[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

[[Page 16394]]

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

[[Page 16395]]

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

[[Page 16396]]

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