[Federal Register Volume 62, Number 12 (Friday, January 17, 1997)]
[Proposed Rules]
[Pages 2636-2639]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-1133]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 69

[CC Docket No. 97-21] [FCC 97-11]


Changes to the Board of Directors of the National Exchange 
Carrier Association, Inc.

AGENCY: Federal Communications Commission.

ACTION: Notice of Proposed rulemaking and notice of inquiry.

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SUMMARY: On January 10, 1997, the Commission adopted a Notice of 
Proposed Rulemaking (NPRM) and an accompanying Notice of Inquiry (NOI) 
to amend the Commission's rules consistent with proposals to permit the 
National Exchange Carrier Association (NECA) to change the size and 
composition of its Board of Directors. In the NPRM, the Commission 
tentatively concludes that the composition of NECA's Board of Directors 
must be altered to make the Board more representative of all segments 
of the telecommunications industry before NECA may be appointed as the 
temporary administrator of the new universal service support 
mechanisms, pursuant to the Universal Service proceeding in CC Docket 
96-45. In the

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Notice of Inquiry (NOI), the Commission seeks comment on how the 
Commission might amend its rules to remove any regulatory barriers that 
otherwise may prevent NECA from satisfying the Joint Board's criteria 
for a neutral third party permanent administrator for the new universal 
service support mechanisms. The NOI also seeks comment as to what, if 
any, additional reforms the Commission should adopt with respect to the 
administration of the current access tariff and pool revenue 
distribution programs and whether, in connection with any such proposed 
reforms, interested parties, in addition to NECA, should be entitled to 
participate in a selection process to serve as the administrator of 
those programs. The Commission seeks comment on the NPRM and NOI.

DATES: NPRM comments should be filed on or before January 27, 1997 and 
NPRM reply comments should be filed on or before February 3, 1997. NOI 
comments should be filed on or before March 3, 1997 and NOI reply 
comments should be filed on or before April 3, 1997.

ADDRESSES: Interested parties must file an original and four copies of 
their comments with the Office of the Secretary, Federal Communications 
Commission, Room 222, 1919 M Street, NW., Washington, DC 20554. 
Comments should reference CC Docket No. 96-. Parties should send one 
copy of their comments to the Commission's copy contractor, 
International Transcription Service, Room 140, 2100 M Street, NW., 
Washington, DC 20037. After filing, comments will be available for 
public inspection during regular business hours in the FCC Reference 
Center, Room 239, 1919 M Street, NW., Washington, DC 20554.
    Parties are also asked to submit comments on diskette. Diskette 
submissions would be in addition to and not a substitute for the formal 
filing requirements addressed above. Parties submitting diskettes 
should submit them to Sheryl Todd, Common Carrier Bureau, 2100 M 
Street, NW., Room 8611, Washington, DC 20554. Such a submission should 
be on a 3.5 inch diskette in an IBM compatible format using WordPerfect 
5.1 for Windows software in a ``read only'' mode. The diskette should 
be clearly labelled with the party's name, proceeding, and date of 
submission. The diskette should be accompanied by a cover letter.

FOR FURTHER INFORMATION CONTACT: Sheryl Todd at 202-530-6040.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice 
of Proposed Rulemaking and Notice of Inquiry adopted and released on 
January 10, 1997 (FCC 97-11). The full text of this NPRM and NOI is 
available for inspection and copying during normal business hours in 
the FCC Reference Center, Room 239, 1919 M Street, Washington, DC 
20554.

Summary of Notice of Proposed Rulemaking

    1. On October 18, 1996, NECA requested that the Commission amend 
section 69.602 of the Commission's rules to permit NECA to modify the 
size and composition of its Board of Directors to reflect the interests 
of competitive local exchange carriers (LECs), interexchange carriers, 
wireless carriers, and non-carriers such as schools, libraries, rural 
healthcare providers, and the states.
    2. On March 8, 1996, the Commission initiated a rulemaking in CC 
Docket 96-45, pursuant to section 254 of the Communications Act of 1934 
(Communications Act), as amended by the Telecommunications Act of 1996 
(1996 Act), to reform our system of universal service support. On 
November 8, 1996, the Federal-State Joint Board (Joint Board) on 
Universal Service released a Recommended Decision regarding numerous 
universal service issues. The Joint Board recommended that NECA be 
appointed as the temporary fund administrator of the universal service 
support mechanisms for schools, libraries and health care providers in 
order to provide supported telecommunications services to these 
entities as quickly as possible. The Joint Board also recommended that, 
prior to appointing NECA as temporary administrator, the ``Commission 
permit NECA to add significant, meaningful representation'' for non-
incumbent LEC interests to the NECA Board of Directors.
    3. NECA is an association of incumbent LECs. Along with 
administering the interstate access tariff and revenue distributions 
processes, NECA currently administers the existing universal service 
fund, the Lifeline Assistance program, the long term support (LTS) 
program and the interstate Telecommunications Relay Services (TRS) 
fund. The universal service fund, the Lifeline Assistance program, and 
the LTS program were designed to promote affordable telephone service 
throughout the nation. The TRS fund is the cost recovery mechanism that 
reimburses eligible TRS providers for interstate TRS minutes of use. 
NECA presently has a 15-member Board of Directors that consists of five 
directors from outside of the LEC industry, two directors representing 
Bell Operating Companies (BOCs), two directors representing other LECs 
having operating revenues in excess of $40 million, and six directors 
representing LECs having annual operating of less than $40 million.
    4. Under NECA's proposal, three directors would represent carrier 
participants such as interexchange carriers, wireless carriers, and 
competitive LECs, and three would represent non-carriers, such as 
schools, libraries, rural health care providers, and states. Under 
NECA's proposal, the new Board members would participate in NECA's 
administration of the current universal service, Lifeline Assistance, 
and LTS programs, as well as Board oversight of auditing, finance, and 
general corporate matters. Access tariffs and pool revenue 
distribution, however, would continue to be the responsibility of the 
access charge committees, consisting of current members of NECA's 
Board. We find that for NECA to act on this proposal, Sec. 69.602 of 
the Commission's rules would require amendment in order to create a 
fourth category or subset of six new directors, with three of those 
directors representing non-incumbent LEC participants, such as 
interexchange carriers, wireless carriers, and competitive LECs, and 
three directors representing support beneficiaries of universal service 
policies or other non-carriers, potentially including schools, 
libraries, rural health care providers, and states.
    5. In this Notice of Proposed Rulemaking (NPRM), we address NECA's 
request and the Joint Board's recommendations and seek comment on how 
the Commission should amend its rules so that NECA can reform its Board 
of Directors in a manner that will enable it to become eligible to 
serve as the temporary administrator of the universal service support 
mechanisms. We tentatively conclude that, in order to be eligible to 
serve as the temporary administrator, NECA's Board of Directors must 
become more representative of the telecommunications industry as a 
whole. Accordingly, in order to meet the implementation schedule 
recommended by the Joint Board in its Recommended Decision and 
consistent with the recommendation that the Commission appoint NECA as 
temporary administrator of the new universal service support 
mechanisms, this NPRM proposes to amend Sec. 69.602 of the Commission's 
rules so that NECA may modify the size and composition of its Board of 
Directors to make the Board more representative of the 
telecommunications industry. We also

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seek comment on whether other part 69 rule sections should be modified 
in conjunction with the proposed rule changes to Sec. 69.602.

Notice of Inquiry

    6. In the Recommended Decision released on November 8, 1996, the 
Joint Board recommended that the permanent administrator of the new 
universal service support mechanisms, including its Board of Directors: 
(1) Be neutral and impartial; (2) not advocate specific positions to 
the Commission in non-administration-related proceedings; (3) not be 
aligned or associated with any particular industry segment; and (4) not 
have a direct financial interest in the support mechanisms established 
by the Commission. In declining to recommend NECA for the position of 
permanent administrator, the Joint Board emphasized the importance of 
the permanent administrator's ability to maintain an ``appearance of 
impartiality'' and questioned NECA's ability to do this in light of its 
current membership and governance. The Joint Board specifically cited 
commenters' concerns that NECA's ability to appear to be a neutral 
arbitrator among contributing carriers, its current membership of 
incumbent LECs, and the advocacy role it has assumed in several 
Commission proceedings created an appearance to non-LECs of NECA's bias 
favoring incumbent LECs. The Joint Board further stated that ``[i]f 
changes to its membership and governance render NECA a neutral, third-
party, NECA should be eligible to compete in the advisory board's 
selection process'' for choosing a permanent administrator.
    7. In this NOI, we seek comment as to how the Commission might 
amend subpart G of its part 69 rules to remove any regulatory barriers 
that otherwise may prevent NECA from making itself a neutral, third 
party and satisfying the four criteria identified by the Joint Board. 
We also seek comment on whether, and if so how, the Commission should 
streamline its rules to enable NECA to change the composition of its 
Board without unnecessary regulatory oversight. Alternatively, the 
Commission could repeal the rules currently contained in part 69 
constraining NECA's structure and functions so that NECA could make 
whatever organizational changes it deems necessary without Commission 
endorsement or sanction. If the Commission's oversight function of 
NECA's structure and functions were diminished in this fashion, we seek 
additional comment with respect to whether the interests of NECA's 
current membership, as well as other carriers, could be adversely 
affected by how NECA might administer tariffs and access charges.
    8. In the Recommended Decision, the Joint Board also recommended 
that the qualified applicant have the capacity to process large amounts 
of data and bill large number of carriers. Accordingly, we seek comment 
on whether existing Commission rules prevent NECA from satisfying these 
criteria, and if so, how such rules should be amended.
    9. Finally, we seek comment as to what, if any, additional reforms 
the Commission should adopt with respect to the administration of the 
current access tariff and pool revenue distribution programs and 
whether, in connection with any such proposed reforms, interested 
parties, in addition to NECA, should be entitled to participate in a 
selection process to serve as the administrator of one or more of those 
programs. As noted above, NECA currently administers the CL and TS 
access tariff pools, the existing universal service fund, the Lifeline 
Assistance program, the LTS program, and the TRS fund. Consistent with 
the de-regulatory and pro-competitive spirit of the 1996 Act, we seek 
comment regarding whether additional amendments to the Commission's 
part 69 rules are needed with respect to the administration of these 
programs and whether the administration of one or more of the programs 
should be subject to a competitive bidding process. In light of the 
Commission's recent reappointment of NECA to an additional four-year 
term as administrator of the TRS fund and given that NECA's 
reappointment to that fund was unopposed, we do not seek comment at 
this time on NECA's role as TRS administrator. Accordingly, we seek 
comment on whether administration of the CL and TS access tariff pools, 
the Lifeline Assistance program, and the LTS program should remain the 
exclusive province of NECA or whether other interested parties should 
be entitled to participate in a selection process to serve as the 
administrator of those programs. We request from those commenters 
advocating other parties' participation in the selection process 
suggestions on how such participation could be effectuated and what 
changes to our rules would be necessary to effectuate these changes.

Procedural Matters

    10. This is a non-restricted notice and comment rulemaking 
proceeding. Ex parte presentations are permitted, except during the 
Sunshine Agenda period, provided they are disclosed as provided in the 
Commission's rules.
    11. We invite comment on the proposals and tentative conclusions 
set forth above. Pursuant to applicable procedures set forth in 
Secs. 1.415 and 1.419 of the Commission's rules, interested parties may 
file NPRM comments on or before January 27, 1997 and NPRM reply 
comments on or before February 3, 1997. Interested parties may file NOI 
comments on or before March 3, 1997 and NOI reply comments on or before 
April 3, 1997. To file formally in this proceeding, you must file an 
original and six copies of all comments, reply comments, and supporting 
comments. If you want each Commissioner to receive a personal copy, you 
must file an original plus eleven copies. You should send comments and 
reply comments to Office of the Secretary, Federal Communications 
Commission, 1919 M Street, NW., Room 222, Washington, DC 20554. Five 
courtesy copies should also be sent to Tejal Mehta at 2100 M Street, 
NW., Room 8611, Washington, DC 20554. Parties should also file one copy 
of any document filed in this docket with the Commission's copy 
contractor, International Transcription Services, Inc. (ITS), 2100 M 
Street, NW., Suite 140, Washington, DC 20037. ITS's telephone number is 
202-857-3800. Comments and reply comments will be available for public 
inspection during regular business hours in the FCC Reference Center, 
Room 239, 1919 M Street, NW., Washington, DC 20554. Comments and reply 
comments must include a short and concise summary of the substantive 
arguments raised in the pleading. For further information concerning 
this proceeding, contact Sheryl Todd, Accounting and Audits Division, 
Common Carrier Bureau at 202-530-6001.

Initial Regulatory Flexibility Analysis

    12. Section 603 of the Regulatory Flexibility Act (RFA), as 
amended, requires an Initial Regulatory Flexibility Analysis in notice 
and comment rulemaking proceedings, unless the head of the agency 
certifies that ``the rule will not, if promulgated, have a significant 
economic impact on a substantial number of small entities.'' The NPRM 
portion of this proceeding applies only to NECA and concerns the 
proposal to amend the Commission's rules to modify the size and 
composition of NECA's current Board of Directors to make the Board more 
representative of the telecommunications industry as a whole.
    13. For the purposes of this NPRM, the RFA defines a ``small 
business'' to be the same as a ``small business

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concern'' under the Small Business Act, unless the Commission has 
developed one or more definitions that are appropriate to its 
activities. Under the Small Business Act, a ``small business concern'' 
includes a small organization, which is defined as a non-profit 
enterprise that is not independently owned and operated and is not 
dominant in its field. NECA is a non-profit, quasi-governmental 
association that was initially created to administer the Commission's 
interstate access tariff and revenue distribution processes. Therefore, 
NECA is not a small organization within the meaning of the RFA. 
Furthermore, these proposals do not apply to other ``small business 
concerns'' since they propose to modify the composition of NECA's Board 
of Directors. For this reason, we tentatively conclude that these 
proposals would not have a significant economic impact on a substantial 
number of small entities.
    14. We therefore certify, pursuant to Section 605(b) of the RFA, 
that these proposals would not have a significant economic impact on a 
substantial number of small entities. We seek comment on this tentative 
conclusion. The Commission shall publish this certification in the 
Federal Register, and shall provide a copy of this NPRM, including this 
certification, to the Chief Counsel for Advocacy of the Small Business 
Administration.

Ordering Clauses

    15. Accordingly, It is ordered that, pursuant to Secs. 1, 4(i), 
201-205, 218-220, 254 and 403 of the Communications Act of 1934, as 
amended, 47 U.S.C. 151, 154(i), 201-05, 218-20, 254 and 403, notice is 
hereby given of proposed amendments to Part 69 of the Commission's 
rules, 47 CFR part 69, as described in this notice of proposed 
rulemaking.
    16. Accordingly, it is ordered that, pursuant to sections 1, 4(i), 
201-205, 218-220, 254 and 403 of the Communications Act of 1934, as 
amended, 47 U.S.C. 151, 154(i), 201-05, 218-20, 254 and 403, notice is 
hereby given of proposals described in this notice of inquiry.

Federal Communications Commission.
William F. Caton,
Acting Secretary.
[FR Doc. 97-1133 Filed 1-16-97; 8:45 am]
BILLING CODE 6712-01-M