[House Report 107-20]
[From the U.S. Government Publishing Office]



107th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     107-20

======================================================================



 
    INDEPENDENT TELECOMMUNICATIONS CONSUMER ENHANCEMENT ACT OF 2001

                                _______
                                

 March 13, 2001.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. Tauzin, from the Committee on Energy and Commerce, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 496]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 496) to amend the Communications Act of 1934 to 
promote deployment of advanced services and foster the 
development of competition for the benefit of consumers in all 
regions of the Nation by relieving unnecessary burdens on the 
Nation's two percent local exchange telecommunications 
carriers, and for other purposes, having considered the same, 
report favorably thereon with an amendment and recommend that 
the bill as amended do pass.

                                CONTENTS

                                                                   Page
Amendment........................................................     2
Purpose and Summary..............................................     5
Background and Need for Legislation..............................     5
Hearings.........................................................     6
Committee Consideration..........................................     6
Committee Votes..................................................     6
Statement of General Performance Goals and Objectives............     6
New Budget Authority, Entitlement Authority, and Tax Expenditures     6
Committee Cost Estimate..........................................     6
Congressional Budget Office Estimate.............................     7
Federal Mandates Statement.......................................     8
Advisory Committee Statement.....................................     8
Constitutional Authority Statement...............................     8
Applicability to Legislative Branch..............................     8
Section-by-Section Analysis of the Legislation...................     8
Changes in Existing Law Made by the Bill, as Reported............    10

                               Amendment

      The amendment is as follows:
      Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Independent Telecommunications 
Consumer Enhancement Act of 2001''.

SEC. 2. FINDINGS AND PURPOSE.

  (a) Findings.--Congress finds the following:
          (1) The Telecommunications Act of 1996 was enacted to foster 
        the rapid deployment of advanced telecommunications and 
        information technologies and services to all Americans by 
        promoting competition and reducing regulation in 
        telecommunications markets nationwide.
          (2) The Telecommunications Act of 1996 specifically 
        recognized the unique abilities and circumstances of local 
        exchange carriers with fewer than two percent of the Nation's 
        subscriber lines installed in the aggregate nationwide.
          (3) Given the markets two percent carriers typically serve, 
        such carriers are uniquely positioned to accelerate the 
        deployment of advanced services and competitive initiatives for 
        the benefit of consumers in less densely populated regions of 
        the Nation.
          (4) Existing regulations are typically tailored to the 
        circumstances of larger carriers and therefore often impose 
        disproportionate burdens on two percent carriers, impeding such 
        carriers' deployment of advanced telecommunications services 
        and competitive initiatives to consumers in less densely 
        populated regions of the Nation.
          (5) Reducing regulatory burdens on two percent carriers will 
        enable such carriers to devote additional resources to the 
        deployment of advanced services and to competitive initiatives 
        to benefit consumers in less densely populated regions of the 
        Nation.
          (6) Reducing regulatory burdens on two percent carriers will 
        increase such carriers' ability to respond to marketplace 
        conditions, allowing them to accelerate deployment of advanced 
        services and competitive initiatives to benefit consumers in 
        less densely populated regions of the Nation.
  (b) Purposes.--The purposes of this Act are--
          (1) to accelerate the deployment of advanced services and the 
        development of competition in the telecommunications industry 
        for the benefit of consumers in all regions of the Nation, 
        consistent with the Telecommunications Act of 1996, by reducing 
        regulatory burdens on local exchange carriers with fewer than 
        two percent of the Nation's subscriber lines installed in the 
        aggregate nationwide;
          (2) to improve such carriers' flexibility to undertake such 
        initiatives; and
          (3) to allow such carriers to redirect resources from paying 
        the costs of such regulatory burdens to increasing investment 
        in such initiatives.

SEC. 3. DEFINITION.

  Section 3 of the Communications Act of 1934 (47 U.S.C. 153) is 
amended--
          (1) by redesignating paragraphs (51) and (52) as paragraphs 
        (52) and (53), respectively; and
          (2) by inserting after paragraph (50) the following:
          ``(51) Two percent carrier.--The term `two percent carrier' 
        means an incumbent local exchange carrier within the meaning of 
        section 251(h) whose access lines, when aggregated with the 
        access lines of any local exchange carrier that such incumbent 
        local exchange carrier directly or indirectly controls, is 
        controlled by, or is under common control with, are fewer than 
        two percent of the Nation's subscriber lines installed in the 
        aggregate nationwide.''.

SEC. 4. REGULATORY RELIEF FOR TWO PERCENT CARRIERS.

  Title II of the Communications Act of 1934 is amended by adding at 
the end thereof a new part IV as follows:

         ``PART IV--PROVISIONS CONCERNING TWO PERCENT CARRIERS

``SEC. 281. REDUCED REGULATORY REQUIREMENTS FOR TWO PERCENT CARRIERS.

  ``(a) Commission To Take Into Account Differences.--In adopting rules 
that apply to incumbent local exchange carriers (within the meaning of 
section 251(h)), the Commission shall separately evaluate the burden 
that any proposed regulatory, compliance, or reporting requirements 
would have on two percent carriers.
  ``(b) Effect of Commission's Failure To Take Into Account 
Differences.--If the Commission adopts a rule that applies to incumbent 
local exchange carriers and fails to separately evaluate the burden 
that any proposed regulatory, compliance, or reporting requirement 
would have on two percent carriers, the Commission shall not enforce 
the rule against two percent carriers unless and until the Commission 
performs such separate evaluation.
  ``(c) Additional Review Not Required.--Nothing in this section shall 
be construed to require the Commission to conduct a separate evaluation 
under subsection (a) if the rules adopted do not apply to two percent 
carriers, or such carriers are exempted from such rules.
  ``(d) Savings Clause.--Nothing in this section shall be construed to 
prohibit any size-based differentiation among carriers mandated by this 
Act, chapter 6 of title 5, United States Code, the Commission's rules, 
or any other provision of law.
  ``(e) Effective Date.--The provisions of this section shall apply 
with respect to any rule adopted on or after the date of enactment of 
this section.

``SEC. 282. LIMITATION OF REPORTING REQUIREMENTS.

  ``(a) Limitation.--The Commission shall not require a two percent 
carrier--
          ``(1) to file cost allocation manuals or to have such manuals 
        audited or attested, but a two percent carrier that qualifies 
        as a class A carrier shall annually certify to the Commission 
        that the two percent carrier's cost allocation complies with 
        the rules of the Commission; or
          ``(2) to file Automated Reporting and Management Information 
        Systems (ARMIS) reports.
  ``(b) Preservation of Authority.--Except as provided in subsection 
(a), nothing in this Act limits the authority of the Commission to 
obtain access to information under sections 211, 213, 215, 218, and 220 
with respect to two percent carriers.

``SEC. 283. INTEGRATED OPERATION OF TWO PERCENT CARRIERS.

  ``The Commission shall not require any two percent carrier to 
establish or maintain a separate affiliate to provide any common 
carrier or noncommon carrier services, including local and 
interexchange services, commercial mobile radio services, advanced 
services (within the meaning of section 706 of the Telecommunications 
Act of 1996), paging, Internet, information services or other enhanced 
services, or other services. The Commission shall not require any two 
percent carrier and its affiliates to maintain separate officers, 
directors, or other personnel, network facilities, buildings, research 
and development departments, books of account, financing, marketing, 
provisioning, or other operations.

``SEC. 284. PARTICIPATION IN TARIFF POOLS AND PRICE CAP REGULATION.

  ``(a) NECA Pool.--The participation or withdrawal from participation 
by a two percent carrier of one or more study areas in the common line 
tariff administered and filed by the National Exchange Carrier 
Association or any successor tariff or administrator shall not obligate 
such carrier to participate or withdraw from participation in such 
tariff for any other study area. The Commission may require a two 
percent carrier to give 60 days notice of its intent to participate or 
withdraw from participation in such common line tariff with respect to 
a study area. Except as permitted by section 310(f)(3), a two percent 
carrier's election under this subsection shall be binding for one year 
from the date of the election.
  ``(b) Price Cap Regulation.--A two percent carrier may elect to be 
regulated by the Commission under price cap rate regulation, or elect 
to withdraw from such regulation, for one or more of its study areas. 
The Commission shall not require a carrier making an election under 
this subsection with respect to any study area or areas to make the 
same election for any other study area. Except as permitted by section 
310(f)(3), a two percent carrier's election under this subsection shall 
be binding for one year from the date of the election.

``SEC. 285. DEPLOYMENT OF NEW TELECOMMUNICATIONS SERVICES BY TWO 
                    PERCENT COMPANIES.

  ``(a) One-Day Notice of Deployment.--The Commission shall permit two 
percent carriers to introduce new interstate telecommunications 
services by filing a tariff on one day's notice showing the charges, 
classifications, regulations, and practices therefor, without obtaining 
a waiver, or make any other showing before the Commission in advance of 
the tariff filing. The Commission shall not have authority to approve 
or disapprove the rate structure for such services shown in such 
tariff.
  ``(b) Definition.--For purposes of subsection (a), the term `new 
interstate telecommunications service' means a class or subclass of 
service not previously offered by the two percent carrier that enlarges 
the range of service options available to ratepayers of such carrier.

``SEC. 286. ENTRY OF COMPETING CARRIER.

  ``(a) Pricing Flexibility.--Notwithstanding any other provision of 
this Act, any two percent carrier shall be permitted to deaverage its 
interstate switched or special access rates, file tariffs on one day's 
notice, and file contract-based tariffs for interstate switched or 
special access services immediately upon certifying to the Commission 
that a telecommunications carrier unaffiliated with such carrier is 
engaged in facilities-based entry within such carrier's service area. A 
two percent carrier subject to rate-of-return regulation with respect 
to an interstate switched or special access service, for which pricing 
flexibility has been exercised pursuant to this subsection, shall 
compute its interstate rate of return based on the nondiscounted rate 
for such service.
  ``(b) Pricing Deregulation.--Notwithstanding any other provision of 
this Act, upon receipt by the Commission of a certification by a two 
percent carrier that a local exchange carrier that is not a two percent 
carrier is engaged in facilities-based entry within the two percent 
carrier's service area, the Commission shall regulate such two percent 
carrier as non-dominant, and therefore shall not require the tariffing 
of the interstate service offerings of such two percent carrier.
  ``(c) Participation in Exchange Carrier Association Tariff.--A two 
percent carrier that meets the requirements of subsection (a) or (b) of 
this section with respect to one or more study areas shall be permitted 
to participate in the common line tariff administered and filed by the 
National Exchange Carrier Association or any successor tariff or 
administrator, by electing to include one or more of its study areas in 
such tariff.
  ``(d) Definitions.--For purposes of this section:
          ``(1) Facilities-based entry.--The term `facilities-based 
        entry' means, within the service area of a two percent 
        carrier--
                  ``(A) the provision or procurement of local telephone 
                exchange switching or its equivalent; and
                  ``(B) the provision of telephone exchange service to 
                at least one unaffiliated customer.
          ``(2) Contract-based tariff.--The term `contract-based 
        tariff' shall mean a tariff based on a service contract entered 
        into between a two percent carrier and one or more customers of 
        such carrier. Such tariff shall include--
                  ``(A) the term of the contract, including any renewal 
                options;
                  ``(B) a brief description of each of the services 
                provided under the contract;
                  ``(C) minimum volume commitments for each service, if 
                any;
                  ``(D) the contract price for each service or services 
                at the volume levels committed to by the customer or 
                customers;
                  ``(E) a brief description of any volume discounts 
                built into the contract rate structure; and
                  ``(F) a general description of any other 
                classifications, practices, and regulations affecting 
                the contract rate.
          ``(3) Service area.--The term `service area' has the same 
        meaning as in section 214(e)(5).

``SEC. 287. SAVINGS PROVISIONS.

  ``(a) Commission Authority.--Nothing in this part shall be construed 
to restrict the authority of the Commission under sections 201 through 
208.
  ``(b) Rural Telephone Company Rights.--Nothing in this part shall be 
construed to diminish the rights of rural telephone companies otherwise 
accorded by this Act, or the rules, policies, procedures, guidelines, 
and standards of the Commission as of the date of enactment of this 
section.''.

SEC. 5. LIMITATION ON MERGER REVIEW.

  (a) Amendment.--Section 310 of the Communications Act of 1934 (47 
U.S.C. 310) is amended by adding at the end the following:
  ``(f) Deadline for Making Public Interest Determination.--
          ``(1) Time limit.--In connection with any merger between two 
        percent carriers, or the acquisition, directly or indirectly, 
        by a two percent carrier or its affiliate of securities or 
        assets of another two percent carrier or its affiliate, if the 
        merged or acquiring carrier remains a two percent carrier after 
        the merger or acquisition, the Commission shall make any 
        determinations required by this section and section 214, and 
        shall rule on any petition for waiver of the Commission's rules 
        or other request related to such determinations, not later than 
        60 days after the date an application with respect to such 
        merger or acquisition is submitted to the Commission.
          ``(2) Approval absent action.--If the Commission does not 
        approve or deny an application as described in paragraph (1) by 
        the end of the period specified, the application shall be 
        deemed approved on the day after the end of such period. Any 
        such application deemed approved under this subsection shall be 
        deemed approved without conditions.
          ``(3) Election permitted.--The Commission shall permit a two 
        percent carrier to make an election pursuant to section 284 
        with respect to any local exchange facilities acquired as a 
        result of a merger or acquisition that is subject to the review 
        deadline established in paragraph (1) of this subsection.''.
  (b) Effective Date.--The provisions of this section shall apply with 
respect to any application that is submitted to the Commission on or 
after the date of enactment of this Act. Applications pending with the 
Commission on the date of enactment of this Act shall be subject to the 
requirements of this section as if they had been filed with the 
Commission on the date of enactment of this Act.

SEC. 6. TIME LIMITS FOR ACTION ON PETITIONS FOR RECONSIDERATION OR 
                    WAIVER.

  (a) Amendment.--Section 405 of the Communications Act of 1934 (47 
U.S.C. 405) is amended by adding to the end the following:
  ``(c) Expedited Action Required.--
          ``(1) Time limit.--Within 90 days after receiving from a two 
        percent carrier a petition for reconsideration or other review 
        filed under this section or a petition for waiver of a rule, 
        policy, or other Commission requirement, the Commission shall 
        issue an order granting or denying such petition. If the 
        Commission fails to act on a petition for waiver subject to the 
        requirements of this section within this 90-day period, the 
        relief sought in such petition shall be deemed granted. If the 
        Commission fails to act on a petition for reconsideration or 
        other review subject to the requirements of this section within 
        such 90-day period, the Commission's enforcement of any rule 
        the reconsideration or other review of which was specifically 
        sought by the petitioning party shall be stayed with respect to 
        that party until the Commission issues an order granting or 
        denying such petition.
          ``(2) Finality of action.--Any order issued under paragraph 
        (1), or any grant of a petition for waiver that is deemed to 
        occur as a result of the Commission's failure to act under 
        paragraph (1), shall be a final order and may be appealed.''.
  (b) Effective Date.--The provisions of this section shall apply with 
respect to any petition for reconsideration or other review or petition 
for waiver that is submitted to the Commission on or after the date of 
enactment of this Act. Petitions for reconsideration or petitions for 
waiver pending with the Commission on the date of enactment of this Act 
shall be subject to the requirements of this section as if they had 
been filed on the date of enactment of this Act.

                          Purpose and Summary

    The purpose of H.R. 496, the Independent Telecommunications 
Consumer Enhancement Act of 2001, is to reduce the regulatory 
burden imposed upon two percent telecommunications carriers so 
that they may more effectively respond to competition in rural 
and less-densely populated areas.

                  Background and Need for Legislation

    In February 1998, the Independent Telephone and 
Telecommunications Alliance (ITTA), a group of 14 mid-size 
incumbent local exchange carriers (ILECs) that each have less 
than two percent of the nation's installed subscriber lines, 
petitioned the Federal Communications Commission (FCC) to 
forbear from a number of regulations. In May 1999, the FCC 
released six orders which denied the vast majority of ITTA's 
requests, but granted limited relief on some grounds. As a 
result, two percent carriers argue that the regulatory burdens 
imposed by the FCC prevent them from being fully competitive in 
a competitive environment. H.R. 496 would legislatively remedy 
some of the items denied by the FCC and would, additionally, 
relieve other regulatory burdens imposed on two percent 
carriers.

                           Committee Hearings

    The Committee has held no hearings on H.R. 496. During the 
106th Congress, however, the Subcommittee on 
Telecommunications, Trade, and Consumer Protection held a 
hearing on July 20, 2000 on H.R. 3850, legislation that was 
comparable to H.R. 496. The Subcommittee received testimony 
from: Carol E. Mattey, Deputy Chief, Common Carrier Bureau, 
Federal Communications Commission; Larry F. Darby, Darby 
Associates, Communications Consultants; John Sumpter, Vice 
President of Regulatory Affairs, Pac-West Telecomm, Inc., on 
behalf of Association for Local Telecommunications Services; 
Jack Mueller, Cincinnati Telephone Company/BroadWing; and David 
Cole, Senior Vice President of Operations Support, CenturyTel, 
Inc.

                        Committee Consideration

    On February 28, 2001, the Full Committee met in open markup 
session and ordered H.R. 496 reported to the House, with an 
amendment in the nature of a substitute offered by 
Representative Cubin, by a voice vote, a quorum being present.

                            Committee Votes

    Clause 3(b) of Rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. 
There were no record votes taken in connection with ordering 
H.R. 496 reported. A motion by Mr. Tauzin to order H.R. 496 
reported to the House, with amendment, was agreed to by a voice 
vote.

         Statement of General Performance Goals and Objectives

    H.R. 496 will reduce the regulatory burden imposed upon two 
percent telecommunications carriers so that they may more 
effectively respond to competition in rural and less-densely 
populated areas.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of Rule XIII of the Rules 
of the House of Representatives, the Committee finds that H.R. 
496, the Independent Telecommunications Consumer Enhancement 
Act, would result in no new or increased budget authority, 
entitlement authority, or tax expenditures or revenues.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, March 12, 2001.
Hon. W.J. ``Billy'' Tauzin,
Chairman, Committee on Energy and Commerce, House of Representatives, 
        Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 496, the 
Independent Telecommunications Consumer Enhancement Act of 
2001.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Ken Johnson.
            Sincerely,
                                           Steven Lieberman
                                    (For Dan L. Crippen, Director).
    Enclosure.

H.R. 496--Independent Telecommunications Consumer Enhancement Act of 
        2001

    H.R. 496 would exempt small telecommunications carriers 
from certain rules and reporting requirements administered by 
the Federal Communications Commission (FCC). The bill also 
would require the FCC to grant or deny merger petitions from 
these companies within 60 days, and all reconsideration and 
waiver petitions within 90 days.
    CBO estimates that H.R. 496 would have no significant 
impact on the federal budget. However, the bill could affect 
direct spending, so pay-as-you-go procedures would apply. H.R. 
496 contains no intergovernmental or private-sector mandates as 
defined in the Unfunded Mandates Reform Act and would impose no 
costs on state, local, or tribal governments.
    Based on information from the FCC, CBO estimates that 
implementing H.R. 496 would cost the agency about $3 million in 
the first year after enactment and $2 million a year 
thereafter. The commission would need more staff to investigate 
the costs incurred by small telecommunications carriers, which 
the bill would exempt from certain reporting requirements. The 
FCC also would have to hire additional personnel to review 
merger, reconsideration, and waiver petitions in order to meet 
the bill's deadlines for acting on such petitions. Under 
current law, enforcement and regulatory costs that the agency 
incurs are offset by fees charged to the industries that the 
FCC regulates. Therefore, CBO expects that the net costs of 
implementing these provisions would be negligible.
    H.R. 496 would affect application fees the FCC collects to 
offset costs associated with tariff filings and other 
applications from the telecommunications industry. Those 
licensing fees are recorded in the budget as offsetting 
receipts. Based on information from the FCC, CBO expects that, 
under H.R. 496, small telecommunications carriers might file 
slightly fewer tariffs. However, CBO estimates that the effect 
on application fees would not be significant.
    The CBO staff contact for this estimate is Ken Johnson. 
This estimate was approved by Robert A. Sunshine, Assistant 
Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of Rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional authority for this legislation is provided in 
Article I, section 8, clause 3, which grants Congress the power 
to regulate commerce with foreign nations, among the several 
States, and with the Indian tribes.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    Section 1 establishes the short title of the bill, the 
``Independent Telecommunications Consumer Enhancement Act of 
2001.''

Section 2. Findings and purpose

    Section 2 makes certain Congressional findings and 
describes the purposes of the bill.

Section 3. Definition

    Section 3 defines the term ``two percent carrier'' as an 
incumbent local exchange carrier within the meaning of section 
251(h) whose access lines, when aggregated with the access 
lines of any local exchange carrier that such incumbent local 
exchange carrier directly or indirectly controls, is controlled 
by, or is under common control with, are fewer than two percent 
of the Nation's subscriber lines installed in the aggregate 
nationwide.

Section 4. Regulatory relief for two percent carriers

    Section 4 of the bill adds a new section 281 to the 
Communications Act of 1934 (47 U.S.C. Sec. 151 et seq.) that 
requires the FCC to separately evaluate the burden that any 
proposed regulation would have on two percent carriers. If the 
FCC fails to separately evaluate such regulations, the 
Commission is not permitted to enforce the rule against two 
percent carriers. If the proposed regulation does not apply to 
two percent carriers, a separate evaluation is not required. 
This section applies to any rule adopted on or after the date 
of enactment of the bill.
    New section 282 of the Communications Act exempts two 
percent carriers from filing and auditing or attesting cost 
allocation manuals and annual Automated Reporting and 
Management Information Systems reports. Two percent carriers 
that qualify as Class A carriers must annually certify that 
they are complying with cost allocation rules. Except for the 
provisions contained in section 282, nothing in this bill is 
meant to limit the authority of the FCC to request or obtain 
access to information currently allowed under the 
Communications Act. The elimination of CAM and ARMIS burdens 
would not affect other Commission reporting requirements such 
as Form 492 and Form 499.
    New section 283 of the Communications Act prevents the FCC 
from requiring a two percent carrier to establish a separate 
affiliate to provide any common carrier or noncommon carrier 
service, including local and interexchange services, commercial 
mobile radio service, advanced services (within the meaning of 
section 706 of the Communications Act), paging, Internet, 
information services or other enhanced services. Although 
Section 283 prevents the Commission from requiring two percent 
carriers to maintain separate books of account, this provision 
does not relieve two percent carriers of their obligation to 
comply with existing cost allocation requirements.
    New section 284 of the Communications Act eliminates the 
``all or nothing rules'' relating to the National Exchange 
Carrier Assocation (NECA) common line tariff pool and price cap 
regulations. This section allows two percent carriers to 
participate in NECA's common line tariff in one or more study 
areas, and elect to be regulated as a price cap carrier for one 
or more study areas. However, a two percent carrier is not 
required to participate in NECA's common line tariff in every 
one of its study areas, nor is the carrier required to elect 
price cap regulation in every one of its study areas. After a 
two percent carrier has elected to participate or withdraw from 
the NECA common line tariff for a particular study area, or to 
be regulated as a price cap carrier for a particular study 
area, the choice may not be changed for at least one year 
unless a change in ownership occurs.
    New section 285 of the Communications Act allows two 
percent carriers to introduce new interstate services by filing 
a tariff with one day's notice, without obtaining a waiver, and 
prevents the FCC from approving or disapproving the rate 
structure. The term ``new interstate telecommunications 
service'' means a class or subclass of service not previously 
offered that enlarges the carrier's range of service options.
    New section 286 of the Communications Act allows a two 
percent carrier to deaverage its interstate switched or special 
access rates, file a tariff with one day's notice, or file 
contract-based tariffs for interstate switched or special 
access services upon certifying that the carrier faces 
competition from a facilities-based carrier. However, a two 
percent carrier subject to rate of return regulation may not 
compute its interstate rate of return based on a discounted 
rate offered for an interstate service. Upon certifying that a 
two percent carrier faces competition from a facilities-based 
competitor that is not a two percent carrier, the FCC must 
regulate a two percent carrier as non-dominant, and, therefore, 
shall not require the tariffing of interstate service 
offerings. A two percent carrier that qualifies for pricing 
flexibility or non-dominant treatment in any study area shall 
not be required to exercise such regulatory relief for that 
study area. A two percent carrier may not include access lines 
for which pricing flexibility or non-dominant treatment has 
been exercised in the common line tariff administered and filed 
by the National Exchange Carrier Association or any successor 
tariff or administrator. The term ``Facilities-based entry'' is 
defined as the provision or procurement of local telephone 
exchange switching or its equivalent and the provision of 
telephone exchange service to at least one unaffiliated 
customer.
    New section 287 of the Communications Act includes a 
savings provision providing that nothing in this section is to 
be construed to restrict the authority of the FCC under 
sections 201 through 208 of the Communications Act or to 
diminish the rights of rural telephone companies under the 
Communications Act or any related rules, policies, procedures, 
guidelines, and standards of the FCC.

Section 5. Limitation on merger review

    Section 5 amends section 310 of the Communications Act (47 
U.S.C. Sec. 310) by adding a deadline for making a public 
interest determination on the application or any associated 
waiver or request. This provision was intended to apply in 
instances where a merger between two percent carriers, or the 
acquisition of a two percent carrier or the assets or 
securities of another carrier by a two percent carrier, results 
in a two percent carrier. The FCC, in making a determination 
under section 214 and 310 of the Communications Act, must make 
a determination not later than 60 days after the date an 
application is filed with the FCC. If the FCC fails to approve 
or deny the application within 60 days, the merger application 
is deemed approved without conditions. This section is 
effective with respect to any application submitted to the FCC 
on or after the date of enactment. Merger applications pending 
at the FCC on the date of enactment shall be subject to this 
section as if they had been filed with the FCC on the date of 
enactment.

Section 6. Time limits for action on petitions for reconsideration or 
        waiver

    Section 6 amends section 405 of the Communications Act (47 
U.S.C. Sec. 405) by requiring the FCC to act on waiver and 
reconsideration petitions filed by two percent carriers within 
90 days of filing. If no action is taken on a waiver petition 
within 90 days, the petition is deemed granted. If no action is 
taken on a petition for reconsideration within 90 days, the 
Commission's enforcement of any rule the reconsideration of 
which was specifically sought shall be stayed with respect to 
that party until the Commission issues an order granting or 
denying the petition. This section applies to other reviews 
conducted by the Commission that involve two-percent carriers.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

COMMUNICATIONS ACT OF 1934

           *       *       *       *       *       *       *



TITLE I--GENERAL PROVISIONS

           *       *       *       *       *       *       *


SEC. 3. DEFINITIONS.

  For the purposes of this Act, unless the context otherwise 
requires--
          (1)  * * *

           *       *       *       *       *       *       *

          (51) Two percent carrier.--The term ``two percent 
        carrier'' means an incumbent local exchange carrier 
        within the meaning of section 251(h) whose access 
        lines, when aggregated with the access lines of any 
        local exchange carrier that such incumbent local 
        exchange carrier directly or indirectly controls, is 
        controlled by, or is under common control with, are 
        fewer than two percent of the Nation's subscriber lines 
        installed in the aggregate nationwide.
          [(51)] (52) United states.--The term ``United 
        States'' means the several States and Territories, the 
        District of Columbia, and the possessions of the United 
        States, but does not include the Canal Zone.
          [(52)] (53) Wire communication.--The term ``wire 
        communication'' or ``communication by wire'' means the 
        transmission of writing, signs, signals, pictures, and 
        sounds of all kinds by aid of wire, cable, or other 
        like connection between the points of origin and 
        reception of such transmission, including all 
        instrumentalities, facilities, apparatus, and services 
        (among other things, the receipt, forwarding, and 
        delivery of communications) incidental to such 
        transmission.

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TITLE II--COMMON CARRIERS

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          PART IV--PROVISIONS CONCERNING TWO PERCENT CARRIERS

SEC. 281. REDUCED REGULATORY REQUIREMENTS FOR TWO PERCENT CARRIERS.

  (a) Commission To Take Into Account Differences.--In adopting 
rules that apply to incumbent local exchange carriers (within 
the meaning of section 251(h)), the Commission shall separately 
evaluate the burden that any proposed regulatory, compliance, 
or reporting requirements would have on two percent carriers.
  (b) Effect of Commission's Failure To Take Into Account 
Differences.--If the Commission adopts a rule that applies to 
incumbent local exchange carriers and fails to separately 
evaluate the burden that any proposed regulatory, compliance, 
or reporting requirement would have on two percent carriers, 
the Commission shall not enforce the rule against two percent 
carriers unless and until the Commission performs such separate 
evaluation.
  (c) Additional Review Not Required.--Nothing in this section 
shall be construed to require the Commission to conduct a 
separate evaluation under subsection (a) if the rules adopted 
do not apply to two percent carriers, or such carriers are 
exempted from such rules.
  (d) Savings Clause.--Nothing in this section shall be 
construed to prohibit any size-based differentiation among 
carriers mandated by this Act, chapter 6 of title 5, United 
States Code, the Commission's rules, or any other provision of 
law.
  (e) Effective Date.--The provisions of this section shall 
apply with respect to any rule adopted on or after the date of 
enactment of this section.

SEC. 282. LIMITATION OF REPORTING REQUIREMENTS.

  (a) Limitation.--The Commission shall not require a two 
percent carrier--
          (1) to file cost allocation manuals or to have such 
        manuals audited or attested, but a two percent carrier 
        that qualifies as a class A carrier shall annually 
        certify to the Commission that the two percent 
        carrier's cost allocation complies with the rules of 
        the Commission; or
          (2) to file Automated Reporting and Management 
        Information Systems (ARMIS) reports.
  (b) Preservation of Authority.--Except as provided in 
subsection (a), nothing in this Act limits the authority of the 
Commission to obtain access to information under sections 211, 
213, 215, 218, and 220 with respect to two percent carriers.

SEC. 283. INTEGRATED OPERATION OF TWO PERCENT CARRIERS.

  The Commission shall not require any two percent carrier to 
establish or maintain a separate affiliate to provide any 
common carrier or noncommon carrier services, including local 
and interexchange services, commercial mobile radio services, 
advanced services (within the meaning of section 706 of the 
Telecommunications Act of 1996), paging, Internet, information 
services or other enhanced services, or other services. The 
Commission shall not require any two percent carrier and its 
affiliates to maintain separate officers, directors, or other 
personnel, network facilities, buildings, research and 
development departments, books of account, financing, 
marketing, provisioning, or other operations.

SEC. 284. PARTICIPATION IN TARIFF POOLS AND PRICE CAP REGULATION.

  (a) NECA Pool.--The participation or withdrawal from 
participation by a two percent carrier of one or more study 
areas in the common line tariff administered and filed by the 
National Exchange Carrier Association or any successor tariff 
or administrator shall not obligate such carrier to participate 
or withdraw from participation in such tariff for any other 
study area. The Commission may require a two percent carrier to 
give 60 days notice of its intent to participate or withdraw 
from participation in such common line tariff with respect to a 
study area. Except as permitted by section 310(f)(3), a two 
percent carrier's election under this subsection shall be 
binding for one year from the date of the election.
  (b) Price Cap Regulation.--A two percent carrier may elect to 
be regulated by the Commission under price cap rate regulation, 
or elect to withdraw from such regulation, for one or more of 
its study areas. The Commission shall not require a carrier 
making an election under this subsection with respect to any 
study area or areas to make the same election for any other 
study area. Except as permitted by section 310(f)(3), a two 
percent carrier's election under this subsection shall be 
binding for one year from the date of the election.

SEC. 285. DEPLOYMENT OF NEW TELECOMMUNICATIONS SERVICES BY TWO PERCENT 
                    COMPANIES.

  (a) One-Day Notice of Deployment.--The Commission shall 
permit two percent carriers to introduce new interstate 
telecommunications services by filing a tariff on one day's 
notice showing the charges, classifications, regulations, and 
practices therefor, without obtaining a waiver, or make any 
other showing before the Commission in advance of the tariff 
filing. The Commission shall not have authority to approve or 
disapprove the rate structure for such services shown in such 
tariff.
  (b) Definition.--For purposes of subsection (a), the term 
``new interstate telecommunications service'' means a class or 
subclass of service not previously offered by the two percent 
carrier that enlarges the range of service options available to 
ratepayers of such carrier.

SEC. 286. ENTRY OF COMPETING CARRIER.

  (a) Pricing Flexibility.--Notwithstanding any other provision 
of this Act, any two percent carrier shall be permitted to 
deaverage its interstate switched or special access rates, file 
tariffs on one day's notice, and file contract-based tariffs 
for interstate switched or special access services immediately 
upon certifying to the Commission that a telecommunications 
carrier unaffiliated with such carrier is engaged in 
facilities-based entry within such carrier's service area. A 
two percent carrier subject to rate-of-return regulation with 
respect to an interstate switched or special access service, 
for which pricing flexibility has been exercised pursuant to 
this subsection, shall compute its interstate rate of return 
based on the nondiscounted rate for such service.
  (b) Pricing Deregulation.--Notwithstanding any other 
provision of this Act, upon receipt by the Commission of a 
certification by a two percent carrier that a local exchange 
carrier that is not a two percent carrier is engaged in 
facilities-based entry within the two percent carrier's service 
area, the Commission shall regulate such two percent carrier as 
non-dominant, and therefore shall not require the tariffing of 
the interstate service offerings of such two percent carrier.
  (c) Participation in Exchange Carrier Association Tariff.--A 
two percent carrier that meets the requirements of subsection 
(a) or (b) of this section with respect to one or more study 
areas shall be permitted to participate in the common line 
tariff administered and filed by the National Exchange Carrier 
Association or any successor tariff or administrator, by 
electing to include one or more of its study areas in such 
tariff.
  (d) Definitions.--For purposes of this section:
          (1) Facilities-based entry.--The term ``facilities-
        based entry'' means, within the service area of a two 
        percent carrier--
                  (A) the provision or procurement of local 
                telephone exchange switching or its equivalent; 
                and
                  (B) the provision of telephone exchange 
                service to at least one unaffiliated customer.
          (2) Contract-based tariff.--The term ``contract-based 
        tariff'' shall mean a tariff based on a service 
        contract entered into between a two percent carrier and 
        one or more customers of such carrier. Such tariff 
        shall include--
                  (A) the term of the contract, including any 
                renewal options;
                  (B) a brief description of each of the 
                services provided under the contract;
                  (C) minimum volume commitments for each 
                service, if any;
                  (D) the contract price for each service or 
                services at the volume levels committed to by 
                the customer or customers;
                  (E) a brief description of any volume 
                discounts built into the contract rate 
                structure; and
                  (F) a general description of any other 
                classifications, practices, and regulations 
                affecting the contract rate.
          (3) Service area.--The term ``service area'' has the 
        same meaning as in section 214(e)(5).

SEC. 287. SAVINGS PROVISIONS.

  (a) Commission Authority.--Nothing in this part shall be 
construed to restrict the authority of the Commission under 
sections 201 through 208.
  (b) Rural Telephone Company Rights.--Nothing in this part 
shall be construed to diminish the rights of rural telephone 
companies otherwise accorded by this Act, or the rules, 
policies, procedures, guidelines, and standards of the 
Commission as of the date of enactment of this section.

                TITLE III--PROVISIONS RELATING TO RADIO

PART I--GENERAL PROVISIONS

           *       *       *       *       *       *       *


SEC. 310. LIMITATION ON HOLDING AND TRANSFER OF LICENSES.

  (a)  * * *

           *       *       *       *       *       *       *

  (f) Deadline for Making Public Interest Determination.--
          (1) Time limit.--In connection with any merger 
        between two percent carriers, or the acquisition, 
        directly or indirectly, by a two percent carrier or its 
        affiliate of securities or assets of another two 
        percent carrier or its affiliate, if the merged or 
        acquiring carrier remains a two percent carrier after 
        the merger or acquisition, the Commission shall make 
        any determinations required by this section and section 
        214, and shall rule on any petition for waiver of the 
        Commission's rules or other request related to such 
        determinations, not later than 60 days after the date 
        an application with respect to such merger or 
        acquisition is submitted to the Commission.
          (2) Approval absent action.--If the Commission does 
        not approve or deny an application as described in 
        paragraph (1) by the end of the period specified, the 
        application shall be deemed approved on the day after 
        the end of such period. Any such application deemed 
        approved under this subsection shall be deemed approved 
        without conditions.
          (3) Election permitted.--The Commission shall permit 
        a two percent carrier to make an election pursuant to 
        section 284 with respect to any local exchange 
        facilities acquired as a result of a merger or 
        acquisition that is subject to the review deadline 
        established in paragraph (1) of this subsection.

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TITLE IV--PROCEDURAL AND ADMINISTRATIVE PROVISIONS

           *       *       *       *       *       *       *


SEC. 405. RECONSIDERATIONS.

  (a)  * * *

           *       *       *       *       *       *       *

  (c) Expedited Action Required.--
          (1) Time limit.--Within 90 days after receiving from 
        a two percent carrier a petition for reconsideration or 
        other review filed under this section or a petition for 
        waiver of a rule, policy, or other Commission 
        requirement, the Commission shall issue an order 
        granting or denying such petition. If the Commission 
        fails to act on a petition for waiver subject to the 
        requirements of this section within this 90-day period, 
        the relief sought in such petition shall be deemed 
        granted. If the Commission fails to act on a petition 
        for reconsideration or other review subject to the 
        requirements of this section within such 90-day period, 
        the Commission's enforcement of any rule the 
        reconsideration or other review of which was 
        specifically sought by the petitioning party shall be 
        stayed with respect to that party until the Commission 
        issues an order granting or denying such petition.
          (2) Finality of action.--Any order issued under 
        paragraph (1), or any grant of a petition for waiver 
        that is deemed to occur as a result of the Commission's 
        failure to act under paragraph (1), shall be a final 
        order and may be appealed.

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