[Federal Register Volume 64, Number 64 (Monday, April 5, 1999)]
[Proposed Rules]
[Pages 16389-16396]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-7788]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 69
[CC Docket No. 97-181; FCC 99-28]
Defining Primary Lines
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
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SUMMARY: The Federal Communications Commission has adopted a location-
based definition of ``primary residential line.'' Under this
definition, one residential line that a price cap local exchange
carrier (LEC) provides to a particular location will be considered
primary. Any other residential lines the price cap LEC provides to the
same location shall be deemed non-primary residential lines. This
definition will facilitate implementation of the Commission's access
charge rules, which set higher caps for the subscriber line charges
(SLCs) and presubscribed interexchange carrier charges (PICCs) that
price cap LECs may assess on non-primary residential lines and multi-
line business lines than on primary residential lines and single line
business lines. The Commission issues a Further Notice of Proposed
Rulemaking in which we tentatively conclude that individuals with
speech or hearing disabilities should have access at primary-line rates
to one residential line per location for use with a TTY, regardless of
whether another line at the location is also treated as primary for
residents without such disabilities. We seek comment on this tentative
conclusion, and several proposals for implementing it.
DATES: Comments are due on or before April 9, 1999, and reply comments
are due on or before April 26, 1999.
ADDRESSES: The entire file is available for inspection and copying
weekdays from 9:00 a.m. to 4:30 p.m. in the Commission's Reference
Center, 445 Twelfth Street SW, Washington, DC 20554. Copies may be
purchased from the Commission's duplicating contractor, ITS Inc., 1231
Twentieth St., NW, Washington, DC 20036, (202) 857-3800.
FOR FURTHER INFORMATION CONTACT: Neil Fried, Common Carrier Bureau,
(202) 418-1520; TTY: (202) 418-0484.
SUPPLEMENTARY INFORMATION:
A. Background
1. To provide interstate telecommunications services, interexchange
carriers (IXCs) usually rely on some of the telephone infrastructure
that incumbent LECs use to provide local telephone service. The
incumbent LEC's local loop, for example, connects a customer to the LEC
network so that the customer can make and receive intrastate calls. The
incumbent LEC's local loop also connects the customer to the networks
of IXCs so that the customer can make and receive interstate calls.
Consequently, a portion of the costs an incumbent LEC incurs in
providing this common infrastructure is allocated to intrastate service
and recovered pursuant to state regulation, and a portion is allocated
to interstate service and recovered pursuant to regulations of the
Federal Communications Commission.
2. The Commission adopted uniform access charge rules in 1983 to
govern the way incumbent LECs recover that portion of the costs of the
common infrastructure allocated to interstate service. Under these
rules, the Commission allows incumbent LECs to recover some of the
interstate costs of providing the local loop through a flat, monthly
end-user common line charge (EUCL)--sometimes called a SLC--that they
assess on end users. The Commission limited the amount of the SLC,
however, because of concerns that an excessively high SLC might cause
end users to disconnect their telephone service. The Commission allowed
the incumbent LECs to recover the remainder of their interstate costs
attributable to the local loop through a per-minute carrier common line
charge (CCLC) that they assess on IXCs.
3. Under principles of cost-causation, it is most economically
efficient for incumbent LECs to recover the costs of providing
interstate access in the same way that they incur them. Under such
principles, incumbent LECs should recover their traffic-sensitive costs
of interstate access through per-minute charges, and should recover
their non-traffic-sensitive costs through flat charges. The incumbent
LECs' costs of providing the local loop do not change with the number,
length, or type of telephone calls customers make, and so are non-
traffic sensitive. Because of the cap on SLCs, however, incumbent LECs
recover some of these non-traffic-sensitive loop costs through the
traffic sensitive CCLC. In its May 1997 Access Charge Reform Order, the
Commission decided to phase out the CCLC for price cap LECs on the
grounds that recovering the non-traffic-sensitive loop costs through
traffic-sensitive charges is economically inefficient.
4. To provide price cap LECs with a means to recover some of the
loop costs they previously recovered in the CCLC, the Commission raised
the price cap LECs' SLC caps for non-primary residential lines and
multi-line business lines, but chose not to raise the price cap LECs'
SLC caps for primary residential lines and single line business lines.
For 1999, the SLC cap for price cap LECs is $3.50 per month for each
primary residential and single line business line, $6.07 per month for
each non-primary residential line, and $9.20 per month for each multi-
line business line. To address concerns that charging a higher SLC for
non-primary residential lines sold by price cap LECs might encourage
subscribers to obtain their additional residential lines from
resellers, the Commission decided in
[[Page 16390]]
the Access Charge Reform Order to allow price cap LECs to charge the
higher SLC to carriers that resell price-cap LECs' lines if the lines
are non-primary.
5. Because the SLC caps on residential and single line business
lines would prevent most price cap LECs from recovering through the SLC
all the costs they formerly recovered through the CCLC, the Commission
also created the PICC: a flat, per-line charge that price cap LECs may
assess on an end user's presubscribed IXC. As with the SLC, the
Commission set higher PICC caps for non-primary residential lines and
multi-line business lines than for primary residential lines and single
line business lines. Through June 30, 1999, the PICC cap is $0.53 per
month for each primary residential and single line business line, $1.50
per month for each non-primary residential line, and $2.75 per month
for each multi-line business line. As a result of the various caps, the
lines of customers that subscribe to single residential or business
lines are not assessed the entire cost of the loops. Until the access
reform rate structure is fully phased in, these lines are subsidized by
customers that subscribe to multiple business lines. The Commission has
adopted a location-based definition of ``primary residential line.''
Under this definition, one residential line that a price cap local
exchange carrier (LEC) provides to a particular location will be
considered primary. Any other residential lines the price cap LEC
provides to the same location shall be deemed non-primary residential
lines.
B. Discussion
6. In establishing different SLCs and PICCs for primary and non-
primary residential lines, we cited the important universal service
goal of subsidizing rates for at least one line so that consumers have
access to the telephone network. It has come to our attention that when
one or more members of a residence have hearing or speech disabilities,
the members of the residence often subscribe to one line dedicated for
a traditional telephone and one line for a text telephone (TTY), which
uses graphic communication in the transmission of coded signals through
a wire or radio communication system. See 47 CFR 64.601(8). The
residents can use the TTY to communicate directly with other TTYs, or
can use the TTY in conjunction with Telecommunications Relay Services
(TRS) and ``two-line'' voice or hearing carryover.
7. Telecommunications Relay Services (TRS) are telephone
transmission services that enable an individual who has a hearing or
speech disability to communicate by wire or radio with a hearing
individual in a manner that is functionally equivalent to the way an
individual who does not have a hearing or speech disability
communicates using voice telephone services by wire or radio. See 47
CFR 64.601(7). Voice carryover (VCO) is a form of TRS that allows users
with hearing disabilities to speak directly to a hearing person, while
the TRS communication assistant (CA) types what is said to the TTY
user. Hearing carryover (HCO) is a form of TRS that allows persons with
speech disabilities to listen to the person they are calling, while
typing their statements for the CA to read aloud to the voice telephone
user. See 47 CFR 64.601(6), (9). ``Two line'' VCO and HCO are versions
of these services that use two telephone lines and conference calling
functions to increase the transparency of the CA and improve the
functional equivalency of these services. Thus, in residences where one
family member has a hearing or speech disability, two lines may be
necessary for all the residents to have access to telephone service.
8. We believe that it is important to ensure that consumers with
hearing or speech disabilities have access to the telephone network at
primary-line rates, but we lack a detailed record in the present
proceeding to determine how to address this issue. We tentatively
conclude that individuals with speech or hearing disabilities served by
price cap LEC lines should have access to the telecommunications
network at primary line rates. Moreover, if we extend the non-primary
line rate structure to rate-of-return LECs, we tentatively conclude
that individuals with hearing or speech disabilities served by rate-of-
return LEC lines should receive similar treatment. We seek comment on
these tentative conclusions. In addition, we seek comment on other
technologies or services that require an additional line to permit
consumers with disabilities to access the telephone network and on
whether those additional lines should also receive primary line rates.
We believe that our tentative conclusions above are consistent with the
Commission's mandate to ensure that all Americans have access to
telecommunications services, and with the policy goals underlying the
Commission's decision to cap primary residential SLCs and PICCs at
lower levels than are applicable to other lines.
9. One way to ensure that consumers with hearing or speech
disabilities have access to the telephone network at primary-line rates
would be to treat as primary one residential line per location that is
used by such individuals in conjunction with a TTY, regardless of
whether another line at the location is also treated as primary for
residents without such disabilities. We seek comment on such an
approach, and how it might be implemented.
10. Another approach would be to subsidize more explicitly the
difference in charges that would apply when the TTY-dedicated line is
deemed non-primary as opposed to primary. We seek comment on such an
approach, and how it might be implemented. In particular, we seek
comment on whether the subsidies for such an approach should come from
the TRS Fund or the more general Universal Service Fund. We also seek
comment on the implications of section 225(d)(1)(D), which ``require[s]
that users of telecommunications relay services pay rates no greater
than the rates paid for functionally equivalent voice communication
services with respect to such factors as the duration of the call, the
time of day, and the distance from point of origination to point of
termination.'' 47 U.S.C. 225(d)(1)(D).
11. In many cases, the only change necessary to make a telephone
line more easily accessible to an individual with a disability is to
add a piece of consumer premises equipment (CPE), such as a TTY.
Consequently, carriers may have no readily apparent means of
determining which lines are being used by individuals with
disabilities. We seek comment on whether carrier records indicate the
presence at a location of certain CPE such as TTYs. We also seek
comment on whether self-certification would be an appropriate means for
carriers to identify the relatively small universe of customers to
which either the definitional or funding approaches would apply, and if
so, how such self-certification could be implemented. We note that many
IXCs offer qualified TTY users the opportunity to self-certify to
receive toll discounts, in recognition of the longer calling times
associated with TTY use. For the sake of a clear record and so that all
parties understand the issues involved, we also ask commenters to
describe the developments in technology and services associated with
TTYs, TRS, and ``two-line'' voice or hearing carryover. Parties should
also address the extent to which any of these proposals would affect
small business entities, including new entrants.
[[Page 16391]]
C. Procedural Matters
1. Ex Parte
12. This matter shall be treated as a ``permit-but-disclose''
proceeding in accordance with the Commission's revised ex parte rules.
Parties making oral ex parte presentations are reminded that memoranda
summarizing the presentations must contain summaries of the substance
of the presentations and not merely a listing of the subjects
discussed. More than a one or two sentence description of the views and
arguments presented is generally required. See 47 CFR 1.1206(b)(2), as
revised. Other rules pertaining to oral and written presentations are
set forth in Section 1.1206(b), as well.
2. Initial Regulatory Flexibility Act Analysis
13. As required by the RFA, the Commission has prepared an Initial
Regulatory Flexibility Analysis (IRFA) of the possible significant
economic impact on small entities by the policies and rules proposed in
the Further Notice of Proposed Rulemaking (Further Notice). Written
public comments are requested on the IRFA. These comments must be filed
in accordance with the same filing deadlines for comments on the rest
of the Further Notice, but they must have a separate and distinct
heading, designating the comments as responses to the IRFA. The
Commission will send a copy of the Further Notice, including the IRFA,
to the Chief Counsel for Advocacy of the Small Business Administration.
In addition, the Further Notice and IRFA (or summaries thereof) will be
published in the Federal Register.
14. Need for and Objectives of the Proposed Rules: In the Access
Reform Order, the Commission set lower SLC and PICC caps for primary
residential lines and single line business lines than for non-primary
residential lines and multi-line business lines. The Report and Order
in this proceeding promulgates definitions of ``primary residential
line'' and ``single line business line'' to promote uniformity in the
way price cap LECs assess SLCs and PICCs. The Further Notice seeks
comment on how to apply the primary line distinction to TTY lines used
by individuals with speech or hearing disabilities.
15. Legal Basis: The proposed action is authorized by sections 1,
2, 4(i), 4(j), 201-205, 218-220, 225, and 254 of the Communications Act
as amended, 47 U.S.C. 151, 152, 154(i), 154(j), 201-205, 218-220, 225,
and 254.
16. Description and Estimate of the Number of Small Entities To
Which the Proposed Rules Will Apply: The RFA directs agencies to
provide, where feasible, a description of the type and number of small
entities that our proposed rules may affect. See 5 U.S.C. 603(b)(3).
The proposals set forth in the proceeding may have a significant
economic impact on a substantial number of small entities identified by
the SBA. Because one of the proposals is to use a funding mechanism,
such as the Universal Service Fund, we provide estimates of the number
of small entities potentially affected across many sectors of the
telecommunications industry. A definitional approach, on the other
hand, would affect only price cap LECs. Consequently, the rules we
eventually adopt may affect significantly fewer small entities than we
describe here.
17. The most reliable source of information regarding the total
numbers of certain common carrier and related providers nationwide, as
well as the numbers of commercial wireless entities, appears to be data
the Commission publishes annually in its Telecommunications Industry
Revenue report, regarding the Telecommunications Relay Service (TRS).
According to data in the most recent report, there are 3,459 interstate
carriers. We further describe and estimate the number of small entities
that may be affected by the proposed rules, if adopted. We ask parties
to comment on the number of small carriers that they believe will be
affected by rules regarding the primary-line treatment of TTY lines
used by individuals with speech or hearing disabilities. Wherever
possible, commenters should break their estimates into categories and
subcategories similar to those we discuss here.
18. Telephone Companies (SIC 4813). We shall continue to exclude
small incumbent LECs from the definitions of ``small entity'' and
``small business concern,'' but nonetheless consider the impact on
small incumbent LECs in our IRFA. Accordingly, our use of the terms
``small entities'' and ``small businesses'' does not encompass ``small
incumbent LECs.'' We use the term ``small incumbent LECs'' to refer to
any incumbent LECs that arguably might be defined by SBA as ``small
business concerns.''
19. Total Number of Telephone Companies Affected. The proposals
herein may have a significant effect on a substantial number of the
small entity telephone companies identified by SBA. The U.S. Bureau of
the Census reports that, at the end of 1992, there were 3,497 firms
engaged in providing telephone services 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. Although it seems certain that some of the
3,497 telephone service firms are not ``independently owned and
operated,'' are dominant in their field, or have more than 1,500
employees, we will assume for present purposes that they qualify as
small entities or small incumbent LECs. Thus, we estimate that the
rules we eventually adopt following the Further Notice will affect no
more than 3,497 small entity telephone companies and small incumbent
LECs.
20. 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 2,321 such telephone companies were in operation for at
least one year at the end of 1992. All but 26 of the 2,321 non-
radiotelephone companies listed by the Census Bureau were reported to
have fewer than 1,000 employees. Because we lack more specific data, we
will assume for present purposes that the 26 companies have fewer than
1,500 employees. Although it seems certain that some of the 2,321
carriers are not independently owned and operated, or are dominant in
their field, we are 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 the SBA's definition.
Consequently, we estimate that the rules we eventually adopt will
affect no more than 2,321 small entity wireline companies and small
incumbent LECs.
21. Local Exchange Carriers. Neither the Commission nor the SBA has
developed a definition of small LEC. The closest applicable definition
under SBA rules is for telephone communications companies other than
radiotelephone (wireless) companies. According to our most recent data,
1,371 carriers 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, are dominant in
their field, or have more than 1,500 employees, we are unable at this
time to estimate with greater precision the number of LECs that
[[Page 16392]]
would qualify as small business concerns under SBA's definition.
Consequently, we estimate that the rules we eventually adopt following
the Further Notice will affect no more than 1,371 small entity LECs and
small incumbent LECs.
22. Interexchange Carriers. Neither the Commission nor SBA has
developed a definition of small IXCs. The closest applicable definition
under SBA rules is for telephone communications companies other than
radiotelephone (wireless) companies. According to the most recent
Telecommunications Industry Revenue data, 143 carriers reported that
they were engaged in the provision of interexchange services. Although
it seems certain that some of these carriers are not independently
owned and operated, or have more than 1,500 employees, we are unable at
this time to estimate with greater precision the number of IXCs that
would qualify as small business concerns under SBA's definition.
Consequently, we estimate that the rules we eventually adopt following
the Further Notice will affect no more than 143 small entity IXCs.
23. Competitive Access Providers. Neither the Commission nor the
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. According to the most recent Telecommunications Industry
Revenue data, 109 carriers 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, we are 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, we
estimate that the rules we eventually adopt following the Further
Notice will affect no more than 109 small entity CAPs.
24. Operator Service Providers. Neither the Commission nor the SBA
has developed a definition of small entities specifically applicable to
providers of operator services. The closest applicable definition under
SBA rules is for telephone communications companies other than
radiotelephone (wireless) companies. According to the most recent
Telecommunications Industry Revenue data, 27 carriers reported that
they were engaged in the provision of operator services. Although some
of these companies may not be independently owned and operated, or may
have more than 1,500 employees, we are unable at this time to estimate
with greater precision the number of operator service providers that
would qualify as small business concerns under SBA's definition.
Consequently, we estimate that the rules we eventually adopt following
the Further Notice will affect no more than 27 small entity operator
service providers.
25. Pay Telephone Operators. Neither the Commission nor the SBA has
developed a definition of small entities specifically applicable to pay
telephone operators. The closest applicable definition under SBA rules
is for telephone communications companies other than radiotelephone
(wireless) companies. According to the most recent Telecommunications
Industry Revenue data, 441 carriers reported that they were engaged in
the provision of pay telephone services. We do not have data specifying
the number of these carriers that are not independently owned and
operated or have more than 1,500 employees, and thus are unable at this
time to estimate with greater precision the number of pay telephone
operators that would qualify as small business concerns under the SBA's
definition. Consequently, we estimate that there are fewer than 441
small entity pay telephone operators that may be affected by the
proposed rules, if adopted.
26. Resellers (including debit card providers). Neither the
Commission nor the SBA has developed a definition of small entities
specifically applicable to resellers. The closest applicable SBA
definition for a reseller is a telephone communications company other
than radiotelephone (wireless) companies. According to the most recent
Telecommunications Industry Revenue data, 339 reported that they were
engaged in the resale of telephone service. We do not have data
specifying the number of these carriers that are not independently
owned and operated or have more than 1,500 employees, and thus are
unable at this time to estimate with greater precision the number of
resellers that would qualify as small business concerns under the SBA's
definition. Consequently, we estimate that there are fewer than 339
small entity resellers that may be affected by the proposed rules, if
adopted.
27. Radiotelephone (Wireless) Carriers. The Census Bureau reports
that there were 1,178 companies in operation for at least one year at
the end of 1992 that meet the SBA's definition of radiotelephone
company. The Census Bureau also reported that all but 12 of those
radiotelephone companies had fewer than 1,000 employees. Because we
lack more specific data, we will assume for present purposes that the
remaining 12 companies have fewer than 1,500 employees. Although it
seems certain that some of the wireless carriers are not independently
owned and operated, we are 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, we estimate that the rules we eventually adopt following
the Further Notice will affect no more than 1,178 small entity
radiotelephone companies.
28. Cellular Licensees. Neither the Commission nor the SBA has
developed a definition of small entities applicable to cellular
licensees. Therefore, the applicable definition of small entity is the
definition under the SBA rules applicable to radiotelephone (wireless)
companies, as discussed. We note that there are 1,758 cellular
licenses, although a cellular licensee may own several licenses.
According to the most recent Telecommunications Industry Revenue data,
804 carriers reported that they were engaged in the provision of either
cellular service or Personal Communications Service (PCS) services,
which are placed together in the data. We do not have data specifying
the number of these carriers that are not independently owned and
operated or have more than 1,500 employees, and thus are unable at this
time to estimate with greater precision the number of cellular service
carriers that would qualify as small business concerns under the SBA's
definition. Consequently, we estimate that there are fewer than 804
small cellular service carriers that may be affected by the proposed
rules, if adopted.
29. Mobile Service Carriers. Neither the Commission nor the SBA has
developed a definition of small entities applicable to mobile service
carriers. Therefore, the applicable definition of small entity is the
definition under the SBA rules applicable to radiotelephone (wireless)
companies. The most recent Telecommunications Industry Revenue data
shows that 172 carriers reported that they were engaged in the
provision of either paging or ``other mobile'' services. Consequently,
we estimate that there are fewer than 172 small mobile service carriers
that may be affected by the proposed rules, if adopted.
30. Paging Services. The Commission has adopted a two-tier
definition of small businesses in the context of auctioning licenses in
the paging
[[Page 16393]]
service. A small business is defined as either (1) a entity that,
together with its affiliates and controlling principals, has average
gross revenues for the three preceding years of not more than $3
million; or (2) an entity that, together with affiliates and
controlling principals, has average gross revenues for the three
preceding calendar years of not more than $15 million. The SBA has
approved this definition for paging companies. The Commission estimates
that the total current number of paging carriers is approximately 600.
In addition, the Commission anticipates that a total of 16,630 non-
nationwide geographic area licenses will be granted or auctioned. The
geographic area licenses will consist of 2,550 Major Trading Area (MTA)
licenses and 14,080 Economic Area (EA) licenses. In addition to the 47
Rand McNally MTAs, the Commission is licensing Alaska as a separate MTA
and adding three MTAs for the U.S. territories, for a total of 51 MTAs.
No auctions of paging licenses have been held yet, and there is no
basis to determine the number of licenses that will be awarded to small
entities. Given the fact that no reliable estimate of the number of
paging licensees can be made, we assume, for purposes of the IRFA, that
all of the current licensees and the 16,630 geographic area paging
licensees either are or will consist of small entities, as that term is
defined by the SBA.
31. 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, the Commission added a classification for ``very small
business,'' which the Commission defined as an entity that, together
with its affiliates, has average gross revenues of not more than $15
million for the preceding three calendar years. The SBA has approved
these regulations defining ``small entity'' in the context of broadband
PCS auctions. We do not have sufficient data to determine how many
small entities under the SBA-approved definition bid successfully for
licenses in Blocks A and B. As of now there are 90 non-defaulting
winning bidders that qualified as small entities in the Block C
auctions. A total of 93 small and very small business bidders qualify
as small entities for Blocks D, E, and F. Based on this information, we
conclude that the rules we eventually adopt following the Further
Notice will affect no more than 183 non-defaulting winning bidders that
qualify as small entities in the C, D, E, and F Block broadband PCS
auctions.
32. Narrowband PCS. The Commission has auctioned nationwide and
regional licenses for narrowband PCS. There are 11 nationwide and 30
regional licensees for narrowband PCS. The Commission does not have
sufficient information to determine whether any of these licensees are
small businesses within the SBA-approved definition for radiotelephone
companies. At present, there have been no auctions held for the major
trading area (MTA) and basic trading area (BTA) narrowband PCS
licenses. The Commission anticipates a total of 561 MTA licenses and
2,958 BTA licenses will be awarded by auction. Such auctions have not
yet been scheduled, however. Given that nearly all radiotelephone
companies have no more than 1,500 employees and that no reliable
estimate of the number of prospective MTA and BTA narrowband licensees
can be made, we assume, for purposes of the IRFA, that all of the
licenses will be awarded to small entities, as that term is defined by
the SBA.
33. Rural Radiotelephone Service. The Commission has not adopted a
definition of small entity specific to the Rural Radiotelephone
Service. A significant subset of the Rural Radiotelephone Service is
the Basic Exchange Telephone Radio Systems (BETRS). We will use the
SBA's definition applicable to radiotelephone companies. There are
approximately 1,000 licensees in the Rural Radiotelephone Service, and
we estimate that almost all of them qualify as small entities under the
SBA's definition.
34. Specialized Mobile Radio. Pursuant to Section 90.814(b)(1) of
the Commission's Rules, the Commission has defined ``small entity'' for
geographic area 800 MHz and 900 MHz SMR licenses as firms that had
average gross revenues of no more than $15 million in the three
previous calendar years. This regulation defining ``small entity'' in
the context of 800 MHz and 900 MHz SMR has been approved by the SBA. We
do not know how many firms provide 800 MHz or 900 MHz geographic area
SMR service, nor how many of these providers have annual revenues of no
more than $15 million. The Commission recently held auctions for
geographic area licenses in the 900 MHz SMR band. There were 60 winning
bidders who qualified as small entities under the Commission's
definition in the 900 MHz auction. Based on this information, we
conclude that the rules we eventually adopt following the Further
Notice will affect no more than 60 small entity geographic area SMR
licensees. A total of 525 licenses were auctioned for the upper 200
channels in the 800 MHz geographic area SMR auction. There were 62
qualifying bidders, of which 52 were small businesses. 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 to estimate, moreover, how many small entities within the SBA's
definition will win these lower channel licenses. We assume that, for
purposes of our evaluations in the IRFA, all of the current specialized
mobile radio licensees are small entities, as the SBA defines that
term.
35. 220 MHz Service. The 220 MHz service has both Phase I and Phase
II licenses. Phase I licensing was conducted by lotteries in 1992 and
1993. There are approximately 1,515 such non-nationwide licensees and
four nationwide licensees currently authorized to operate in the 220
MHz band. The Commission has not developed a definition of small
entities specifically applicable to such incumbent 220 MHz Phase I
licensees. To estimate the number of such licensees that are small
businesses, we apply the definition under the SBA rules applicable to
Radiotelephone Communications companies. According to the Bureau of the
Census, only 12 radiotelephone firms out of a total of 1,178 such firms
that operated during 1992 had 1,000 or more employees. Therefore, if
this general ratio continues to 1999 in the context of Phase I 220 MHz
licensees, we estimate that nearly all such licensees are small
businesses under the SBA's definition.
36. The Phase II 220 MHz service is a new service, and is subject
to spectrum auctions. In the 220 MHz Third Report and Order we adopted
criteria for defining small businesses and very small businesses for
purposes of determining their eligibility for special provisions such
as bidding credits and installment payments. We have defined a small
business as an entity that, together with its affiliates and
controlling principals, has average gross revenues not exceeding $15
million for the preceding three years. Additionally, a very small
business is defined as an entity that, together with its affiliates and
controlling principals, has average gross revenues that are not more
than $3 million for the preceding
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three years. The SBA has approved these definitions. An auction of
Phase II licenses commenced on September 15, 1998, and closed on
October 22, 1998. 908 licenses were auctioned in 3 different-sized
geographic areas: three nationwide licenses, 30 Regional Economic Area
Group Licenses, and 875 Economic Area (EA) Licenses. Of the 908
licenses auctioned, 693 were sold. Companies claiming small business
status won: one of the Nationwide licenses, 67% of the Regional
licenses, and 54% of the EA licenses. As of January 22, 1999, the
Commission announced that it was prepared to grant 654 of the Phase II
licenses won at auction. A re-auction of the remaining, unsold licenses
is likely to take place during calendar year 1999.
37. Mobile Satellite Services (MSS). The Commission has not
developed a definition of small entities applicable to licensees in the
international services. Therefore, the applicable definition of small
entity is the definition under the SBA rules applicable to
Communications Services, Not Elsewhere Classified (NEC). This
definition provides that a small entity is one with $11.0 million or
less in annual receipts. According to the Census Bureau, there were a
total of 848 communications services, NEC, in operation in 1992, and a
total of 775 had annual receipts of less than $9.999 million. Mobile
Satellite Services or Mobile Satellite Earth Stations are intended to
be used while in motion or during halts at unspecified points. These
stations operate as part of a network that includes a fixed hub or
stations. The stations that are capable of transmitting while a
platform is moving are included under section 20.7(c) of the
Commission's rules as mobile services within the meaning of sections
3(27) and 332 of the Communications Act. Those MSS services are treated
as CMRS if they connect to the Public Switched Network (PSN) and also
satisfy other criteria of Section 332. Facilities provided through a
transportable platform that cannot move when the communications service
is offered are excluded from Section 20.7(c). The MSS networks may
provide a variety of land, maritime and aeronautical voice and data
services. There are eight mobile satellite licensees. At this time, we
are unable to make a precise estimate of the number of small businesses
that are mobile satellite earth station licensees.
38. Air-Ground Radiotelephone Service. The Commission has not
adopted a definition of small business specific to the Air-Ground
Radiotelephone Service, which is defined in section 22.99 of the
Commission's rules. Accordingly, we will use the SBA's definition
applicable to radiotelephone companies. There are approximately 100
licensees in the Air-Ground Radiotelephone Service, and we estimate
that almost all of them qualify as small under the SBA definition.
39. Fixed Microwave Services. Microwave services include common
carrier, private-operational fixed, and broadcast auxiliary radio
services. At present, there are approximately 22,015 common carrier
fixed licensees and 61,670 private operational-fixed licensees and
broadcast auxiliary radio licensees in the microwave services. The
Commission has not yet defined a small business with respect to
microwave services. For purposes of the IRFA, we will use the SBA's
definition applicable to radiotelephone companies. We estimate, for
this purpose, that all of the Fixed Microwave licensees (excluding
broadcast auxiliary licensees) would qualify as small entities under
the SBA definition for radiotelephone companies, and may be affected by
the rules we eventually adopt to the extent that they contribute to the
Universal Service or TRS funds.
40. Wireless Communications Services. This service can be used for
fixed, mobile, radiolocation and digital audio broadcasting satellite
uses. The Commission defined ``small business'' for the wireless
communications services (WCS) auction as an entity with average gross
revenues of $40 million for each of the three preceding years, and a
``very small business'' as an entity with average gross revenues of $15
million for each of the three preceding years. The Commission auctioned
geographic area licenses in the WCS service. In the auction, there were
seven winning bidders that qualified as very small business entities,
and one that qualified as a small business entity. We conclude that the
number of geographic area WCS licensees affected includes these eight
entities.
41. Cable System Operators (SIC 4841). The SBA has developed a
definition of small entities for cable and other pay television
services that 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 1,758 total cable and other pay television
services and 1,423 had less than $11 million in revenue. We note that
cable system operators are included in our analysis due to their
ability to provide telephony.
42. The Commission has developed with the SBA's approval our 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. Based on our
most recent information, we estimate 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, we estimate that there are fewer than 1,439 small entity
cable system operators that may be affected by the decisions and rules
adopted in the Order. We conclude that only a small percentage of these
entities currently provide qualifying ``telecommunications services''
required by the Act and, therefore, estimate that the number of such
entities affected are significantly fewer than noted.
43. The Act also contains a definition of 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.'' The Commission has determined that there are 61,700,000
subscribers in the United States. Therefore, we found that an operator
serving fewer than 617,000 subscribers shall be deemed a small
operator, if its annual revenues, when combined with the total annual
revenues of all of its affiliates, do not exceed $250 million in the
aggregate. Based on available data, we find that the number of cable
operators serving 617,000 subscribers or fewer total 1,450. We do not
request nor do we collect information concerning whether cable system
operators are affiliated with entities whose gross annual revenues
exceed $250,000,000, and thus are 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 Act.
44. Direct Broadcast Satellites (DBS). Because DBS provides
subscription services, DBS falls within the SBA definition of Cable and
Other Pay Television Services (SIC 4841). As of
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December 1996, there were eight DBS licensees. The Commission, however,
does not collect annual revenue data for DBS and, therefore, is unable
to ascertain the number of small DBS licensees that could be impacted
by these rules. Although DBS service requires a great investment of
capital for operation, we acknowledge that there are several new
entrants in this field that may not yet have generated $11 million in
annual receipts, and therefore may be categorized as a small business,
if independently owned and operated.
45. International Services. The Commission has not developed a
definition of small entities applicable to licensees in the
international services. Therefore, the applicable definition of small
entity is the definition under the SBA rules applicable to
Communications Services, Not Elsewhere Classified (NEC). This
definition provides that a small entity is expressed as one with $11
million or less in annual receipts. According to the Census Bureau,
there were a total of 848 communications services, NEC in operation in
1992, and a total of 775 had annual receipts of less than $9,999
million. We note that those entities providing only international
service will not be affected by our rules. We do not, however, have
sufficient data to estimate with greater detail those providing both
international and interstate services. Consequently, we estimate that
there are fewer than 775 small international service entities
potentially impacted by our rules.
46. International Broadcast Stations. Commission records show that
there are 20 international broadcast station licensees. We do not
request or collect annual revenue information, and thus are unable to
estimate the number of international broadcast licensees that would
constitute a small business under the SBA definition. We note that
those entities providing only international service will not be
affected by our rules. We do not, however, have sufficient data to
estimate with greater detail those providing both international and
interstate services. Consequently, we estimate that there are fewer
than 20 international broadcast stations potentially impacted by our
rules.
47. Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements: Once we adopt rules regarding the primary-line
treatment of TTY lines used by individuals with speech or hearing
disabilities, carriers will need to identify such individuals. To do
so, carriers may be able to rely on existing mechanisms, such as the
toll discount program. If carriers are unable to use existing
mechanisms, they may need to implement a self-certification mechanism.
If the Commission adopts a funding approach, carriers may also need to
report revenues for the administration of the funding mechanism.
Carriers may, however, already be providing some of the necessary
information in conjunction with existing funding mechanisms, such as
the one currently in place for TRS. Under the funding approach,
carriers may also need to provide data on the revenues attributable to
TTY lines used by speech or hearing-impaired individuals as primary
lines and as non-primary lines. We ask parties to comment on the
reporting, recordkeeping, and other compliance requirements they
believe will be necessary to implement rules regarding the primary-line
treatment of TTY lines used by individuals with speech or hearing
disabilities.
48. Steps Taken to Minimize Significant Economic Impact on Small
Entities, and Significant Alternatives Considered: We have outlined and
sought comment on what we believe are the significant possible
alternatives for implementing a primary-line definition with respect to
TTY lines used by speech-or hearing-disabled individuals. We note that
small entities will be largely unaffected by the rules we promulgate
following the Further Notice because the distinction between primary
and non-primary lines applies only to price cap LECs. Depending on the
funding mechanism--if any--chosen, however, some small entities may
have contribution requirements. We seek comment on any significant
alternative compliance or reporting requirements or timetables that
take into account the resources available to small entities and
accomplish our stated objectives.
49. Federal Rules that May Overlap, Duplicate, or Conflict with the
Proposed Rules. Because this is the first occasion in which the
Commission has attempted to define primary lines, we do not believe
that the proposals in the Further Notice overlap with or duplicate any
existing federal rules. We ask parties to comment on any federal rules
that they believe may overlap with, duplicate, or conflict with the
approaches we discuss in the Further Notice.
3. Initial Paperwork Reduction Act Analysis
50. Certain proposals contained in the Further Notice may require
an information collection. As part of our continuing effort to reduce
paperwork burdens, and as required by the Paperwork Reduction Act of
1995, Public Law No. 104-13, we invite the general public and the OMB
to take this opportunity to comment on those information collections.
Public and agency comments are due at the same time as other comments
on the Further Notice; OMB comments are due 60 days from date of
publication of the Further Notice in the Federal Register. Comments
should address: (a) whether the proposed information collections are
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.
4. Notice and Comment Procedures
51. Pursuant to sections 1.415 and 1.419 of the Commission's Rules,
47 CFR 1.415, 1.419, interested parties may file comments on or before
April 9, 1999, and reply comments on or before April 26, 1999. Comments
may be filed using the Commission's Electronic Comment Filing System
(ECFS) or by filing paper copies.
52. Comments filed through the ECFS can be sent as an electronic
file via the Internet to <http://www.fcc.gov/e-file/ecfs.html>.
Generally, only one copy of an electronic submission must be filed. If
multiple docket or rulemaking numbers appear in the caption of this
proceeding, however, commenters must transmit one electronic copy of
the comments to each docket or rulemaking number referenced in the
caption. In completing the transmittal screen, commenters should
include their full name, Postal Service mailing address, and the
applicable docket or rulemaking number. Parties may also submit an
electronic comment by Internet e-mail. To get filing instructions for
e-mail comments, commenters should send an e-mail message to
[email protected], and should include the following words in the body of the
message, ``get form .'' A sample form and
directions will be sent in reply.
53. Parties who choose to file by paper must file an original and
four copies of each filing. All filings must be sent to the
Commission's Secretary, Magalie Roman Salas, Office of the Secretary,
Federal Communications Commission, 445 Twelfth Street SW, Room TW-A325,
Washington, DC 20554. In addition, one copy of each
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pleading must be filed with the Commission's duplicating contractor,
International Transcription Services (ITS), 1231 Twentieth Street, NW,
Washington, DC 20036, and one copy with the Chief, Competitive Pricing
Division, 445 Twelfth St. SW, Fifth Floor, Washington, DC 20554.
54. Parties are also asked to submit comments and reply comments on
diskette. Such diskette submission would be in addition to and not a
substitute for the formal filling requirements addressed above. Such a
submission should be on a 3.5-inch diskette formatted in an IBM
compatible form using MS Dos 5.0 and WordPerfect 5.1 software. The
diskette should be submitted in ``read only'' mode. The diskette should
be clearly labeled with the party's name, proceeding, type of pleading
(comment or reply comments), and date of submission. The diskette
should be accompanied by a cover letter.
55. Written comments by the public on the proposed information
collections are due April 9, 1999, and replies are due on or before
April 26, 1999. The Office of Management and Budget (OMB) must submit
written comments on the proposed information collections on or before
60 days after date of publication in the Federal Register. In addition
to filing comments with the Secretary, a copy of any comments on the
information collections contained herein should be submitted to Judy
Boley, Federal Communications Commission, 445 Twelfth St. SW,
Washington, DC 20554, Room 1-C804, or via the Internet to
[email protected], and to Timothy Fain, OMB Desk Officer, 10236 NEOB, 725
Seventeenth Street NW, Washington, DC 20503, or via the Internet to
[email protected].
56. Alternative formats (computer diskette, large print, audio
cassette and Braille) of the Report and Order and Further Notice of
Proposed Rulemaking are available to persons with disabilities by
contacting Martha Contee at (202) 418-0260 voice, (202) 418-2555 TTY,
or [email protected]. The Notice can also be downloaded at: http://
www.fcc.gov/dtf/.
57. Accordingly, It is ordered, pursuant to the authority contained
in sections 1, 2, 4(i), 4(j), 201-205, 218-220, 225, and 254 of the
Communications Act as amended, 47 U.S.C. 151, 152, 154(i), 154(j), 201-
205, 218-220, 225, and 254, a Further Notice of Proposed Rulemaking Is
hereby adopted.
58. It is further ordered that the Commission's Office of Public
Affairs, References Operations Division, Shall send a copy of the
Further Notice of Proposed Rulemaking, including the Initial Regulatory
Flexibility Analysis, to the Chief Counsel for Advocacy of the Small
Business Administration.
Federal Communications Commission.
Magalie Roman Salas,
Secretary.
[FR Doc. 99-7788 Filed 4-2-99; 8:45 am]
BILLING CODE 6712-01-P