[Federal Register Volume 62, Number 72 (Tuesday, April 15, 1997)]
[Rules and Regulations]
[Pages 18280-18299]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-8483]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 52
[CC Docket No. 95-116; FCC 97-74]
Telephone Number Portability
AGENCY: Federal Communications Commission.
ACTION: Final rule.
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SUMMARY: The First Memorandum Opinion and Order on Reconsideration,
(Order) released March 11, 1997, affirms and clarifies the Commission's
rules implementing section 251(b)(2) of the Communications Act of 1934,
as amended, which requires all LECs to offer long-term number
portability in accordance with requirements prescribed by the
Commission in the First Report and Order, 61 FR 38605 (July 25, 1996).
The First Report & Order also requires all LECs to implement long-term
number portability in the 100 largest Metropolitan Statistical Areas
(MSAs) according to a five-phase deployment schedule that commences
October 1, 1997, and concludes December 31, 1998. The Commission herein
concludes, first, that Query on Release (QOR) is not an acceptable
long-term number portability method. Second, the Commission extends the
completion deadlines in the implementation schedule for wireline
carriers by three months for Phase I and by 45 days for Phase II,
clarifies the requirements imposed thereunder, concludes that LECs need
only provide number portability within the 100 largest MSAs in switches
for which another carrier has made a specific request for portability,
and addresses issues raised by rural LECs and certain other parties.
Finally, the Commission affirms and clarifies its implementation
schedule for wireless carriers.
DATES: Effective May 15, 1997. Information collections, however, which
are subject to approval by the Office of Mangement and Budget (OMB),
shall become effective upon approval by OMB, but no sooner than
September 12, 1997. A document announcing the information collections
approval by OMB will be published in the Federal Register at a later
date.
FOR FURTHER INFORMATION CONTACT: Jeannie Su, Attorney, Common Carrier
Bureau, Policy and Program Planning Division, (202) 418-1580.
SUPPLEMENTARY INFORMATION:
Regulatory Flexibility Analysis
This is a summary of the Commission's Order on Reconsideration
[[Page 18281]]
adopted March 6, 1997, and released March 11, 1997.
Synopsis of First Memorandum Opinion and Order on Reconsideration
Introduction
1. On June 27, 1996, the Commission adopted the First Report and
Order and Further Notice of Proposed Rulemaking (First Report & Order),
61 FR 38605 (July 25, 1996), in this docket implementing the
requirement under Section 251(b) of the Communications Act of 1934, as
amended (the Act), that all local exchange carriers (LECs) offer, ``to
the extent technically feasible, number portability in accordance with
requirements prescribed by the Commission.'' 47 U.S.C. 251(b). By this
action, the Commission resolves certain petitions for reconsideration
or clarification of the Commission's number portability rules adopted
in the First Report & Order. First, the Commission concludes that Query
on Release (QOR) is not an acceptable long-term number portability
method. Second, the Commission extends the completion deadlines in the
implementation schedule for wireline carriers by three months for Phase
I and by 45 days for Phase II, clarifies the requirements imposed
thereunder, concludes that LECs need only provide number portability
within the 100 largest MSAs in switches for which another carrier has
made a specific request for portability, and addresses issues raised by
rural LECs and certain other parties. Finally, the Commission affirms
and clarifies its implementation schedule for wireless carriers.
Background
2. Pursuant to the statutory requirement of section 251(b), the
First Report & Order requires all LECs to implement a long-term number
portability method in the 100 largest Metropolitan Statistical Areas
(MSAs) according to a phased deployment schedule that commences October
1, 1997, and concludes December 31, 1998. Thereafter, in areas outside
the 100 largest MSAs, each LEC must make long-term number portability
available within six months after a specific request by another
telecommunications carrier. The First Report & Order also requires all
cellular, broadband personal communications services (PCS), and covered
Specialized Mobile Radio (SMR) providers to be able to deliver calls
from their networks to ported numbers by December 31, 1998, and
requires cellular, broadband PCS, and covered SMR providers to offer
number portability throughout their networks and have the capability to
support roaming nationwide by June 30, 1999.
3. Rather than choosing a particular technology for the provision
of number portability, the Commission established performance criteria
that any long-term number portability method selected by a LEC must
meet. The Commission noted, however, that one of the criteria it
adopted effectively precludes carriers from implementing QOR. The First
Report & Order further concludes that long-term number portability
should be provided through a system of regional databases that will be
managed by one or more independent administrators selected by the North
American Numbering Council (NANC).
4. The First Report & Order also requires wireline LECs, pending
their deployment of a long-term number portability method, to provide
currently available number portability measures upon request by another
telecommunications carrier. Consistent with Section 251(e)(2) of the
Communications Act, the First Report & Order sets forth principles that
ensure that the costs of currently available measures are borne by all
telecommunications carriers on a competitively neutral basis, and
permits states to utilize various cost recovery mechanisms, so long as
they are consistent with these statutory requirements and the
Commission's principles. The Commission also concurrently adopted a
Further Notice of Proposed Rulemaking (Further NPRM), 61 FR 38687 (July
25, 1996), seeking comment on cost recovery for long-term number
portability.
Discussion
Issues Relating to Long-Term Number Portability Methods
Performance Criteria
5. Criterion Four. The Commission concludes that criterion four
should be removed from the list of minimum performance criteria
required for number portability, because all interconnected carriers
are likely to rely upon each other's networks to some extent to process
and route calls in a market in which a long-term number portability
method has been deployed. For example, under both Location Routing
Number (LRN) and Query on Release (QOR), the competitive LEC may be
dependent upon facilities provided by the original service provider for
the proper routing of all ported calls, because the original service
provider is the entity that launches a query to the number portability
database to obtain the location routing number for the dialed number.
Furthermore, the Commission finds no basis in the record for drawing a
principled distinction between permissible and impermissible levels of
reliance on the original service provider's network. For these reasons,
the Commission finds that criterion four--which requires that any
number portability method may not ``require telecommunications carriers
to rely on databases, other network facilities, or services provided by
other telecommunications carriers in order to route calls to the proper
termination point''--is, from a practical perspective, unworkable.
Moreover, many of the Commission's concerns about reliance on a
competitor's network (e.g., the possibility of service degradation and
call blocking) are addressed by criterion six. Thus, criterion four
does not appear to be necessary in order to implement the statutory
definition of number portability. In light of the Commission's decision
to eliminate criterion four, the Commission concludes that AirTouch's
requested clarification of criterion four is moot.
6. Criterion Six. With respect to criterion six, the Commission
affirms its conclusion in the First Report & Order that any long-term
number portability method must not result in any degradation of service
quality or network reliability when customers switch carriers. The
Commission further concludes, based on the record in this proceeding,
that criterion six prohibits the use of QOR as a long-term number
portability method. The Commission agrees with the commenters,
primarily potential new providers of local exchange services (also
referred to as ``competitive LECs''), that: (1) QOR results in
degradation of service by imposing post-dial delay only on calls ported
to new carriers; (2) if network reliability problems were to arise as a
result of QOR, those problems would disproportionately affect customers
who port their numbers; and (3) QOR should not be permitted on an
intranetwork basis, because it is not ``competitively neutral.'' The
Commission discusses each of these conclusions in more detail below.
Service Degradation
7. After considering petitioners' arguments and concerns, the
Commission affirms its conclusion in the First Report & Order that, in
accordance with criterion six, a long-term number portability method
may not cause customers to experience ``a greater dialing delay or call
set up time'' as compared to when the customer was with the original
carrier. Criterion six implements the statutory requirement that
consumers be able to retain their
[[Page 18282]]
numbers ``without impairment of quality, reliability, or convenience
when switching from one telecommunications carrier to another.''
8. At the outset, the Commission agrees with AT&T and Time Warner
that the time it takes to receive a call is an important factor for
many subscribers, particularly businesses that receive and respond to a
large number of calls on a daily basis. If the party making a call to a
business experiences additional delay because that business has
switched carriers, that delay may negatively impact how the business is
perceived, which, in turn, could dissuade the business from switching
carriers in the first place. Therefore, the Commission clarifies that
performance criterion six requires that calls to customers who change
carriers (not just calls from customers who change carriers) must not
take longer to complete merely because the customer has switched local
service providers. In order to implement the statutory requirement that
consumers should be able to change carriers and retain their original
phone number without impairment of quality, reliability, or
convenience, the Commission concludes that any post-dial delay imposed
by a number portability method should be roughly equivalent for all
consumers, whether they are calling to or from a ported or a non-ported
number.
9. The Commission further concludes that consumers that switch
telecommunications carriers and retain their numbers would experience
``impairment of quality'' if QOR were used, because the post-dial delay
imposed by QOR is not equivalent for all consumers. Under QOR, calls
that are placed to ported numbers must undergo a series of signalling
and routing steps that result in longer post-dial delay than occurs for
calls that are placed to non-ported numbers. No party disputes that QOR
causes additional post-dial delay. There is disagreement, however, over
the appropriate baseline for comparison. Proponents of QOR erroneously
focus on the post-dial delay of alternative number portability
technologies, comparing the incremental post-dial delay associated with
a call to a ported number using LRN with that of a call to a ported
number using QOR. That is not the statutory standard. The Commission
agrees with AT&T and MCI that the proper comparison for incremental
post-dial delay is the difference in delay between calls placed to
ported numbers and calls placed to non-ported numbers, because that is
the delay that occurs ``when switching from one telecommunications
carrier to another.'' According to the most conservative estimates,
calls to ported numbers from a network that uses QOR would experience
an additional post-dial delay of approximately 1.3 seconds as compared
to calls placed to non-ported numbers. Because the Commission finds
that post-dial delay of 1.3 seconds is significant, it concludes that
QOR violates the statutory definition of number portability and
criterion six. By contrast, under LRN, there is no differential between
ported and non-ported calls; for all calls, it takes the same amount of
time to query the database for appropriate routing instructions. LRN
therefore does not impair service quality when a customer changes
carriers. Accordingly, the Commission concludes that LRN is consistent
with the statutory definition of number portability and performance
criterion six.
10. The Commission also rejects petitioners' argument that some
degree of added post-dial delay should be acceptable, provided that it
is not ``perceptible'' to the public. First, the Commission agrees with
AT&T that the studies submitted by petitioners fail to demonstrate that
1.3 seconds of post-dial delay is imperceptible to the public. Second,
the Commission agrees with those parties that contend that, even if the
additional post-dial delay were imperceptible to the caller, QOR could
adversely affect competitors, because the incumbent LEC could
truthfully advertise the fact that calls to customers that remain on
the incumbent LEC's network are completed more quickly than calls to
customers that switch to a competitor's network. MCI points out that
this could create a marketplace perception that competitive LECs are
operating inferior networks, which could harm competition. In response,
six incumbent LECs have voluntarily committed not to mention the call
set-up time differences between LRN and QOR in their advertising
materials. As AT&T and MCI point out, however, the incumbent LECs'
voluntary commitment is limited to ``advertising materials,'' and
therefore does not preclude them from mentioning call set up in all
other aspects of their marketing, such as direct sales and
telemarketing, news releases, studies commenced to compare competitors'
service performance, and editorials. Furthermore, because only six
incumbent LECs signed the letter, the Commission has no basis on which
to conclude that all incumbent LECs will refrain from using the
differences in call set-up time to influence marketplace perceptions
and inhibit competition. Thus, the Commission declines to designate a
threshold below which added post-dial delay is permissible. Moreover,
given the Commission's concerns about these marketplace perceptions,
the Commission finds U S West's suggestion that the Commission survey
consumers to ascertain whether they can perceive the post-dial delay
associated with QOR to be unnecessary.
Network Reliability
11. QOR. As discussed above, criterion six requires that no long-
term number portability method may result in ``any degradation of
service quality or network reliability when customers switch
carriers.'' The Commission agrees with the opponents of QOR that
technical concerns raised by QOR are more likely to impact ported
numbers adversely than non-ported numbers. For example, QOR requires
fewer SS7 links to the number portability database than LRN because of
the lower number of queries to support. There is a risk, therefore,
that an SS7 network engineered to accommodate a lower traffic level
would not be able to handle an unexpected sharp increase in the number
of calls to ported numbers. Such increases could occur in response to
advertising or promotions by competitive LECs with ported numbers.
Difficulties in querying the database may result in call blockage
(i.e., lost or incomplete calls) and increased post-dial delay, but
only on calls to ported numbers. The Commission also notes that the
apparent advantage of QOR in requiring fewer queries to the database is
offset by the fact that it will require at least two additional
signalling messages for each call to a ported number before routing
instructions are obtained. This additional load on the signalling
network creates the potential for reliability problems for ported
calls. The Commission concludes that network reliability concerns posed
by QOR violate criterion six and the statutory definition of number
portability because, if any network problems arise as a result of QOR,
they would disproportionately affect consumers who port their numbers.
12. LRN. As a related matter, proponents of QOR assert that
deployment of LRN is more likely to result in network failure than if
carriers are permitted to use the QOR enhancement to LRN. Although the
proponents of QOR do not frame their arguments in terms of the
performance criteria the Commission adopted in the First Report &
Order, the thrust of their argument appears to fall within the scope of
criterion five, which requires that no number portability method
[[Page 18283]]
should result in ``unreasonable degradation in service quality or
network reliability when implemented.''
13. The Commission also concludes that petitioners have not
demonstrated that LRN fails to meet criterion five. Although the
initial deployment of any new technology may pose some risk to the
network, the Commission is not persuaded that deployment of LRN will
result in unreasonable degradation of network reliability when deployed
under the revised schedule adopted in this First Reconsideration Order.
Indeed, petitioners' concerns about LRN's impact on network reliability
are mitigated by a number of factors. First, as the Commission noted
previously, LRN has been examined extensively by a number of state
commissions and industry workshops, and had been selected for
deployment by at least six states prior to the adoption of the First
Report & Order. Second, the Commission provided in the First Report &
Order for a field test of LRN in the Chicago MSA (Chicago trial), which
should help to protect against network reliability problems. If
technical problems with LRN arise with respect to the Chicago trial,
the Commission can take appropriate action at that time. Third, as
discussed in more detail below, the Commission is extending the
implementation schedule for Phase I to allow carriers additional time
to test number portability in a live environment, and to take
appropriate steps to safeguard network reliability. Indeed, the
Bellcore study submitted by SBC supports the Commission's conclusion
that additional time for testing, integration, and soaking (limited use
of the software in a live environment for a length of time sufficient
to find initial defects) will help to reduce the probability of network
failure. Fourth, as the Commission clarifies below, its implementation
schedule does not require a flashcut implementation on October 1, 1997,
for those MSAs in the first phase of the deployment schedule. Rather,
number portability may be implemented gradually throughout the initial
phase, provided that implementation in the designated markets is
completed by the end of that phase.
Intranetwork Use of QOR
14. Incumbent LECs ask the Commission to permit them to use QOR on
all calls that originate on their network and are placed to numbers
that originally were assigned to one of their end offices (i.e., calls
``within their own network'' or ``intranetwork calls''). The Commission
concludes that their request is misleading insofar as it implies that
only calls to and from their own customers would be affected. In fact,
calls that are placed to numbers that have been ported would require a
query to the number portability database after the originating switch
is notified by the terminating switch in the incumbent LEC's service
area that the called number has been ported. The Commission agrees with
MCI that, as customers subscribe to alternative carriers, the only
calls that will remain ``within'' the incumbent LEC's network will be
calls from one of the incumbent LEC's customers to another. As
discussed above, however, the call to the ported number would
experience increased post-dial delay because of the additional
signalling and routing preparations required by QOR. Such disparity in
treatment between ported and non-ported numbers violates criterion six
and the statutory definition of number portability.
Public Interest Considerations
Overview
15. Petitioners further assert that, regardless of the Commission's
performance criteria, incumbent LECs should not be prohibited from
using QOR as a number portability method, because deployment of QOR
serves the public interest. First, they claim that QOR will result in
significant cost savings. Second, they claim that permitting incumbent
LECs to use QOR will make it easier for them to meet the Commission's
implementation schedule.
16. As an initial matter, the Commission disagrees with the
petitioners' premise that LECs should be permitted to implement QOR
regardless of the performance criteria, if the Commission determines
that QOR serves the public interest. As stated above, the Commission
concludes that QOR violates criterion six, which is required by the
statute. Thus, the Commission is not at liberty to apply a public
interest analysis that could result in an abrogation of the statutory
mandate. Nevertheless, because the parties raised public interest
concerns, the Commission addresses them in order to establish that its
decision to prohibit QOR is not contrary to the public interest.
17. Discussion. As most carriers recognize, LRN is the more
economical way to provide long term number portability once ported
numbers for a given switch reach a certain level, although the point at
which it becomes more cost-effective to use LRN rather than QOR remains
in dispute. From an economic perspective, the question is whether the
present discounted value of the cost of initially deploying LRN is less
than the present discounted value of the cost of deploying QOR
initially and LRN at some later date. Proponents of QOR contend that
the use of the QOR enhancement to LRN would result in real cost
savings, not just a short-term deferral of expenses, because the number
of ported calls in some areas will never reach the level where it is
more cost effective to disable QOR and complete the build-out necessary
to support LRN. The Commission concludes, however, that the statutory
scheme that Congress has put in place should, over time, result in
vigorous facilities-based competition in most areas, and therefore LRN
will be the most economical long-term solution. Thus, deploying QOR
would most likely result in short-term cost savings, not overall cost
savings. In fact, at least one incumbent LEC, Ameritech, has already
decided that it is beneficial to deploy LRN from the outset, rather
than converting from QOR to LRN at some later date. Even if facilities-
based competition does not develop in the immediate future, however,
the Commission concludes that the harm that QOR imposes on competitors
outweighs the benefit of allowing incumbent LECs to defer the cost of
implementing a superior long-term number portability solution.
18. Moreover, the Commission is not convinced that the incumbent
LEC's estimates of the short-term savings associated with QOR are
reliable. The Commission is particularly concerned by the fact that the
cost savings estimates submitted by incumbent LECs have varied
significantly over the course of this proceeding. In some cases,
estimates from the same carrier have changed by 100 percent or more.
Further, the changed estimates have not moved in the same direction;
some carriers' estimates of the cost savings increased drastically and
other carriers' estimates decreased equally drastically. While the
Commission recognizes that carriers have worked over time to refine
their projections, the wide variation in the estimates submitted by
individual carriers at different points in this proceeding raises
questions about the reliability of these estimates. Furthermore, the
fact that some carriers have not explained the basis for the
assumptions underlying their estimates precludes the Commission from
conducting an independent evaluation of the reasonableness and
reliability of their projected cost savings and, consequently, limits
the weight the
[[Page 18284]]
Commission can reasonably assign to those estimates.
19. In addition, MCI alleges that the cost savings that would be
realized by permitting the deployment of QOR are far less than the
estimated $54 million to $136.3 million in annual savings alleged by
individual incumbent LECs. The LECs collectively estimate they would
save between $624 and $649 million if permitted to use QOR. MCI has
provided figures indicating that the LECs collectively would save only
$50 million, but that figure only includes estimated savings for four
out of the seven carriers. MCI was unable to estimate cost savings for
three carriers due to insufficient information in the record. For three
of the carriers for which MCI was able to provide estimates, however,
these estimates ranged from 20% to 23% of the corresponding LEC figure.
For the fourth carrier, MCI argued that QOR actually would cost more
than LRN.
20. MCI's calculation of the asserted cost savings associated with
QOR challenges a key assumption underlying the incumbent LECs'
estimates. Specifically, MCI claims that the LECs substantially
underestimate the number of transactions (i.e., queries) per second
(tps) that an SCP pair can perform and, consequently, their estimate of
the number of SCP pairs that must be deployed to provide LRN is
overstated. AT&T also alleges that the incumbent LECs' savings
estimates do not take into account offsetting increases in additional
switching facilities costs that would be required for QOR. MCI and AT&T
further contend that the incumbent LECs' estimates of the relative
costs of deploying LRN and QOR must be adjusted downward to account for
revenues that they will receive to perform database queries at the
request of rural and other LECs that do not have the capability to
perform such queries themselves. Although incumbent LECs would obtain
such revenues with both the LRN and QOR methodologies, the revenue
stream is likely to be significantly greater with LRN because the
number of database queries is likely to be much greater. Indeed,
Pacific, a proponent of QOR, acknowledges that its estimate of the cost
savings associated with QOR would be reduced by as much as $18 million
if such revenues were included in the estimate. In view of the
significant changes in the estimates of the cost savings associated
with QOR submitted by individual incumbent LECs over the past months, a
lack of data explaining many of the assumptions underlying their
estimates, and the questions raised by MCI and AT&T with respect to
specific aspects of the estimates, the Commission finds, on balance,
that the incumbent LECs have not substantiated their claim that
deployment of QOR will produce significant cost savings.
21. Moreover, a recent submission by Illuminet, a provider of SS7,
database, and other services to independent LECs and other entities,
casts doubt on the reasonableness of one of the most basic assumptions
underlying the incumbent LECs' estimates of the relative costs of QOR
and LRN. Incumbent LEC estimates assume that the LEC number portability
architecture will be deployed through a network of SCPs, and that a
major cost driver of LRN is the number of SCPs needed to handle
increased traffic volumes. On the other hand, Illuminet advocates using
an STP-based architecture, in which call routing information from the
regional database is transferred to a carrier's STP instead of an SCP,
and the SCP is not involved in processing the number portability query.
Illuminet asserts that STPs are designed specifically to do ten-digit
translations such as LRN query processing and can process number
portability queries at a much faster rate than SCPs. In contrast, SCPs
are designed to support multiple call processing applications and
process significantly fewer queries per second. Carriers using an STP-
based architecture, therefore, would need to purchase and install a
relatively smaller number of STPs instead of the larger number of SCPs
alleged by the LECs, and would not need to purchase and install
additional SS7 links between the SCPs and STPs. Thus, according to
Illuminet, use of an STP-based architecture would reduce dramatically
the cost of LRN. In response, Pacific acknowledges that a combined STP-
SCP approach may reduce some costs, but that expenses related to
upgrading switch processors, links, and existing STPs will still be
substantial. Although the Commission acknowledges that carriers
deploying LRN will incur costs other than those associated with SCPs,
the Commission agrees with Illuminet that an STP-based approach should
reduce the relative cost differential between LRN and QOR.
Conclusion
22. Congress recognized that there are costs associated with the
implementation of local number portability. Although carriers may
realize some short-term cost savings if permitted to use QOR instead of
LRN, the exact amount of savings from utilizing QOR is unclear. Even if
the cost savings figures submitted by the LECs were correct, the
Commission believes that the benefits to consumers of such savings do
not outweigh the harm that QOR would impose on competitive LECs, the
cost of disrupting state efforts to implement LRN, or any delay in
implementation that might result from such disruption. Thus, the
Commission concludes that permitting carriers to deploy QOR as a long-
term number portability method does not serve the public interest.
Implementation Schedule for Wireline Carriers
Background
23. In the First Report & Order, the Commission required local
exchange carriers operating in the 100 largest MSAs to offer long-term
service provider portability, according to a phased deployment schedule
commencing on October 1, 1997, and concluding on December 31, 1998. The
Commission required deployment in one specified MSA in each of the
seven BOC regions by the end of fourth quarter 1997 (``Phase I''), 16
additional specified MSAs by the end of first quarter 1998 (``Phase
II''), 22 additional specified MSAs by the end of second quarter 1998
(``Phase III''), 25 additional specified MSAs by the end of third
quarter 1998 (``Phase IV''), and 30 additional specified MSAs by the
end of fourth quarter 1998 (``Phase V''). The Commission noted that, in
establishing the deployment schedule, it relied upon representations of
switch vendors regarding the dates by which the necessary switching
software will be generally available for deployment. In particular,
vendors estimated that they could begin to make software for at least
one long-term number portability method generally available for
deployment by carriers around mid-1997. In addition, a carrier may file
a specific request for number portability beginning January 1, 1999,
for areas outside the 100 largest MSAs, and each LEC must make long-
term number portability available in that MSA within six months after
the specific request. The Commission also directed the carriers that
are members of the Illinois Commerce Commission Local Number
Portability Workshop (ICC Workshop) to conduct in the Chicago MSA,
concluding no later than August 31, 1997, a field test of LRN or
another technically feasible long-term number portability method that
comports with the performance criteria. The Commission noted that
section 251(f)(2) of the Act permits a LEC with fewer than two percent
of the country's total installed subscriber lines to petition a state
commission for suspension or
[[Page 18285]]
modification of the interconnection requirements of sections 251 (b)
and (c).
24. The Commission delegated to the Chief, Common Carrier Bureau,
the authority to monitor the progress of LECs implementing number
portability, and to direct carriers to take any actions necessary to
ensure compliance with its deployment schedule. The Commission also
delegated to the Chief, Common Carrier Bureau, the authority to waive
or stay any of the dates in the implementation schedule, for a period
not to exceed nine months (i.e., no later than September 30, 1999, for
the MSAs in Phase V of the deployment schedule), as is necessary to
ensure the efficient development of number portability. In the event a
carrier is unable to meet the Commission's deadlines for implementing a
long-term number portability method, it may file with the Commission,
at least 60 days in advance of the implementation deadline, a petition
to extend the time by which implementation of long-term number
portability in its network will be completed. The Commission
emphasized, however, that carriers are expected to meet the prescribed
deadlines, and a carrier seeking relief must present extraordinary
circumstances beyond its control in order to obtain an extension of
time. The Commission required a carrier seeking such relief to
demonstrate through substantial, credible evidence the basis for its
contention that it is unable to comply with the deployment schedule.
Deployment Only in Requested Switches
25. Discussion. The Commission agrees with the majority of the
parties commenting on this issue that it is reasonable to focus initial
efforts in implementing number portability in areas where competing
carriers plan to enter. This approach will permit LECs to target their
resources where number portability is needed and avoid expenditures in
areas within an MSA in which competitors are not currently interested.
The Commission further agrees that such a procedure will foster
efficient deployment, network planning, and testing, reduce costs, and
lessen demands on software vendors. Moreover, the Commission believes
that limiting deployment to switches in which a competitor expresses
interest in number portability will address the concerns of smaller and
rural LECs with end offices within the 100 largest MSAs that they may
have to upgrade their networks at significant expense even if no
competitors desire portability. Limiting deployment to switches in
which a competitor expresses interest in deployment will be consistent
to a large extent with procedures suggested by Ameritech and BellSouth
and already considered by several state commissions, as well as the
Commission's past practice in implementing conversion to equal access
for independent telephone companies.
26. The Commission therefore concludes that LECs need only provide
number portability within the 100 largest MSAs in switches for which
another carrier has made a specific request for the provision of
portability. The Commission leaves it to the industry and to state
commissions to determine the most efficient procedure for identifying
those switches in which carriers have expressed interest and which will
be deployed with number portability according to the original
deployment schedule for the 100 largest MSAs. The Commission finds,
however, that any procedure to identify and request switches for
deployment of number portability must comply with certain minimum
criteria to ensure that minimal burden is imposed upon carriers
requesting deployment in particular switches, and that carriers that
receive requests for deployment in their switches have adequate time to
fulfill the requests. As explained below, the Commission requires that:
(1) Any wireline carrier that is certified, or has applied for
certification, to provide local exchange service in the relevant state,
or any licensed CMRS provider, must be allowed to make a request for
deployment; (2) requests for deployment must be submitted at least nine
months before the deadline in the Commission's deployment schedule for
that MSA; (3) carriers must make available lists of their switches for
which deployment has and has not been requested; and (4) additional
switches must be deployed upon request within the time frames described
below.
27. First, any wireline carrier that is certified (or has applied
for certification) to provide local exchange service in a state, or any
licensed CMRS provider, must be given a reasonable opportunity to make
a specific request for deployment of number portability in any
particular switch located in the MSAs in that state designated in the
First Report & Order. According to the Act, any carrier that desires
number portability from a LEC must be able to obtain portability, in
accordance with the requirements established by the Commission. 47
U.S.C. 251(b)(2). A state commission, however, may review whether the
requests made by a carrier are unreasonable, given the state
commission's knowledge of that carrier's plans to enter the state.
Based on the limited information available to the Commission at this
time, the states that are reviewing seemingly unreasonable requests
appear to be acting in good faith to accommodate carriers' interests in
number portability capabilities. If the Commission receives evidence in
the future that states are unreasonably limiting deployment, then it
can revisit this issue at that time.
28. Second, a carrier must make its specific requests for
deployment of number portability in particular switches at least nine
months before the deadline for completion of implementation of number
portability in that MSA. The Commission concludes that this deadline
will enable a LEC to plan ahead for the deployment of number
portability in multiple switches in a given MSA. The Commission
encourages carriers to make such requests earlier than the nine-month
deadline to give the LEC that operates the switch in which portability
is requested more time to implement number portability capabilities. In
addition, carriers may agree among themselves, or state commissions may
require carriers, to comply with a deadline for submitting requests
that is more than nine months prior to the implementation deadline.
29. The Commission encourages carriers, before requests for
deployment are submitted, to seek to reach a consensus on the
particular switches that initially will be deployed with number
portability. The Commission notes, moreover, that the state commission
may decide, or carriers affected in the state may agree, that it would
be preferable for the state commission to aggregate the requests to
produce a master list of requested switches. In addition, the
Commission concludes that carriers may negotiate private agreements
specifying that a carrier will not request that certain switches be
deployed according to the Commission's schedule if the LEC from which
deployment is requested agrees to deploy other number portability-
capable switches, either inside or outside the 100 largest MSAs, at an
earlier date than the deadlines in the Commission's schedule. For
example, NEXTLINK suggests waiving the scheduled deployment deadlines
for switches in the 100 largest MSAs for which no competitor expresses
interest in deployment, and allowing carriers instead to deploy
switches outside the 100 largest MSAs in which a competitor expresses
interest, according to the deadlines for those unrequested switches
within the 100 largest MSAs.
[[Page 18286]]
30. Third, after carriers have submitted their requests, a carrier
must make readily available upon request to any interested parties a
list of its switches for which number portability has been requested
and a list of its switches for which number portability has not been
requested. The Commission finds that simplifying the task of
identifying the switches in each MSA in which number portability is
initially scheduled to be deployed is consistent with its policy of
facilitating the deployment of number portability in areas where new
competitors plan to enter.
31. Fourth, carriers must be able to request at any time that
number portability be deployed in additional switches. LECs must
provide portability in these additional switches upon request, after
the deployment deadline mandated by the Commission's schedule for that
MSA, within the time frames that the Commission adopts here, unless
requesting carriers specify a later date. Although carriers may make
specific requests for deployment in additional switches in a particular
MSA at any time, the time frames set forth below will commence after
the deadline for deployment in that particular MSA in the
implementation schedule. The Commission agrees with Sprint and Time
Warner that specific time frames within which number portability must
be deployed in all switches that were not initially requested are
necessary to ensure that competitive LECs can be certain that
portability will be available in areas in which they plan to compete
and can formulate their business plans accordingly. Absent this
certainty, competing carriers would have an incentive to request more
switches during the initial request process, including those serving
markets which they do not plan to enter in the near future, in order to
ensure deployment of portability in any switch in which they might ever
want portability. The Commission finds, therefore, that establishing
specific time frames for deployment in all additional switches will
benefit competitive LECs by ensuring that portability will be available
to them at a designated future time, and will benefit incumbent LECs by
reducing their initial deployment burdens.
32. The Commission finds that the time frames developed by the
carriers participating in the ICC Workshop generally successfully
balance the needs of competitive LECs for certainty of deployment and
the burdens faced by incumbent LECs in deploying number portability in
additional switches that require different levels of upgrades. The
Commission therefore adopts, with slight modification, the time frames
developed by the ICC Workshop for the conversion of additional
exchanges: (1) Equipped Remote Switches within 30 days; (2) Hardware
Capable Switches within 60 days; (3) Capable Switches Requiring
Hardware within 180 days; and (4) Non-Capable Switches within 180 days.
For example, if carriers request deployment in a certain number of
switches in the Pittsburgh, PA MSA nine months before that MSA's Phase
III deadline of June 30, 1998 (i.e., they make requests by September
30, 1998), and a carrier requests on April 1, 1998, deployment in an
additional Equipped Remote Switch in Pittsburgh, then the additional
switch must be equipped with number portability capability on or before
July 30, 1998 (i.e., 30 days after June 30, 1998). The Commission notes
that the ICC Workshop developed the time frames for the first three
switch categories, but did not reach agreement on a time frame for
converting a Non-Capable Switch. Since the Commission finds, as
discussed above, that specific time frames for deployment of all
additional switches are necessary, the Commission finds that it is
reasonable to allow no more time for deployment of any switches within
the 100 largest MSAs than is allowed for deployment of switches outside
the 100 largest MSAs. Deployment in additional switches will be less
burdensome for carriers with networks within the 100 largest MSAs that
have already made network-wide upgrades, e.g., SCP hardware and OSS
modifications, to support number portability in the initially requested
switches.
33. Carriers seeking relief from these deadlines may file a
petition for waiver under the procedures set forth in the First Report
& Order. The Commission notes that the deadlines for switches in
categories (1) and (2) are shorter than switches in categories (3) and
(4) because the former require less extensive upgrades. The Commission
realizes that the shorter deadlines for switches in categories (1) and
(2) do not allow time for carriers to file a petition for waiver under
the procedure established in the First Report & Order on the grounds of
extraordinary circumstances that prevent it from complying with the
Commission's deployment requirements. The Commission therefore will
suspend the deadlines for switches in categories (1) and (2) during the
period that the Commission is considering a carrier's petition for
waiver. For example, if a LEC receives a request for deployment in an
additional switch that is an Equipped Remote Switch, and five days
later the LEC files a petition for waiver, then the LEC need not deploy
number portability in the switch until 25 days after the Commission
denies its petition, or until the date specified in the Commission's
grant of the petition.
34. The Commission agrees with MCI that, after portability has been
introduced in an MSA, the incremental cost and resources needed to add
additional end offices are relatively minor because most costs, e.g.,
SCP hardware and signalling links, OSS modifications, and shared
regional database costs, will have already been incurred. Number
portability, consequently, can be deployed more quickly in the switches
for which number portability is requested after the initial deployment
of number portability. The Commission therefore declines to adopt
suggestions by USTA and GTE to allow a longer time after receipt of a
request for deployment of number portability capability in switches not
in the initial deployment.
35. The Commission emphasizes that a carrier operating a non-
portability-capable switch must still properly route calls originated
by customers served by that switch to ported numbers. When the switch
operated by the carrier designated to perform the number portability
database query is non-portability-capable, that carrier could either
send it to a portability-capable switch operated by that carrier to do
the database query, or enter into an arrangement with another carrier
to do the query.
36. The Commission concludes that permitting carriers to specify
those switches within the 100 largest MSAs in which they desire
portability is more workable than the procedures proposed by some
petitioners that would require incumbent LECs to file waiver requests
for specific switches for which the incumbent LECs believe that no
competitor is interested. A waiver procedure would create a period of
uncertainty for both the incumbent LEC and the competitive LEC as to
whether portability would actually be deployed in that switch.
Moreover, a waiver procedure would burden the incumbent LEC with
preparing and filing the petition for waiver, require that the
Commission review the petition, and potentially burden the state
commission with determining whether there is actual competitive
interest in the switch. In addition, these proposals by petitioners
appear to assume generally that no competitive LEC would oppose the
waiver petition; if this is not the case, then a waiver procedure would
burden competing carriers with
[[Page 18287]]
challenging the waiver. A waiver procedure would also burden both
competing carriers and consumers by hampering competitive entry into
the market while waiting for a determination by the Commission or a
state commission.
37. The Commission believes that the criteria set forth above
adequately address MCI's concern that requesting carriers would bear an
unnecessary burden of justifying deployment in each end office and
endure uncertainty as to deployment. The only burden on requesting
carriers is to identify and request their preferred switches. In
addition, carriers have a time frame for deployment of the initially
unrequested switches within the 100 largest MSAs. Competitive LECs can
thus market their services as widely as they desire with assurance that
number portability will be available in the areas where, and at the
times when, they desire to compete. As an additional safeguard against
anticompetitive abuses of the procedures to identify and request those
switches for which a carrier desires deployment of number portability,
the Commission delegates authority to the Chief, Common Carrier Bureau,
to take action to address any problems that arise over any specific
procedures.
Extension of Implementation Schedule
38. Discussion. The Commission grants, with some modifications, the
requests by BellSouth and other parties to extend the deadlines for
completion of deployment of long-term number portability for Phases I
and II, as set forth in appendix E of this First Reconsideration Order.
On reconsideration, the Commission extends the end date for Phase I by
three months. Thus, deployment in Phase I will now take place from
October 1, 1997, through March 31, 1998. The Commission takes this
action because it is now persuaded that initial implementation of this
new number portability technology is likely to require more time than
subsequent deployment once the technology has been thoroughly tested
and used in a live environment. For example, initial implementation of
this new technology is likely to involve more extensive testing, and
may require extra time to resolve any problems that may arise during
the testing. It therefore is appropriate that Phase I be longer than
subsequent phases in the schedule to allow carriers to take appropriate
steps to safeguard network reliability.
39. The Commission also notes that the participants in the Chicago
trial have recently informed it that the completion date of the Chicago
trial, previously scheduled for August 31, 1997, has been postponed by
approximately one month until September 26, 1997. While the Chicago
trial participants have committed to providing the Commission with
weekly updates on trial progress, the full report on the Chicago trial
that participants had planned to file September 30, 1997, is now
scheduled to be filed October 17, 1997. Consistent with this
notification by the Chicago trial participants, the Commission hereby
extends the deadline for carriers that are members of the ICC Workshop
to conduct a field test of any technically feasible long-term database
method for number portability in the Chicago, Illinois, MSA and to
report the results of that trial. While the Commission understands that
participants in the Chicago trial are prepared to commence
implementation in Chicago immediately upon conclusion of the trial and
still expect to meet the original December 31, 1997, deadline, the
Commission recognizes that carriers operating in other MSAs may require
additional time to interpret the results of the Chicago trial in light
of their individual network configurations. Finally, the Commission
finds some merit in CBT's argument that an extra 90 days for initial
implementation may permit small and mid-size LECs to reduce their
testing costs by allowing time for larger LECs to test and resolve the
problems of new technology. Given all the factors listed above, the
Commission concludes that a three-month extension of the time period
for initial deployment in Phase I markets appropriately safeguards
network reliability, and therefore is warranted.
40. The Commission also extends the end date for Phase II by 45
days. Thus, deployment in Phase II will now take place from January 1,
1998, through May 15, 1998. The Commission extends Phase II to
alleviate potential problems that may arise if deployment in markets in
Phase I and II must be completed on the same date. Requiring that
implementation be completed in a greater number of markets by a
specific deadline may make that deadline more difficult to meet (e.g.,
by straining vendor resources to perform software upgrades in any given
period of time). For the same reason, the Commission declines to extend
Phase II by 90 days as requested by BellSouth, as such an extension
would establish the same deadline for completion of deployment for
Phases II and III. The Commission concludes that the modest adjustment
of the deadline for Phase II adopted in this First Reconsideration
Order will more effectively stagger the deadlines for deployment in
different markets than BellSouth's proposal.
41. The Commission clarifies, per BellSouth's request, that
implementation of number portability for a phase may begin at any time
during that phase, provided that implementation in the designated
markets is completed by the end of that phase. Contrary to the
allegations of Pacific and other parties, number portability thus need
not be introduced ``on virtually the same day'' in the seven of the
largest MSAs, especially because it may now be phased into the first
markets more gradually over six months, instead of three.
42. The Commission strongly advises carriers to begin
implementation early in each phase, however, as they will not be able
to obtain a waiver of the schedule if they cannot demonstrate, through
substantial, credible evidence, at least sixty days before the
completion deadline, the extraordinary circumstances beyond their
control that leave them unable to comply with the schedule, including
``a detailed explanation of the activities that the carrier has
undertaken to meet the implementation schedule prior to requesting an
extension of time.'' This is especially applicable to Phases I and II,
given that the Commission now is granting carriers additional time
during those phases specifically so that they can implement number
portability more gradually. The Commission will not look favorably upon
a waiver request if the carrier has not taken significant action to
implement portability, if the carrier does not place orders with switch
manufacturers in a timely manner, or, for example, if the carrier
requests a waiver for a Phase II market because it only began preparing
for implementation for a Phase I market in the first quarter of 1998,
and then claims that it has too many software upgrades to perform from
January through May 15, 1998. Carriers should be able to identify any
specific technical problems that may necessitate an extension of the
deployment deadline for Phase I during the four months between the
scheduled end of the Chicago trial and the deadline for requesting an
extension for Phase I, especially because carriers will be receiving
initial feedback from testing in Chicago far in advance of the Chicago
trial's conclusion. As noted above, the participants in the Chicago
trial have committed to providing weekly progress reports as the trial
progresses. Initial tests of LRN hardware and software on a subset of
switches in the Chicago MSA began in January 1997. Intra-network and
database testing
[[Page 18288]]
in Chicago is scheduled to take place for several months before the
start of the Chicago trial mandated by the Commission.
43. The Commission's decision to extend the deadlines for
completing Phases I and II of its deployment schedule reflects the fact
that the Commission considers network reliability to be of paramount
importance. Consistent with that commitment, in the First Report &
Order the Commission delegated authority to the Chief, Common Carrier
Bureau, to monitor generally the progress of number portability
implementation and take appropriate action, as well as establishing a
procedure for individual LECs to obtain an extension of the deployment
deadlines as necessary for their specific markets. The Chief, Common
Carrier Bureau, will monitor the weekly reports from the Chicago trial
and any other pertinent developments. The Commission finds that further
adjustment of the deployment schedule in response to these developments
is more properly a matter for the Chief, Common Carrier Bureau, to
handle as number portability technology is tested and carriers discover
any actual, specific difficulties. If significant problems arise during
the Chicago trial, or other significant implementation problems arise
during Phase I, the Chief, Common Carrier Bureau, has the authority to
adjust the schedule for the Chicago trial or the deadline for Phase I
implementation, as appropriate, to ensure network reliability.
44. Although the findings of the Bellcore study submitted by SBC
were vigorously challenged by AT&T and MCI, it bears mention that
extending the Phase I completion date by three months is responsive to
the recommendation in the Bellcore study that the Commission should
allow additional ``time for testing, integration, and soaking (limited
use of the software in a live environment for a length of time
sufficient to find initial defects) of the software.'' In fact, the
Bellcore study specifically recommended that the Commission ``(e)xtend
the time interval for introduction of (number portability) by 3
months.'' The Commission's extension of Phase I, in combination with
its conclusion that carriers need provide portability only in requested
switches, also allows carriers the flexibility to introduce portability
more gradually, beginning with a subset of switches within the MSA.
45. The Commission denies the petitions to extend the deployment
deadlines for all markets or otherwise provide wireline carriers
greater flexibility in the schedule to implement long-term number
portability. Although the Commission concludes that initial
implementation of this new number portability technology may require
additional time, the Commission is not persuaded that implementation in
subsequent phases, after the technology has already been tested and
installed in the initial markets, need be delayed to the extent
requested by some petitioners. The Commission finds on the basis of the
record in this proceeding that the implementation schedule as revised
in this First Reconsideration Order is reasonable, and that granting
any further delay of the schedule at this time is premature and
unnecessary, especially because there is still approximately one year
before LECs must complete deployment for the earliest phase.
Petitioners have only speculated that unpredictable events may, at some
point in the future, generally delay implementation, and have not shown
that a specific factor will render the later schedule impossible to
meet for any particular reason, much less for any particular LEC.
46. Petitioners' arguments are even more speculative given that
their implementation obligations are likely to be significantly lighter
than they assume, because, as the Commission discusses above, LECs are
required to deploy number portability only in switches for which they
receive requests for number portability capability. Moreover, even if
the problems identified by petitioners do in fact develop, in the First
Report & Order the Commission established a procedure for LECs to
obtain an extension of the deployment deadlines as necessary, and
delegated authority to the Chief, Common Carrier Bureau, to monitor the
progress of number portability implementation.
47. Furthermore, the Commission finds it unnecessary to act on
GTE's request that it clarify that LECs may obtain a waiver if they
cannot meet the schedule for reasons beyond their control. The waiver
procedure established in the First Report & Order for extending
deployment deadlines as necessary provides an effective vehicle for
addressing any problems in implementing number portability that LECs
can document. In particular, if problems necessitating delay do arise,
the Chief of the Common Carrier Bureau may waive or stay any of the
dates in the implementation schedule, as the Chief determines is
necessary to ensure the efficient development of number portability,
for a period not to exceed nine months. In the event a carrier is
unable to meet the deadlines for implementing a long-term number
portability method, it may file with the Commission, at least 60 days
in advance of the deadline, a petition to extend the time by which
implementation in its network will be completed. See ALTS Opposition at
6 n.7 (arguing that incumbent LECs should try to settle their claims
with carriers and vendors and develop a record before challenging the
schedule); Sprint Opposition at 13-14. The Commission notes that
carriers may file petitions for waiver of the deployment schedule more
than 60 days in advance of an implementation deadline, and thus receive
relief earlier, if they are able to present substantial, credible
evidence at that time establishing their inability to comply with the
deadlines.
48. The Commission rejects USTA's proposal to give every state
commission and/or workshop the authority to extend independently the
deployment deadlines according to their assessments of the level of
local competition in an area. As set forth above, the Commission
requires carriers to identify the switches in which they desire number
portability capability well before the deadline for deployment in a
particular MSA. The Commission finds that this requirement will enable
LECs to deploy number portability in areas in which local competition
is likely to develop at an early stage, while relieving LECs of the
obligation to install the capability in areas that competitive LECs
have no initial interest in serving. This requirement, in the
Commission's view, addresses USTA's concerns by striking a reasonable
balance between a LEC's interest in avoiding unnecessary switch
upgrades, and a competitive LEC's interest in having assurances that
number portability will be available in areas where it plans to compete
to serve existing LEC customers.
49. The Commission declines to expedite the Chicago trial, as
requested by NYNEX. The First Report & Order scheduled the completion
date for the Chicago trial for as early as appeared reasonably possible
at that time. Given the record before it now, the Commission concludes
that it would not be possible to accelerate the commencement of that
trial. Moreover, the Commission agrees with the Chicago trial
participants that it would be inappropriate to shorten or delete any of
the planned testing.
50. The Commission also declines to order additional field tests,
as requested by NYNEX. The requirement that there be a field trial in
Chicago is only intended to ensure that at least one field trial is
held to identify technical
[[Page 18289]]
problems in advance of widespread deployment, which will provide all
carriers, as well as the Commission, with information on
implementation. All carriers will have an opportunity to monitor
testing in Chicago and evaluate the results of the testing on an
ongoing basis. The Commission finds, moreover, that LECs currently have
access to additional information concerning the impact of number
portability on their systems, because many LECs are, and have been for
some time, analyzing extensively implementation and inter-carrier OSS
impact of number portability under the auspices of state and industry
fora. As the Commission stated in the First Report & Order, it does not
routinely schedule field trials in rulemaking proceedings; its
requiring a field trial in the Chicago MSA is an exceptional step that
the Commission adopted to safeguard against any risk to the public
switched telephone network. The need for any further trials should be
determined by the industry.
51. To the extent that other networks differ in design or switch
use or other relevant variables, the Commission does not preclude the
testing of either software or hardware in other areas or by other
carriers, either contemporaneously with the Chicago trial or even
before that trial begins. Indeed, the Commission encourages carriers to
test portability within their own networks as early as possible. For
example, Bell Atlantic plans to do ``first office application'' testing
in Gaithersburg, Maryland, from July 15, 1997, to August 30, 1997. The
Gaithersburg test, therefore, will have been completed seven months
before Bell Atlantic's March 31, 1998, deadline to complete
implementation in Philadelphia, the market in which it must deploy
long-term number portability in Phase I under the revised schedule. In
any event, carriers should have the opportunity to perform their own
testing, including on ``live traffic,'' well before the date by which
they must request any waiver of the Phase I implementation
requirements.
52. The Commission also declines to adopt NYNEX's proposal to
deploy portability in smaller MSAs instead of the largest ones during
Phase I of the deployment schedule. At this time, there is only
speculation that starting with the most populous MSAs will result in
technical problems. Indeed, carriers are further ahead in preparing for
number portability in many of the larger MSAs than in the smaller ones;
for example, several state commissions that had addressed the issue of
number portability before issuance of the First Report & Order had
ordered that deployment begin in several major cities that are
currently in Phases I or II of the schedule. Therefore, switching the
deadlines of those larger MSAs with other, smaller MSAs now would, at a
minimum, disrupt planning by competitive LECs and state commissions in
those jurisdictions. Moreover, the three-month extension of the end
date of Phase I, in combination with the Commission's conclusion that
carriers need provide portability only in requested switches, will
serve much the same purpose as NYNEX's request by allowing carriers the
flexibility to begin deployment in a subset of switches within each of
the Phase I MSAs and gradually increase coverage over the six-month
period. In addition, the Commission does not prohibit, but rather
encourages, carriers to take whatever additional actions they believe
are necessary to safeguard their networks, including testing deployment
of portability in one of their smaller MSAs before or during Phase I of
the deployment schedule. For example, Bell Atlantic is testing number
portability in the smaller market of Gaithersburg, MD before Phase I.
53. The Commission also denies NYNEX's request that it explicitly
encourage states to be flexible in opting out of the regional database
or choosing to construct joint databases, or to work with less active
neighboring states to establish regional databases. The Commission
finds that the First Report & Order allows sufficient flexibility for
states to opt out of the regional databases. In addition, NYNEX's
concern that the NANC would not resolve the database issues in time for
carriers to meet the deployment schedule is now largely moot, given the
recent activities of the NANC. The NANC has committed to making its
final recommendations to the Commission on the database system by May
1, 1997. The NANC's working groups and task forces relating to number
portability are already organized and holding regular meetings to
resolve the database issues. The Local Number Portability
Administration Selection Working Group projects that all seven regional
databases will be ready for testing on dates ranging from April 18,
1997, to July 1, 1997, and will be ready to support number portability
deployment on or before October 1, 1997, in accordance with the
deployment schedule set forth in the First Report & Order.
54. Finally, the Commission clarifies that the first performance
criterion, that any method ``support existing network services,
features, and capabilities,'' refers only to services existing at the
time of the First Report & Order. The Commission cautions LECs that
problems in implementing their chosen number portability method due to
modifications necessitated by the introduction of a new service or
technology will not justify a delay of the deployment schedule. The
Commission declines, however, specifically to prohibit the introduction
of any new service that is incompatible with LRN, as the First Report &
Order did not adopt LRN or mandate use of any specific long-term number
portability method.
Acceleration of Implementation Schedule
55. Discussion. The Commission denies the petitions for
reconsideration that advocate: (1) Accelerating deadlines for certain
MSAs; (2) allowing carriers with operational networks in the 100
largest MSAs and the authority to provide local exchange service to
request portability in any MSA in the 100 largest MSAs beginning July
1, 1997, and requiring LECs to fulfill such requests on a specified
date six or more months in the future; (3) adding MSAs outside the
largest 100 MSAs to the initial deployment schedule; or (4) combining
the deadlines of consolidated MSAs. The current schedule is based on
the projected availability of switch software, and recognizes the
burden on carriers serving multiple regions and the fact that more
significant upgrades may be necessary for carriers operating in smaller
areas. Petitioners have not made a showing that the necessary software,
hardware, and other resources will be available earlier in areas
originally scheduled for later deployment, or will be available in
quantities sufficient to support deployment in additional areas,
particularly in areas outside the 100 largest MSAs. If such hardware
and software is not available for deployment early enough or in
sufficient quantities to support deployment in additional areas, then
accelerating deployment deadlines for smaller MSAs may divert these
limited resources from deployment in other, larger MSAs, and thus delay
deployment of number portability where a greater population might
benefit from competition.
56. For the reasons stated above, the Commission also rejects
ACSI's request to require deployment in Phase I in certain additional
markets in which the incumbent LECs are not BOCs. In addition, the
Commission continues to believe that non-BOC incumbent LECs, most of
which have more limited resources than the BOCs, should have additional
time to upgrade and test their networks. Moreover, the Commission
[[Page 18290]]
concludes above that LECs need deploy number portability in the 100
largest MSAs only in switches for which another carrier has made a
specific request for the provision of portability. Requiring that
additional MSAs be deployed in Phase I does not give sufficient notice
to carriers or states to establish switch-requesting procedures in MSAs
for which they had no previous notice that deployment was required in
Phase I. The Commission also declines to adopt USTA's proposal that
state commissions be free to accelerate the deployment schedule. While
the Commission is sympathetic to the desires of some states to advance
deployment where actual competitive interest exists, it concludes that
the schedule adopted in the First Report & Order, as modified in this
First Reconsideration Order, represents a reasonable balancing of
competing interests, and carriers need to have certainty that these are
the requirements with which they must comply. The Commission's First
Report & Order was silent on the issue of whether states could
accelerate the deployment schedule. The Commission therefore
grandfathers any state decisions to accelerate deployment for a
particular market from one phase to an earlier phase that were adopted
prior to release of this First Reconsideration Order.
57. The Commission does not prohibit LECs from agreeing to
accelerate implementation, either for specific MSAs or specific
switches within MSAs. The Commission finds, however, that acceleration
of the schedule is more properly determined by private agreements among
carriers. Competitive LECs are free to negotiate with incumbent LECs
for deployment of number portability ahead of the Commission's
schedule. Moreover, to the extent that carriers agree to ``swap'' the
implementation deadlines for specific MSAs or switches within MSAs,
they can jointly file specific waiver petitions to do so.
58. The Commission grants in part the petitions of ACSI, KMC, and
NEXTLINK to allow requests for deployment of number portability in
areas outside the 100 largest MSAs to be submitted earlier than January
1, 1999. The Commission therefore modifies its rules to permit carriers
to submit requests for deployment of number portability in areas
outside the 100 largest MSAs at any time. The Commission declines,
however, to require that deployment be completed within six months of
request for requests filed prior to January 1, 1999. This modification
to the rules will benefit all parties, because receiving earlier notice
to upgrade switches will likely ease a LEC's compliance burden and help
to ensure that competing carriers will receive portability within the
time requested. Finally, the Commission clarifies that, contrary to KMC
and ACSI's view, the current schedule does not leave an implementation
gap between December 31, 1998, and July 1, 1999, since implementation
of requests for deployment of number portability in areas outside the
100 largest MSAs filed on or before January 1, 1999, will occur during
the first six months of 1999. KMC and ACSI's suggestion that the
Commission permit requests for markets outside the 100 largest MSAs
beginning July 1, 1998, and require fulfillment of those requests
within six months, would actually require that those smaller markets be
completed at the same time as the MSAs in the last phase of the
deployment schedule, thus sharply increasing the burden on carriers
during that phase.
Exemptions for Rural and/or Smaller LECs
59. Discussion. As set forth above, the Commission grants the
petitions to limit deployment of portability to those switches for
which a competitor has expressed interest in deployment by concluding
that LECs need only provide number portability within the 100 largest
MSAs in switches for which another carrier has made a specific request
for the provision of portability. The Commission finds that this
modification to the rules should address the concerns of parties that
urge it to waive number portability requirements for rural and/or
smaller LECs serving areas in the largest 100 MSAs until receipt of a
request.
60. The Commission denies the petitions that request a blanket
waiver of the number portability requirements for rural and/or smaller
LECs that receive a request for deployment in one of their switches.
The Commission finds that such a blanket waiver is unnecessary and may
hamper the development of competition in areas served by smaller and
rural LECs that competing carriers want to enter. If, as petitioners
allege, competition is not imminent in the areas covered by rural/
smaller LEC switches, then the rural or smaller LEC will not receive
requests from competing carriers to implement portability, and thus
will not need to expend its resources, until competition actually
develops in its service area. In addition, by that time extensive non-
carrier-specific testing will likely have been done, and carriers'
testing costs will likely be smaller.
61. Further, to the extent that portability is requested in a rural
or smaller LEC's switch, and that LEC has difficulty complying with the
request, it has two avenues for relief. Pursuant to the First Report &
Order, a LEC may apply for an extension of time on the basis of
extraordinary circumstances beyond its control that prevent it from
complying with the Commission's deployment schedule. In addition, under
section 251(f)(2), a LEC with fewer than two percent of the nation's
subscriber lines installed in the aggregate nationwide (an ``eligible
LEC'') may petition the appropriate state commission for suspension or
modification of the requirements of section 251(b). The state
commission shall grant such petition to the extent that, and for as
long as, the state commission determines that such suspension or
modification: (A) Is necessary to avoid a significant adverse economic
impact on end users, to avoid imposing an unduly economically
burdensome requirement, or to avoid imposing a technically infeasible
requirement; and (B) is consistent with the public interest,
convenience and necessity. 47 U.S.C. 251(f)(2). The state commission is
required to act on the petition within 180 days. 47 U.S.C. 251(f)(2).
The Commission believes eligible LECs will have sufficient time to
obtain any appropriate section 251(f)(2) relief as provided by the
statute, especially since the state commission can suspend the
application of the deployment deadlines to that LEC while it is
considering the LEC's petition for suspension or modification of the
requirements. Section 251(f)(2) provides that ``[t]he State commission
shall act upon any petition filed under (section 251(f)(2)) within 180
days after receiving such petition. Pending such action, the State
commission may suspend enforcement of the requirement or requirements
to which the petition applies with respect to the petitioning carrier
or carriers.'' 47 U.S.C. 251(f)(2).
62. If, however, a competitor is interested in number portability
in a particular switch operated by a rural or smaller LEC, and the LEC
cannot demonstrate extraordinary circumstances justifying an extension
of the deployment requirements, and the state commission denies a
Section 251(f)(2) request for suspension or modification, the
Commission finds no statutory basis for excusing such a LEC from its
obligations to provide number portability. In addition, issuance of a
blanket exemption in this proceeding would be inconsistent with the
Local Competition Order, 61 FR 45476
[[Page 18291]]
(August 29, 1996), in which the Commission generally declined to adopt
national rules regarding Section 251(f), or provide for different
treatment of rural and smaller carriers. Rather, Congress established a
specific procedure under which state commissions are empowered to make
case-by-case decisions on the application of number portability
requirements to eligible LECs pursuant to Section 251(f)(2), based on
the particular facts and circumstances presented. Eligible LECs that
have been granted suspension or modification of number portability
requirements under Section 251(f)(2) are not bound by the
implementation schedule until the state commission removes the
suspension.
63. The comments of some parties in this proceeding appear to
reflect a misapprehension of the scope of section 251(f). Sections
251(f)(1) and 251(f)(2) apply to different classes of carriers, and
provide different types of relief. Section 251(f)(1) applies only to
rural LECs, and offers an exemption only from the requirements of
section 251(c). In contrast, section 251(f)(2) applies to all LECs with
less than two percent of the nation's subscriber lines. In addition,
section 251(f)(2) establishes a procedure for requesting suspension or
modification of the requirements of sections 251(b) and 251(c). Number
portability is an obligation imposed by section 251(b). Because section
251(f)(1) does not exempt rural LECs from the requirements of section
251(b), there is no exemption for rural LECs of their number
portability obligations under section 251(f)(1). The only statutory
avenue for relief from the section 251(b) requirements specifically for
eligible LECs is to request suspension or modification of the number
portability requirements under the procedure established by section
251(f)(2).
64. The plain text of the statute refutes JSI's argument that
section 251(f)(1) exempts rural LECs from number portability
requirements. JSI states that the section 251(f)(1) exemption from
interconnection requirements permits the Commission to impose number
portability requirements upon rural LECs only to the extent it is
technically feasible for rural LECs to provide portability without
having to upgrade their networks to utilize databases, install SS7 or
AIN capabilities, or install and furnish functions requiring new
switching software. JSI adds that this exemption may be terminated only
by a state commission.
65. Because sections 251(b) and 251(c) are separate statutory
mandates, the requirements of section 251(b) apply to a rural LEC even
if section 251(f)(1) exempts such LECs from a concurrent section 251(c)
requirement. To interpret section 251(f)(1) otherwise would undercut
section 251(b) and, in this case, would effectively preclude any
provision of long-term number portability by rural LECs until
termination of the section 251(f)(1) exemption by a state commission.
The Commission finds such an interpretation to be contrary to
Congress's mandate that all LECs provide number portability, and
Congress's exclusion of the section 251(b) obligations, including the
duty to provide number portability, from the section 251(f)(1)
exemption for rural LECs.
66. Moreover, under JSI's interpretation, the only carriers that
would have to provide number portability would be incumbent LECs that
are not exempt under section 251(f)(1). Non-incumbent LECs, as well as
rural incumbent LECs that are exempt under section 251(f)(1), would not
have to satisfy the requirements of section 251(b) and, consequently,
would not have to provide number portability. This directly contradicts
section 251(b)(2), which specifically requires ``all local exchange
carriers'' to provide number portability. 47 U.S.C. 251(b)(2). Section
251(c) sets forth ``additional obligations'' that apply only to
incumbent LECs, whereas section 251(b) sets forth obligations that
apply to all LECs.
67. Even if the Commission were to agree with JSI's statutory
interpretation that rural LECs that are exempt from the section 251(c)
requirements are also exempt from any requirements of sections 251 (b)
and (c) that overlap, petitioners have not demonstrated that the
section 251 (b) and (c) obligations in fact overlap. To provide long-
term number portability under section 251(b)(2), LECs obviously must
install and use any necessary databases, SS7 or AIN capabilities, or
switching software. Section 251(c), in contrast, requires incumbent
LECs to provide unbundled access to network elements, including call-
related databases. See 47 U.S.C. 251(c)(3). Number portability does not
require any provision of unbundled access to these elements. Moreover,
to provide number portability, carriers can interconnect either
directly or indirectly as required under section 251(a)(1). See 47
U.S.C. 251(a)(1). For example, a smaller rural carrier and a competing
carrier might interconnect indirectly by both establishing direct
connections with a third carrier and routing calls to each other
through that third carrier. The smaller rural carrier could then
provide portability by performing its own database queries and then
routing the call to the competing carrier through that third carrier.
Another option would be for the smaller rural LEC to contract with that
third carrier to perform its queries and the necessary routing. Section
251(c), in contrast, imposes an additional requirement on incumbent
LECs to provide ``equal'' interconnection at ``any technically feasible
point within the carrier's network,'' which a carrier does not need to
provide number portability. See 47 U.S.C. 251(c)(2). Thus, sections
251(a) and (b), not section 251(c), require that carriers interconnect
and install and use necessary network elements to provide number
portability. Rural LECs are not exempt from section 251(a) or (b)
requirements under section 251(f)(1). See 47 U.S.C. 251(f)(1). The
Commission therefore denies JSI and USTA's request to ``automatically
exempt'' rural LECs from the number portability requirements to the
extent that they are exempt from the requirements of section 251(c)
under the provisions of section 251(f)(1).
68. The Commission also denies the requests that it clarify that
smaller and/or rural LECs serving areas that only partially overlap one
of the 100 largest MSAs need not deploy number portability until
receipt of a bona fide request. The Commission believes that, when
determining whether a suspension or modification is necessary to avoid
imposing an unduly economically burdensome requirement, pursuant to
section 251(f)(2), state commissions would likely consider whether an
eligible LEC's presence in the MSA is truly de minimus and whether such
a LEC is entitled to a suspension or modification of the number
portability requirements on this basis.
69. Finally, NTCA/OPASTCO erroneously claims that the First Report
& Order violates the Regulatory Flexibility Act (RFA) because its Final
Regulatory Flexibility Analysis (FRFA) does not address the impact of
the rules on small incumbent LECs, and is, therefore, inconsistent with
the Local Competition Order. As the Commission stated in the First
Report & Order's FRFA, small incumbent LECs do not qualify as small
businesses because they are dominant in their field of operation. The
Local Competition Order's FRFA likewise set forth the Commission's view
that small incumbent LECs are not subject to regulatory flexibility
analyses because they are not small businesses due to their dominance
in their field of operation. The Commission in that proceeding
specifically stated that it
[[Page 18292]]
was including small incumbent LECs in its FRFA only because two parties
had especially questioned that conclusion in that proceeding's Initial
Regulatory Flexibility Analysis (IRFA), and it wanted to ``remove any
possible issue of RFA compliance.'' In contrast, no party commented on
the IRFA in this proceeding. The Commission attaches, nevertheless, a
Supplemental Final Regulatory Flexibility Analysis that further
explains its analysis of the rules' impact upon rural and smaller
carriers and the basis for selecting the particular options that the
Commission has selected. This analysis takes into account NTCA/
OPASTCO's specific claim raised in its petition for reconsideration, in
order to ``remove any possible issue of RFA compliance.'' The
Commission also notes that its establishment of a procedure whereby
number portability would only be deployed in requested switches
effectively grants the relief sought by NTCA/OPASTCO, the sole
petitioner on this issue.
Implementation Requirements for Intermediate (N-1) Carriers
70. Discussion. The Commission denies Pacific's request that it
require all N-1 carriers, including interexchange carriers, to meet the
implementation schedule the Commission established for LECs. Such a
requirement is not mandated by the 1996 Act, which subjects only LECs,
not interexchange carriers engaged in the provision of interexchange
service, to the number portability requirements. 47 U.S.C. 251(b)(2).
Moreover, petitioners have not demonstrated a need for the Commission
to impose such requirements under its independent rulemaking authority
under sections 1, 2, and 4(i) of the Communications Act of 1934, as
amended. 47 U.S.C. 151, 152, 154(i). In that regard, the Commission is
not convinced that Pacific's hypothetical situation, whereby the N-1
carrier would not perform any queries and the original terminating LEC
would thus have to perform all the queries not performed by the
originating LEC, will arise often. The industry already appears to
favor using the N-1 scenario, under which the N-1 carrier performs the
database query, as indicated in the majority of comments on call
processing scenario issues received pursuant to the original Notice of
Proposed Rulemaking. The vast majority of interLATA calls are routed
through the major interexchange carriers, and the two largest
interexchange carriers, at least, claim they plan to deploy portability
as soon as possible. Therefore, most interLATA calls will be queried by
the major interexchange carriers, not the incumbent LECs. Moreover, as
the Commission stated in the First Report & Order, it wishes to allow
carriers the flexibility to choose and negotiate among themselves which
carrier shall perform the database query, according to what best suits
their individual networks and business plans. Finally, the Commission
declines to address Pacific's argument that, if the terminating carrier
is forced to perform queries, that would violate the fourth performance
criterion. Since the Commission is eliminating the fourth performance
criterion, Pacific's argument is moot.
71. The Commission clarifies, however, per NYNEX's request, that if
an N-1 carrier is designated to perform the query, and that N-1 carrier
requires the original terminating LEC to perform the query, then the
LEC may charge the N-1 carrier for performing the query, pursuant to
guidelines the Commission will establish in the order addressing long-
term number portability cost allocation and recovery.
Implementation Schedule for Wireless Carriers
72. Background. In the First Report & Order, the Commission
required all cellular, broadband PCS, and covered SMR carriers to have
the capability of querying the appropriate number portability database
systems in order to deliver calls from their networks to ported numbers
anywhere in the country by December 31, 1998. The term ``covered SMR''
means either 800 MHz or 900 MHz SMR licensees that hold geographic area
licenses or incumbent wide area SMR licensees that offer real-time,
two-way switched voice service that is interconnected with the public
switched network, either on a stand-alone basis or packaged with other
telecommunications services. This term does not include local SMR
licensees offering mainly dispatch services to specialized customers in
a non-cellular system configuration, licensees offering only data, one-
way, or stored voice services on an interconnected basis, or any SMR
provider that is not interconnected to the public switched network. 47
CFR 52.1(c). The Commission notes that several parties have petitioned
for reconsideration of the definition of ``covered SMR.'' The
Commission will address this issue in a subsequent order. These
wireless carriers may implement the upgrades necessary to accomplish
the queries themselves, or they may make arrangements with other
carriers to provide that capability. In addition, wireless carriers
subject to these rules are required to offer service provider
portability throughout their networks, including the ability to support
roaming, by June 30, 1999. In the First Report & Order, the Commission
delegated authority to the Chief, Wireless Telecommunications Bureau,
to waive or stay any of the dates in the implementation schedule for a
period not to exceed nine months, and to establish reporting
requirements in order to monitor the progress of wireless carriers. 47
CFR 52.11 (c), (e). In the event a carrier subject to these
requirements is unable to meet the Commission's deadlines for
implementing a long-term number portability method, it must file a
petition to extend the time by which implementation must be completed
with the Commission at least 60 days in advance of the deadline, along
with an explanation of the circumstances and the need for such an
extension. 47 CFR 52.11(d).
73. Discussion. The Commission declines at this time to alter the
implementation schedule imposed by the First Report & Order for
wireless carriers. The Commission recognizes that the wireless industry
has lagged behind the wireline industry in developing a method for
providing number portability, and that the wireless industry faces
special technical challenges in doing so. Nonetheless, the Commission
finds that the schedule for implementation of number portability by
cellular, broadband PCS, and covered SMR providers is reasonable and
takes into account the current stage of development for wireless number
portability. The Commission finds that a period of nearly two years is
sufficient for wireless carriers either to implement the upgrades
necessary to perform the database queries themselves, or to make
arrangements with other carriers to provide that capability. The
Commission also believes it is reasonable to expect wireless carriers
to implement long-term service provider portability, including roaming,
in their networks in a period of more than two years. The Commission
continues to believe the monitoring and reporting mechanism established
in the First Report & Order will ensure that wireless carriers will
continue to work together to find solutions to technical problems
associated with number portability, and to address quickly any
implementation issues which may arise. As the Commission provided in
the First Report & Order, in the event a wireless carrier is unable to
meet the Commission's deadlines for implementing a long-term number
[[Page 18293]]
portability method, it may file a request for extension with the
Commission. If it becomes apparent that the wireless industry is not
progressing as quickly as necessary to meet the deadlines for providing
querying capability and service provider portability, the Wireless
Telecommunications Bureau Chief may waive or stay the implementation
dates for a period of up to nine months. The Commission finds that
enough flexibility has been incorporated into the implementation
schedule for wireless carriers, and that no modification is needed.
74. The Commission also declines to establish target dates in lieu
of actual deadlines or to defer imposing number portability
requirements on wireless carriers, as some petitioners have suggested.
As the Commission stated in the First Report & Order, requiring
cellular, broadband PCS, and covered SMR providers to provide number
portability is in the public interest because these entities are
expected to compete in the local exchange market, and number
portability will enhance competition among wireless service providers,
as well as between wireless service providers and wireline service
providers. Service provider portability offered by wireless service
providers will enable customers to switch carriers more readily and
encourage the successful entry of new service providers into wireless
markets. Removing barriers, such as the requirement that customers must
change phone numbers when changing providers, is likely to foster the
development of new services and create incentives for carriers to lower
prices and costs. In light of these positive competitive results that
are likely to be produced, the Commission continues to believe that
number portability should be provided by wireless carriers with as
little delay as possible. Setting specific deadlines, rather than
amorphous ``target dates,'' is consistent with this goal.
75. In response to requests by CTIA and BANM, the Commission agrees
that some clarification of the requirements under the schedule is
necessary. Contrary to the petitioners' claims, the schedule for CMRS
providers is not stricter than the schedule for wireline service
providers. Some carriers apparently misunderstood the First Report &
Order to require wireless providers to provide number portability in
areas outside the largest 100 MSAs, even if number portability is not
requested in those areas. The Commission requires cellular, broadband
PCS, and covered SMR providers to have the capability to query the
number portability databases nationwide, or arrange with other carriers
to perform the queries, by December 31, 1998, in order to route calls
from wireless customers to customers who have ported their numbers. The
Commission clarifies that, by June 30, 1999, CMRS providers must (1)
offer service provider portability in the 100 largest MSAs, and (2) be
able to support nationwide roaming. Although the Commission has not
provided a specific phased deployment schedule for CMRS providers as it
has for wireline carriers, the Commission expects that CMRS providers
will phase in implementation in selected switches over a number of
months prior to the June 30, 1999, deadline for deployment.
76. In addition, consistent with the modification to the wireline
schedule deployment requirements, CMRS carriers need only deploy local
number portability by this deadline in the 100 largest MSAs in which
they have received a specific request at least nine months before the
deadline (i.e., a request has been received by September 30, 1998). As
in the wireline context, any wireline carrier that is certified, or has
applied for certification, to provide local exchange service in the
relevant state, or any licensed CMRS provider, must be allowed to make
a request for deployment; and cellular, broadband PCS, and covered SMR
providers must make available lists of their switches for which
deployment has and has not been requested. Additional switches within
the 100 largest MSAs (i.e., those that are not requested initially)
must be deployed upon request, after the June 30, 1999, deadline for
wireless carriers, within the same time frames that the Commission
adopts here for wireline carriers, unless requesting carriers specify a
later date. The time frames for deployment of additional wireless
switches are as follows: (1) Equipped Remote Switches within 30 days;
(2) Hardware Capable Switches within 60 days; (3) Capable Switches
Requiring Hardware within 180 days; and (4) Non-Capable Switches within
180 days. As in the wireline context, carriers may submit requests for
deployment of number portability in areas outside the 100 largest MSAs
at any time. CMRS providers must provide number portability in those
smaller areas within six months after receiving a request or within six
months after June 30, 1999, whichever is later. As a result, the
schedule for wireless providers is comparable to the one for wireline
carriers in terms of timing.
77. The Commission adds one further requirement for any procedures
that limit deployment in such fashion to requested wireless switches.
The existing state procedures for limiting deployment of number
portability capabilities within one of the 100 largest MSAs to
requested wireline switches generally appear to require carriers to
specify which switches located within the MSA the carrier wishes to be
deployed. The Commission does not wish to disturb a number of state
decisions concluding that it is preferable to limit the selection of
wireline switches for deployment to switches located within the MSA
rather than switches serving subscribers within the MSA. The Commission
recognizes, however, that the wireless switches that provide service to
areas within a particular MSA are more likely to be located outside the
perimeter of that MSA than the wireline switches that provide service
to areas within the MSA. The Commission concludes, therefore, that,
when limiting deployment within one of the 100 largest MSAs to
particular requested wireless switches, carriers must be able to
request deployment in any wireless switch that provides service to any
area within that MSA, even if the wireless switch is located outside of
the perimeter of that MSA, or outside any of the 100 largest MSAs.
78. By June 30, 1999, the Commission expects that regional or
statewide local number portability databases containing both wireless
and wireline numbers will be widely available; therefore, the
Commission does not anticipate a need to condition the requirement that
number portability be required on request after June 30, 1999, upon the
existence of regional or statewide databases. If there is a delay in
the development of the databases, the Wireless Telecommunications
Bureau Chief has been delegated authority to waive or stay the deadline
for CMRS providers.
79. In its petition for reconsideration, BANM questions the
Commission's authority and its basis in the record for imposing number
portability obligations upon CMRS providers. Specifically, BANM claims
that the Commission has previously held that its regulatory authority
over CMRS providers is limited to instances in which there is a ``clear
cut need'' for doing so, and that regulation of number portability is
not clearly necessary in the CMRS market. BANM advanced essentially the
same argument previously in this proceeding, and its reconsideration
petition raises no new issues. Accordingly, the Commission affirms its
prior rejection of this argument. As the Commission stated in the First
Report & Order, the CT DPUC Petition does not limit its
[[Page 18294]]
authority to require CMRS providers to provide number portability to
other CMRS or wireline carriers because that proceeding was restricted
to the question of state authority to regulate rates of CMRS providers.
The CT DPUC Petition did not reach the question of the Commission's
authority to impose number portability requirements on CMRS providers.
The Commission affirms its determination that it has authority to
impose number portability obligations on CMRS providers based on the
findings that this requirement will result in pro-competitive effects,
and furthers its CMRS regulatory policy of establishing moderate,
symmetrical regulation of all services.
80. BANM has not introduced any new evidence or arguments that
cause the Commission to reconsider its conclusion in the First Report &
Order that provision of number portability by CMRS carriers is
important to competition. Previously in this proceeding, several PCS
providers attested to the importance of number portability in fostering
competition in the CMRS industry. The record in this proceeding
contains convincing evidence that service provider portability would
enhance competition between wireless service providers, as well as
between wireless and wireline service providers, by removing the
requirement that a customer must change numbers when changing service
providers. The Commission also rejects BANM's argument that it failed
to make a determination on the technical feasibility of wireless number
portability. The record in this proceeding supports the prior
conclusion that cellular, broadband PCS, and covered SMR providers will
be able to resolve any technical issues necessary to implement number
portability.
Deferral of Implementation Until Resolution of Cost Recovery Issues
81. Background. Section 251(e)(2) of the Act requires that the
costs of establishing number portability ``be borne by all
telecommunications carriers on a competitively neutral basis as
determined by the Commission.'' In conjunction with the First Report &
Order, the Commission adopted a Further Notice of Proposed Rulemaking
(Further NPRM) that seeks comment on appropriate cost recovery
mechanisms for long-term number portability. The Commission has not yet
issued the Second Report & Order addressing these issues, although it
intends to do so in the near future.
82. Discussion. The Commission is not persuaded by the requests of
U S West and JSI that LECs should be permitted to suspend ongoing
preparations to meet the deployment schedule until the Commission has
acted on the issues raised in the Further NPRM in this proceeding that
involve the LECs' recovery of their costs of providing number
portability. As stated above, the Commission plans to adopt a Second
Report & Order in this proceeding in the near future implementing the
statutory provision that expenses incurred as a result of number
portability be ``borne by all telecommunications carriers on a
competitively neutral basis.'' U S West appears to suggest that it
necessarily will be barred from assessing charges in the future that
are intended to recover costs that it incurs in connection with the
implementation of long-term number portability prior to its resolution
of the cost recovery issues posed in the Further NPRM. That speculative
assertion is unfounded. The Commission anticipates that the Second
Report & Order will be adopted well before a LEC is required by the
deployment schedule to commence the provision of long-term number
portability to the public in the Phase I markets. Moreover, the
Commission expects that LECs will maintain records of the costs that
they incur in implementing the requirements of the First Report & Order
in this proceeding. Those records will enable the LECs to comply with
the decisions the Commission reaches in the Second Report & Order with
respect to their recovery of long-term number portability costs. The
Act does not mandate that the Commission complete action on cost
recovery issues prior to the LECs' commencement of the planning and
other steps required to deploy long-term number portability consistent
with the schedule adopted in the First Report & Order. Indeed,
permitting carriers to suspend their ongoing preparations to meet the
deployment schedule for number portability until the Commission has
adopted specific cost recovery rules may be inconsistent with the
statutory mandate that carriers must provide number portability ``to
the extent technically feasible.''
83. The Commission also concludes that U S West has not described,
much less documented, the specific ``distorting effects'' on investment
decisions, the use of number portability facilities, and the
relationships among providers and between providers and their customers
that it claims will ensue from the Commission's brief deferral of long-
term number portability cost recovery issues. The Commission further
agrees with ALTS that U S West's constitutional claim is premature,
because it is impossible for any party to establish that a cost
recovery mechanism that has not yet been adopted is unconstitutional.
Finally, because the arguments advanced by JSI on behalf of rural
carriers with respect to these cost recovery issues repeat the points
asserted by U S West, the Commission reaches the same conclusions.
Ordering Clauses
84. Accordingly, it is ordered that, pursuant to the authority
contained in Sections 1, 4(i), 4(j), 201-205, 218, 251, and 332 of the
Communications Act as amended, 47 U.S.C. 151, 154(i), 154(j), 201-205,
218, 251, and 332, Part 52 of the Commission's rules, 47 CFR 52, is
amended as set forth in Appendix B hereto.
85. It is further ordered that the Petitions for Reconsideration
and/or Clarification are granted to the extent indicated herein and
otherwise are denied.
86. It is further ordered that the policies, rules, and
requirements set forth herein are adopted, effective May 15, 1997,
except for collections of information subject to approval by the Office
of Management and Budget (OMB), which are effective September 12, 1997.
87. It is further ordered that the Motion to Accept Late-Filed
Comments of Telecommunications Resellers Association and the Motion to
Accept Late-Filed Reply Comments of U S West are granted.
Federal Communications Commission
William F. Caton,
Acting Secretary.
Rule Changes
Part 52 of Title 47 of the Code of Federal Regulations is amended
as follows:
PART 52--NUMBERING
1. Section 52.23 is amended by revising paragraphs (a)(4) through
(a)(8), removing paragraph (a)(9), and revising paragraphs (b) and (g)
to read as follows:
Sec. 52.23 Deployment of long-term database methods for number
portability by LECs.
(a) * * *
(4) Does not result in unreasonable degradation in service quality
or network reliability when implemented;
(5) Does not result in any degradation in service quality or
network reliability when customers switch carriers;
(6) Does not result in a carrier having a proprietary interest;
[[Page 18295]]
(7) Is able to migrate to location and service portability; and
(8) Has no significant adverse impact outside the areas where
number portability is deployed.
(b) (1) All LECs must provide a long-term database method for
number portability in the 100 largest Metropolitan Statistical Areas
(MSAs) by December 31, 1998, in accordance with the deployment schedule
set forth in the Appendix to this part, in switches for which another
carrier has made a specific request for the provision of number
portability, subject to paragraph (b)(2) of this section.
(2) Any procedure to identify and request switches for deployment
of number portability must comply with the following criteria:
(i) Any wireline carrier that is certified (or has applied for
certification) to provide local exchange service in a state, or any
licensed CMRS provider, must be permitted to make a request for
deployment of number portability in that state;
(ii) Carriers must submit requests for deployment at least nine
months before the deployment deadline for the MSA;
(iii) A LEC must make available upon request to any interested
parties a list of its switches for which number portability has been
requested and a list of its switches for which number portability has
not been requested; and
(iv) After the deadline for deployment of number portability in an
MSA in the 100 largest MSAs, according to the deployment schedule set
forth in the Appendix to this part, a LEC must deploy number
portability in that MSA in additional switches upon request within the
following time frames:
(A) For remote switches supported by a host switch equipped for
portability (``Equipped Remote Switches''), within 30 days;
(B) For switches that require software but not hardware changes to
provide portability (``Hardware Capable Switches''), within 60 days;
(C) For switches that require hardware changes to provide
portability (``Capable Switches Requiring Hardware''), within 180 days;
and
(D) For switches not capable of portability that must be replaced
(``Non-Capable Switches''), within 180 days.
* * * * *
(g) Carriers that are members of the Illinois Local Number
Portability Workshop must conduct a field test of any technically
feasible long-term database method for number portability in the
Chicago, Illinois, area. The carriers participating in the test must
jointly file with the Common Carrier Bureau a report of their findings
within 30 days following completion of the test. The Chief, Common
Carrier Bureau, shall monitor developments during the field test, and
may adjust the field test completion deadline as necessary.
2. Section 52.31 is amended by revising paragraph (a) to read as
follows:
Sec. 52.31 Deployment of long-term database methods for number
portability by CMRS Providers.
(a) By June 30, 1999, all cellular, broadband PCS, and covered SMR
providers must provide a long-term database method for number
portability, in the MSAs identified in the Appendix to this part in
compliance with the performance criteria set forth in Sec. 52.23(a), in
switches for which another carrier has made a specific request for the
provision of number portability, subject to paragraph (a)(1) of this
section.
(1) Any procedure to identify and request switches for deployment
of number portability must comply with the following criteria:
(i) Any wireline carrier that is certified (or has applied for
certification) to provide local exchange service in a state, or any
licensed CMRS provider, must be permitted to make a request for
deployment of number portability in that state;
(ii) For the MSAs identified in the Appendix to this part, carriers
must submit requests for deployment by September 30, 1998;
(iii) A cellular, broadband PCS, or covered SMR provider must make
available upon request to any interested parties a list of its switches
for which number portability has been requested and a list of its
switches for which number portability has not been requested;
(iv) After June 30, 1999, a cellular, broadband PCS, or covered SMR
provider must deploy additional switches serving the MSAs identified in
the Appendix to this part upon request within the following time
frames:
(A) For remote switches supported by a host switch equipped for
portability (``Equipped Remote Switches''), within 30 days;
(B) For switches that require software but not hardware changes to
provide portability (``Hardware Capable Switches''), within 60 days;
(C) For switches that require hardware changes to provide
portability (``Capable Switches Requiring Hardware''), within 180 days;
and
(D) For switches not capable of portability that must be replaced
(``Non-Capable Switches''), within 180 days.
(v) Carriers must be able to request deployment in any wireless
switch that serves any area within that MSA, even if the wireless
switch is outside that MSA, or outside any of the MSAs identified in
the Appendix to this part.
(2) By June 30, 1999, all cellular, broadband PCS, and covered SMR
providers must be able to support roaming nationwide.
* * * * *
3. The Appendix to part 52 is revised to read as follows:
Appendix to Part 52--Deployment Schedule for Long-Term Database
Methods for Local Number Portability
Implementation must be completed by the carriers in the relevant
MSAs during the periods specified below:
Phase I--10/1/97-3/31/98
Chicago, IL................................................... 3
Philadelphia, PA.............................................. 4
Atlanta, GA................................................... 8
New York, NY.................................................. 2
Los Angeles, CA............................................... 1
Houston, TX................................................... 7
Minneapolis, MN............................................... 12
Phase II--1/1/98-5/15/98
Detroit, MI................................................... 6
Cleveland, OH................................................. 20
Washington, DC................................................ 5
Baltimore, MD................................................. 18
Miami, FL..................................................... 24
Fort Lauderdale, FL........................................... 39
Orlando, FL................................................... 40
Cincinnati, OH................................................ 30
Tampa, FL..................................................... 23
Boston, MA.................................................... 9
Riverside, CA................................................. 10
San Diego, CA................................................. 14
Dallas, TX.................................................... 11
St. Louis, MO................................................. 16
Phoenix, AZ................................................... 17
Seattle, WA................................................... 22
Phase III--4/1/98-6/30/98
Indianapolis, IN.............................................. 34
Milwaukee, WI................................................. 35
Columbus, OH.................................................. 38
Pittsburgh, PA................................................ 19
Newark, NJ.................................................... 25
Norfolk, VA................................................... 32
New Orleans, LA............................................... 41
Charlotte, NC................................................. 43
Greensboro, NC................................................ 48
Nashville, TN................................................. 51
Las Vegas, NV................................................. 50
Nassau, NY.................................................... 13
Buffalo, NY................................................... 44
Orange Co, CA................................................. 15
Oakland, CA................................................... 21
San Francisco, CA............................................. 29
Rochester, NY................................................. 49
Kansas City, KS............................................... 28
Fort Worth, TX................................................ 33
Hartford, CT.................................................. 46
Denver, CO.................................................... 26
Portland, OR.................................................. 27
Phase IV--7/1/98-9/30/98
Grand Rapids, MI.............................................. 56
Dayton, OH.................................................... 61
Akron, OH..................................................... 73
Gary, IN...................................................... 80
Bergen, NJ.................................................... 42
[[Page 18296]]
Middlesex, NJ................................................. 52
Monmouth, NJ.................................................. 54
Richmond, VA.................................................. 63
Memphis, TN................................................... 53
Louisville, KY................................................ 57
Jacksonville, FL.............................................. 58
Raleigh, NC................................................... 59
West Palm Beach, FL........................................... 62
Greenville, SC................................................ 66
Honolulu, HI.................................................. 65
Providence, RI................................................ 47
Albany, NY.................................................... 64
San Jose, CA.................................................. 31
Sacramento, CA................................................ 36
Fresno, CA.................................................... 68
San Antonio, TX............................................... 37
Oklahoma City, OK............................................. 55
Austin, TX.................................................... 60
Salt Lake City, UT............................................ 45
Tucson, AZ.................................................... 71
Phase V--10/1/98-12/31/98
Toledo, OH.................................................... 81
Youngstown, OH................................................ 85
Ann Arbor, MI................................................. 95
Fort Wayne, IN................................................ 100
Scranton, PA.................................................. 78
Allentown, PA................................................. 82
Harrisburg, PA................................................ 83
Jersey City, NJ............................................... 88
Wilmington, DE................................................ 89
Birmingham, AL................................................ 67
Knoxville, KY................................................. 79
Baton Rouge, LA............................................... 87
Charleston, SC................................................ 92
Sarasota, FL.................................................. 93
Mobile, AL.................................................... 96
Columbia, SC.................................................. 98
Tulsa, OK..................................................... 70
Syracuse, NY.................................................. 69
Springfield, MA............................................... 86
Ventura, CA................................................... 72
Bakersfield, CA............................................... 84
Stockton, CA.................................................. 94
Vallejo, CA................................................... 99
El Paso, TX................................................... 74
Little Rock, AR............................................... 90
Wichita, KS................................................... 97
New Haven, CT................................................. 91
Omaha, NE..................................................... 75
Albuquerque, NM............................................... 76
Tacoma, WA.................................................... 77
Supplemental Final Regulatory Flexibility Analysis
1. As required by section 603 of the Regulatory Flexibility Act
(RFA), 5 U.S.C. 603, an Initial Regulatory Flexibility Analysis
(IRFA) was incorporated in the Notice of Proposed Rulemaking (NPRM).
The Commission sought written public comment on the proposals in the
NPRM. In addition, pursuant to section 603, a Final Regulatory
Flexibility Analysis (FRFA) was incorporated in the First Report &
Order. That FRFA conformed to the RFA, as amended by the Small
Business Regulatory Enforcement Fairness Act of 1996 (SBREFA) 5
U.S.C. 601 et seq. The SBREFA is title II of the Contract With
America Advancement Act of 1996 (CWAAA), Public Law 104-121, 110
Stat. 847 (1996). The Supplemental Final Regulatory Flexibility
Analysis in this First Memorandum Opinion and Order on
Reconsideration (First Reconsideration Order) (Supplemental FRFA)
also conforms to the RFA.
A. Need for and Objectives of this First Reconsideration Order and
the Rules Adopted Herein
2. The need for and objectives of the rules adopted in this
First Reconsideration Order are the same as those discussed in the
FRFA in the First Report & Order. In general, the rules implement
the statutory requirement that all LECs provide telephone number
portability when technically feasible. In this First Reconsideration
Order, the Commission grants in part and denies in part several of
the petitions filed for reconsideration and/or clarification of the
First Report & Order, in order to further the same needs and
objectives. First, the Commission concludes that QOR is not an
acceptable long-term number portability method. Second, the
Commission extends the implementation schedule for wireline
carriers, clarifies the requirements imposed thereunder, and
addresses issues raised by rural LECs and certain other parties. The
Commission concludes that LECs need only provide number portability
within the 100 largest MSAs in switches for which another carrier
has made a specific request for the provision of portability.
Finally, the Commission affirms and clarifies the implementation
schedule for wireless carriers.
B. Analysis of Significant Issues Raised in Response to the FRFA
3. Summary of the FRFA. In the FRFA, the Commission concluded
that incumbent LECs do not qualify as small businesses because they
are dominant in their field of operation, and, accordingly, the
Commission did not address the impact of the rules on incumbent
LECs. The Commission noted that the RFA generally defines the term
``small business'' as having the same meaning as the term ``small
business concern'' under the Small Business Act. 15 U.S.C. 632. A
small business concern is one that (1) is independently owned and
operated; (2) is not dominant in its field of operation; and (3)
satisfies any additional criteria established by the Small Business
Administration (SBA). 15 U.S.C. 632. According to the SBA's
regulations, entities engaged in the provision of telephone service
may have a maximum of 1,500 employees in order to qualify as a small
business concern. 13 CFR 121.201. This standard also applies in
determining whether an entity is a small business for purposes of
the Regulatory Flexibility Act.
4. The Commission did recognize that these rules may have a
significant economic impact on a substantial number of small
businesses insofar as they apply to telecommunications carriers
other than incumbent LECs, including competitive LECs, as well as
cellular, broadband PCS, and covered SMR providers. Based upon data
contained in the most recent census and a report by the Commission's
Common Carrier Bureau, the Commission estimated that 2,100 carriers
could be affected. The Commission also discussed the reporting
requirements imposed by the First Report & Order.
5. Finally, the Commission discussed the steps it had taken to
minimize the impact on small entities, consistent with stated
objectives. The Commission concluded that the actions in the First
Report & Order would benefit small entities by facilitating their
entry into the local exchange market. The Commission found that the
record in this proceeding indicated that the lack of number
portability would deter entry by competitive providers of local
service because of the value customers place on retaining their
telephone numbers. These competitive providers, many of which may be
small entities, may find it easier to enter the market as a result
of number portability, which will eliminate this barrier to entry.
The Commission noted that, in general, it attempted to keep burdens
on local exchange carriers to a minimum. For example, the Commission
adopted a phased deployment schedule for implementation in the 100
largest MSAs, and then elsewhere upon a carrier's request; the
Commission conditioned the provision of currently available measures
upon request only; the Commission did not require cellular,
broadband PCS, and covered SMR providers, which may be small
businesses, to offer currently available number portability
measures; and it did not require paging and messaging service
providers, which may be small entities, to provide any number
portability.
1. Treatment of Small Incumbent LECs
6. Comments. NTCA/OPASTCO claims that the First Report & Order's
Final Regulatory Flexibility Analysis does not address the impact of
the rules on small incumbent LECs, and is thus inconsistent with the
Local Competition Order. NTCA/OPASTCO suggests that exempting rural
LECs from number portability requirements absent a bona fide request
would fulfill the Commission's responsibility under the Regulatory
Flexibility Act.
7. Discussion. 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 the Commission's
prior practice, they are excluded from the definition of ``small
entity'' and ``small business concerns.'' As the Commission stated
in the Local Competition Order, it has found incumbent LECs to be
``dominant in their field of operation'' since the early 1980's, and
that it consistently has certified under the RFA (5 U.S.C. 605(b))
that incumbent LECs are not subject to regulatory flexibility
analyses because they are not small businesses. The Commission has
made similar determinations in other areas. Accordingly, the use of
the terms ``small entities'' and ``small businesses'' does not
encompass small incumbent LECs. Although the Commission is not fully
persuaded on the basis of this record that the prior practice has
been incorrect, in light of the special concerns raised by NTCA/
OPASTCO in this proceeding, for regulatory flexibility analysis
purposes, the Commission will include small incumbent LECs in this
Supplemental FRFA and use the term ``small incumbent LECs'' to refer
to any incumbent LECs that arguably might be defined by SBA as
``small business concerns.'' Out of an abundance of caution,
therefore, the Commission will include small incumbent LECs in the
Supplemental FRFA in this First Reconsideration Order to remove any
possible issue of RFA compliance.
[[Page 18297]]
2. Other Issues
8. Although not in response to the FRFA, certain parties urge
the Commission to waive number portability requirements for rural
and/or smaller LECs serving areas in the largest 100 MSAs until
receipt of a bona fide request, or to grant an exemption from the
Commission's rules on the basis of rural and/or smaller LEC status.
The Commission discusses these issues above in the First
Reconsideration Order.
C. Description and Estimates of the Number of Small Entities
Affected by this First Reconsideration Order
9. For the purposes of this First Reconsideration 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. 632, unless the
Commission has developed one or more definitions that are
appropriate to its activities. See 5 U.S.C. 601(3) (incorporating by
reference the definition of ``small business concern'' in 15 U.S.C.
632). 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 SBA. 15 U.S.C. 632. 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 with
fewer than 1,500 employees. The Commission first discusses generally
the total number of small telephone companies falling within both of
those SIC categories. Then, the Commission discusses the number of
small businesses within the two subcategories that may be affected
by these rules, and attempt to refine further those estimates to
correspond with the categories of telephone companies that are
commonly used under the rules.
10. Consistent with the prior practice, the Commission shall
continue to exclude small incumbent LECs from the definition of a
small entity for the purpose of this Supplemental FRFA.
Nevertheless, as mentioned above, the Commission includes small
incumbent LECs in this Supplemental FRFA. Accordingly, the use of
the terms ``small entities'' and ``small businesses'' does not
encompass ``small incumbent LECs.'' The Commission uses the term
``small incumbent LECs'' to refer to any incumbent LECs that
arguably might be defined by SBA as ``small business concerns.'' See
13 CFR Sec. 121.201 (SIC 4813).
11. Total Number of Telephone Companies Affected. Many of the
decisions and rules adopted herein may have a significant effect on
a substantial number of the small telephone companies identified by
SBA. The United States Bureau of the Census (``the Census Bureau'')
reports that, at the end of 1992, there were 3,497 firms engaged in
providing telephone services, as defined therein, for at least one
year. 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.'' 15 U.S.C. 632(a)(1). 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. The Commission believes that these
rules may affect certain subcategories within that estimate, i.e.,
wireline carriers and service providers, including local exchange
carriers and competitive access providers; and wireless carriers,
including cellular service carriers, broadband PCS licensees, and
SMR licensees. The Commission discusses those subcategories below in
further detail. The Commission believes, on the other hand, that
these rules will not affect certain subcategories within that
estimate, i.e., interexchange carriers, operator service providers,
pay telephone operators, mobile service carriers, and resellers,
and, moreover, will not affect small cable system operators.
12. Wireline Carriers and Service Providers. SBA has developed a
definition of small entities for telephone communications companies
other than radiotelephone (wireless) companies. The Census Bureau
reports that, there were 2,321 such telephone companies in operation
for at least one year at the end of 1992. According to SBA's
definition, a small business telephone company other than a
radiotelephone company is one employing fewer than 1,500 persons. 13
CFR 121.201. Standard Industrial Classification (SIC) Code 4812. All
but 26 of the 2,321 non-radiotelephone companies listed by the
Census Bureau were reported to have fewer than 1,000 employees.
Thus, even if all 26 of those companies had more than 1,500
employees, there would still be 2,295 non-radiotelephone companies
that might qualify as small entities or small incumbent LECs.
Although it seems certain that some of these carriers are not
independently owned and operated, the Commission is unable at this
time to estimate with greater precision the number of wireline
carriers and service providers that would qualify as small business
concerns under SBA's definition. Consequently, the Commission
estimates that there are fewer than 2,295 small entity telephone
communications companies other than radiotelephone companies that
may be affected by the decisions and rules adopted in this First
Reconsideration Order.
13. Local Exchange Carriers. Neither the Commission nor SBA has
developed a definition of small providers of local exchange services
(LECs). The closest applicable definition under SBA rules is for
telephone communications companies other than radiotelephone
(wireless) companies. The most reliable source of information
regarding the number of LECs nationwide of which the Commission is
aware appears to be the data that the Commission collects annually
in connection with the Telecommunications Relay Service (TRS).
According to the Commission's most recent data, 1,347 companies
reported that they were engaged in the provision of local exchange
services. Although it seems certain that some of these carriers are
not independently owned and operated, or have more than 1,500
employees, the Commission is unable at this time to estimate with
greater precision the number of LECs that would qualify as small
business concerns under SBA's definition. Consequently, the
Commission estimates that there are fewer than 1,347 small incumbent
LECs that may be affected by the decisions and rules adopted in this
First Reconsideration Order.
14. Competitive Access Providers. Neither the Commission nor SBA
has developed a definition of small entities specifically applicable
to providers of competitive access services (CAPs). The closest
applicable definition under SBA rules is for telephone
communications companies other than radiotelephone (wireless)
companies. The most reliable source of information regarding the
number of CAPs nationwide of which the Commission is aware appears
to be the data that the Commission collects annually in connection
with the TRS. According to the Commission's most recent data, 57
companies reported that they were engaged in the provision of
competitive access services. Although it seems certain that some of
these carriers are not independently owned and operated, or have
more than 1,500 employees, the Commission is unable at this time to
estimate with greater precision the number of CAPs that would
qualify as small business concerns under SBA's definition.
Consequently, the Commission estimates that there are fewer than 57
small entity CAPs that may be affected by the decisions and rules
adopted in this First Reconsideration Order.
15. Wireless (Radiotelephone) Carriers. SBA has developed a
definition of small entities for radiotelephone (wireless)
companies. The Census Bureau reports that there were 1,176 such
companies in operation for at least one year at the end of 1992.
According to SBA's definition, a small business radiotelephone
company is one employing fewer than 1,500 persons. 13 CFR 121.201,
Standard Industrial Classification (SIC) Code 4812. 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, the Commission is unable at this time to estimate with
greater precision the number of radiotelephone carriers and service
providers that would qualify as small business concerns under SBA's
definition. Consequently, the Commission estimates that there are
fewer than 1,164 small entity radiotelephone companies that may be
affected by the decisions and rules adopted in this First
Reconsideration Order.
16. Cellular Service Carriers. Neither the Commission nor SBA
has developed a definition of small entities specifically applicable
to providers of cellular services. The closest applicable definition
under SBA rules is for telephone communications
[[Page 18298]]
companies other than radiotelephone (wireless) companies. The most
reliable source of information regarding the number of cellular
service carriers nationwide of which the Commission is aware appears
to be the data that the Commission collects annually in connection
with the TRS. According to the Commission's most recent data, 792
companies reported that they were engaged in the provision of
cellular services. Although it seems certain that some of these
carriers are not independently owned and operated, or have more than
1,500 employees, the Commission is unable at this time to estimate
with greater precision the number of cellular service carriers that
would qualify as small business concerns under SBA's definition.
Consequently, the Commission estimate that there are fewer than 792
small entity cellular service carriers that may be affected by the
decisions and rules adopted in this First Reconsideration Order.
17. Broadband PCS Licensees. The broadband PCS spectrum is
divided into six frequency blocks designated A through F, and the
Commission has held auctions for each block. The Commission defined
``small entity'' for Blocks C and F as an entity that has average
gross revenues of less than $40 million in the three previous
calendar years. For Block F, an additional classification for ``very
small business'' was added and is defined as an entity that,
together with their affiliates, has average gross revenues of not
more than $15 million for the preceding three calendar years. These
regulations defining ``small entity'' in the context of broadband
PCS auctions have been approved by the SBA. No small businesses
within the SBA-approved definition bid successfully for licenses in
Blocks A and B. There were 90 winning bidders that qualified as
small entities in the Block C auctions. A total of 93 small and very
small business bidders won approximately 40 percent of the 1,479
licenses for Blocks D, E, and F. However, licenses for blocks C
through F have not been awarded fully; therefore, there are few, if
any, small businesses currently providing PCS services. Based on
this information, the Commission concludes that the number of small
broadband PCS licensees will include the 90 winning C Block bidders
and the 93 qualifying bidders in the D, E, and F blocks, for a total
of 183 small PCS providers as defined by the SBA and the
Commission's auction rules.
18. SMR Licensees. Pursuant to 47 CFR 90.814(b)(1), the
Commission has defined ``small entity'' in auctions for geographic
area 800 MHz and 900 MHz SMR licenses as a firm that had average
annual gross revenues of less than $15 million in the three previous
calendar years. This definition of a ``small entity'' in the context
of 800 MHz and 900 MHz SMR has been approved by the SBA. The rules
adopted in this First Reconsideration Order may apply to SMR
providers in the 800 MHz and 900 MHz bands that either hold
geographic area licenses or have obtained extended implementation
authorizations. The Commission does not know how many firms provide
800 MHz or 900 MHz geographic area SMR service pursuant to extended
implementation authorizations, nor how many of these providers have
annual revenues of less than $15 million. The Commission assumes,
for purposes of this Supplemental FRFA, that all of the extended
implementation authorizations may be held by small entities, which
may be affected by the decisions and rules adopted in this First
Reconsideration Order.
19. The Commission's auctions for geographic area licenses in
the 900 MHz SMR band concluded in April of 1996. There were 60
winning bidders who qualified as small entities in the 900 MHz
auction. Based on this information, the Commission concludes that
the number of geographic area SMR licensees affected by the rules
adopted in this First Reconsideration Order includes these 60 small
entities. No auctions have been held for 800 MHz geographic area SMR
licenses. Therefore, no small entities currently hold these
licenses. A total of 525 licenses will be awarded for the upper 200
channels in the 800 MHz geographic area SMR auction. However, the
Commission has not yet determined how many licenses will be awarded
for the lower 230 channels in the 800 MHz geographic area SMR
auction. There is no basis, moreover, on which to estimate how many
small entities will win these licenses. Given that nearly all
radiotelephone companies have fewer than 1,000 employees and that no
reliable estimate of the number of prospective 800 MHz licensees can
be made, the Commission assumes, for purposes of this Supplemental
FRFA, that all of the licenses may be awarded to small entities who,
thus, may be affected by the decisions in this First Reconsideration
Order.
20. Cable System Operators. SBA has developed a definition of
small entities for cable and other pay television services, which
includes all such companies generating less than $11 million in
revenue annually. This definition includes cable systems operators,
closed circuit television services, direct broadcast satellite
services, multipoint distribution systems, satellite master antenna
systems and subscription television services. According to the
Census Bureau, there were 1,432 such cable and other pay television
services generating $11 million or less in annual receipts that were
in operation for at least one year at the end of 1992.
21. The Commission has developed its own definition of a small
cable system operator for the purposes of rate regulation. Under the
Commission's rules, a ``small cable company,'' is one serving fewer
than 400,000 subscribers nationwide. 47 CFR 76.901(e). Based on the
Commission's most recent information, the Commission estimates that
there were 1,439 cable operators that qualified as small cable
system operators at the end of 1995. Since then, some of those
companies may have grown to serve over 400,000 subscribers, and
others may have been involved in transactions that caused them to be
combined with other cable operators. Consequently, the Commission
estimates that there are fewer than 1,468 small entity cable system
operators that may be affected by the decisions and rules adopted in
this First Reconsideration Order.
22. The Communications Act also contains a definition of a small
cable system operator, which is ``a cable operator that, directly or
through an affiliate, serves in the aggregate fewer than 1 percent
of all subscribers in the United States and is not affiliated with
any entity or entities whose gross annual revenues in the aggregate
exceed $250,000,000.'' 47 U.S.C. 543(m)(2). There were 63,196,310
basic cable subscribers at the end of 1995, and 1,450 cable system
operators serving fewer than one percent (631,960) of subscribers.
Although it seems certain that some of these cable system operators
are affiliated with entities whose gross annual revenues exceed
$250,000,000, the Commission is unable at this time to estimate with
greater precision the number of cable system operators that would
qualify as small cable operators under the definition in the
Communications Act.
D. Summary Analysis of the Projected Reporting, Recordkeeping, and
Other Compliance Requirements and Steps Taken to Minimize the
Significant Economic Impact of this First Reconsideration Order on
Small Entities and Small Incumbent LECs, Including the Significant
Alternatives Considered and Rejected
23. Structure of the Analysis. In this Section of the
Supplemental FRFA, the Commission analyzes the projected reporting,
recordkeeping, and other compliance requirements that may apply to
small entities and small incumbent LECs as a result of this First
Reconsideration Order. See 5 U.S.C. 604(a)(4). As a part of this
discussion, the Commission mentions some of the types of skills that
will be needed to meet the new requirements. The Commission also
describes the steps taken to minimize the economic impact of its
decisions on small entities and small incumbent LECs, including the
significant alternatives considered and rejected. See 5 U.S.C.
604(a)(5).
24. The Commission provides this summary analysis to provide
context for the analysis in this Supplemental FRFA. To the extent
that any statement contained in this Supplemental FRFA is perceived
as creating ambiguity with respect to the rules or statements made
in the First Report & Order or preceding Sections of this First
Reconsideration Order, the rules and statements set forth in the
First Report & Order and those preceding Sections of this First
Reconsideration Order shall be controlling.
1. Implementation Schedule
25. Summary of Projected Reporting, Recordkeeping and Other
Compliance Requirements. In the First Report & Order, the Commission
required local exchange carriers operating in the 100 largest MSAs
to offer long-term service provider portability, according to a
phased deployment schedule commencing on October 1, 1997, and
concluding by December 31, 1998, set forth in appendix F of the
First Report & Order. In this First Reconsideration Order, the
Commission extends the end dates for Phase I of the deployment
schedule by three months, and for Phase II by 45 days. Thus,
deployment will now take place in Phase I from October 1, 1997,
through March 31,
[[Page 18299]]
1998, and in Phase II from January 1, 1998, through May 15, 1998.
The Commission also clarifies that LECs need only provide number
portability within the 100 largest MSAs in switches for which
another carrier has made a specific request for the provision of
portability. LECs must make available lists of their switches for
which deployment has and has not been requested. The parties
involved in such requests identifying preferred switches may need to
use legal, accounting, economic and/or engineering services.
26. Steps Taken to Minimize Significant Economic Impact on Small
Entities and Small Incumbent LECs, and Alternatives Considered. In
this First Reconsideration Order, the Commission lightens the
burdens on rural and smaller LECs by establishing a procedure
whereby, within as well as outside the 100 largest MSAs, portability
need only be implemented in the switches for which another carrier
has made a specific request for the provision of portability. If, as
petitioners allege, competition is not imminent in the areas covered
by rural/small LEC switches, then the rural or smaller LEC should
not receive requests from competing carriers to implement
portability, and thus need not expend its resources until
competition does develop. By that time, extensive non-carrier-
specific testing will likely have been done, and rural and small
LECs need not expend their resources on such testing. The Commission
notes that the majority of parties representing small or rural LECs
specified as the relief sought that the Commission only impose
implementation requirements where competing carriers have shown
interest in portability. Moreover, the Commission's extension of
Phases I and II of the deployment schedule may permit smaller LECs
to reduce their testing costs by allowing time for larger LECs to
test and resolve the problems of this new technology.
27. Indeed, in this First Reconsideration Order, the Commission
rejects several alternatives put forth by parties that might impose
greater burdens on small entities and small incumbent LECs. The
Commission rejects requests put forth by ACSI, KMC, ICG, NEXTLINK,
and ALTS to accelerate the deployment schedule for areas both within
and outside the 100 largest MSAs. The Commission also rejects the
procedures proposed by some parties that would require LECs to file
waiver requests for their specific switches if they believe there is
no competitive interest in those switches, instead of requiring LECs
to identify in which switches of other LECs they wish portability
capabilities. The suggested waiver procedures would burden the LEC
from whom portability is requested with preparing and filing the
petition for waiver. In addition, a competing carrier that opposes
the waiver petition would be burdened with challenging the waiver.
In contrast, under the procedure the Commission establishes, the
only reporting burden on requesting carriers is to identify and
request their preferred switches. Carriers from which portability is
being requested, which may be small incumbent LECs, only incur a
reporting burden if they wish to lessen their burdens further by
requesting more time in which to deploy portability. Finally, the
Commission clarifies that CMRS providers, like wireline providers,
need only provide portability in requested switches, both within and
outside the 100 largest MSAs.
2. Exemptions for Rural or Small LECs
28. Summary of Projected Reporting, Recordkeeping and Other
Compliance Requirements. Section 251(f)(2) provides that LECs with
fewer than two percent of the nation's subscriber lines may petition
a state commission for a suspension or modification of any
requirements of sections 251(b) and 251(c). Section 251(f)(2) is
available to all LECs, including competitive LECs, which may be
small entities. A small incumbent LEC or a competitive LEC, which
may be a small entity, seeking under 251(f)(2) to modify or suspend
the number portability requirements imposed by section 251(b)(2),
bears the burden of proving that the number portability requirements
would: (1) Create a significant adverse economic impact on
telecommunications users; (2) be unduly economically burdensome; or
(3) be technically infeasible. The parties involved in such a
proceeding may need to use legal, accounting, economic and/or
engineering services.
29. Steps Taken to Minimize Significant Economic Impact on Small
Entities and Small Incumbent LECs, and Alternatives Considered. As
explained above in the First Reconsideration Order, the Commission
considers it unnecessary to create a general exemption for all small
and/or rural LECs, as suggested by some parties. The Commission has
effectively granted the small and rural LEC petitioners' requests
that it waive number portability requirements for rural and/or small
LECs serving areas in the largest 100 MSAs until receipt of a bona
fide request, since the Commission now requires all competing
carriers specifically to request, of any LEC, the particular
switches in which they desire portability. To the extent that
portability is requested in a rural or small LEC's switch, and that
LEC has difficulty complying with the request, it may apply for an
extension of time on the basis of extraordinary circumstances beyond
its control that prevent it from complying with the Commission's
deployment schedule or, if eligible, it may petition the appropriate
state commission for suspension or modification of the requirements
of section 251(b). 47 U.S.C. 251(f)(2). The Commission's grant of
petitioners' requests to limit deployment to requested switches,
however, decreases the likelihood that smaller and rural LECs will
have to apply for extensions of time or file petitions under section
251(f)(2).
30. As the Commission stated in the Local Competition Order, the
determination whether a section 251(f)(2) suspension or modification
should be continued or granted lies primarily with the relevant
state commission. By largely leaving this determination to the
states, the Local Competition Order stated, the Commission's
decisions permit this fact-specific inquiry to be administered in a
manner that minimizes regulatory burdens and the economic impact on
small entities and small incumbent LECs. However, to minimize
further regulatory burdens and minimize the economic impact of the
Commission's decision, in the Local Competition Order the Commission
adopted several rules that may facilitate the efficient resolution
of such inquiries, provide guidance, and minimize uncertainty. In
the Local Competition Order, the Commission found that the rural LEC
or smaller LEC must prove to the state commission that the financial
harm shown to justify a suspension or modification would be greater
than the harm that might typically be expected as a result of
competition. Finally, the Commission concluded that section 251(f)
adequately provides for varying treatment for smaller or rural LECs
where such variances are justified. As a result, the Commission
stated, it expects that section 251(f) will significantly minimize
regulatory burdens and economic impacts from the rules adopted in
the First Report & Order and this First Reconsideration Order.
3. Reporting Requirements by the Chief, Wireless Telecommunications
Bureau, on Carriers' Progress
31. Summary of Projected Reporting, Recordkeeping and Other
Compliance Requirements. In the First Report & Order, the Commission
delegated authority to the Chief, Wireless Telecommunications
Bureau, to require reports from cellular, PCS, and covered SMR
providers in order to monitor the progress of these providers toward
implementing long-term number portability. These reporting
requirements were not defined in sufficient detail in the First
Report & Order to obtain approval from the Office of Management and
Budget. Separate approval will be requested when the specific
requirements are imposed by the Wireless Telecommunications Bureau.
32. Steps Taken to Minimize Significant Economic Impact on Small
Entities and Small Incumbent LECs, and Alternatives Considered.
Although no party to this proceeding suggested that changes to these
reporting requirements would affect small entities or small
incumbent LECs, several parties requested that the Chief, Wireless
Telecommunications Bureau, be given greater authority to act to
increase flexibility in the schedule. As explained above in this
First Reconsideration Order, the Commission lightens the burden on
smaller and rural wireless carriers by modifying these rules so that
CMRS providers, like wireline providers, need only provide
portability in requested switches, both within and outside the 100
largest MSAs. The Commission also declines at this time to alter
further the implementation schedule imposed by the First Report &
Order for wireless carriers because the Commission finds that enough
flexibility has been incorporated into the implementation schedule
for wireless carriers, and that no modification is needed.
E. Report to Congress
33. The Commission shall send a copy of this Supplemental FRFA,
along with this First Reconsideration Order, in a report to Congress
pursuant to the Small Business Regulatory Enforcement Fairness Act
of 1996, 5 U.S.C. 801(a)(1)(A). A copy of this Supplemental FRFA
will also be published in the Federal Register.
[FR Doc. 97-8483 Filed 4-14-97; 8:45 am]
BILLING CODE 6712-01-P