[Federal Register Volume 61, Number 135 (Friday, July 12, 1996)]
[Rules and Regulations]
[Pages 36653-36654]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17809]


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[[Page 36654]]


FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 66

[FCC 96-242]


Applications Relating to Consolidation, Acquisition, or Control 
of Telephone Companies

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: The Telecommunications Act of 1996 specifically repealed 
section 221(a) of the Communications Act of 1934. In 1956, the 
Commission had enacted part 66 of the rules to set out the contents of 
an application for authority to consolidate telephone companies. Since 
the Commission no longer has this authority, it has removed part 66 of 
its rules as unnecessary.

EFFECTIVE DATE: July 12, 1996.

FOR FURTHER INFORMATION CONTACT: R.J. Hertz, Enforcement Division, 
Common Carrier Bureau, (202) 418-0984.

SUPPLEMENTARY INFORMATION:

    Adopted: May 29, 1996;
    Released: June 4 , 1996.

    1. On February 8, 1996, the Telecommunications Act of 1996 (the 
``1996 Act'') became law.1 Section 601(b)(2) of the 1996 Act 
2 reads: ``(s)ubsection (a) of section 221 (47 U.S.C. 221(a)) is 
repealed.'' This Order removes part 66 of the Commission's rules,3 
which concerns the applications to be filed upon the consolidation, 
acquisition, or change of control of telephone companies. Section 1.527 
of our rules contained the rules to implement Section 221(a) of the 
Communications Act of 1934, as amended.4 In 1956, after Congress 
made minor changes to section 221(a), the Commission adopted part 66 to 
establish new procedures and delineate the information necessary for an 
application for Commission approval of the consolidation.5
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    \1\ Pub. L. No. 104-104, 110 Stat. 56 (1996).
    \2\ Id. sec. 601(b)(2).
    \3\ 47 CFR 66.11-66.15.
    \4\ 47 U.S.C. 221(a).
    \5\ See Transfer of Carrier's Property, 42 FCC 125 (1956).
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    2. Under section 221(a) of the Act, before a consolidation could 
take place,6 the Commission was required to make a finding that it 
was not contrary to the public interest for a telecommunications 
carrier to acquire control, either by acquisition of the physical 
assets or the securities, of another carrier. Specifically, it provided 
that upon the filing of an application to consolidate, the Commission 
was to issue a notice to the areas affected by the consolidation so 
that the subscribers in those areas, as well as the state or local 
authorities, would have the opportunity to submit comments on the 
proposed consolidation. Then, if the Commission determined that the 
consolidation was in the public interest, it was to certify this fact 
so as to make inapplicable any other Act or Acts of Congress that would 
make the proposed transaction unlawful.
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    \6\ See supra note 4.
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    3. Congress enacted section 221(a) at a time when local telephone 
service was viewed as a natural monopoly; thus, section 221(a) allowed 
competing local telephone companies to merge without facing antitrust 
scrutiny.7 According to the Joint Explanatory Statement:
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    \7\ See Joint Explanatory Statement of the Committee of 
Conference, S. Rep. No. 104-458, at 200 (1996) (Joint Explanatory 
Statement).
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    [S]ection 221(a) could inadvertently undercut several of the 
provisions of the Telecommunications Act of 1996. The problem arises 
for at least two reasons. First, the crucial term ``telephone company'' 
is not defined. In the old world of regulated monopolies, a definition 
probably was not necessary. However, in the new world of competition, 
many companies will be able to argue plausibly that they are telephone 
companies.
    Second, section 221(a) allows the Commission to confer immunity 
from any Act of Congress (including the Telecommunications Act of 1996) 
after performing a public interest review. Section 221(a) could be used 
to avoid the cable-telco buyout provisions of the Telecommunications 
Act of 1996. Any cable company that owned any telephone assets could 
become a telephone company and be bought out by a BOC by applying for 
immunity under this section.
    In addition, if immunity were conferred under section 221(a), it 
would allow mergers between telecommunications giants to go forward 
without any antitrust or securities review. In the old world, the 
statute was usually used to confer immunity on mergers between 
noncompeting Bell operating subsidiaries or mergers between Bells and 
small independents within their territories. Neither of these 
situations involved competitive considerations.8
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    \8\ Id. at 200-01.
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    The Joint Explanatory Statement clarifies, however, that repeal of 
Section 221(a) would not affect the Commission's ability to conduct any 
review of a merger for Communications Act purposes but would simply end 
the Commission's ability to confer antitrust immunity.9
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    \9\ Id. at 201.
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    4. Because the part 66 rules were promulgated to effectuate a 
process that has been repealed by the 1996 Act, these rules are now 
unnecessary and should be removed. Accordingly, we find for good cause 
that further notice and comment are not necessary, nor required, under 
section 553(3)(B) of the Administrative Procedure Act,10 because 
such changes are purely ministerial and necessary to conform our 
written rules to the Congressional mandate found in the 1996 Act.
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    \10\ 5 U.S.C. 553(3)(B).
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    5. Accordingly, it is ordered, pursuant to sections 4 (i) and (j) 
of the Communications Act of 1934, as amended, 47 U.S.C. 154 (i) and 
(j), and section 601(b)(2) of the Telecommunications Act of 1996, Pub. 
L. No. 104-104, sec. 601(b)(2), 110 Stat. 56 (1996), that part 66 of 
the rules is hereby removed.

List of Subjects in 47 CFR Part 66

    Administrative practice and procedure, Communications Carriers, 
Federal Communications Commission, Telephone.

Federal Communications Commission.
William F. Caton,
Acting Secretary.

Rule Changes

    Title 47 of the Code of Federal Regulations, part 66, is amended as 
follows:

PART 66--APPLICATIONS RELATING TO CONSOLIDATION, ACQUISITION, OR 
CONTROL OF TELEPHONE COMPANIES--[REMOVED]

    1. The authority citation for part 66 continues to read as follows:

    Authority: Sec. 4, 48 Stat. 1066, as amended: 47 U.S.C. 154.

    2. Part 66 is removed.
[FR Doc. 96-17809 Filed 7-11-96; 8:45 am]
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