[Federal Register Volume 62, Number 42 (Tuesday, March 4, 1997)]
[Rules and Regulations]
[Pages 9704-9714]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-5177]
=======================================================================
-----------------------------------------------------------------------
FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 59
[CC Docket 96-237, FCC 97-36]
Implementation of Infrastructure Sharing Provisions in the
Telecommunications Act of 1996
AGENCY: Federal Communications Commission.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: On February 7, 1996, the Commission released Implementation of
Infrastructure Sharing Provisions in the Telecommunications Act of
1996, Report and Order, CC Docket 96-237, FCC 97-36, to implement new
section 259 of the Communications Act of 1934, as added by the
Telecommunications Act of 1996. Section 259 generally requires
incumbent local exchange carriers (incumbent LECs) to make available
``public switched network infrastructure, technology, information, and
telecommunications facilities and functions'' to ``qualifying
carriers'' that are eligible to receive federal universal service
support but that lack economies of scale or scope. Wherever possible,
the Commission adopts general rules that restate the statutory
language. This approach, which relies in large part on private
negotiations among parties to satisfy their unique requirements in each
case, will help ensure that certain carriers who agree to fulfill
universal service obligations pursuant to section 214(e) can implement
evolving levels of technology to continue to fulfill those obligations.
EFFECTIVE DATE: The requirements and regulations established in this
decision shall become effective upon approval by the Office of
Management and Budget (OMB) of the new information collection
requirements adopted herein, but no sooner than April 3, 1997. The
Commission will publish a document in the Federal Register announcing
the effective date of these regulations following OMB's approval of the
information collections in this decision.
FOR FURTHER INFORMATION CONTACT: Thomas J. Beers, Deputy Chief,
Industry Analysis Division, Common Carrier Bureau, at (202) 418-0952,
or Scott Bergmann, Industry Analysis Division, Common Carrier Bureau,
at (202) 418-7102. For additional information concerning the
information collections in the Report and Order contact Dorothy Conway,
at (202) 418-0217, or via the Internet to [email protected].
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Report
[[Page 9705]]
and Order, Implementation of Infrastructure Sharing Provisions in the
Telecommunications Act of 1996 adopted February 6, 1997 and released
February 7, 1997 (CC Docket 96-237, FCC 97-36). The full text of this
Report and Order is available for inspection and copying during normal
business hours in the FCC Reference Center, Room 239, 1919 M Street,
Washington, D.C. 20554. This Report and Order contains new or modified
information collection requirements subject to the Paperwork Reduction
Act of 1995 (PRA). It has been submitted to the Office of Management
and Budget (OMB) for review under the PRA. OMB, the general public, and
other Federal agencies are invited to comment on the proposed and/or
modified information collections contained in this proceeding. The
complete text also may be purchased from the Commission's copy
contractor, International Transcription Service, Inc. (202) 857-3800,
2100 M Street, N.W., Suite 140, Washington, D.C. 20037.
PAPERWORK REDUCTION ACT: As required by the Paperwork Reduction Act of
1995 (PRA), Public Law 104-13, the NPRM invited the general public and
the Office of Management and Budget (OMB) to comment on proposed
information collection requirements contained in the NPRM.1 On
January 22, 1997, OMB approved the proposed information collection
requirements, as submitted to OMB, in accordance with the Paperwork
Reduction Act.2
---------------------------------------------------------------------------
\1\ NPRM at para. 55.
\2\ Notice of Office of Management and Budget Action (OMB No.
3060-0755) (January 22, 1997).
---------------------------------------------------------------------------
In this Report and Order, we adopt new or modified information
collection requirements that are subject to OMB review. These
requirements are contingent upon approval by OMB. The Commission, as
part of its continuing effort to reduce paperwork burdens, invites the
general public and the Office of Management and Budget (OMB) to comment
on the information collections contained in this Order, as required by
the PRA. Written comments by the public on the information collections
are due 30 days after date of publication in the Federal Register. OMB
notification of action is due May 5, 1997. Comments should address: (1)
whether the new or modified collection of information is necessary for
the proper performance of the functions of the Commission, including
whether the information shall have practical utility; (b) the accuracy
of the Commission's burden estimates; (c) ways to enhance the quality,
utility, and clarity of the information collected; and (d) ways to
minimize the burden of the collection of information on the respondents
including the use of automated collection techniques or other forms of
information technology.
OMB Approval Number: 3060-0755.
Title: Policy and Rules Concerning the Implementation of
Infrastructure Sharing Provisions in the Telecommunications Act of
1996, CC Docket 96-237.
Form Number: Not Applicable.
Type of Review: Revision.
Respondents: Business or other for profit, including small
businesses.
Burden Estimate:
----------------------------------------------------------------------------------------------------------------
Est. time per Frequency (per Annual burden
Section/title Respondents resp. (hrs.) year) (hrs.)
----------------------------------------------------------------------------------------------------------------
(1) Section 259(b)(7) filing of tariffs,
contracts or other arrangements........... 75 1 5 375
(2) Section 259(c) information concerning
deployment of new services and equipment.. 75 2 12 1800
(3) Sixty day notice before termination of
agreement................................. 75 1 5 150
----------------------------------------------------------------------------------------------------------------
Total Annual Burden: 2,325 total hours.
Estimated Costs Per Respondent: $0.00.
Needs and Uses: The information collections for which approval is
sought are contained in new section 259 (``Infrastructure Sharing'') of
the Communications Act of 1934 (the Act), as amended. First, the
information collections adopted pursuant to section 259(c) in this
Report and Order will provide notice to third parties (qualifying
carriers) of changes in the incumbent local exchange carrier's network
that might affect the parties' ability to fully benefit from section
259 agreements. Second, the information collected pursuant to section
259(b)(7) will make available for public inspection any tariffs,
contracts or other arrangements showing the conditions under which the
incumbent LEC is making available public switched network
infrastructure and functions pursuant to section 259. Third, the sixty
day notice of termination requirement will ensure that third parties
(qualifying carriers) will be able to anticipate service disruptions
and to inform their customers accordingly. Fourth, placing the burden
of proof on providing incumbent LECs to show that section 259
agreements have become economically unreasonable is appropriate because
such providing incumbent LECs are seeking to terminate the agreement
and are in control of the necessary information. Failing to collect the
information would violate the language and the intent of the 1996 Act
to ensure that access to the evolving, advanced telecommunications
infrastructure would be made broadly available in all regions of the
nation at just, reasonable and affordable rates.
Summary of the Report and Order
1. In this Report and Order, part of the Commission's
implementation of the Telecommunications Act of 1996,3 we adopt
rules implementing new section 259 of the Communications Act of 1934,
as amended.4 Section 259 generally requires an incumbent local
exchange carrier (incumbent LEC) 5 to make available ``public
switched network infrastructure, technology, information, and
telecommunications facilities and functions'' to ``qualifying
carriers'' that are eligible to receive federal universal service
support but that lack economies of scale or scope.6 In contrast to
sections 251 and 252, which grant rights to requesting carriers
irrespective of whether the requesting carrier intends
[[Page 9706]]
to compete with the incumbent LEC, section 259 does not permit
``qualifying carriers'' to use an incumbent LEC's public switched
network infrastructure, technology, information, and telecommunications
facilities and functions obtained pursuant to section 259 to offer
services or access to the incumbent LEC's customers in competition with
the incumbent LEC. Section 259(a) directs the Commission to prescribe
regulations that implement this requirement within one year after the
date of enactment of the 1996 Act, i.e., by February 8, 1997.7
Pursuant to the Notice of Proposed Rulemaking that initiated this
proceeding,8 we have elected, overall, to articulate general rules
and guidelines to implement section 259.9
---------------------------------------------------------------------------
\3\ Telecommunications Act of 1996, Public Law 104-104, 110
Stat. 56 (1996 Act).
\4\ The Communications Act of 1934, as amended, 47 U.S.C.
Secs. 259, et seq. (1934 Act or Act).
\5\ Section 251(h) of the Communications Act defines incumbent
local exchange carriers as follows:
(1) DEFINITION--For purposes of this section, the term
`incumbent local exchange carrier' means, with respect to an area,
the local exchange carrier that--
(A) on the date of enactment of the Telecommunications Act of
1996, provided telephone exchange service in such area; and
(B)(i) on such date of enactment, was deemed to be a member of
the exchange carrier association pursuant to section 69.601(b) of
the Commission's regulations (47 CFR 69.601(b)); or
(ii) is a person or entity that, on or after such date of
enactment, became a successor or assign of a member described in
clause (i).
47 U.S.C. Sec. 251(h).
\6\ 47 U.S.C. Sec. 259. See also 47 U.S.C. Sec. 214(e).
\7\ 47 U.S.C. Sec. 259(a).
\8\ Implementation of Infrastructure Sharing Provisions in the
Telecommunications Act of 1996, Notice of Proposed Rulemaking, CC
Docket 96-237, FCC 96-456, (released November 22, 1996) (NPRM) 61 FR
63774 (December 2, 1996).
\9\ Twenty parties filed comments in this proceeding and
fourteen of these parties filed reply comments. Two additional
parties filed comments to the Commission which were subsequently
transferred to the universal service proceeding in CC Docket 96-45.
The parties, along with the shorthand forms of identification used
in the Report and Order, are listed in Appendix A of the Report and
Order.
---------------------------------------------------------------------------
2. We determine that section 259 is complementary to the other
sections of the 1996 Act and is a ``limited and discrete'' provision
designed to promote universal service in areas that in many cases, at
least initially, will be without competitive service providers, but
without restricting the development of competition.10 Essential
differences in the language of sections 259 and 251 make clear that
these provisions address fundamentally different situations. First, in
accord with section 259(b)(6), section 259 applies only in instances
where the qualifying carrier does not seek to use shared infrastructure
to offer certain services within the incumbent LEC's telephone exchange
area, whereas section 251 applies irrespective of whether new entrants
seek to provide local exchange or exchange access service within the
incumbent's telephone exchange area.11 Second, section 259(a)
establishes specific limitations on a qualifying carrier's use of an
incumbent LEC's infrastructure, i.e., a qualifying carrier may use
section 259 only ``for the purpose of enabling such qualifying carrier
to provide telecommunications services, or to provide access to
information services, in the service area in which such qualifying
carrier has requested and obtained designation as an eligible
telecommunications carrier under section 214(e).'' 12 Third,
section 259, in contrast to section 251, limits the telecommunications
carriers that may obtain access to an incumbent LEC's network by the
inclusion of qualifying criteria in subsection 259(d).13
---------------------------------------------------------------------------
\10\ See Implementation of the Local Competition Provisions in
the Telecommunications Act of 1996, First Report and Order, CC
Docket 96-98, FCC 96-325, 11 FCC Rcd 15499 at Paras. 165 (released
August 8, 1996), 61 FR 45476 (August 29, 1996) (Local Competition
First Report and Order). We note that the U.S. Court of Appeals for
the Eighth Circuit has stayed the pricing rules developed in the
Local Competition First Report and Order, pending review on the
merits. Iowa Utilities Board v. FCC, No. 96-3321 (8th Circuit,
October 15, 1996).
\11\ 47 U.S.C. Sec. 259(b)(6). See also Discussion at Section
III. C. 6. of the Report and Order.
\12\ 47 U.S.C. Sec. 259(a) (emphasis added). See also Discussion
at Section III. A. 1. of the Report and Order.
\13\ 47 U.S.C. Sec. 259(d). See also Discussion at Section III.
E. of the Report and Order.
---------------------------------------------------------------------------
3. Thus, we conclude that while section 251 applies to all carriers
in all situations--including, but not limited to, new entrants
competing with the incumbent LEC--section 259 only applies in narrow
circumstances, i.e., for the benefit of those carriers that are
eligible to receive universal service support but lack economies of
scale or scope and only to the extent that the qualifying carriers do
not use section 259-obtained infrastructure to compete with the
providing incumbent LEC. We conclude that a qualifying carrier that
obtains, pursuant to section 259 arrangements, interconnection,
unbundled network elements, and other telecommunications
functionalities otherwise available pursuant to section 251, does not
lose its section 251-derived obligation to provide interconnection to
competitive LECs. We also find that section 259 arrangements can
include additional functionalities that may be provided to qualifying
carriers uniquely pursuant to section 259. Making clear that we will
enforce the section 251-derived interconnection rights of competitive
LECs, however, will help ensure that competitive entry into markets
served by qualifying carriers markets is not hampered by the operation
of otherwise valid section 259 arrangements. Moreover, we further
promote competitive entry by finding that qualifying carriers may
include any carrier that satisfies the requirements of section 259(d)--
in other words, not just incumbent LECs, but competitive LECs and any
other carrier that satisfies section 259(d) requirements.
4. In this Report and Order, we choose to implement section 259 by
adopting rules that recognize the central role played by private
negotiations in promoting the ability of qualifying carriers to obtain
access to ``public switched network infrastructure, technology,
information, and telecommunications facilities and functions'' provided
by other carriers. A negotiation-driven approach is appropriate
because, inter alia, section 259, unlike section 251, contemplates
situations where the requesting carrier is not using the incumbent
LEC's facilities or functions to compete in the incumbent LEC's
telephone exchange area. In such circumstances, we believe that the
unequal bargaining power between qualifying carriers, including new
entrants, and providing incumbent LECs is less relevant since the
incumbent LEC has less incentive to exploit any inequality for the sake
of competitive advantage. Thus, wherever possible we adopt specific
rules that restate the statutory language. The approach we adopt, which
relies in large part on private negotiations among parties to satisfy
their unique requirements in each case, will help ensure that certain
carriers who agree to fulfill universal service obligations pursuant to
section 214(e) can implement evolving levels of technology to continue
to fulfill those obligations. Again, because we also affirm the rights
of competitive LECs to secure interconnection pursuant to section 251
our approach to implementing section 259 does not discourage the
development of competition in any local market.
5. Regarding the scope of section 259(a), we allow the parties to
section 259 agreements to negotiate what ``public switched network
infrastructure, technology, information, and telecommunications
facilities and functions'' will be made available, without per se
exclusions. We also decide that, whenever it is the only means to gain
access to facilities or functions subject to sharing requirements,
section 259(a) requires the providing incumbent LEC to seek to obtain
and to provide necessary licensing of any software or equipment
necessary to gain access to the shared capability or resource by the
qualifying carrier's equipment, subject to the reimbursement for or the
payment of reasonable royalties. We decide that it shall be the
responsibility of the providing incumbent LEC to find a way to
negotiate and implement section 259 agreements that do not
unnecessarily burden qualifying carriers with licensing requirements.
In cases where the only means available is including the qualifying
carrier in a licensing arrangement, the providing incumbent LEC must
secure such licensing by
[[Page 9707]]
negotiating with the relevant third party directly.
6. Regarding the implementation of section 259, we conclude that
section 259(a) grants the Commission authority to promulgate rules
concerning any section 259 agreement to share public switched network
infrastructure, technology, information, and telecommunications
facilities and functions, regardless of whether they are used to
provide interstate or intrastate services. At the same time, we make
clear that nothing in our analysis of section 259 indicates an intent
to regulate intrastate services, as opposed to regulating agreements
regarding the sharing of infrastructure. We also note that section 259
dictates two discrete roles for the states with respect to section 259:
states may accept for public inspection the filings of section 259
agreements that are required by section 259(b)(7); and states must
designate a carrier as an ``eligible telecommunications carrier''
pursuant to section 214(e)(2)-(3). We further conclude that it is
unnecessary to adopt any particular rules to govern disputes between
parties to section 259 agreements that may be brought before the
Commission. Finally, we decide that it would be inappropriate to
further construe the requirements of section 259(d)(2) in this
proceeding because issues materially relating to section 259(d)(2) will
be decided by the Commission in the universal service proceeding
scheduled to be concluded by May 8, 1997.
7. We require that providing incumbent LECs may recover their costs
associated with infrastructure sharing arrangements, and we conclude
that incentives already exist to encourage providing and qualifying
carriers to reach negotiated agreements that do so (section 259(b)(1)).
We decide that no incumbent LEC should be required to develop,
purchase, or install network infrastructure, technology, and
telecommunications facilities and functions solely on the basis of a
request from a qualifying carrier to share such elements when such
incumbent LEC has not otherwise built or acquired, and does not intend
to build or acquire, such elements. We also decide that a providing
incumbent LEC may withdraw from a section 259 infrastructure sharing
agreement upon an appropriate showing to the Commission that the
arrangement has become economically unreasonable or is otherwise not in
the public interest.
8. We permit but do not require providing incumbent LECs and
qualifying carriers to develop through negotiation terms and conditions
for joint ownership or operation of ``public switched network
infrastructure, technology, information, and telecommunications
facilities and functions'' (section 259(b)(2)). We decide that joint
owners will be treated as providing incumbent LECs for purposes of
section 259 regulations. We also decide that it is not necessary for
the Commission to consider, at this time, the accounting and
jurisdictional separations implications of joint ownership arrangements
pursuant to section 259.
9. We conclude that infrastructure sharing does not subject
providing incumbent LECs to common carrier obligations, including a
nondiscrimination requirement, because such a result would be contrary
to the clear mandate of section 259(b)(3). In the NPRM we asked whether
an ``implied nondiscrimination requirement'' should be inferred based
on the ``just and reasonable'' requirement included in Section
259(b)(4). We conclude that Section 259(b)(4) includes no
nondiscrimination requirement, but we also conclude that the ``just and
reasonable'' requirement will serve to ensure that all qualifying
carriers receive the benefits of section 259. We reaffirm that, to the
extent that requesting carriers seek access to elements pursuant to
section 251, sections 201 and 251 expressly require rates set pursuant
to those provisions not only to be just and reasonable, but also non-
discriminatory or not unreasonably discriminatory.14
---------------------------------------------------------------------------
\14\ 47 U.S.C. Secs. 201 (not unreasonably discriminatory), 251
(nondiscriminatory).
---------------------------------------------------------------------------
10. We decide that, although the Commission may have pricing
authority to prescribe guidelines to ensure that qualifying carriers
``fully benefit from the economies of scale and scope of [the providing
incumbent LEC],'' it is not necessary at this time to exercise this
authority (section 259(b)(4)). We anticipate that, in this negotiation-
driven approach, qualifying carriers and providing incumbent LECs will
face economic incentives that will allow them to reach mutually
satisfactory terms for infrastructure sharing. In particular, we note
that, because section 259 contemplates situations where requesting
carriers are not using the incumbent LEC's facilities or functions to
compete in the incumbent LEC's telephone exchange area, the unequal
bargaining power between qualifying carriers, including new entrants,
and providing incumbent LECs is less relevant since the incumbent LEC
has less incentive to exploit any inequality for the sake of
competitive advantage vis-a-vis a non-competing qualifying LEC. We
further decide that availability, timeliness, functionality,
suitability, and other operational aspects of infrastructure sharing
also are relevant to determining whether the qualifying carrier
receives the benefits mandated by section 259(b)(4). We conclude that
the negotiation process, along with the available dispute resolution,
arbitration, and complaint processes available from the Commission,
will ensure that qualifying carriers fully benefit from the economies
of scale and scope of providing incumbent LECs. We note that non-
qualifying competitive LECs may avail themselves of these same
processes to prevent unlawful anticompetitive outcomes resulting from
section 259-negotiated arrangements. Further, we note that any
anticompetitive outcomes may be proscribed by operation of the
antitrust laws from which Congress has granted no exemption to parties
negotiating section 259 agreements. We further note that the Commission
has ample authority pursuant to Title II to set aside any intercarrier
agreements found to be contrary to the public interest.
11. We conclude that it is unnecessary at this time for the
Commission to establish detailed national rules to promote cooperation
(section 259(b)(5)). We conclude that, because there is a requirement
that infrastructure sharing arrangements not be used to compete with
the providing incumbent LEC, and because a providing incumbent LEC is
permitted to recover its costs incurred in providing shared
infrastructure pursuant to section 259, sufficient incentives exist to
encourage lawful cooperation among carriers. We also decide that the
adoption of a good faith negotiation standard would promote cooperation
between providing incumbent LECs and qualifying carriers.
12. We conclude that, for any services and facilities otherwise
available pursuant to section 251, carriers that do not intend to
compete using those services and facilities may request those services
and facilities pursuant to either section 251 or 259, and carriers that
do intend to compete using those services and facilities must request
them pursuant to section 251. We decide that, with respect to
facilities and information that are within the scope of section 259 but
beyond the scope of section 251, carriers that do not intend to compete
using those facilities and information may pursue agreements with
incumbent LECs pursuant to section 259. We conclude that a providing
incumbent LEC is not required to share services or access used to
compete against it, and that an
[[Page 9708]]
incumbent LEC's right to deny or terminate sharing arrangements extends
to the full breadth of section 259. We also conclude that a qualifying
carrier may not make available any information, infrastructure, or
facilities it obtained from a providing incumbent LEC to any party that
intends to use such information, infrastructure, or facilities to
compete with the providing incumbent LEC. We emphasize that this will
not otherwise affect the interconnection obligations of carriers
pursuant to section 251. Moreover, competitive carriers, i.e.,
regardless of whether they qualify for infrastructure sharing pursuant
to section 259(d), that require the use of information or facilities to
compete with the providing incumbent LEC may request the necessary
facilities pursuant to sections 251 and 252. We also find that nothing
in section 259 permits a providing incumbent LEC to refuse to enter
into a section 259 agreement simply because the qualifying carrier is
competing with the providing incumbent LEC, provided that the
qualifying carrier is not using any shared infrastructure obtained from
the providing incumbent LEC pursuant to a section 259 agreement to
compete.
13. We decide that section 259 agreements must be filed with the
appropriate state commission, or with the Commission if the state
commission is unwilling to accept the filing; must be made available
for public inspection; and must include the rates, terms, and
conditions under which an incumbent LEC is making available all
``public switched network infrastructure, technology, information, and
telecommunications facilities and functions'' that are the subject of
the negotiated agreement (section 259(b)(7)). We decide that this
filing requirement refers only to agreements negotiated pursuant to
section 259 and affirm that all previous interconnection agreements
must be filed pursuant to section 252 as mandated by the Commission's
Local Competition First Report and Order.15
---------------------------------------------------------------------------
\15\ Local Competition First Report and Order at para. 165-171.
We note that section 252(a) requires all interconnection agreements,
``including any interconnection agreements negotiated before the
date of enactment of the Telecommunications Act of 1996,'' to be
submitted to the appropriate state commission for approval. In
contrast, we note that section 259 does not include a comparable
provision.
---------------------------------------------------------------------------
14. We decide that section 259(c) requires notice to qualifying
carriers of changes in the incumbent LECs' network that might affect
qualifying carriers' ability to utilize the shared public switched
network infrastructure, technology, information and telecommunications
facilities and functions; that section 259(c) requires timely
information disclosure by each providing incumbent LEC for each of its
section 259-derived agreements; and that such notice and disclosure,
provided pursuant to a section 259 agreement, are only for the benefit
of the parties to a section 259-derived agreement. We also decide that
section 259(c) does not include a requirement that providing incumbent
LECs provide information on planned deployments of telecommunications
and services prior to the make/buy point.
15. We decide that no incumbent LEC is excused, per se, from
sharing its infrastructure because of the size of the requesting
carrier, its geographic location, or its affiliation with a holding
company. A carrier qualifying under section 259(d) therefore may be
entitled to request and share certain infrastructure and, at the same
time, be obligated to share the same or other infrastructure. We
conclude that parties to section 259 negotiations can and will make the
necessarily fact-based evaluations of their relative economies of scale
and scope pertaining to the infrastructure that is requested to be
shared. To facilitate such negotiations, we adopt a presumption that a
telecommunication carrier falling within the definition of ``rural
telephone company'' in section 3(37) lacks economies of scale or scope
under section 259(d)(1), but we decide to exclude no class of carriers
from attempting to demonstrate to a providing incumbent LEC that they
qualify under section 259(d)(1). In negotiations with a requesting
carrier or in response to a complaint arising from a refusal to enter
into a section 259 agreement, a providing incumbent LEC may rebut the
presumption that a ``rural telephone company'' lacks economies of scale
or scope.
Final Regulatory Flexibility Act Analysis
16. As required by section 603 of the Regulatory Flexibility Act
(RFA), 5 U.S.C. Sec. 603, an Initial Regulatory Flexibility Analysis
(IRFA) was incorporated in the Notice of Proposed Rulemaking,
Implementation of Infrastructure Sharing Provisions in the
Telecommunications Act of 1996.16 The Commission sought written
public comments on the proposals in the Infrastructure Sharing NPRM
including on the IRFA. The Commission's Final Regulatory Flexibility
Analysis (FRFA) in this Report and Order conforms to the RFA, as
amended by the Small Business Regulatory Enforcement Fairness Act of
1996 (SBREFA), Public Law 104-121, 110 Stat. 847 (1996).17
---------------------------------------------------------------------------
\16\ NPRM at para. 55.
\17\ SBREFA was codified as Title II of the Contract With
America Advancement Act of 1996 (CWAAA), 5 U.S.C. Sec. 601 et seq.
---------------------------------------------------------------------------
A. Need for and Objectives of This Report and Order and the Rules
Adopted Herein
17. The Commission, in compliance with section 259(a) of the
Communications Act of 1934, as amended by the Telecommunications Act of
1996, promulgates the rules in this Report and Order to ensure the
prompt implementation of the infrastructure sharing provisions in
section 259 of the 1996 Act. Section 259 directs the Commission, within
one year after the date of enactment of the 1996 Act, to prescribe
regulations that require incumbent LECs to make certain ``public
switched network infrastructure, technology, information, and
telecommunications facilities and functions'' available to any
qualifying carrier in the service area in which the qualifying carrier
has requested and obtained designation as an eligible carrier under
section 214(e).18
---------------------------------------------------------------------------
\18\ 47 U.S.C. Sec. 259. See also 47 U.S.C. Sec. 214(e)(1).
---------------------------------------------------------------------------
B. Summary and Analysis of the Significant Issues Raised by the Public
Comments in Response to the IRFA
18. The only party to comment on our IRFA, the Rural Telephone
Coalition (RTC), essentially argues that the Commission violated the
RFA when we declined to include small incumbent LECs in our definition
of the class of entities protected by the RFA.19 RTC argues that
small incumbent LECs that meet the SBA definition of ``small entities''
are among the class of carriers that will be affected by these rules
either as providing incumbent LECs or as qualifying carriers.20
RTC argues that the Commission has engaged in a ``meaningless
exercise'' despite the fact that our IRFA included estimates of the
number of small incumbent LECs potentially affected by the proposed
rules and presented alternatives for comment by the public.
---------------------------------------------------------------------------
\19\ RTC Comments at 631.
\20\ Id.
---------------------------------------------------------------------------
19. We disagree. Because the small incumbent LECs subject to these
rules are either dominant in their field of operations or are not
independently owned and operated, consistent with our prior practice,
they are excluded from the definition of ``small entity'' and ``small
business concerns.'' 21
[[Page 9709]]
Accordingly, our use of the terms ``small entities'' and ``small
businesses'' does not encompass small incumbent LECs. Out of an
abundance of caution, however, for regulatory flexibility analysis
purposes, we did consider small incumbent LECs within the IRFA and used
the term ``small incumbent LECs'' to refer to any incumbent LECs that
arguably might be defined by SBA as ``small business concerns.''
22 We find nothing in this record to persuade us that our prior
practice of treating all LECs as dominant is incorrect. Thus, we
conclude that we have fully satisfied the requirements and objectives
of the RFA.
---------------------------------------------------------------------------
\21\ See Implementation of the Local Competition Provisions in
the Telecommunications Act of 1996, First Report and Order, CC
Docket 96-98, FCC 96-325, 11 FCC Rcd 15499 at Paras. 1328-30, 1342
(released August 8, 1996), 61 FR 45476 (August 29, 1996) (Local
Competition First Report and Order). We note that the U.S. Court of
Appeals for the Eighth Circuit has stayed the pricing rules
developed in the Local Competition First Report and Order, pending
review on the merits. Iowa Utilities Board v. FCC, No. 96-3321 (8th
Circuit, October 15, 1996).
\22\ See id.
---------------------------------------------------------------------------
C. Description and Estimate of the Number of Small Entities to Which
the Rules Adopted in the Report and Order in CC Docket 96-237 Will
Apply
20. Section 259 of the 1934 Act, as added by the 1996 Act,
establishes a variety of infrastructure sharing obligations.23
Many of the obligations adopted in this Report and Order will apply
solely to providing incumbent LECs which may include small business
concerns.24 The beneficiaries of section 259 infrastructure
sharing agreements--also affected by the rules adopted herein--are the
class of carriers designated as ``qualifying carriers'' under section
259(d).25 Such qualifying carriers must be telecommunications
carriers, which, as defined in section 3(44) of the act, may include
LECs, non-LEC wireline carriers, and various types of wireless
carriers.26 Because section 259(d)(1) limits qualifying carriers
to those carriers that ``lack economies of scale or scope,'' it is
likely that there will be small business concerns affected by the rules
proposed in this NPRM. We note, however, that section 259(d)(2) makes
the definition of ``qualifying carriers'' dependent on the Commission's
decisions in the universal service proceeding.27 Until the
Commission issues an order pursuant to the Universal Service NPRM that
addresses related issues, it is not feasible to define precisely the
number of ``qualifying carriers'' that may be ``small business
concerns'' or, derivatively, the number of incumbent LECs that may be
``small business concerns.'' 28 With that caveat, we attempt to
estimate the number of small entities--both providing incumbent LECs
and qualifying carriers--that may be affected by the rules included in
this Report and Order.
---------------------------------------------------------------------------
\23\ 47 U.S.C. Sec. 259.
\24\ See, e.g., 47 U.S.C. Sec. 259(a).
\25\ 47 U.S.C. Sec. 259(a), (d).
\26\ 47 U.S.C. Sec. 259(d). See also 47 U.S.C. Sec. 3(44).
\27\ 47 U.S.C. Sec. 259(d)(2). See Federal-State Joint Board on
Universal Service, Notice of Proposed Rulemaking and Order
Establishing Joint Board, CC Docket 96-45, FCC 96-93 (released March
8, 1996), 61 FR 10499 (March 14, 1996) (``Universal Service NPRM'').
\28\ See Universal Service NPRM; see also Joint Board
Recommendation on Universal Service, Recommended Decision, CC Docket
96-45, FCC 96J-3 (released November 8, 1996), 61 FR 63778 (December
2, 1996) (Joint Board Recommendation on Universal Service)
(recommending eligibility criteria for carriers seeking universal
service support). We note that the Commission must complete a
proceeding to implement the Joint Board's recommendations on or
before May 8, 1997.
---------------------------------------------------------------------------
21. For the purposes of this analysis, we examined the relevant
definition of ``small entity'' or ``small business'' and applied this
definition to identify those entities that may be affected by the rules
adopted in this Report and Order. The RFA defines a ``small business''
to be the same as a ``small business concern'' under the Small Business
Act, 15 U.S.C. Sec. 632, unless the Commission has developed one or
more definitions that are appropriate to its activities.29 Under
the Small Business Act, a ``small business concern'' is one that: (1)
is independently owned and operated; (2) is not dominant in its field
of operation; and (3) meets any additional criteria established by the
Small Business Administration (SBA).30 Moreover, the SBA has
defined a small business for Standard Industrial Classification (SIC)
categories 4812 (Radiotelephone Communications) and 4813 (Telephone
Communications, Except Radiotelephone) to be small entities when they
have fewer than 1,500 employees.31 We first discuss generally the
total number of small telephone companies falling within both of those
categories. Then, we discuss the number of small businesses within the
two subcategories, and attempt to refine further those estimates to
correspond with the categories of telephone companies that are commonly
used under our rules.
---------------------------------------------------------------------------
\29\ See 5 U.S.C. Sec. 601(3) (incorporating by reference the
definition of ``small business concern'' in 5 U.S.C. Sec. 632).
\30\ 15 U.S.C. Sec. 632.
\31\ 13 C.F.R. Sec. 121.201.
---------------------------------------------------------------------------
22. As discussed supra, and consistent with our prior practice, we
shall continue to exclude small incumbent LECs from the definition of
``small entity'' and ``small business concerns'' for the purpose of
this IRFA. Because the small incumbent LECs subject to these rules are
either dominant in their field of operations or are not independently
owned and operated, consistent with our prior practice, they are
excluded from the definition of ``small entity'' and ``small business
concerns.'' 32 Accordingly, our use of the terms ``small
entities'' and ``small businesses'' does not encompass small incumbent
LECs. Out of an abundance of caution, however, for regulatory
flexibility analysis purposes, we will consider small incumbent LECs
within this analysis and use the term ``small incumbent LECs'' to refer
to any incumbent LECs that arguably might be defined by SBA as ``small
business concerns.'' 33
---------------------------------------------------------------------------
\32\ See Local Competition First Report and Order at Paras.
1328-30, 1342.
\33\ See id.
---------------------------------------------------------------------------
21. Telephone Companies (SIC 481)
23. Total Number of Telephone Companies Affected. The decisions and
rules adopted herein may have a significant effect on a substantial
number of small telephone companies identified by the SBA. The United
States Bureau of the Census (Census Bureau) reports that, at the end of
1992, there were 3,497 firms engaged in providing telephone service, as
defined therein, for at least one year. 34 This number contains a
variety of different categories of carriers, including local exchange
carriers, interexchange carriers, competitive access providers,
cellular carriers, mobile service carriers, operator service providers,
pay telephone operators, PCS providers, covered SMR providers, and
resellers. It seems certain that some of those 3,497 telephone service
firms may not qualify as small entities or small incumbent LECs because
they are not ``independently owned and operated.'' 35 For example,
a PCS provider that is affiliated with an interexchange carrier having
more than 1,500 employees would not meet the definition of a small
business. It seems reasonable to conclude, therefore, that fewer than
3,497 telephone service firms are small entity telephone service firms
or small incumbent LECs that may be affected by this Order.
---------------------------------------------------------------------------
\34\ United States Department of Census, Bureau of the Census,
1992 Census of Transportation, Communications, and Utilities:
Establishment and Firm Size, at Firm Size 1-123 (1995) (``1992
Census'').
\35\ 15 U.S.C. Sec. 632(a)(1).
---------------------------------------------------------------------------
24 Wireline Carriers and Service Providers. The SBA has developed a
definition of small entities for telecommunications companies other
than radiotelephone (wireless) companies (Telephone Communications,
Except
[[Page 9710]]
Radiotelephone). The Census Bureau reports that there were 2,321 such
telephone companies in operation for at least one year at the end of
1992. 36 According to the SBA's definition, a small business
telephone company other than a radiotelephone company is one employing
fewer than 1,500 persons. 37 Of the 2,321 non-radiotelephone
companies listed by the Census Bureau, 2,295 companies (or, all but 26)
were reported to have fewer than 1,000 employees. Thus, at least 2,295
non-radiotelephone companies might qualify as small incumbent LECs or
small entities based on these employment statistics. However, because
it seems certain that some of these carriers are not independently
owned and operated, this figure necessarily overstates the actual
number of non-radiotelephone companies that would qualify as ``small
business concerns'' under the SBA's definition. Consequently, we
estimate using this methodology that there are fewer than 2,295 small
entity telephone communications companies (other than radiotelephone
companies) that may be affected by the proposed decisions and rules and
we seek comment on this conclusion.
---------------------------------------------------------------------------
\36\ 1992 Census, supra, at Firm Size 1-123.
\37\ 13 CFR Sec. 121.201, Standard Industrial Classification
(SIC) Code 4812.
---------------------------------------------------------------------------
25. Local Exchange Carriers. Although neither the Commission nor
the SBA has developed a definition of small providers of local exchange
services, we have two methodologies available to us for making these
estimates. The closest applicable definition under SBA rules is for
telephone communications companies other than radiotelephone (wireless)
companies (SIC 4813) (Telephone Communications, Except Radiotelephone)
as previously detailed, supra. Our alternative method for estimation
utilizes the data that we collect annually in connection with the
Telecommunications Relay Service (TRS). This data provides us with the
most reliable source of information of which we are aware regarding the
number of LECs nationwide. According to our most recent data, 1,347
companies reported that they were engaged in the provision of local
exchange services. 38 Although it seems certain that some of these
carriers are not independently owned and operated, or have more than
1,500 employees, we are unable at this time to estimate with greater
precision the number of incumbent LECs that would qualify as small
business concerns under SBA's definition. Consequently, we estimate
that there are fewer than 1,347 small LECs (including small incumbent
LECs) that may be affected by the actions proposed in this NPRM.
---------------------------------------------------------------------------
\38\ Federal Communications Commission, CCB, Industry Analysis
Division, Telecommunications Industry Revenue: TRS Fund Worksheet
Data, Tbl. 1 (Number of Carriers Reporting by Type of Carrier and
Type of Revenue) (December 1996) (``TRS Worksheet'').
---------------------------------------------------------------------------
26. Our remaining comments are directed solely to non-LEC entities
that may eventually be designated as ``qualifying carriers.'' Section
259(d)(2) requires qualifying carriers, inter alia, to offer
``telephone exchange service, exchange access, and any other service
that is included in universal service'' within the carrier's service
area per universal service obligations imposed pursuant to section
214(e). As addressed supra, because section 259(d)(2) makes the scope
of potential ``qualifying carriers'' contingent upon the Commission's
decisions in the universal service proceeding, we are unable to define
the scope of small entities that might eventually be designated as
``qualifying carriers.'' 39 Thus, the remaining estimates of the
number of small entities affected by our rules--based on the most
reliable data for the non-LEC wireline and non-wireline carriers--may
be overinclusive depending on how many such entities otherwise qualify
pursuant to section 259(d)(2).
---------------------------------------------------------------------------
\39\ See Universal Service NPRM; see also Joint Board
Recommendation on Universal Service (recommending eligibility
criteria for carriers seeking universal service support). We note
that the Commission must complete a proceeding to implement the
Joint Board's recommendations on or before May 8, 1997.
---------------------------------------------------------------------------
27. Non-LEC wireline carriers. We next estimate the number of non-
LEC wireline carriers, including interexchange carriers (IXCs),
competitive access providers (CAPs), Operator Service Providers (OSPs),
Pay Telephone Operators, and resellers that may be affected by these
rules. Because neither the Commission nor the SBA has developed
definitions for small entities specifically applicable to these
wireline service types, the closest applicable definition under the SBA
rules for all these service types is for telephone communications
companies other than radiotelephone (wireless) companies. However, the
TRS data provides an alternative source of information regarding the
number of IXCs, CAPs, OSPs, Pay Telephone Operators, and resellers
nationwide. According to our most recent data: 130 companies reported
that they are engaged in the provision of interexchange services; 57
companies reported that they are engaged in the provision of
competitive access services; 25 companies reported that they are
engaged in the provision of operator services; 271 companies reported
that they are engaged in the provision of pay telephone services; and
260 companies reported that they are engaged in the resale of telephone
services and 30 reported being ``other'' toll carriers.40 Although
it seems certain that some of these carriers are not independently
owned and operated, or have more than 1,500 employees, we are unable at
this time to estimate with greater precision the number of IXCs, CAPs,
OSPs, Pay Telephone Operators, and resellers that would qualify as
small business concerns under SBA's definition. Firms filing TRS
Worksheets are asked to select a single category that best describes
their operation. As a result, some long distance carriers describe
themselves as resellers, some as OSPs, some as ``other,'' and some
simply as IXCs. Consequently, we estimate that there are fewer than 130
small entity IXCs; 57 small entity CAPs; 25 small entity OSPs; 271
small entity pay telephone service providers; and 260 small entity
providers of resale telephone service; and 30 ``other'' toll carriers
that might be affected by the actions and rules adopted in this Report
and Order.
---------------------------------------------------------------------------
\40\ TRS Worksheet, at Tbl. 1 (Number of Carriers Reporting by
Type of Carrier and Type of Revenue).
---------------------------------------------------------------------------
28. Radiotelephone (Wireless) Carriers: The SBA has developed a
definition of small entities for Wireless (Radiotelephone) Carriers.
The Census Bureau reports that there were 1,176 such companies in
operation for at least one year at the end of 1992.41 According to
the SBA's definition, a small business radiotelephone company is one
employing fewer than 1,500 persons.42 The Census Bureau also
reported that 1,164 of those radiotelephone companies had fewer than
1,000 employees. Thus, even if all of the remaining 12 companies had
more than 1,500 employees, there would still be 1,164 radiotelephone
companies that might qualify as small entities if they are
independently owned and operated. Although it seems certain that some
of these carriers are not independently owned and operated, and, we are
unable to estimate with greater precision the number of radiotelephone
carriers and service providers that would both qualify as small
business concerns under SBA's definition. Consequently, we estimate
that there are fewer than 1,164 small entity radiotelephone companies
that might be affected by the
[[Page 9711]]
actions and rules adopted in this Report and Order.
---------------------------------------------------------------------------
\41\ 1992 Census, supra, at Firm Size 1-123.
\42\ 13 CFR Sec. 121.201, (SIC Code 4812).
---------------------------------------------------------------------------
29. Cellular and Mobile Service Carriers. In an effort to further
refine our calculation of the number of radiotelephone companies
affected by the rules adopted herein, we consider the categories of
radiotelephone carriers, Cellular Service Carriers and Mobile Service
Carriers. Neither the Commission nor the SBA has developed a definition
of small entities specifically applicable to Cellular Service Carriers
and to Mobile Service Carriers. The closest applicable definition under
SBA rules for both services is for telephone companies other than
radiotelephone (wireless) companies. The most reliable source of
information regarding the number of Cellular Service Carriers and
Mobile Service Carriers nationwide of which we are aware appears to be
the data that we collect annually in connection with the TRS. According
to our most recent data, 792 companies reported that they are engaged
in the provision of cellular services and 138 companies reported that
they are engaged in the provision of mobile services.43 Although
it seems certain that some of these carriers are not independently
owned and operated, or have more than 1,500 employees, we are unable at
this time to estimate with greater precision the number of Cellular
Service Carriers and Mobile Service Carriers that would qualify as
small business concerns under SBA's definition. Consequently, we
estimate that there are fewer than 792 small entity Cellular Service
Carriers and fewer than 138 small entity Mobile Service Carriers that
might be affected by the actions and rules adopted in this Report and
Order.
---------------------------------------------------------------------------
\43\ TRS Worksheet, at Tbl. 1 (Number of Carriers Reporting by
Type of Carrier and Type of Revenue).
---------------------------------------------------------------------------
30. Broadband PCS Licensees. In an effort to further refine our
calculation of the number of radiotelephone companies affected by the
rules adopted herein, we consider the category of radiotelephone
carriers, Broadband PCS Licensees. The broadband PCS spectrum is
divided into six frequency blocks designated A through F. As set forth
in 47 CFR Sec. 24.720(b), the Commission has defined ``small entity''
in the auctions for Blocks C and F as a firm that had average gross
revenues of less than $40 million in the three previous calendar years.
Our definition of a ``small entity'' in the context of broadband PCS
auctions has been approved by SBA.44 The Commission has auctioned
broadband PCS licenses in Blocks A through F. We do not have sufficient
data to determine how many small businesses bid successfully for
licenses in Blocks A and B. There were 183 winning bidders that
qualified as small entities in the Blocks C, D, E, and F auctions.
Based on this information, we conclude that the number of broadband PCS
licensees affected by the decisions in the Infrastructure Sharing
Report & Order includes, at a minimum, the 183 winning bidders that
qualified as small entities in the Blocks C through F broadband PCS
auctions.
---------------------------------------------------------------------------
\44\ See Implementation of Section 309(j) of the Communications
Act--Competitive Bidding, PP Docket 93-253, Fifth Report & Order, 9
FCC Rcd 5532, 5581-84, 59 FR 37566 (July 22, 1994).
---------------------------------------------------------------------------
D. Description of Projected Reporting, Recordkeeping and Other
Compliance Requirements and Steps Taken To Minimize the Significant
Economic of This Report and Order on Small Entities and Small Incumbent
LECs, Including the Significant Alternatives Considered and Rejected
31. In this section of the FRFA, we analyze the projected
reporting, recordkeeping, and other compliance requirements that may
apply to small entities and small incumbent LECs, and we mention some
of the skills needed to meet these new requirements. We also describe
the steps taken to minimize the economic impact of our decisions on
small entities and small incumbent LECs, including the significant
alternatives considered and rejected. Overall, we anticipate that the
impact of these rules will be beneficial to small businesses since they
may be able to share infrastructure with larger incumbent LECs, in
certain circumstances, enabling small carriers to provide
telecommunication services or information services that they otherwise
might not be able to provide without building or buying their own
facilities.45
---------------------------------------------------------------------------
\45\ 47 U.S.C. Sec. 259(a).
---------------------------------------------------------------------------
Section 259(a)
32. Summary of Projected Reporting, Recordkeeping, and other
Compliance Requirements. Regarding the scope of section 259(a), we
allow the parties to section 259 agreements to negotiate what ``public
switched network infrastructure, technology, information, and
telecommunications facilities and functions'' will be made available,
without per se exclusions.46 In addition, we conclude that
qualifying carriers should be able to obtain network facilities and
functionalities available under section 251--including lease
arrangements and resale--alternatively pursuant to section 251 or
pursuant to section 259 (subject to the limitations in section
259(b)(6)), or pursuant to both if they so choose.47
---------------------------------------------------------------------------
\46\ See Infrastructure Sharing Report and Order Discussion at
Section III. A. of the Report and Order.
\47\ See Infrastructure Sharing Report and Order Discussion at
Section III. B. 1. of the Report and Order.
---------------------------------------------------------------------------
33. To the extent that there are small businesses that are
providing incumbent LECs, they will be required to make available
``public switched network infrastructure, technology, information, and
telecommunications facilities and functions'' to defined qualifying
carriers. We anticipate that compliance with such requests for
infrastructure sharing may require the use of legal, engineering,
technical, operational, and administrative skills. At the same time,
these rules should create opportunities for small businesses that are
qualifying carriers to utilize infrastructure that might not otherwise
be available. To obtain access to infrastructure from a providing
incumbent LEC, a qualifying carrier is required to pay the costs
associated with the shared infrastructure.
34. Steps Taken To Minimize the Significant Economic Impact of this
Report and Order on Small Entities and Small Incumbent LECs, Including
the Significant Alternatives Considered and Rejected. We reject
proposals offered by those parties who would assert limitations that
remove whole classes or categories of ``public switched network
infrastructure, technology, information and telecommunications
facilities and functions''--e.g., resale services and classes of non-
network information--from the scope of section 259(a).48
Similarly, we declined to exclude section 251-provided interconnection
elements from section 259 arrangements.49 We believe that the
flexible approach that we adopt will give parties the ability to
negotiate unique agreements that will vary based on individual
requirements of parties in each case. Such an approach is particularly
important because as technology continues to evolve, definitions based
on present network requirements seem likely to limit qualifying
carriers' opportunities to
[[Page 9712]]
obtain infrastructure unnecessarily. Further, we found no clear
evidence of Congressional intent to limit the broad parameters of
section 259(a).
---------------------------------------------------------------------------
\48\ See, e.g., GTE Comments at 4 (``Section 259 requires only
the sharing of infrastructure, not services. When Congress intended
to include services, it did so specifically . . . .''); Southwestern
Bell Comments at i, 5; Sprint Comments at 4 (``section 259
establishes requirements for the sharing of infrastructure, not the
provision of service''); NCTA Comments at 4 n.13 (scope of section
259(a) should be no broader than section 251). But see RTC Comments
at 7. See also Infrastructure Sharing Report and Order Discussion at
Section III. B. 1. of the Report and Order.
\49\ See Infrastructure Sharing Report and Order Discussion at
Section III. B. 1. of the Report and Order.
---------------------------------------------------------------------------
35. Overall, we believe that there will be a significant positive
economic impact on small entity carriers that--as a result of section
259 agreements--will be able to provide advanced telecommunications and
information services in the most efficient manner possible by taking
advantage of the economies of scale and scope of incumbent LECs. With
regard to any small incumbent LECs that might receive requests for
infrastructure sharing from qualifying carriers, we believe that the
statutory scheme imposed by Congress and adopted in our rules will
promote small business interests. First, we note that section 259(b)(1)
protects providing incumbent LECs--small and large, alike--from having
to take any actions that are economically unreasonable.50 Second,
we note that, under our rules, an incumbent LEC may demonstrate that
the requesting carrier does not lack economies of scale and scope,
relative to itself, with respect to the requested infrastructure and,
thus, may avoid infrastructure sharing obligations in certain
situations.51
---------------------------------------------------------------------------
\50\ See Infrastructure Sharing Report and Order Discussion at
Section III. C. of the Report and Order.
\51\ See Infrastructure Sharing Report and Order Discussion at
Section III. E. of the Report and Order.
---------------------------------------------------------------------------
Section 259(b) Terms and Conditions of Infrastructure Sharing
36. Summary of Projected Reporting, Recordkeeping, and other
Compliance Requirements. We require that providing LECs can recover
their costs associated with infrastructure sharing arrangements, and we
conclude that market incentives already exist to encourage providing
and qualifying carriers to reach negotiated agreements that do so
(section 259(b)(1)).52 Congress directed in section 259(b)(4) that
providing incumbent LECs make section 259 agreements available to
qualifying carriers on just and reasonable terms and conditions that
permit such qualifying carrier to fully benefit from the economies of
scale and scope of such providing incumbent local exchange carriers. We
decide that, although the Commission has pricing authority to prescribe
guidelines to ensure that qualifying carriers ``fully benefit from the
economies of scale and scope of [the providing incumbent LEC],'' it is
not necessary at this time to exercise this authority (section
259(b)(4)).53
---------------------------------------------------------------------------
\52\ See Infrastructure Sharing Report and Order Discussion at
Section III. C. 1. of the Report and Order.
\53\ See Infrastructure Sharing Report and Order Discussion at
Section III. C. 4. of the Report and Order.
---------------------------------------------------------------------------
37. We decide that section 259 agreements must be filed with the
appropriate state commission, or with the Commission if the state
commission is unwilling to accept the filing, and must be made
available for public inspection (section 259(b)(7)). Compliance with
this rule will require legal and administrative skills.
38. Steps Taken to Minimize the Significant Economic Impact of this
Report and Order on Small Entities and Small Incumbent LECs, Including
the Significant Alternatives Considered and Rejected. We generally
reject proposals that incumbent LECs should be required to develop,
purchase, or install network infrastructure, technology, and
telecommunications facilities and functions solely on the basis of a
request from a qualifying carrier to share such elements when such
incumbent LEC has not otherwise built or acquired, and does not intend
to build or acquire, such elements.54 Because the record did not
indicate that there would exist any scale and scope benefits in
situations where the providing incumbent LEC did not also use the
facilities, we concluded that such a result would be inappropriate. We
believe that the approach that we adopt will enable small entity
qualifying carriers to enjoy the benefits of section 259 sharing
agreements without imposing undue burdens on providing incumbent LECs.
---------------------------------------------------------------------------
\54\ MCI Comments at 7. Contra NYNEX Reply Comments at 10. See
Infrastructure Sharing Report and Order Discussion at Section III.
C. 1. of the Report and Order.
---------------------------------------------------------------------------
39. Further, we decline to accept various proposals that the
Commission adopt pricing schemes for infrastructure shared per section
259.55 Instead, we conclude that the negotiation process, along
with the available dispute resolution, arbitration, and formal
complaint processes available from the states and the Commission, will
ensure that qualifying carriers fully benefit from the economies of
scale and scope of providing LECs. We believe that allowing providing
incumbent LECs--including any small business--to recover the costs
associated with infrastructure sharing will encourage and facilitate
infrastructure sharing agreements. We believe that such agreements will
lead to mutual benefits for both qualifying carriers and providing
incumbent LECs.
---------------------------------------------------------------------------
\55\ See, e.g., MCI Comments at 7. Contra RTC Comments at 11.
See Infrastructure Sharing Report and Order Discussion at Section
III. C. 1. and 4. of the Report and Order.
---------------------------------------------------------------------------
Section 259(c) Information Disclosure Requirements
40. Summary of Projected Reporting, Recordkeeping, and other
Compliance Requirements. The statute also requires incumbent LECs to
provide ``timely information on the planned deployment of
telecommunications services and equipment'' to any parties to
infrastructure sharing agreements.56 The rules we adopt herein
require disclosure by each providing incumbent LEC for each of its
section 259-derived agreements and require that such notice and
disclosure are only for the benefit of the parties to a section 259-
derived agreement. Under our rules, providing incumbent LECs must
provide notice of changes in their networks that might affect
qualifying carriers' ability to utilize the shared infrastructure.
Should a small incumbent LEC be subject to this requirement, we
anticipate that it will require use of engineering, technical,
operational, and administrative skills.
---------------------------------------------------------------------------
\56\ See Infrastructure Sharing Report and Order at Section III.
D. of the Report and Order.
---------------------------------------------------------------------------
41. Steps Taken to Minimize the Significant Economic Impact of this
Report and Order on Small Entities and Small Incumbent LECs, Including
the Significant Alternatives Considered and Rejected. A number of
parties suggest that the Commission need not adopt any new disclosure
rules pursuant to section 259(c) because other network disclosure
provisions provide similar notice of changes in the network.57 We
conclude that specific notice of changes to an incumbent LEC's network
that affect a qualifying carrier's ability to utilize the shared
infrastructure, a qualifying carrier--including small businesses--will
enable qualifying carriers, including small entities, to maintain a
high level of interoperability between its network and that of the
providing incumbent LEC.
---------------------------------------------------------------------------
\57\ See, e.g., NYNEX Comments at 16-17; GTE Comments at 12.
---------------------------------------------------------------------------
42. We also decide that section 259(c) does not include a
requirement that providing incumbent LECs provide information on
planned deployments of telecommunications and services prior to the
make/buy point. We conclude that section 259 does not require such
mandatory joint planning, but we note that providing incumbent LECs may
have obligations to coordinate network planning and design under
sections 251(a), 256, 273(e)(3) and other provisions.
[[Page 9713]]
Section 259(d) Definition of Qualifying Carriers
43. Summary of Projected Reporting, Recordkeeping, and other
Compliance Requirements. We adopt a rebuttable presumption that
carriers satisfying the statutory definition of ``rural telephone
company'' in section 3(37) also satisfy the qualifying criteria in
section 259(d)(1) of lacking ``economies of scale or scope,'' but we
decide to exclude no class of carriers from attempting to show that
they qualify under section 259(d)(1).58 A carrier otherwise
qualifying under section 259(d) therefore may be entitled to request
and share certain infrastructure and, at the same time, be obligated to
share the same or other infrastructure. We conclude that parties to
section 259 negotiations can and will make the necessarily fact-based
evaluations of their relative economies of scale and scope pertaining
to the infrastructure that is requested to be shared. Complying with
the section 259 process set out in our rules may require small
incumbent LECs and requesting small entities to use legal and
negotiation skills.
---------------------------------------------------------------------------
\58\ See Infrastructure Sharing Report and Order Discussion at
Section III. E. of the Report and Order.
---------------------------------------------------------------------------
44. Steps Taken to Minimize the Significant Economic Impact of this
Report and Order on Small Entities and Small Incumbent LECs, Including
the Significant Alternatives Considered and Rejected. We believe that
the approach we take will facilitate negotiations between requesting
carriers and incumbent LECs. We expect that many if not most requests
for infrastructure sharing agreements will be made by carriers whose
customers reside predominantly, if not exclusively, in rural, sparsely-
populated areas.59 At the same time, there is nothing in the
statutory language or legislative history to persuade us that Congress
intended such a per se restriction on who can qualify under section
259(d). Thus, we rejected proposals that we limit qualifying carriers
to those who meet the requirements of section 3(37).60 We opposed
these proposals because they would unduly limit the opportunities to
engage in section 259 sharing agreements to those qualifying carriers
located in particular geographic areas. We believe that the approach
that we have adopted will enable all small entity qualifying carriers
to enjoy the benefits of section 259 sharing agreements without regard
to their geographic location.
---------------------------------------------------------------------------
\59\ See RTC Comments at 19-20 (urging the Commission to adopt a
rebuttable presumption in favor of ``rural telephone companies'').
\60\ See NCTA Comments at 3.
---------------------------------------------------------------------------
F. Report to Congress
45. The Commission shall send a copy of this Final Regulatory
Flexibility Analysis, along with this Report and Order, in a report to
Congress pursuant to the Small Business Regulatory Enforcement Fairness
Act of 1996, 5 U.S.C. Sec. 801 (a)(1)(A). A copy of this FRFA will also
be published in the Federal Register.
Ordering Clauses
46. Accordingly, It is ordered That, pursuant to sections 4(i),
4(j), 201-205, 259, 303(r), 403 of the Communications Act of 1934, as
amended by the 1996 Act, 47 U.S.C. Secs. 154(i), 154(j), 201-205, 259,
303(r), 403, the rules, requirements and policies discussed in this
Report and Order are adopted and Secs. 59.1 through 59.4 of the
Commission's rules, 47 CFR Secs. 59.1 through 59.4, are adopted as set
forth below.
47. It is further ordered That the requirements and regulations
established in this decision shall become effective upon approval by
OMB of the new information collection requirements adopted herein, but
no sooner than April 3, 1997. The Commission will publish a notice in
the Federal Register announcing OMB's approval of the information
collections in this decision.
List of Subjects in 47 CFR Part 59
Antitrust, Communications common carriers, Communications
equipment, Reporting and recordkeeping requirements, Rural areas,
Telegraph, Telephone.
Federal Communications Commission.
William F. Caton,
Acting Secretary.
Rule Changes
Part 59 of Title 47 of the Code of Federal Regulations is added to
read as follows:
PART 59--INFRASTRUCTURE SHARING
Sec.
59.1 General duty.
59.2 Terms and conditions of infrastructure sharing.
59.3 Information concerning deployment of new services and
equipment.
59.4 Definition of ``qualifying carrier''.
Authority: 47 U.S.C. 154(i), 154(j), 201-205, 259, 303(r), 403.
Sec. 59.1 General duty.
Incumbent local exchange carriers (as defined in 47 U.S.C. section
251(h)) shall make available to any qualifying carrier such public
switched network infrastructure, technology, information, and
telecommunications facilities and functions as may be requested by such
qualifying carrier for the purpose of enabling such qualifying carrier
to provide telecommunications services, or to provide access to
information services, in the service area in which such qualifying
carrier has obtained designation as an eligible telecommunications
carrier under section 214(e) of 47 U.S.C.
Sec. 59.2 Terms and conditions of infrastructure sharing.
(a) An incumbent local exchange carrier subject to the requirements
of section 59.1 shall not be required to take any action that is
economically unreasonable or that is contrary to the public interest.
(b) An incumbent local exchange carrier subject to the requirements
of section 59.1 may, but shall not be required to, enter into joint
ownership or operation of public switched network infrastructure,
technology, information and telecommunications facilities and functions
and services with a qualifying carrier as a method of fulfilling its
obligations under section 59.1.
(c) An incumbent local exchange carrier subject to the requirements
of section 59.1 shall not be treated by the Commission or any State as
a common carrier for hire or as offering common carrier services with
respect to any public switched network infrastructure, technology,
information, or telecommunications facilities, or functions made
available to a qualifying carrier in accordance with regulations issued
pursuant to this section.
(d) An incumbent local exchange carrier subject to the requirements
of section 59.1 shall make such public switched network infrastructure,
technology, information, and telecommunications facilities, or
functions available to a qualifying carrier on just and reasonable
terms and pursuant to conditions that permit such qualifying carrier to
fully benefit from the economies of scale and scope of such local
exchange carrier. An incumbent local exchange carrier that has entered
into an infrastructure sharing agreement pursuant to section 59.1 must
give notice to the qualifying carrier at least sixty days before
terminating such infrastructure sharing agreement.
(e) An incumbent local exchange carrier subject to the requirements
of section 59.1 shall not be required to engage in any infrastructure
sharing agreement for any services or access which are to be provided
or offered to
[[Page 9714]]
consumers by the qualifying carrier in such local exchange carrier's
telephone exchange area.
(f) An incumbent local exchange carrier subject to the requirements
of section 59.1 shall file with the State, or, if the State has made no
provision to accept such filings, with the Commission, for public
inspection, any tariffs, contracts, or other arrangements showing the
rates, terms, and conditions under which such carrier is making
available public switched network infrastructure, technology,
information and telecommunications facilities and functions pursuant to
this part.
Sec. 59.3 Information concerning deployment of new services and
equipment.
An incumbent local exchange carrier subject to the requirements of
section 59.1 that has entered into an infrastructure sharing agreement
under section 59.1 shall provide to each party to such agreement timely
information on the planned deployment of telecommunications services
and equipment, including any software or upgrades of software integral
to the use or operation of such telecommunications equipment.
Sec. 59.4 Definition of ``qualifying carrier''.
For purposes of this part, the term ``qualifying carrier'' means a
telecommunications carrier that:
(a) Lacks economies of scale or scope; and
(b) Offers telephone exchange service, exchange access, and any
other service that is included in universal service, to all consumers
without preference throughout the service area for which such carrier
has been designated as an eligible telecommunications carrier under
section 214(e) of 47 U.S.C.
[FR Doc. 97-5177 Filed 3-3-97; 8:45 am]
BILLING CODE 6712-01-P