[Federal Register Volume 67, Number 10 (Tuesday, January 15, 2002)]
[Proposed Rules]
[Pages 1945-1947]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-903]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 51

[CC Docket No. 01-337, FCC 01-360]


Review of Regulatory Requirements for Incumbent LEC Broadband 
Telecommunications Services

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: This document seeks comment on changes, if any, the Commission 
should make to its traditional regulatory requirements for incumbent 
local exchange carriers' (LECs) broadband service. In particular, it 
asks: What the relevant product and geographic markets should be for 
broadband services; whether incumbent LECs possess market power in any 
relevant market; and whether dominant carrier safeguards or other 
regulatory requirements should govern incumbent LECs provision of 
broadband service.

DATES: Comments are due March 1, 2002 and Reply Comments are due April 
1, 2002.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice 
of Proposed Rulemaking (NPRM) in CC Docket No. 01-337, FCC 01-360, 
adopted December 12, 2001, and released December 20, 2001. The complete 
text of this NPRM is available for inspection and copying during normal 
business hours in the FCC Reference Information Center, Portals II, 445 
12th Street, SW., Room CY-A257, Washington, DC 20554. This document may 
also be purchased from the Commission's duplicating contractor, Qualex 
International, Portals II, 445 12th Street, SW., Room CY-B402, 
Washington, DC 20554, telephone 202-863-2893, facsimile 202-863-2898, 
or via e-mail [email protected]. It is also available on the 
Commission's Web site at http://www.fcc.gov.

Synopsis of the Notice of Proposed Rulemaking (NPRM)

    1. In this proceeding, the Commission initiates an examination of 
appropriate regulatory requirements for incumbent LECs' provision of 
domestic broadband telecommunications services (broadband services). 
The NPRM focuses on traditional Title II common carrier regulation, 
arising largely out of sections 201 and 202 of the Communications Act 
of 1934, as amended, as applied to incumbent LEC provision of broadband 
services. In particular, the Commission seeks comment on what 
regulatory safeguards and carrier obligations, if any, should apply 
when a carrier that is dominant in the provision of traditional local 
exchange and exchange access services provides broadband service.
    2. The Commission asks for comments on the nature and scope of the 
market for domestic broadband services. It also seeks comment on the 
relevant market dynamics--including intermodal competition and the 
nascent stage of market development for residential broadband 
services--affecting the provision of domestic broadband services. The 
Commission requests comment on the appropriate regulatory requirements 
under Title II of the Act for the provision of broadband services by 
incumbent LECs given current market conditions.
    3. In particular, the Commission asks interested parties to address 
how the Commission can best balance the goals of encouraging broadband 
investment and deployment, fostering competition in the provision of 
broadband services, promoting innovation, and eliminating unnecessary 
regulation. As part of this proceeding, the Commission also invites 
comment on the Petition filed by SBC Communications on October 3, 2001, 
requesting an expedited ruling that it is non-dominant in the provision 
of broadband services, and asking the Commission to forbear from 
dominant carrier regulation of those services.
    4. Background. The NPRM summarizes the various regulatory 
requirements the Commission has developed in the past, which involve 
streamlining regulation of firms in increasingly competitive markets, 
and competitive safeguards to ensure competition in related markets.
    5. Identification of Incumbent LEC-Provided Broadband Services 
Markets. The Commission asks for comment aimed at defining and 
analyzing the relevant markets in which incumbent LECs provide these 
broadband services. Consistent with Commission precedent, our 
regulatory response should be guided by a full understanding of the 
existing market dynamics for broadband services. The Commission begins 
its analysis by asking questions about the relevant product and 
geographic markets for incumbent LEC-provided broadband services. It 
then analyzes what, if any, market power the incumbent LECs may possess 
in the relevant markets for broadband services.
    6. Appropriate Regulatory Requirements. Once the Commission has 
defined the relevant product and geographic markets for broadband 
services, it can use this information to determine what regulatory 
requirements, if any, should govern the provision of broadband 
services. The Commission begins by briefly describing relevant portions 
of the existing regulatory structure for broadband services provided by 
incumbent LECs. Then it invites interested parties to propose 
alternative requirements for these broadband services in light of 
existing market and technological developments. The Commission 
encourages interested parties to develop proposals for new or modified 
regulatory requirements for broadband services.

I. Initial Regulatory Flexibility Analysis

    7. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), the Commission has prepared the present Initial 
Regulatory Flexibility Analysis (IRFA) of the possible significant 
economic impact on a substantial number of small entities by the 
policies and rules proposed in this NPRM. 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 NPRM 
provided in section V.B. The Commission will send a copy of the NPRM, 
including the IRFA, to the Chief Counsel for Advocacy of the Small 
Business Administration. In addition, the Notice and IRFA (or summaries 
thereof) will be published in the Federal Register.

II. Need for, and Objectives of, the Proposed Rules

    8. In this proceeding, the Commission seeks comment on: (1) The 
nature and scope of the market for domestic broadband services; (2) the 
relevant market dynamics affecting the provision of domestic broadband 
services; and (3) the appropriate regulatory requirements for the 
provision of broadband services by incumbent LECs, given current market 
conditions. The basic elements of the existing regulatory requirements 
for incumbent LEC-provided broadband services were initially developed 
in an era of circuit-switched, analog voice services, and may no longer 
serve the public interest. Thus, the Commission asks interested parties 
to address how it can best balance the goals of

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encouraging advanced telecommunications investment and deployment, 
fostering competition in the provision of broadband services, promoting 
innovation, and eliminating unnecessary regulation. This proceeding 
also invites comment on the Petition filed by SBC Communications on 
October 3, 2001, requesting an expedited ruling that it is non-dominant 
in the provision of advanced services, and asking the Commission to 
forebear from dominant carrier regulation of those services.

III. Legal Basis

    9. The legal basis for any action that may be taken pursuant to the 
NPRM is contained in sections 4, 10, 201-202, 214, 303 and 403 of the 
Communications Act of 1934, as amended, 47 U.S.C. 154, 160, 201-204, 
214, 303, and 403, section 706 of the Telecommunications Act of 1996, 
and sections 1.1, 1.48, 1.411, 1.412, 1.415, 1.419, and 1.1200-1.1216, 
of the Commission's rules, 47 CFR Secs. 1.1, 1.48, 1.411, 1.412, 1.415, 
1.419, and 1.1200-1.1216.

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

    10. The RFA directs agencies to provide a description of and, where 
feasible, an estimate of the number of small entities that will be 
affected by the proposed rules. The RFA generally defines the term 
``small entity'' as having the same meaning as the terms ``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. A small business concern is one which: (1) Is independently owned 
and operated; (2) is not dominant in its field of operation; and (3) 
satisfies any additional criteria established by the Small Business 
Administration (SBA).
    11. The Commission has included small incumbent LECs in this 
present RFA analysis. As noted above, a ``small business'' under the 
RFA 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.'' 
The SBA's Office of Advocacy contends that, for RFA purposes, small 
incumbent LECs are not dominant in their field of operation because any 
such dominance is not ``national'' in scope. The Commission has 
therefore included small incumbent LECs in this RFA analysis, although 
it emphasizes that this RFA action has no effect on FCC analyses and 
determinations in other, non-RFA contexts.
    12. Local Exchange Carriers. Neither the Commission nor the SBA has 
developed a definition for small local exchange carriers. The closest 
applicable definitions for this type of carrier 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 appears To be the data that we collect annually in 
connection with the Telecommunications Relay Service (TRS). According 
to our most recent data, there are 1,335 incumbent LECs. Although some 
of these carriers may not be independently owned and operated, or have 
more than 1,500 employees, the Commission is 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 there are no more than 1,335 small entity 
incumbent LECs that may be affected by the proposals in the NPRM.

V. Description of Projected Reporting, Recordkeeping and Other 
Compliance Requirements

    13. The Commission expects that any proposal we may adopt pursuant 
this NPRM will decrease existing reporting, recordkeeping or other 
compliance requirements. As noted above, dominant carriers are 
currently subject to a broad range of regulatory requirements that are 
generally intended to protect consumers from unjust and unreasonable 
rates, terms, and conditions and unreasonable discrimination in the 
provision of communications services. The Commission's dominant carrier 
regulation includes rate regulation and tariff filing requirements, and 
also requires supporting information, which in some cases includes 
detailed cost data, to be filed by dominant carriers with their tariff 
filings. Incumbent LECs are subject to rate level regulation in the 
provision of their interstate access services. The BOCs and GTE are 
subject to mandatory price cap regulation, and several other incumbent 
LECs have entered price caps on an elective basis, while smaller 
incumbent LECs are regulated under rate-of-return regulation. In 
addition, in markets where carriers may have the incentive and ability 
to leverage control over bottleneck facilities to disadvantage 
competitors in related markets, the Commission has developed various 
safeguards to neutralize that ability. This NPRM seeks comment on what 
relevance, if any, these types of regulations have for broadband 
services provided by incumbent LECs, and asks whether it would be 
appropriate to streamline the traditional dominant carrier regulations 
of incumbent LECs' provision of broadband services.

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

    14. The RFA requires an agency to describe any significant, 
specifically small business, 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 or 
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.
    15. The overall objective of this proceeding is to reduce existing 
regulatory burdens on incumbent LECs to the extent consistent with the 
public interest. The NPRM seeks specific proposals as to which existing 
regulations might be removed or streamlined in their application to 
broadband services, and asks parties to comment on whether incumbent 
LECs should be reclassified as non-dominant in the provision of 
broadband services. The NPRM further asks parties to discuss the extent 
to which different categories of broadband services face different 
levels of competition, warranting different regulatory treatment, and 
to address the extent to which the markets for different broadband 
services are at different stages in their development and thus should 
be treated differently for regulatory purposes. It asks what forms of 
regulation or de-regulation would best spur deployment of alternative 
technologies and facilities by existing and potential competitors, and 
seeks comment on whether existing regulation inhibits or stimulates the 
deployment of broadband services.

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

    16. None.

Ordering Clauses

    17. Accordingly, pursuant to the authority contained in sections 2, 
4(i)-

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4(j), 201, and 303(r) of the Communications Act of 1934, as amended, 47 
U.S.C. 152, 154(i)-4(j), 201, 303(r), this NPRM is adopted.
    18. The Commission's Consumer Information Bureau, Reference 
Information Center, shall send a copy of this NPRM, including the 
Initial Regulatory Flexibility Analysis, to the Chief Counsel for 
Advocacy of the Small Business Administration.

Federal Communications Commission.
William F. Caton,
Deputy Secretary.
[FR Doc. 02-903 Filed 1-14-02; 8:45 am]
BILLING CODE 6712-02-P