[Federal Register Volume 66, Number 154 (Thursday, August 9, 2001)]
[Proposed Rules]
[Pages 41823-41827]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-20001]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 63

[CC Docket No. 01-150; FCC 01-205]


Implementation of Further Streamlining Measures for Domestic 
Section 214 Authorizations

AGENCY: Federal Communications Commission

ACTION: Proposed rule.

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SUMMARY: This document proposes further streamlining of applications 
under section 214 of the Communications Act of 1934, as amended (Act), 
to acquire domestic transmission lines through acquisitions of 
corporate control where, based on predetermined criteria, it would 
require little scrutiny for the Commission to determine that they would 
serve the public interest.

DATES: Comments are due September 10, 2001. Reply Comments are due 
October 9, 2001.

FOR FURTHER INFORMATION CONTACT: Henry Thaggert, Attorney-Advisor, 
Policy and Program Planning Division, Common Carrier Bureau, (202) 418-
7941.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice 
of Proposed Rulemaking, CC Docket No. 01-150, FCC 01-205, adopted July 
12, 2001 and released July 20, 2001. The complete text of this Notice 
of Proposed Rulemaking is available for inspection and copying during 
normal business hours in the FCC Reference Information Center, 
Courtyard Level, 445 12th Street, SW., Washington, DC, and also may be 
purchased from the Commission's copy contractor, International 
Transcription Services, (ITS, Inc.), CY-B400, 445 12th Street, SW., 
Washington, DC.

Synopsis of Notice of Proposed Rulemaking

    1. The Commission seeks comment on its proposal to streamline its 
rules with respect to domestic section 214 authorizations involving 
acquisitions of corporate control. In particular, it proposes 
streamlined treatment of

[[Page 41824]]

applications under section 214 of the Act for transfer of domestic 
interstate transmission lines through acquisition of corporate control 
where it would require little scrutiny in order for the Commission to 
determine that the transaction would serve the public interest.
    2. Specifically, the Commission seeks comment on whether to shorten 
the review period for a predetermined class of domestic section 214 
applications so that absent written notice to the contrary from the 
Commission, transfers involving a predetermined class of non-dominant 
carriers would automatically be granted after 31 days, and transfers 
involving a predetermined class of dominant carriers would 
automatically be granted after 60 days. Additionally, the Commission 
seeks comment on: (1) What criteria to employ to determine eligibility 
for streamlined review; (2) how to treat a streamlined domestic section 
214 application that is accompanied by a request for waiver of 
Commission rules; (3) whether the Commission should have the discretion 
to remove an application from streamlined processing; (4) how the 
Common Carrier Bureau should treat a streamlined application when the 
applicants file related applications in other bureaus; and (5) whether 
the Commission should continue to require resellers and other non-
dominant carriers to file applications for transfers of control.

Initial Regulatory Flexibility Act Analysis

    1. As required by the Regulatory Flexibility Act, 5 U.S.C. 603, the 
Commission has prepared this Initial Regulatory Flexibility Analysis 
(IRFA) of the possible significant economic impact on small entities by 
the policies and rules proposed in this Notice of Proposed Rule Making. 
Written public comments are requested on this IRFA. Comments must be 
identified as responses to the IRFA and must be filed by the deadlines 
for comments on the Notice of Proposed Rule Making provided in section 
IV(C) of the Notice of Proposed Rule Making. The Commission will send a 
copy of the Notice of Proposed Rule Making, including this IRFA, to the 
Chief Counsel for Advocacy of the Small Business Administration. See 5 
U.S.C. 603(a).

Need for, and Objectives of, the Proposed Rules

    2. The Commission has initiated this proceeding to seek comment on 
how it might improve and streamline applications under section 214 to 
acquire domestic transmission lines through acquisitions of corporate 
control that require little scrutiny in order for the Commission to 
determine that they serve the public interest. The Commission also 
proposes to shorten the review periods for transfers of control.

Legal Basis

    3. The legal basis for any action that may be taken pursuant to the 
Notice of Proposed Rulemaking is contained in sections 2, 4, 201, 214, 
303 and 403 of the Communications Act of 1934, as amended, 47 U.S.C. 
154, 201-202, 303 and 403, and Secs. 1.1, 1.411 and 1.412 of the 
Commission's rules, 47 CFR 1.1, 1.411 and 1.412.

Description and Estimate of the Number of Small Entities To Which the 
Proposed Rules Will Apply

    4. The Regulatory Flexibility Act directs agencies to provide a 
description of, and where feasible, an estimate of the number of small 
entities that may be affected by the proposed rulemaking, if adopted. 
See 5 U.S.C. 603(b)(3). The Regulatory Flexibility Act defines the term 
``small entity'' as having the same meaning as the terms ``small 
business,'' ``small organization,'' and ``small governmental 
jurisdiction.'' See 5 U.S.C. 601(6). In addition, the term ``small 
business'' has the same meaning as the term ``small business concern'' 
under section 3 of the Small Business Act. See 5 U.S.C. 601(3). A small 
business concern is one which: (1) Is independently owned and operated; 
(2) is not dominant in its field of operation; and (3) satisfies any 
additional criteria established by the SBA. See 15 U.S.C. 632.
    5. The most reliable source of information regarding the total 
numbers of certain common carrier and related providers nationwide, as 
well as the number of commercial wireless entities, appears to be data 
the Commission publishes in its Trends in Telephone Service report. See 
FCC, Common Carrier Bureau, Industry Analysis Division, Trends in 
Telephone Service, Table 19.3 (March 2000). The Commission has 
indicated that there are 4,144 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 service, providers of telephone exchange 
service, and resellers.
    6. The SBA has defined establishments engaged in providing 
``Radiotelephone Communications'' and ``Telephone Communications, 
Except Radiotelephone'' to be small businesses when they have no more 
than 1,500 employees. See 13 CFR 121.201; Executive Office of the 
President, Office of Management and Budget, Standard Industrial 
Classification Manual (1987). Further, this analysis discusses the 
total estimated number of telephone companies falling within the two 
categories and the number of small businesses in each. This analysis 
also attempts to refine further those estimates to correspond with the 
categories of telephone companies that are commonly used under our 
rules.
    7. The Commission includes small incumbent local exchange carriers 
(LECs) in this present Regulatory Flexibility Act analysis. As noted 
above, a ``small business'' under the Regulatory Flexibility Act is one 
that, inter alia, meets the pertinent small business size standard 
(e.g., a telephone communications business having 1,500 or fewer 
employees), and ``is not dominant in its field of operation.'' See 15 
U.S.C. 632(a)(1). The SBA's Office of Advocacy contends that, for 
Regulatory Flexibility Act purposes, small incumbent LECs are not 
dominant in their field of operation because any such dominance is not 
``national'' in scope. See Letter from Jere W. Glover, Chief Counsel 
for Advocacy, SBA, to William E. Kennard, Chairman, FCC (May 27, 1999); 
15 U.S.C. 632(a) (Small Business Act); 5 U.S.C. 601(3); 13 CFR 
121.102(b). The Commission, therefore, included small incumbent LECs in 
this Regulatory Flexibility Act analysis, although the Commission 
emphasizes that this Regulatory Flexibility Act action has no effect on 
FCC analyses and determinations in other, non-Regulatory Flexibility 
Act contexts.
    8. Total Number of Telephone Companies Affected. The U.S. Bureau of 
the Census (``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. See U.S. Department of Commerce, Bureau 
of the Census, 1992 Census of Transportation, Communications, and 
Utilities: Establishment and Firm Size, at Firm Size 1-123 (1995) 
(``1992 Census''). 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, covered specialized mobile radio providers, and 
resellers. It seems certain that some of these 3,497 telephone service 
firms may not qualify as small entities or small

[[Page 41825]]

incumbent LECs because they are not ``independently owned and 
operated.'' See 15 U.S.C. 632(a)(1). For example, a PCS provider that 
is affiliated with an interexchange carrier having more than 1,500 
employees would not meet the definition of a small business. It is 
reasonable to conclude that fewer than 3,497 telephone service firms 
are small entity telephone service firms or small incumbent LECs that 
may be affected by the proposed rules, herein adopted.
    9. Wireline Carriers and Service Providers. The SBA has developed a 
definition of small entities for telephone communications companies 
except radiotelephone (wireless) companies. The Census Bureau reports 
that there were 2,321 such telephone companies in operation for at 
least one year at the end of 1992. See 1992 Census, at Firm Size 1-123. 
According to the SBA's definition, a small business telephone company 
other than a radiotelephone company is one employing no more than 1,500 
persons. See 13 CFR 121.201, SIC Code 4813; 1997 NAICS 51331. 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. The Commission does not have data 
specifying the number of these carriers that are not independently 
owned and operated, and thus 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, the Commission estimates that fewer than 
2,295 small telephone communications companies other than 
radiotelephone companies are small entities or small incumbent LECs 
that may be affected by the proposed rulemaking. The Commission further 
notes that some of these small entities may be ``connecting carriers,'' 
as defined in section 3(11) of the Act, 47 U.S.C. 153(11), and would 
not be subject to section 214 or Sec. 63.01 when engaging in an 
acquisition of corporate control and thus would not require prior 
Commission approval to consummate a transaction involving an 
acquisition of corporate control.
    10. Local Exchange Carriers. Neither the Commission nor the SBA has 
developed a definition for small providers of local exchange services. 
The closest applicable definition under the SBA rules is for telephone 
communications companies other than radiotelephone (wireless) 
companies. See 13 CFR 121.201, SIC Code 4813. According to the most 
recent Trends in Telephone Service data, 1,348 incumbent carriers 
reported that they were engaged in the provision of local exchange 
services. See FCC, Common Carrier Bureau, Industry Analysis Division, 
Trends in Telephone Service, Table 19.3 (March 2000). The Commission 
does not have data specifying the number of these carriers that are 
either dominant in their field of operations, 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 
LECs that would qualify as small business concerns under the SBA's 
definition. Consequently, the Commission estimates that fewer than 
1,348 providers of local exchange service are small entities or small 
incumbent LECs that may be affected by the proposed rulemaking.
    11. Interexchange Carriers. Neither the Commission nor the SBA has 
developed a definition of small entities specifically applicable to 
providers of interexchange services. The closest applicable definition 
under the SBA rules is for telephone communications companies other 
than radiotelephone (wireless) companies. See 13 CFR 121.201, SIC code 
4813; 1997 NAICS 51331. According to the most recent Trends in 
Telephone Service data, 171 carriers reported that they were engaged in 
the provision of interexchange services. See FCC, Common Carrier 
Bureau, Industry Analysis Division, Trends in Telephone Service, Table 
19.3 (March 2000). The Commission does 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 IXCs that would qualify 
as small business concerns under the SBA's definition. Consequently, 
the Commission estimates that there are fewer than 171 small entity 
IXCs that may be affected by the proposed rulemaking.
    12. Competitive Access Providers. Neither the Commission nor the 
SBA has developed a definition of small entities specifically 
applicable to competitive access services providers (CAPs). The closest 
applicable definition under the SBA rules is for telephone 
communications companies other than radiotelephone (wireless) 
companies. See 13 CFR 121.201, SIC code 4813; 1997 NAICS 51331. 
According to the most recent Trends in Telephone Service data, 212 CAP/
competitive LECs carriers and 10 other LECs reported that they were 
engaged in the provision of competitive local exchange services. See 
FCC, Common Carrier Bureau, Industry Analysis Division, Trends in 
Telephone Service, Table 19.3 (March 2000). The Commission does 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 CAPs that would qualify as small business concerns under the 
SBA's definition. Consequently, the Commission estimates that there are 
fewer than 212 small entity CAPs and 10 other LECs that may be affected 
by the proposed rulemaking.
    13. 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 
the SBA rules is for telephone communications companies other than 
radiotelephone (wireless) companies. See 13 CFR 121.201, SIC code 4813; 
1997 NAICS 51331. According to the most recent Trends in Telephone 
Service data, 24 carriers reported that they were engaged in the 
provision of operator services. See FCC, Common Carrier Bureau, 
Industry Analysis Division, Trends in Telephone Service, Table 19.3 
(March 2000). The Commission does 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 operator service providers that 
would qualify as small business concerns under the SBA's definition. 
Consequently, the Commission estimates that there are fewer than 24 
small entity operator service providers that may be affected by the 
proposed rulemaking.
    14. 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. See 13 CFR 121.201, SIC code 4813; 1997 NAICS 
51331. According to the most recent Trends in Telephone Service data, 
615 carriers reported that they were engaged in the provision of pay 
telephone services. See FCC, Common Carrier Bureau, Industry Analysis 
Division, Trends in Telephone Service, Table 19.3 (March 2000). The 
Commission does not have data

[[Page 41826]]

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, the Commission estimates that 
there are fewer than 615 small entity pay telephone operators that may 
be affected by the proposed rulemaking.
    15. 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. See 13 CFR 121.201, SIC code 
4813; 1997 NAICS 51331. According to the most recent Trends in 
Telephone Service data, 388 toll and 54 local entities reported that 
they were engaged in the resale of telephone service. See FCC, Common 
Carrier Bureau, Industry Analysis Division, Trends in Telephone 
Service, Table 19.3 (March 2000). The Commission does 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, the Commission estimates that there are fewer 
than 388 small toll entity resellers and 54 small local entity 
resellers that may be affected by the proposed rulemaking.
    16. Toll-Free 800 and 800-Like Service Subscribers. Neither the 
Commission nor the SBA has developed a definition of small entities 
specifically applicable to 800 and 800-like service (``toll free'') 
subscribers. The most reliable source of information regarding the 
number of these service subscribers appears to be data the Commission 
collects on the 800, 888, and 877 numbers in use. See FCC, CCB Industry 
Analysis Division, FCC Releases Study on Telephone Trends, Tbls. 21.2, 
21.3 and 21.4 (February 19, 1999). According to our most recent data, 
at the end of January 1999, the number of 800 numbers assigned was 
7,692,955; the number of 888 numbers that had been assigned was 
7,706,393; and the number of 877 numbers assigned was 1,946,538. The 
Commission does not have data specifying the number of these 
subscribers 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 toll free subscribers that would 
qualify as small business concerns under the SBA's definition. 
Consequently, the Commission estimates that there are fewer than 
7,692,955 small entity 800 subscribers, fewer than 7,706,393 small 
entity 888 subscribers, and fewer than 1,946,538 small entity 877 
subscribers may be affected by the proposed rulemaking.

Description of Projected Reporting, Recordkeeping, and Other Compliance 
Requirements

    17. In this Notice of Proposed Rulemaking, the Commission proposes 
a number of steps to reduce the regulatory burden on carriers filing 
section 214 authorization under the Communications Act. The Commission 
does not believe that small entities would be disproportionately 
affected by the implementation of the measures under consideration. In 
this Notice of Proposed Rulemaking, the Commission proposes to clarify 
existing rules and shorten the review period for a predetermined class 
of domestic section 214 applications. The Commission expects these 
changes would save carriers time and labor in the pre-filing stage, by 
reducing the amount of research required and documentation to be 
submitted when it is apparent that the transaction would require little 
scrutiny in order for the Commission to determine that it serves the 
public interest. The Commission also expects these changes would save 
carriers time and labor during the review period by reducing costs 
associated with uncertainty surrounding the current process. 
Accordingly, any costs associated with the proposed measures in this 
Notice of Proposed Rulemaking would not be greater for small carriers.

Steps Taken To Minimize Significant Economic Impact on Small Entities, 
and Significant Alternatives Considered

    18. The Regulatory Flexibility Act requires an agency to describe 
any significant alternatives that it has considered in reaching its 
proposed approach, which may include the following four alternatives 
(among others): (1) The establishment of differing compliance or 
reporting requirements or timetables that take into account the 
resources available to small entities; (2) the clarification, 
consolidation, or simplification of compliance and reporting 
requirements under the rule for small entities; (3) the use of 
performance, rather than design standards; and (4) an exemption from 
coverage of the rule, or any part thereof, for small entities. See 5 
U.S.C. 603(c).
    19. In section II(B) of the Notice of Proposed Rulemaking, the 
Commission seeks comment on whether the established Commission review 
periods for transfers of control should be 31 days for non-dominant 
carriers. In considering alternatives to a 31-day review, the 
Commission weighed the need for Commission time to review the 
application and public record (including adequate time for competitors 
and other interested parties to file a petition to deny a proposed 
application), versus the costs faced by the applicants associated with 
filing, as well as the business and legal uncertainty that accompanies 
an extended waiting period. Accordingly, it is possible that a 31-day 
review period would minimize application-related costs and 
uncertainties while preserving the Commission's ability to review the 
proposed transaction. The item also seeks comment whether longer or 
shorter review periods should apply. The review period would apply to 
all non-dominant carriers including small entities. The Commission 
staff has come to no conclusion as to what length review period should 
apply. However, one argument in favor of a 31-day review period is that 
a shorter review period would have the unintended result of impacting 
small entities negatively rather than beneficially. Small entities 
commenting on the appropriate review period may wish to address whether 
small entities would be negatively impacted by a shorter review period 
because they would not be able to effectively comment on the public 
interest benefits or harms of competitors' proposed consolidations.
    20. The Notice of Proposed Rulemaking, in section II(B), also seeks 
comment on whether to accord streamlined treatment to applications that 
are accompanied by requests for waivers of other Commission rules. The 
Commission has come to no conclusion whether such a rule should apply. 
However, one consideration in favor of considering waiver requests on a 
case by case basis is that small entities seeking to comment on issues 
raised by the waiver may lack the resources to adequately or timely 
respond otherwise. Therefore, the Commission believes it should 
maintain the flexibility to consider whether commenters representing 
the interests of small entities have had adequate opportunity to 
comment.

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Federal Rules That May Duplicate, Overlap, or Conflict With the 
Proposed Rules

    21. None.

Procedural Matters

    1. Pursuant to the authority contained in sections 2, 4(i)-(j), 
201, 214, and 303(r) of the Communications Act of 1934, as amended, 47 
U.S.C. 152, 154(i)-(j), 201, 214, and 303(r), that the Notice of 
Proposed Rulemaking in CC Docket No. 01-150 is adopted.
    2. The Commission's Consumer Information Bureau, Reference 
Information Center, shall send a copy of the Notice of Proposed 
Rulemaking, including the Initial Regulatory Flexibility Analysis, to 
the Chief Counsel for Advocacy of the Small Business Administration.
    3. Pursuant to sections 2, 4(i)-(j), 201, 214, and 303(r) of the 
Communications Act of 1934, as amended, 47 U.S.C. 152, 154(i)-(j), 201, 
214, and 303(r), that the Notice of Proposed Rulemaking in CC Docket 
No. 01-150 is adopted. Comments are due September 10, 2001. Reply 
Comments are due October 9, 2001.

List of Subjects in 47 CFR Part 63

    Communications common carriers, Telecommunications, Transfers of 
control, Mergers.

Federal Communications Commission.
Magalie Roman Salas,
Secretary.
[FR Doc. 01-20001 Filed 8-8-01; 8:45 am]
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