[Federal Register Volume 63, Number 159 (Tuesday, August 18, 1998)]
[Proposed Rules]
[Pages 44220-44224]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-22162]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 43

[CC Docket 98-117; FCC 98-147]


1998 Biennial Regulatory Review--Review of ARMIS Reporting 
Requirements

AGENCY: Federal Communications Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Commission is required, in every even-numbered year 
beginning in 1998, to review its regulations applicable to providers of 
telecommunications service to determine whether the regulations are no 
longer in the public interest due to meaningful economic competition 
between providers of such service and whether such regulations should 
be repealed or modified. In this Notice of Proposed Rulemaking 
(``NPRM''), we propose as part of the biennial review to reduce the 
reporting requirements of our Automated Reporting Management 
Information System (``ARMIS''). These modifications are designed to 
minimize the reporting burden on carriers, improve the quality and use 
of the reported information and reduce the cost to the Commission of 
collection, verification, and distribution of the data. This Notice 
invites interested parties to comment on several modifications to the 
ARMIS ten reports.

DATES: Comments are to be filed on or before August 20, 1998 and reply 
comments are due on or before September 4, 1998. Written comments

[[Page 44221]]

and reply comments by the public on the information collections are due 
October 19, 1998.

ADDRESSES: Federal Communications Commission, Secretary, Room 222, 1919 
M Street NW., Washington, D.C. 20554. In addition to filing comments 
with the Commission's Secretary, a copy of any comments on the proposed 
information collections contained herein should be submitted to Judy 
Boley, Federal Communications Commission, Room 234, 1919 M Street, NW., 
Washington, DC 20554, or via the Internet to [email protected], and to 
Timothy Fain, OMB Desk Officer, 10236 NEOB, 725 17th Street, N.W., 
Washington, D.C. 20503, or via the Internet to [email protected].

FOR FURTHER INFORMATION CONTACT: Anthony Dale, Common Carrier Bureau, 
Accounting Safeguards Division, (202) 418-2260, or via E-mail to 
``[email protected]''. For additional information concerning information 
collections, contact Judy Boley at (202) 418-0214, or via the Internet 
at [email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice 
of Proposed Rulemaking in the matter of 1998 Biennial Regulatory 
Review--Review of ARMIS Reporting Requirements, CC Docket 98-117, 
adopted July 6, 1998, and released July 17, 1998. The complete text of 
this Notice of Proposed Rulemaking is available for inspection and 
copying during normal business hours in the Commission's Reference 
Center, Room 239, 1919 M Street, NW, Washington, DC. The NPRM is 
available through the Internet at http://www.fcc.gov/Bureaus/
Common__Carrier/Notices/1998/fcc98147.wp. The complete text may be 
purchased from the Commission's duplicating contractor, International 
Transcription Service, Inc. (ITS, Inc.), at 1231 20th Street NW., 
Washington, DC 20036 (202-857-3800).

Paperwork Reduction Act

    This NPRM contains proposed information collections. The 
Commission, as part of its continuing effort to reduce paperwork 
burdens, invites the general public and the Office of Management and 
Budget (OMB) to comment on the information collections contained in 
this notice, as required by the Paperwork Reduction Act of 1995, Public 
Law 104-13. Public and agency comments are due at the same time as 
other comments on this notice; OMB notification of action is due 
October 19, 1998. Comments should address: (a) Whether the proposed 
collection of information is necessary for the proper performance of 
the functions of the Commission, including whether the information 
shall have practical utility; (b) the accuracy of the Commission's 
burden estimates; (c) ways to enhance the quality, utility, and clarity 
of the information collected; and (d) ways to minimize the burden of 
the collection of information on the respondents, including the use of 
automated collection techniques or other forms of information 
technology.
    OMB Approval Number: None.
    Title: 1998 Annual Biennial Review of ARMIS Reporting Requirements.
    Form No.: FCC Reports 43-01 through 43-08 and FCC Reports 495A and 
495B.
    Type of Review: New collections.
    Respondents: Business or other for profit.

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                                                                      No. of      Estimated time   Total annual 
                              Title                                 respondents    per response       burden    
----------------------------------------------------------------------------------------------------------------
ARMIS Annual Summary Report.....................................             150             135          20,250
ARMIS USOA Report...............................................              50             190           9,500
ARMIS Joint Cost Report.........................................             150             110          12,450
ARMIS Access Charge Report......................................             150             621          93,150
ARMIS Service Quality Report....................................              12             625           7,500
ARMIS Customer Satisfaction Report..............................               8             675           5,400
ARMIS Infrastructure Report.....................................               8             412           3,296
ARMIS Operating Data Report.....................................              50             120           6,000
ARMIS Forecast of Investment Usage & Actual Usage Reports.......             300              21           6,300
----------------------------------------------------------------------------------------------------------------

    Total Annual Burden: 163,846.
    Estimated costs per respondent: $0.
    Needs and Uses: As part of the biennial regulatory review, we are 
required to review our regulation applicable to providers of 
telecommunications service to determine whether the regulations are no 
longer in the public interest due to meaningful economic competition 
between providers of such service and whether such regulations should 
be repealed or modified. In this NPRM we propose as part of the 
biennial review to reduce the reporting requirements of our ARMIS. 
ARMIS is needed to administer our accounting, jurisdictional 
separations, access charges and joint cost rules and rules to analyze 
revenue requirements and rates of reform, service quality and 
infrastructure development. It collects financial and operating data 
from certain local exchange carriers. The information contained in the 
reports provide the necessary detail to enable this Commission to 
fulfill its regulatory responsibilities. These proposed modifications 
will reduce the reporting burdens on carriers, improve the quality and 
use of the reported information. If adopted the proposed modifications 
will reduce public burden by approximately 50% for the ARMIS reports.

Synopsis of Notice of Proposed Rulemaking

A. Eliminating Paper Filing Requirement

    1. The Common Carrier Bureau (``the Bureau'') currently requires 
carriers to submit both paper and electronic copies of the ARMIS 
reports. The Commission has, in recent years, relied increasingly on 
the data filed electronically to maintain internal databases and 
generate meaningful reports for policy making. We tentatively conclude 
that paper versions of the ARMIS reports do not significantly 
contribute to the Commission's current efforts or future goals in 
administering its accounting, joint cost, jurisdictional separations, 
access charge rules, or in monitoring the quality of service and 
infrastructure development in the public network. Therefore, we 
tentatively conclude that we should eliminate the paper filing 
requirement. We anticipate that the transition to an electronic-only 
reporting program will represent a substantial cost savings for all 
carriers that file ARMIS reports. We seek comment on this tentative 
conclusion and request suggestions for improving the electronic filing 
system for ARMIS reports.
    2. The paper versions of the ARMIS reports, however, are our 
primary means for distributing ARMIS data to the public. To satisfy the 
frequent requests

[[Page 44222]]

from the public for ARMIS data, we plan to meet the demand by making it 
available through the Internet. This will require Commission staff to 
develop software that will allow interested parties to obtain ARMIS 
reports over the Internet, which we anticipate to be a costly process. 
We seek comment on this proposal and request parties to provide 
information on the costs of filing paper copies of ARMIS data so that 
we can assess the utility of eliminating the paper filing requirement. 
In considering whether to make ARMIS data available on the Internet, we 
plan to balance the benefits of such availability, in particular the 
frequency of requests from the public and the reduced administrative 
burden on Commission staff, against the costs of this course of action.

B. Equal Access, Payphone, and Inside Wire Data

    3. The ARMIS 43-04 Access Report provides jurisdictional 
separations and access charge data by part 36 category at the study 
area level. The data collected in this report are used by Commission 
staff to verify cost information filed in tariffs. We propose to modify 
the ARMIS 43-04 Access Report by eliminating 114 rows and three columns 
in which carriers report data pertaining to equal access, inside wire, 
and payphone investment. We tentatively conclude that the equal access 
information is no longer necessary because the nearly complete 
transition to equal access has reduced our need to monitor its 
deployment. We tentatively conclude that we can eliminate the inside 
wire and payphone investment columns because these two categories are 
no longer regulated. In the NPRM, Appendix A presents the specific row 
and column deletions and our reasons for their removal. We solicit 
comment on these tentative conclusions and seek additional suggestions 
from interested parties on streamlining the ARMIS 43-04 Access Report.
    4. The ARMIS 43-01 Annual Summary Report summarizes the carriers' 
accounting, rate base, and cost allocation data prescribed in parts 32, 
36, 64, 65, and 69 of the Commission's rules (See 47 CFR 32, 36, 64, 
65, and 69). The Annual Summary Report consists of two tables: (1) 
Table I, the ``Cost and Revenue Table;'' and (2) Table II, the ``Demand 
Analysis Table.'' In order to make the ARMIS 43-01 Annual Summary 
Report consistent with the streamlined version of the ARMIS 43-04 
Access Report, we tentatively conclude that we should eliminate the 
corresponding rows and columns pertaining to equal access, inside wire, 
and payphone investment. Appendix B presents the specific row and 
column deletions and our reasons for their removal. We seek comment on 
this proposal and ask whether any additional streamlining or 
consolidation of these reports should be made.

C. Reduced Reporting Requirements for Mid-Sized Incumbent LECs

    5. Incumbent LECs whose annual operating revenues exceed an indexed 
revenue threshold are required to file ARMIS reports (See Reform of 
Filing Requirements and Carrier Classifications; Anchorage Telephone 
Utility, Petition for Withdrawal of Cost Allocation Manual, Report and 
Order, (FR cite 62 FR 39776 (July 24,1997) 12 FCC Rcd 8071)). The 
indexed revenue threshold, which has recently been increased to $112 
million, is based on annual operating revenues for both regulated and 
nonregulated activities and is adjusted for inflation. (See 47 CFR 
32.9000). Based on our experience with administering the ARMIS 
reporting system, it appears that the carriers' costs of implementing 
that system are largely fixed with respect to the number of access 
lines served. This implies that, on a per-access-line basis, the cost 
of complying with the full ARMIS reporting requirements is 
substantially higher for mid-size incumbent LECs than for large 
incumbent LECs, because the large incumbent LECs are able to average 
their fixed reporting costs over a larger number of access lines. 
Reducing the reporting requirements on mid-sized carriers would 
eliminate a costly reporting burden on those carriers that must recover 
the cost from a smaller number of customers.
    6. We propose to streamline the ARMIS reporting requirements for 
certain mid-sized incumbent LECs based on the aggregate revenues of the 
incumbent LEC and any LEC that it controls, is controlled by, or with 
which it is under common control (See 47 CFR 32.9000). If the aggregate 
revenues of these affiliated incumbent LECs are less than $7 billion, 
then each LEC within that group would be eligible for the streamlined 
reporting requirements described below. Incumbent LECs with individual 
annual operating revenues below the indexed revenue threshold would 
continue to be exempt from all ARMIS reporting requirements. The $7 
billion threshold will still provide the Commission with data for 
nearly 90% of the industry for local exchange telecommunications, as 
measured by annual operating revenues. We seek comment on our proposal 
to streamline the reporting requirements for mid-sized LECs and on 
utility of this threshold mechanism. In addition to the reporting 
requirements detailed below, we seek comment on other suggestions for 
reducing the reporting burden on mid-sized incumbent LECs while still 
collecting the information needed to perform our oversight functions 
and protect ratepayers from the effects of improper cost allocations.
    7. The ARMIS 43-02 USOA Report provides the annual operating 
results of carriers' activities for every account in the Uniform System 
of Accounts (``USOA''), which we use to review the operations of 
communications common carriers subject to our jurisdiction. The USOA 
encompasses both balance sheet and income statement accounts that we 
use to review overall investment and expense levels, affiliate 
transactions, property valuation, and depreciation rates. The ARMIS 43-
02 USOA Report collects accounting and financial data in 27 tables. We 
tentatively conclude that we should reduce the filing burden of 
eligible reporting carriers by eliminating the requirement to file 21 
tables in the ARMIS 43-02 USOA Report. Our experience administering the 
ARMIS reporting system and our accounting rules suggests that routine 
reporting of the balance sheet information contained in tables B-3 and 
B-5 through B-15 may not be crucial for eligible reporting carriers to 
report on a regular basis. Because we will continue to have access to 
the underlying data and source documents, we tentatively conclude that 
eliminating these reporting requirements will not impair our ability to 
perform necessary oversight functions.
    8. This tentative conclusion, if adopted, would result in eligible 
reporting carriers filing only six tables in the USOA Report: (1) Table 
B-1, ``Balance Sheet Accounts;'' (2) Table B-2, ``Statement of Cash 
Flows;'' (3) Table B-4, ``Analysis of Assets Purchased from or Sold to 
an Affiliate;'' (4) Table C-3, ``Board of Directors and General 
Officers;'' (5) Table I-1, ``Income Statement Accounts;'' and (6) Table 
I-2, ``Analysis of Services Provided from or Sold to an Affiliate.'' 
Together, these tables provide the information, such as the complete 
financial statements, needed to perform our audit and other oversight 
functions. In addition, we tentatively conclude that we should allow 
eligible reporting carriers to file the Class B level of detail for 
applicable schedules. (See 47 CFR 32.11) This proposed modification 
would not relieve eligible reporting carriers of their responsibility 
to maintain their books of accounts in accordance with part 32 of the 
Commission's rules, but would reduce the filing burden imposed on

[[Page 44223]]

eligible reporting carriers that file ARMIS reports. We seek comment on 
this tentative conclusion.
    9. We note that our pole attachment formulas are based on the Class 
A level of accounting detail. If the Commission adopts Class B accounts 
for mid-sized LECs as proposed herein, the ARMIS reports of the mid-
sized LECs would no longer provide the details needed to calculate pole 
attachment fees using the pole attachment formulas. The details 
provided in eight Class A accounts are needed to provide data for the 
pole attachment formulas: six accounts associated with cable and wire 
facilities investment and expenses, and two accounts associated with 
network operations expenses. We seek comment on whether mid-sized LECs 
should be required to maintain subsidiary record categories to provide 
the data now provided in the eight Class A accounts and to report in 
ARMIS the information in the noted accounts as well as other 
information required by the pole attachment formulas.
    10. The ARMIS 43-03 Joint Cost Report details the regulated and 
nonregulated cost and revenue allocations by study area in accordance 
with the Commission's rules (See 47 CFR 64.901-904). In order to be 
consistent with the modifications to the USOA Report, we tentatively 
conclude that we should allow eligible reporting carriers to file only 
the Class B level of detail. This proposal, if adopted, would eliminate 
roughly two-thirds of the entries for eligible reporting carriers. We 
seek comment on this proposal.
    11. The ARMIS 495A Forecast Report and the ARMIS 495B Actual Usage 
Report provide the information needed to monitor our requirement that 
incumbent LECs allocate the costs of certain telephone plant investment 
used for both regulated and nonregulated activities on the basis of 
forecasted regulated and nonregulated usage. Carriers file these 
reports at the same time as their annual access tariff filing. The 
ARMIS 495A Forecast Report displays forecasts of expected regulated and 
nonregulated investment usage at the study area level. The ARMIS 495B 
Actual Usage Report displays the actual usage of regulated and 
nonregulated investment at the study area level. We tentatively 
conclude to allow eligible reporting carriers to report the data in the 
ARMIS 495A Forecast Report and the ARMIS 495B Actual Usage Report at 
the Class B level of detail. This tentative conclusion, if adopted, 
will provide flexibility for eligible reporting carriers to aggregate 
types of equipment and to forecast the regulated and nonregulated usage 
of such equipment. We seek comment on this tentative conclusion.

D. ARMIS Reporting Requirements for Large Incumbent LECs

    12. For the largest incumbent LECs, we tentatively conclude that we 
should maintain the Class A level of detail for their ARMIS reporting 
requirements. The more detailed reporting requirements are necessary 
for the Commission to uphold our statutory obligations to prevent 
cross-subsidization and discrimination under sections 254(k), 260, 271, 
272, 273, 274, 275, and 276 of the Act. See 47 USC 254(k), 260, 271-
276. The Class A level of detail specified in the part 32 accounting 
rules allows us to identify potential cost misallocations beyond those 
revealed by the Class B system of accounts. In addition, the Class A 
level of detail is critical for monitoring large incumbent LECs because 
such carriers typically conduct a higher volume of transactions 
involving competitive services. We need sufficient detail to adequately 
perform audit and verification functions of the largest incumbent LECs 
that represent nearly 90% of the local exchange industry as measured by 
annual revenues. Moreover, the Class A level of detail is required to 
monitor the large incumbent LECs as competition begins to develop in 
local telephony markets. Therefore, we tentatively conclude that any 
further reduction in reporting requirements for ARMIS financial, cost 
allocation, and access charge data would impair our ability to guard 
against improper cost allocations, to assess the impact of our policies 
on incumbent LECs, and to monitor the development of competition in the 
telecommunications marketplace. We have long recognized that, for 
managerial decision-making and other purposes, incumbent LECs maintain 
their financial records in significantly more detail than that required 
for Class A carriers in our part 32 rules. Because incumbent LECs 
disaggregate their financial records into much greater detail than our 
Class A requirements, we tentatively conclude that the burden on the 
largest incumbent LECs resulting from Class A accounting and reporting 
requirements does not outweigh our needs for collecting financial 
information. We seek comment on these tentative conclusions to maintain 
the Class A accounting requirements for the largest incumbent LECs, 
and, alternatively, on whether there are certain ARMIS reporting 
requirements we could eliminate or streamline for the largest LECs.

Procedural Matters

    13. Ex Parte Presentations. This is a permit-but-disclose 
proceeding. Ex parte presentations are permitted, except during the 
Sunshine Agenda period, provided that they are disclosed as provided in 
the Commission's rules (See 47 U.S.C. 1.102, 1.203 and 1.206).
    14. Initial Regulatory Flexibility Analysis. The Regulatory 
Flexibility Act (``RFA'') (See 5 U.S.C. 601) requires that an initial 
regulatory flexibility analysis be prepared for notice-and-comment 
rulemaking proceedings, unless the agency certifies that ``the rule 
will not, if promulgated, have a significant economic impact on a 
substantial number of small entities.'' (See 5 U.S.C. 605(b)). The RFA 
generally defines ``small entity'' as having the same meaning as the 
terms ``small business,'' ``small organization,'' and ``small 
governmental jurisdiction'' ( See U.S.C. 601(b)). In addition, the term 
``small business'' has the same meaning as the term ``small business 
concern'' under the Small Business Act. A small business concern is one 
which: (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'') (See 15 
U.S.C. 632).
    15. This NPRM proposes to eliminate the requirement to file paper 
versions of ARMIS reports, to reduce the specific reporting 
requirements on all incumbent LECs that file ARMIS reports, and to 
further reduce the reporting requirements for certain mid-sized 
incumbent LECs. Neither the Commission nor SBA has developed a 
definition of ``small entity'' specifically applicable to LECs. The 
closest definition under SBA rules is that for establishments providing 
``Telephone Communications, Except Radiotelephone,'' which is Standard 
Industrial Classification (SIC) code 4813. Under this definition, a 
small entity is one employing no more than 1,500 persons.
    16. We certify that the proposals in this NPRM, if adopted, will 
not have a significant economic impact on a substantial number of small 
entities. Pursuant to long-standing rules, incumbent LECs with annual 
operating revenues exceeding the indexed revenue threshold must report 
financial and operating data to the Commission. This NPRM proposes to 
reduce certain of these reporting requirements and eliminate the 
subject paper filing requirement. These changes should be easy and 
inexpensive for incumbent LECs to implement and will not require

[[Page 44224]]

costly or burdensome procedures. We therefore expect that the potential 
impact of the proposal rules, if such are adopted, is beneficial and 
does not amount to a possible significant economic impact on affected 
entities. If commenters believe that the proposals discussed in the 
NPRM require additional RFA analysis, they should include a discussion 
of these issues in their comments.
    17. The Commission's Office of Public Affairs, Reference Operations 
Division, will send a copy of this NPRM, including this initial 
certification, to the Chief Counsel for Advocacy of the Small Business 
Administration. (See 5 USC 605(b)).

Comment Filing Procedures

    18. Interested parties may file comments no later than August 20, 
1998 and reply comments may be filed no later than September 4, 1998. 
All pleadings should reference CC Docket No. 98-117. A copy of each 
pleading should be sent to Anthony Dale, Accounting Safeguards 
Division, Common Carrier Bureau, FCC, 2000 L Street, Suite 201, 
Washington, DC 20554, and another copy should be sent to International 
Transcription Services (ITS), the Commission's duplicating contractor, 
at its office at 1231 20th Street, NW, Washington, D.C. 20036, (202) 
857-3800. All pleadings will be made available for public inspection 
and copying in the Accounting Safeguards Division public reference 
room, 2000 L Street, NW, Suite 812, Washington, DC 20554.
    19. Comments and replies must also comply with Sec. 1.49 and all 
other applicable sections of the Commission's rules. We also direct all 
interested parties to include the name of the filing party and the date 
of the filing on each page of their comments and replies. In addition, 
one copy of each pleading must be filed with International 
Transcription Services (ITS), the Commission's duplicating contractor, 
at its office at 1231 20th Street, NW, Washington, DC 20037, (202) 857-
3800. All pleadings are available for public inspection and copying in 
the Accounting and Audits public reference room.

List of Subject in 47 CFR Part 43

    Communications common carriers, Radio, Reporting and recordkeeping 
requirements, Telegraph and Telephone.

Federal Communications Commission.
Magalie Roman Salas,
Secretary.
[FR Doc. 98-22162 Filed 8-17-98; 8:45 am]
BILLING CODE 6712-01-P