCS) spectrum is divided into six 
frequency blocks designated A through F, and the Commission has held 
auctions for each block. The Commission defined ``small entity'' for 
Blocks C and F as an entity that has average gross revenues of $40 
million or less in the three previous calendar years. 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. Subsequent events, 
concerning Auction 35, including judicial and agency determinations, 
resulted in a total of 163 C and F Block licenses being available for 
grant.
    34. 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 auctions. However, four of the 
16 winning bidders in the two previous narrowband PCS auctions were 
small businesses, as that term was defined. 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

[[Page 38837]]

means of the Commission's partitioning and disaggregation rules.
    35. 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, we apply the small business 
size standard under the SBA rules applicable to ``Cellular and Other 
Wireless Telecommunications'' companies. This category provides that a 
small business is a wireless company employing no more than 1,500 
persons. The Commission estimates that nearly all such licensees are 
small businesses under the SBA's small business size standard.
    36. 220 MHz Radio Service--Phase II Licensees. The Phase II 220 MHz 
service is a new service, and is subject to spectrum auctions. In the 
220 MHz Third Report and Order, we 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.
    37. 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 800 MHz and 900 MHz bands to firms that had revenues of 
no more than $15 million in each of the three previous calendar years, 
or that had revenues of no more than $3 million in each of the previous 
calendar years, respectively. 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.
    38. 700 MHz Guard Band Licensees. In the 700 MHz Guard Band Order, 
we 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'' 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. 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.
    39. 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 rules and policies adopted herein.
    40. Air-Ground Radiotelephone Service. The Commission has not 
adopted a small business size standard specific to the Air-Ground 
Radiotelephone Service. We 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. There are approximately 
100 licensees in the Air-Ground Radiotelephone Service, and we estimate 
that almost all of them qualify as small under the SBA small business 
size standard.
    41. 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 our evaluations 
in this analysis, we estimate 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

[[Page 38838]]

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 dollars. 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 
dollars. 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.
    42. 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 rules 
and policies adopted herein. We noted, however, that the common carrier 
microwave fixed licensee category includes some large entities.
    43. 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. We are 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.
    44. 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 rules and 
polices adopted herein.
    45. 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, we estimate that the 
majority of providers in this service category are small businesses 
that may be affected by the rules and policies adopted herein. 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, we tentatively conclude that at 
least 1,932 licensees are small businesses.
    46. 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, we conclude 
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.
    47. 218-219 MHz Service. The first auction of 218-219 MHz spectrum 
resulted in 170 entities winning licenses for 594 Metropolitan 
Statistical Area (MSA) 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, we 
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

[[Page 38839]]

million for the preceding three years. These size standards will be 
used in future auctions of 218-219 MHz spectrum.
    48. 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. 
We believe 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 our 
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.
    49. 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.
d. Cable and OVS Operators
    50. Cable and Other Program Distribution. The Census Bureau defines 
this category as follows: ``This industry comprises establishments 
primarily engaged as third-party distribution systems for broadcast 
programming. The establishments of this industry deliver visual, aural, 
or textual programming received from cable networks, local television 
stations, or radio networks to consumers via cable or direct-to-home 
satellite systems on a subscription or fee basis. These establishments 
do not generally originate programming material.'' The SBA has 
developed a small business size standard for Cable and Other Program 
Distribution, which is: All such firms having $13.5 million or less in 
annual receipts. According to Census Bureau data for 2002, there were a 
total of 1,191 firms in this category that operated for the entire 
year. Of this total, 1,087 firms had annual receipts of under $10 
million, and 43 firms had receipts of $10 million or more but less than 
$25 million. Thus, under this size standard, the majority of firms can 
be considered small.
    51. Cable Companies and Systems. The Commission has also developed 
its own small business size standards, for the purpose of cable rate 
regulation. Under the Commission's rules, a ``small cable company'' is 
one serving 400,000 or fewer subscribers, nationwide. Industry data 
indicate that, of 1,076 cable operators nationwide, all but eleven are 
small under this size standard. In addition, under the Commission's 
rules, a ``small system'' is a cable system serving 15,000 or fewer 
subscribers. Industry data indicate that, of 7,208 systems nationwide, 
6,139 systems have under 10,000 subscribers, and an additional 379 
systems have 10,000-19,999 subscribers. Thus, under this second size 
standard, most cable systems are small.
    52. Cable System Operators. The Communications Act of 1934, as 
amended, also contains a size standard for small cable system 
operators, which is ``a cable operator that, directly or through an 
affiliate, serves in the aggregate fewer than 1 percent of all 
subscribers in the United States and is not affiliated with any entity 
or entities whose gross annual revenues in the aggregate exceed 
$250,000,000.'' The Commission has determined that an operator serving 
fewer than 677,000 subscribers shall be deemed a small operator, if its 
annual revenues, when combined with the total annual revenues of all 
its affiliates, do not exceed $250 million in the aggregate. Industry 
data indicate that, of 1,076 cable operators nationwide, all but ten 
are small under this size standard. We note that the Commission neither 
requests nor collects information on whether cable system operators are 
affiliated with entities whose gross annual revenues exceed $250 
million, and therefore we are unable to estimate more accurately the 
number of cable system operators that would qualify as small under this 
size standard.
    53. Open Video Services. Open Video Service (OVS) systems provide 
subscription services. As noted above, the SBA has created a small 
business size standard for Cable and Other Program Distribution. This 
standard provides that a small entity is one with $13.5 million or less 
in annual receipts. The Commission has certified approximately 25 OVS 
operators to serve 75 areas, and some of these are currently providing 
service. Affiliates of Residential Communications Network, Inc. (RCN) 
received approval to operate OVS systems in New York City, Boston, 
Washington, D.C., and other areas. RCN has sufficient revenues to 
assure that they do not qualify as a small business entity. Little 
financial information is available for the other entities that are 
authorized to provide OVS and are not yet operational. Given that some 
entities authorized to provide OVS service have not yet begun to 
generate revenues, the Commission concludes that up to 24 OVS operators 
(those remaining) might qualify as small businesses that may be 
affected by the rules and policies adopted herein.
e. Internet Service Providers
    54. Internet Service Providers. The SBA has developed a small 
business size standard for Internet Service Providers (ISPs). ISPs 
``provide clients access to the Internet and generally provide related 
services such as web hosting, web page designing, and hardware or 
software consulting related to Internet connectivity.'' Under the SBA 
size standard, such a business is small if it has average annual 
receipts of $23 million or less. According to Census Bureau data for 
2002, there were 2,529 firms in this category that operated for the 
entire year. Of these, 2,437 firms had annual receipts of under $10 
million, and an additional 47 firms had receipts of between $10 million 
and $24, 999,999. Consequently, we estimate that the majority of these 
firms are small entities that may be affected by our action.
f. Other Internet-Related Entities
    55. Web Search Portals. Our action pertains to VoIP services, which 
could be provided by entities that provide other services such as 
email, online gaming, web browsing, video conferencing, instant 
messaging, and other, similar IP-enabled services. The Commission has 
not adopted a size standard for entities that create or provide these 
types of services or applications. However, the Census Bureau has 
identified firms that ``operate web sites that use a search engine to 
generate and maintain extensive databases of Internet addresses and 
content in an easily searchable format. Web search portals often 
provide additional Internet services, such as e-mail, connections to 
other Web sites, auctions, news, and other limited content, and serve 
as a home base for Internet users.'' The SBA has developed a small 
business size standard for this category; that size standard is $6.5 
million or less in average annual receipts. According to Census Bureau 
data for 2002, there were 342 firms in this category that operated for 
the entire year. Of these, 303 had annual receipts of under $5 million, 
and

[[Page 38840]]

an additional 15 firms had receipts of between $5 million and 
$9,999,999. Consequently, we estimate that the majority of these firms 
are small entities that may be affected by our action.
    56. Data Processing, Hosting, and Related Services. Entities in 
this category ``primarily * * * provid[e] infrastructure for hosting or 
data processing services.'' The SBA has developed a small business size 
standard for this category; that size standard is $23 million or less 
in average annual receipts. According to Census Bureau data for 2002, 
there were 6,877 firms in this category that operated for the entire 
year. Of these, 6,418 had annual receipts of under $10 million, and an 
additional 251 firms had receipts of between $10 million and 
$24,999,999. Consequently, we estimate that the majority of these firms 
are small entities that may be affected by our action.
    57. All Other Information Services. ``This industry comprises 
establishments primarily engaged in providing other information 
services (except new syndicates and libraries and archives).'' Our 
action pertains to VoIP services, which could be provided by entities 
that provide other services such as email, online gaming, web browsing, 
video conferencing, instant messaging, and other, similar IP-enabled 
services. The SBA has developed a small business size standard for this 
category; that size standard is $6.5 million or less in average annual 
receipts. According to Census Bureau data for 2002, there were 155 
firms in this category that operated for the entire year. Of these, 138 
had annual receipts of under $5 million, and an additional four firms 
had receipts of between $5 million and $9,999,999. Consequently, we 
estimate that the majority of these firms are small entities that may 
be affected by our action.
    58. Internet Publishing and Broadcasting. ``This industry comprises 
establishments engaged in publishing and/or broadcasting content on the 
Internet exclusively. These establishments do not provide traditional 
(non-Internet) versions of the content that they publish or 
broadcast.'' The SBA has developed a small business size standard for 
this census category; that size standard is 500 or fewer employees. 
According to Census Bureau data for 2002, there were 1,362 firms in 
this category that operated for the entire year. Of these, 1,351 had 
employment of 499 or fewer employees, and six firms had employment of 
between 500 and 999. Consequently, we estimate that the majority of 
these firms are small entities that may be affected by our action.
    59. Software Publishers. These companies may design, develop or 
publish software and may provide other support services to software 
purchasers, such as providing documentation or assisting in 
installation. The companies may also design software to meet the needs 
of specific users. The SBA has developed a small business size standard 
of $23 million or less in average annual receipts for all of the 
following pertinent categories: Software Publishers, Custom Computer 
Programming Services, and Other Computer Related Services. For Software 
Publishers, Census Bureau data for 2002 indicate that there were 6,155 
firms in the category that operated for the entire year. Of these, 
7,633 had annual receipts of under $10 million, and an additional 403 
firms had receipts of between $10 million and $24,999,999. For 
providers of Custom Computer Programming Services, the Census Bureau 
data indicate that there were 32,269 firms that operated for the entire 
year. Of these, 31,416 had annual receipts of under $10 million, and an 
additional 565 firms had receipts of between $10 million and 
$24,999,999. For providers of Other Computer Related Services, the 
Census Bureau data indicate that there were 6,357 firms that operated 
for the entire year. Of these, 6,187 had annual receipts of under $10 
million, and an additional 101 firms had receipts of between $10 
million and $24,999,999. Consequently, we estimate that the majority of 
the firms in each of these three categories are small entities that may 
be affected by our action.

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

    60. The NPRM addresses required USF contribution levels; these 
levels, plus associated routine reporting requirements, constitute 
compliance burdens. The NPRM seeks comment, first, on whether to 
eliminate or raise the interim wireless safe harbor. The NPRM asks 
whether mobile wireless providers can, or should be able to, determine 
their actual interstate and international end-user revenues. If we 
decide to eliminate the wireless safe harbor, the NPRM seeks comment on 
how mobile wireless providers would determine their actual usage and 
whether we should continue to permit wireless providers to use traffic 
studies. For example, the NPRM seeks comment on whether originating and 
terminating Numbering Plan Areas (NPAs) reflect whether a call is 
interstate or international. The NPRM also seeks comment on whether 
originating and terminating cell sites could be used to determine the 
jurisdictional nature of a call. The NPRM asks commenters to address 
associated difficulties and costs of implementation. The NPRM also 
seeks comment on whether there are unique difficulties associated with 
analyzing either outgoing or incoming calls, and whether it is 
necessary to analyze both types of calls or would, for example, out-
bound calls reasonably approximate all interstate and international 
usage.
    61. If we decide to retain a wireless safe harbor, the NPRM seeks 
comment on whether the new interim safe harbor of 37.1 percent for 
interstate and international end-user revenue is appropriate or whether 
the safe harbor should be raised. Given that mobile wireless providers 
retain the option of reporting their actual interstate end-user 
telecommunications revenues, we have found that setting the interim 
safe harbor at the high end of the market for interstate and 
international end-user revenue is a reasonable approach. The NPRM asks 
whether a safe harbor of 37.1 percent reflects a reasonable 
approximation of the high end of wireless interstate and international 
end-user usage today, and if not, what percentage does. Since 1998, the 
Commission has increased the interim wireless safe harbor twice to 
reflect more accurately wireless interstate end-user revenue. We are 
mindful that these increases in the safe harbor percentage lagged 
market conditions, resulting in collecting fewer Fund contributions 
than market conditions would have supported. The NPRM seeks comment on 
how to determine the safe harbor percentage to better reflect market 
conditions on an ongoing basis, and on whether the Commission should 
periodically (e.g., annually, quarterly) adjust the interim safe harbor 
percentage to reflect wireless interstate end-user revenue trends.
    62. The NPRM also seeks comment on the USF obligations we have 
established in the Order for interconnected VoIP providers. We 
encourage commenters to describe possible ways in which our new 
requirements for interconnected VoIP providers could be improved. Given 
the interim nature of this order, we welcome suggestions for a 
permanent approach to USF contributions from interconnected VoIP 
providers.
    63. In particular, the NPRM seeks comment on whether to eliminate 
or change the interim safe harbor established in the Order for 
providers of interconnected VoIP service.

[[Page 38841]]

Commenters are asked to address whether a safe harbor continues to be 
appropriate for providers of interconnected VoIP service, and whether 
providers of interconnected VoIP service can identify the amount of 
actual interstate and international, as opposed to intrastate, 
telecommunications they provide. If so, the NPRM asks whether these 
providers should be required to report based on actual data. If not, 
the NPRM seeks comment on whether 64.9 percent is the most appropriate 
level, or whether we should adjust the interim interconnected VoIP safe 
harbor. The NPRM asks that commenters advocating a change to the safe 
harbor explain the basis of their proposed revised safe harbor and how 
the safe harbor should be calculated.

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

    64. The RFA requires an agency to describe any significant 
alternatives that it has considered in reaching its proposed approach, 
which may include (among others) the following four alternatives: (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.
    65. The NPRM specifically seeks comment on whether the Commission 
should revise the USF obligations established for interconnected VoIP 
providers. In addition, the NPRM seeks comment on the appropriateness 
of the interim safe harbors established for wireless carriers and 
interconnected VoIP providers. We seek comment here on the effect the 
various proposals summarized above will have on small entities, and on 
what effect alternative rules would have on those entities. How can the 
Commission achieve its goal of ensuring the stability and sufficiency 
of the Fund while also imposing minimal burdens on small entities? What 
specific steps could the Commission take in this regard?

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

    66. None.

Ordering Clauses

    67. Accordingly, it is ordered that, pursuant to sections 1, 2, 
4(i), 4(j), 201, 202, 218-220, 254, and 303(r) of the Communications 
Act of 1934, as amended, 47 U.S.C. 151, 152, 154(i)-(j), 201, 202, 218-
220, 254, and 303(r), this Notice of Proposed Rulemaking in WC Docket 
No. 06-122 is adopted.
    68. It is further ordered that the Commission's Consumer and 
Governmental Affairs Bureau, Reference Information Center, shall send a 
copy of this 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. 06-6060 Filed 7-7-06; 8:45 am]

BILLING CODE 6712-01-P