[Federal Register Volume 64, Number 155 (Thursday, August 12, 1999)]
[Rules and Regulations]
[Pages 43937-43941]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-20886]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 62

[CC Docket No. 98-195; FCC 99-163]


1998 Biennial Regulatory Review--Repeal of Part 62 of the 
Commission's Rules

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: This document seeks as part of its 1998 biennial review of 
regulations whether its rules governing interlocking directorates 
should be repealed. After reviewing the comments, the Commission 
released a Report and Order (Order) repealing part 62 of the rules 
governing interlocking directorates, because it concluded that part 62 
is no longer necessary in the public interest. The Commission concludes 
that it should forbear from applying those provisions in section 212 of 
the Act that prohibit any person from holding the position of officer 
or director of more than one carrier subject to the Act without 
obtaining prior Commission authorization.

DATES: Effective September 13, 1999.

ADDRESSES: Federal Communications Commission, 445 12th Street, S.W., 
Room TW-A325, Washington, D.C. 20554.

FOR FURTHER INFORMATION CONTACT: Jennifer Myers Kashatus, Formal 
Complaints and Investigations Branch, Enforcement Division, Common 
Carrier Bureau (202) 418-0960.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Report 
and Order in CC Docket 98-195 [FCC 99-163], adopted on July 7, 1999, 
and released on July 16, 1999. The full text of the Report and Order is 
available for inspection and copying during normal business hours in 
the FCC Reference Center, Room CY-A257, 445 12th Street, S.W., 
Washington, D.C. 20554. The complete text of this decision also may be 
purchased from the Commission's duplicating contractor, International

[[Page 43938]]

Transcription Services, 445 12th Street, S.W., Room CY-B400, 
Washington, D.C. 20554.
    1. The Commission initiated this proceeding by a Notice of Proposed 
Rulemaking (Notice) released on November 17, 1998. In the Notice, the 
Commission designated this proceeding as part of its 1998 biennial 
review of regulations pursuant to section 11 of the Act. Section 11 
requires the Commission to conduct a biennial review, in every even-
numbered year beginning in 1998, of ``all regulations * * * that apply 
to the operations or activities of any provider of telecommunications 
service'' and to ``determine whether any such regulation is no longer 
necessary in the public interest as the result of meaningful economic 
competition between providers of such service.'' 1 Section 
11 further requires the Commission to repeal or to modify any 
regulation it determines is no longer necessary in the public interest.
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    \1\ 47 U.S.C. 161(a).
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    2. In the Notice, the Commission tentatively concluded that part 62 
of its rules governing interlocking directorates is no longer necessary 
to the public interest and therefore should be repealed. Specifically, 
the Commission proposed to eliminate the requirements that: (1) 
application be made to hold interlocking positions with more than one 
carrier subject to the Act where one carrier sought to be interlocked 
is either a dominant carrier, or a carrier not yet determined to be 
non-dominant; (2) applications for findings of common ownership be 
filed if dominant carriers are involved; (3) interlocking positions of 
more than one carrier subject to the Act involving non-dominant 
carriers, connecting carriers, cellular licensees operating in 
different geographic markets, and parents of carriers, among others, be 
reported to the Commission within 30 days after such interlock occurs; 
and (4) any change in status as reported under part 62 of the rules be 
reported to the Commission within 30 days of such change.
    3. Additionally, in the Notice, the Commission tentatively 
concluded that it should forbear from enforcing those provisions of 
section 212 of the Act that address interlocking directorates. Section 
10 of the Act requires the Commission to forbear from applying any 
provision of the Act, or any regulations, to a telecommunications 
carrier or telecommunications service, or class thereof, if the 
Commission makes certain specified findings with respect to such 
provisions or regulations. In the Notice, the Commission tentatively 
concluded that section 212 of the Act: (1) is not necessary to ensure 
that carriers' charges, practices, or classifications are just and 
reasonable, and are not unjustly or unreasonably discriminatory; and 
(2) is not necessary for the protection of consumers. The Commission 
also tentatively concluded that forbearance from applying interlocking 
directorate requirements is consistent with the public interest.
    4. The Commission received eleven comments and one reply comment in 
this proceeding. All but one commenter support the Commission's 
tentative conclusions that the Commission should repeal part 62 of its 
rules and forbear from enforcing the interlocking directorate 
provisions of section 212 of the Act.
    5. In the Report and Order, the Commission concludes that it should 
repeal part 62 of its rules, which implements section 212 of the Act. 
Specifically, the Commission concludes that it should delete its rules 
that require: (1) dominant carriers and those carriers not yet found to 
be non-dominant to seek Commission approval prior to accepting an 
interlocking directorate position; (2) non-dominant carriers, 
connecting carriers, parent companies, and other carriers as may be 
required under our rules, to file post interlocking directorate 
reports; (3) carriers desiring authorization to hold interlocking 
directorates based on a finding of common ownership to make specific 
filings with the Commission; and (4) carriers that undergo a change in 
status with respect to interlocking directorate status to file a change 
of status report. The Commission found that interlocking directorates 
rarely threaten to constrain competition. More precisely, the 
Commission finds it difficult to envision a proposed interlock that the 
Commission would conclude to be anticompetitive, ab initio, such that 
the Commission would deny approval for such interlock. To the extent 
that potentially anticompetitive interlocks may occur, the Commission 
further finds that other Title II provisions and antitrust laws 
adequately protect against the particular concerns its Part 62 rules 
seek to address. Therefore, the Commission found that its rules are no 
longer necessary in the public interest and should be repealed.
    The Commission also concludes that, pursuant to section 10 of the 
Act, the Commission should forbear from enforcing the interlocking 
directorate provisions of section 212 of the Act. In the Notice, the 
Commission tentatively concluded that the Commission should forbear 
from enforcing the provisions of section 212 of the Act requiring any 
person seeking to hold the position of officer or director with more 
than one carrier subject to the Act to seek prior Commission approval. 
The Commission tentatively concluded that these provisions of section 
212 of the Act: (1) Are not necessary to ensure that a carrier's 
charges, practices, or classifications are just and reasonable, and are 
not unjustly or unreasonably discriminatory; and (2) are not necessary 
for the protection of consumers. The Commission also tentatively 
concluded that forbearance from enforcing these requirements is 
consistent with the public interest. The Commission recognized in the 
Notice that section 212 of the Act applies to carriers in 
telecommunications markets that may not yet be fully competitive, and 
therefore, sought comment on whether the analysis undertaken to 
consider forbearance from enforcing section 212 of the Act should vary 
from market to market. No commenter opposes the Commission's tentative 
conclusion that the Commission should forbear from section 212 of the 
Act as applied to all carriers in all telecommunications markets. For 
all the reasons detailed previously in support of eliminating its part 
62 rules, the Commission concludes that each of the statutory criteria 
for forbearance is satisfied, and therefore, that it should forbear 
from enforcing these provisions of section 212 of the Act in all 
markets.

V. Final Regulatory Flexibility Act Analysis

    8. As required by the Regulatory Flexibility Act (RFA), the 
Commission incorporated an Initial Regulatory Flexibility Analysis 
(IRFA) of the possible significant economic impact on small entities by 
the policies and rules proposed in the Notice. The Commission sought 
written public comment on the proposals in the Notice, including 
comment on the IRFA. This present Final Regulatory Flexibility Analysis 
(FRFA) conforms to the RFA.
    9. Need for, and Objectives of, this Action: The Commission 
initiated its examination of its part 62 rules as part of its 1998 
biennial review of regulations as required by section 11 of the 
Communications Act of 1934, as amended. The Commission also issued the 
Notice to review its regulatory regime for interlocking directorates, 
and to determine whether in light of section 10 of the Act, the 
Commission should forbear from applying such requirements. The purpose 
of the Report and Order is to delete part 62 of the Commission's rules, 
which the Commission finds are no longer

[[Page 43939]]

necessary in the public interest. The Commission also has determined 
that it should forbear from addressing those provisions in section 212 
of the Act that address interlocking directorates.
    10. Summary of Significant Issues Raised by Public Comments in 
Response to the IRFA: In the IRFA, the Commission sought comment on 
whether repealing part 62 of its rules and forbearing from section 212 
would benefit small entities. The Commission received no comments in 
response to the IRFA. Several commenters, including one small entity, 
however, indicated that the proposals in the Notice would benefit small 
entities by reducing unnecessary regulatory burdens.
    11. Description, potential impact, and number of small entities 
affected: In this order, the Commission has decided to repeal part 62 
of its rules, which includes eliminating the post-interlock filing 
requirement for non-dominant carriers, many of whom may be small 
entities. The Commission also has decided to forbear from enforcing 
those provisions of section 212 of the Act addressing interlocking 
directorates. Forbearance from enforcing these rules will benefit small 
entities by reducing the regulatory burden to which small businesses 
would otherwise be subject.
    12. To estimate the number of small entities that would benefit 
from this positive economic impact, we first consider the statutory 
definition of ``small entity'' under the RFA. The RFA generally defines 
``small entity'' as having the same meaning as the term ``small 
business,'' ``small organization,'' and ``small governmental 
jurisdiction.'' In addition, the term ``small business'' has the same 
meaning as the term ``small business concern'' under the Small Business 
Act, unless the Commission has developed one or more definitions that 
are appropriate to its activities. Under the Small Business Act, a 
``small business concern'' is one that: (1) Is independently owned and 
operated; (2) is not dominant in its field of operation; and (3) meets 
any additional criteria established by the Small Business 
Administration (SBA). The SBA has defined a small business for Standard 
Industrial Classification (SIC) categories 4812 (Radiotelephone 
Communications) and 4813 (Telephone Communications, Except 
Radiotelephone) to be small entities when they have no more than 1,500 
employees. We first discuss the number of small telephone companies 
falling within these SIC categories, then attempt to refine further 
those estimates to correspond with the categories of telephone 
companies that are commonly used under our rules.
    13. 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. These carriers include, inter alia, local exchange carriers, 
wireline carriers and service providers, interexchange carriers, 
competitive access providers, operator service providers, pay telephone 
operators, providers of telephone toll service, providers of telephone 
exchange service, and resellers.
    14. Although some affected incumbent local exchange carriers 
(ILECs) may have 1,500 or fewer employees, we do not believe that such 
entities should be considered small entities within the meaning of the 
RFA because they are either dominant in their field of operations or 
are not independently owned and operated, and therefore by definition 
not ``small entities'' or ``small business concerns'' under the RFA. 
Accordingly, our use of the terms ``small entities'' and ``small 
businesses'' does not encompass small ILECs. Out of an abundance of 
caution, however, for regulatory flexibility analysis purposes, we will 
separately consider small ILECs within this analysis and use the term 
``small ILECs'' to refer to any ILECs that arguably might be defined by 
the SBA as ``small business concerns.''
    15. Total Number of Telephone Companies Affected. The United States 
Bureau of the Census (``the Census Bureau'') reports that, at the end 
of 1992, there were 3,497 firms engaged in providing telephone 
services, as defined therein, for at least one year. This number 
contains a variety of different categories of carriers, including local 
exchange carriers, interexchange carriers, competitive access 
providers, cellular carriers, mobile service carriers, operator service 
providers, pay telephone operators, and resellers. It seems certain 
that some of those 3,497 telephone service firms may not qualify as 
small entities or small incumbent LECs because they are not 
``independently owned and operated.'' Additionally, we note that the 
number of small entities affected by this rule change as set forth in 
this Order is less than the total number of telephone companies as 
stated herein, because as discussed, the Commission already has decided 
to forbear from applying section 212 of the Act with regard to CMRS 
providers. It seems reasonable to conclude, therefore, that fewer than 
3,497 telephone service firms are small entity telephone service firms 
or small incumbent LECs that may be affected by this Order.
    16. Wireline Carriers and Service Providers. SBA has developed a 
definition of small entities for telephone communications companies 
other than radiotelephone companies. The Census Bureau reports that, 
there were 2,321 such telephone companies in operation for at least one 
year at the end of 1992. According to SBA's definition, a small 
business telephone company other than a radiotelephone company is one 
employing no more than 1,500 persons. All but 26 of the 2,321 non-
radiotelephone companies listed by the Census Bureau were reported to 
have fewer than 1,000 employees. Thus, even if all 26 of those 
companies had more than 1,500 employees, there would still be 2,295 
non-radiotelephone companies that might qualify as small entities or 
small incumbent LECs. Although it seems certain that some of these 
carriers are not independently owned and operated, 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 SBA's definition. Consequently, we estimate that there 
are fewer than 2,295 small entity telephone communications companies 
other than radiotelephone companies that may be affected by the 
decisions in this Order.
    17. Local Exchange Carriers. Neither the Commission nor SBA has 
developed a definition of small providers of local exchange services 
(LECs). The closest applicable definition under SBA rules is for 
telephone communications companies other than radiotelephone (wireless) 
companies. The most reliable source of information regarding the number 
of LECs nationwide of which we are aware appears to be the data that we 
collect annually in connection with the Telecommunications Relay 
Service (TRS). According to our most recent data, 1,371 companies 
reported that they were engaged in the provision of local exchange 
services. Although it seems certain that some of these carriers are not 
independently owned and operated, or have more than 1,500 employees, we 
are unable at this time to estimate with greater precision the number 
of LECs that would qualify as small business concerns under SBA's 
definition. Consequently, we estimate that there are fewer than 1,371 
small

[[Page 43940]]

entity LECs or small incumbent LECs that may be affected by the 
decisions in this Order.
    18. Interexchange Carriers. Neither the Commission nor SBA has 
developed a definition of small entities specifically applicable to 
providers of interexchange services (IXCs). The closest applicable 
definition under SBA rules is for telephone communications companies 
other than radiotelephone companies. The most reliable source of 
information regarding the number of IXCs nationwide of which we are 
aware appears to be the data that we collect annually in connection 
with TRS. According to our most recent data, 143 companies 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 there are fewer than 143 
small entity IXCs that may be affected by the decisions in this Order.
    19. Competitive Access Providers. Neither the Commission nor SBA 
has developed a definition of small entities specifically applicable to 
providers of competitive access services (CAPs). The closest applicable 
definition under SBA rules is for telephone communications companies 
other than radiotelephone companies. The most reliable source of 
information regarding the number of CAPs nationwide of which we are 
aware appears to be the data that we collect annually in connection 
with the TRS. According to our most recent data, 109 companies reported 
that they were engaged in the provision of competitive access services. 
Although it seems certain that some of these carriers are not 
independently owned and operated, or have more than 1,500 employees, 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 there are fewer than 109 
small entity CAPs that may be affected by the decisions in this Order.
    20. Pay Telephone Operators. Neither the Commission nor 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 except radiotelephone 
(wireless) companies. The most reliable source of information regarding 
the number of pay telephone operators nationwide is the data that we 
collect annually in connection with the TRS Worksheet. According to our 
most recent data, 441 companies reported that they were engaged in the 
provision of pay telephone services. We do not have information on the 
number of carriers that are not independently owned and operated, nor 
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 SBA's definition. 
Consequently, we estimate that there are fewer than 271 small pay 
telephone operators.
    21. Operator Service Providers. Neither the Commission nor 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 companies. The most reliable source of information 
regarding the number of operator service providers nationwide of which 
we are aware appears to be the data that we collect annually in 
connection with the TRS. According to our most recent data, 27 
companies reported that they were engaged in the provision of operator 
services. Although it seems certain that some of these companies 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 operator service providers that would qualify 
as small business concerns under SBA's definition. Consequently, we 
estimate that there are fewer than 27 small entity operator service 
providers that may be affected by the decisions in this Order.
    22. Resellers. Neither the Commission nor SBA has developed a 
definition of small entities specifically applicable to resellers. The 
closest applicable definition under SBA rules is for all telephone 
communications companies. The most reliable source of information 
regarding the number of resellers nationwide of which we are aware 
appears to be the data that we collect annually in connection with the 
TRS. According to our most recent data, 339 companies reported that 
they were engaged in the resale of telephone 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 resellers that 
would qualify as small business concerns under SBA's definition. 
Consequently, we estimate that there are fewer than 339 small entity 
resellers that may be affected by the decisions adopted in this Order.
    23. Private Paging. At present, there are approximately 24,000 
Private Paging licenses. 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 paging carriers that would qualify 
as small business concerns under the SBA's definition. We estimate that 
the majority of private paging providers would qualify as small 
entities under the SBA definition. We note that private paging does not 
include common carrier paging, for which the Commission has adopted 
auction rules and has proposed to SBA a special small business size 
standard definition.
    24. Wireless (Radiotelephone) Carriers. SBA has developed a 
definition of small entities for radiotelephone (wireless) companies. 
The Census Bureau reports that there were 1,176 such companies in 
operation for at least one year at the end of 1992. According to SBA's 
definition, a small business radiotelephone company is one employing no 
more than 1,500 persons. The Census Bureau also reported that 1,164 of 
those radiotelephone companies had fewer than 1,000 employees. Thus, 
even if all of the remaining 12 companies had more than 1,500 
employees, there would still be 1,164 radiotelephone companies that 
might qualify as small entities if they are independently owned are 
operated. Although it seems certain that some of these 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 there are fewer 
than 1,164 small entity radiotelephone companies that may be affected 
by the decisions adopted in this Order.
    25. Recording, record keeping, and other compliance requirements: 
No additional paperwork will be required by the decisions adopted in 
this proceeding. This proceeding eliminates filing requirements set 
forth in part 62 of the Commission's rules.
    26. Steps Taken to Minimize Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered: The impact of this 
proceeding should be beneficial to small businesses, because 
eliminating the Commission's part 62 rules will reduce the reporting or 
recordkeeping

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requirements on all communications common carriers.
    27. Report to Congress: The Commission will send a copy of this 
Order, including this FRFA, in a report to be sent to Congress pursuant 
to the Small Business Regulatory Enforcement Fairness Act of 1996, 5 
U.S.C. 801(a)(1)(A). In addition, the Commission will send a copy of 
this Order, including FRFA, to the Chief Counsel for Advocacy of the 
Small Business Administration. A copy of the Order and FRFA (or 
summaries thereof) will also be published in the Federal Register.

VI. Conclusion and Ordering Clauses

    28. Accordingly, It is ordered that pursuant to sections 1, 4, 10, 
11, and 212, of the Communications Act of 1934, as amended, 47 U.S.C. 
151, 154, 160, 161, and 212, the policies, rules, and requirements set 
forth herein ARE ADOPTED.
    29. It is further ordered That pursuant to section 11 of the 
Communications Act of 1934, as amended, 47 U.S.C. 161, that part 62 of 
the Commission's rules, 47 CFR part 62, is no longer in the public 
interest, and therefore is REMOVED, effective 30 days after publication 
of the text thereof in the Federal Register.
    30. It is further ordered That pursuant to section 10 of the 
Communications Act of 1934, as amended, 47 U.S.C. 160, the Commission 
WILL FORBEAR from those provisions of section 212 addressing 
interlocking directorates, 47 U.S.C. 212, effective 30 days after 
publication of the text thereof in the Federal Register.
    31. It is further ordered That the Commission's Office of Public 
Affairs, Reference Operations Division, shall send a copy of this 
Order, including the Final Regulatory Flexibility Analysis, to the 
Chief Counsel for Advocacy of the Small Business Administration.

List of Subjects in 47 CFR part 62

    Antitrust, Communications common carriers, Radio, Reporting and 
recordkeeping requirements, Telegraph and telephone.

Federal Communications Commission.
William F. Caton,
Deputy Secretary.

Rule Changes

PART 62--[REMOVED]

    Accordingly, under the authority 47 U.S.C. 154, amend 47 CFR 
chapter I by removing part 62.
[FR Doc. 99-20886 Filed 8-11-99; 8:45 am]
BILLING CODE 6712-01-U