[Federal Register Volume 67, Number 19 (Tuesday, January 29, 2002)]
[Rules and Regulations]
[Pages 4203-4207]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-1982]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 64

[CC Docket No. 98-67; FCC 01-371]


Telecommunications Services for Individuals With Hearing and 
Speech Disabilities; Recommended Telecommunications Relay Services Cost 
Recovery Guidelines; Request by Hamilton Telephone Company for 
Clarification and Temporary Waivers

AGENCY: Federal Communications Commission.

ACTION: Final rule; guidelines and clarification.

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SUMMARY: In this Memorandum Opinion and Order (MO&O), the Federal 
Communications Commission (FCC or Commission), adopts cost-recovery 
guidelines for telecommunications relay services (TRS), speech-to-
speech relay services (STS), and video relay services (VRS). These 
guidelines are based, in part, on the recommendation of the Interstate 
TRS Advisory Council and the TRS Fund Administrator (Advisory Council 
and Fund Administrator, respectively). The MO&O also addresses Hamilton 
Telephone Company's (Hamilton) petition for clarification. The 
Commission agrees that, under the current rules, there is no mandate 
for VRS providers to provide STS. The Commission also finds that VRS 
providers are not required to provide Spanish relay service at this 
time. VRS allows individuals with hearing and speech disabilities who 
use sign language to communicate with voice telephones.

DATES: Effective February 28, 2002.

FOR FURTHER INFORMATION CONTACT: Pam Slipakoff, 202/418-7705, Fax 202/
418-2345, TTY 202/418-0484, [email protected], Network Services 
Division, Common Carrier Bureau.

SUPPLEMENTARY INFORMATION: This is a summary of the Memorandum Opinion 
and Order, CC Docket No. 98-67, FCC 01-371, adopted December 17, 2001 
and released December 21, 2001. The full text of the MO&O is available 
for inspection and copying during the weekday hours of 9 a.m. to 4:30 
p.m. in the FCC Reference Center, Room CY-A257, 445 12th Street, SW., 
Washington, DC 20554, or copies may be purchased from the Commission's 
copy contractor, Qualex International, 445 12th Street, SW., Suite CY-
B402, Washington, DC 20554, phone (202) 863-2893.

Synopsis of the Memorandum Opinion and Order CC Docket No. 98-67

    1. Title IV of the Americans with Disabilities Act of 1990 (ADA) 
requires the Commission to ensure that TRS is available to the extent 
possible and in the most efficient manner to persons

[[Page 4204]]

with hearing or speech disabilities in the United States. The 
Commission first ordered all carriers to provide TRS services 
nationwide on July 26, 1991. The rules for cost recovery were 
established in the TRS Third Report and Order, 58 FR 39671 (July 26, 
1993). The Commission's rules require TRS providers to submit annually 
to the TRS Fund Administrator the data necessary to compute the TRS 
Fund requirements and payments. The administrator uses these data to 
develop formulas that are filed annually with the Commission. Payments 
to relay service providers are distributed based on the approved 
formulas. The compensation formulas are based on conversation minutes 
of use for completed interstate TRS calls. The TRS Third Report and 
Order required that the cost of interstate TRS be recovered from all 
subscribers of every interstate service, utilizing a shared funding 
cost recovery mechanism. The TRS Third Report and Order further 
mandated that every carrier providing interstate telecommunications 
services contribute to the TRS Fund on the basis of gross interstate 
and international telecommunications revenues. In its July 1998 
Biennial Review streamlining carrier reporting requirements, the 
Commission changed the contribution base from gross interstate and 
international telecommunications revenues to end user interstate and 
international telecommunications revenues.
    2. On March 6, 2000, the Commission released the Improved TRS 
Order, 65 FR 38490 (June 21, 2000), which amended the rules governing 
the delivery of TRS by expanding the kinds of relay services available 
to consumers and by improving the quality of relay services. The 
Improved TRS Order changed many of the definitions and standards for 
traditional TRS and added STS and Spanish relay services as 
requirements. It also permitted the recovery of VRS costs through the 
interstate TRS funding mechanism. Finally, the Improved TRS Order 
directed the Advisory Council and the Fund Administrator to develop 
recommendations for how the compensation formula for each service 
should be structured.
    3. On November 9, 2000, the Advisory Council and the Fund 
Administrator submitted recommended guidelines outlining proposed cost 
recovery procedures for traditional TRS, STS, and VRS. The 
recommendations were originally placed on Public Notice on December 6, 
2000, with comments due on January 5, 2001 and reply comments due on 
January 19, 2001. On July 9, 2001, a public notice was placed in the 
Federal Register, seeking additional comment on the recommendations. 66 
FR 35765 (July 9, 2001).
    4. On April 6, 2001, Hamilton filed a request for clarification and 
temporary waiver of certain aspects of the Improved TRS Order relating 
to the provision of VRS. Hamilton requested clarification and 
temporary, two-year waivers of portions of Secs. 64.603 and 64.604 of 
the Commission's rules. On July 16, 2001 the Common Carrier Bureau 
(Bureau) issued a public notice seeking comment on Hamilton's waiver 
request.

Cost Recovery for Improved Traditional TRS

    5. The Advisory Council and the Fund Administrator recommended that 
the Commission: (1) Continue to use the current national average 
costing and pricing methodology for the annual development of the 
interstate cost recovery reimbursement rate; (2) review the TRS Center 
Data Request to ensure that various sections and categories continue to 
be appropriate and up to date; (3) use the same allocation methodology 
in place today for allocating toll-free and 900 call minutes between 
interstate and intrastate demand; and (4) direct that Spanish relay 
costs be collected separately to test whether they are significantly 
different from English relay costs, and continue to reimburse providers 
on completed conversation minutes at a single national average 
reimbursement rate if there is no difference between the Spanish and 
English relay per-minute costs. The Commission adopts all except the 
fourth of these recommendations.
    6. The Commission believes that the current average costing 
methodology represents an efficient and reasonable method of 
compensating eligible providers for the cost of furnishing interstate 
TRS. The Commission further believes that the average costing 
methodology will promote efficiency and that any cost increases 
incurred by providers will be minimal. Although the Commission believes 
that the current TRS Center Data Request captures all of the changes 
that were established by the Improved TRS Order, the Commission wants 
to ensure that all providers are fairly compensated. The Commission 
therefore directs the TRS administrator to review the TRS Center Data 
Request, and report to Bureau on an ongoing basis, any changes 
necessary to ensure that TRS providers are fairly compensated for 
additional costs imposed by the Improved TRS Order. The Commission also 
agrees with the Advisory Council and the Fund Administrator's 
recommendation that the same minutes of use allocation methodology in 
place for toll-free call minutes should be used for 900 call minutes. 
The Commission adopts the toll-free minutes methodology and find that 
it should be applied to 900 calls as well.
    7. At this time, the Commission sees no need to adopt the Advisory 
Council and the Fund Administrator's recommendation that Spanish relay 
costs initially be collected separately and tested to determine whether 
they are significantly different from English relay costs. Because 
there is no evidence in the record that Spanish relay costs will differ 
significantly from English relay costs, the Commission conclude that 
providers should be reimbursed on completed conversation minutes for 
both English and Spanish relay costs at a single national average 
reimbursement rate. If, however, TRS providers believe that their costs 
for providing Spanish and English relay will differ significantly, they 
may track these data separately to verify that the costs are, in fact, 
different. If any TRS provider can demonstrate that the costs are 
different and, thus, that the services should be reimbursed at 
different rates, it may petition the Commission to establish different 
reimbursement rates for English and Spanish relay.

Cost Recovery for Speech-to-Speech Relay Service

    8. The Improved TRS Order required STS to be in place by March 1, 
2001. STS uses CAs who have been specially trained to understand 
different speech patterns, and to repeat the words spoken by the person 
with the speech disability. The Advisory Council and the Fund 
Administrator made the following recommendations for STS cost recovery: 
(1) The same cost recovery methodology used for computing the 
reimbursement rate in place today for traditional TRS interstate cost 
recovery could be used to develop the STS reimbursement rate; (2) due 
to its unique characteristics, a separate reimbursement rate based on 
STS costs and minutes should be calculated; (3) the TRS Center Data 
Request should be expanded to include specific STS sections to capture 
the costs and minutes separately from traditional TRS or VRS; and (4) 
providers should be reimbursed for completed conversation minutes at 
the national average reimbursement rate for STS. The Commission adopts 
each of these recommendations.
    9. The Commission favors the national average per minute 
methodology used for traditional TRS and believe it should be applied 
to STS as well. The Commission also adopts a

[[Page 4205]]

separate per-minute national average compensation formula for STS and 
orders the TRS administrator to develop annually a national average STS 
reimbursement rate for compensating STS providers. As with traditional 
TRS, each provider of STS services will be compensated at the national 
average rate for every completed conversation minute. Given that STS 
service is of a more recent origin, the Commission does not yet have 
sufficient data to conduct an up-front evaluation of its costs. 
Consequently, the Commission adopts the Advisory Council and the Fund 
Administrator's recommendation that the TRS Center Data Request be 
expanded to capture separately STS costs and minutes. The Commission 
therefore orders the TRS administrator to expand the TRS Center Data 
Request to include specific sections to capture STS costs and completed 
conversation minutes for STS.

Cost Recovery for Video Relay Services

    10. The Improved TRS Order did not require VRS, but did allow the 
costs of intrastate and interstate costs for VRS to be reimbursed from 
the interstate TRS Fund while the Commission continues to evaluate the 
service. The Advisory Council and the Fund Administrator made the 
following four recommendations with respect to VRS cost recovery: (1) 
The same methodology for rate development in place today for 
traditional TRS interstate cost recovery could be used to develop the 
VRS reimbursement rate; (2) providers should be reimbursed based on 
completed conversation minutes at a national average reimbursement 
rate; (3) the TRS Center Data Request should be expanded to include 
specific VRS sections to capture VRS costs and demand separately; and 
(4) due to its unique characteristics, a separate reimbursement rate 
based on VRS costs and demand should be calculated.
    11. The Commission agrees with the Advisory Council and the Fund 
Administrator's recommendation that due to the unique characteristics 
of VRS, a separate reimbursement rate for VRS should be calculated. The 
Commission agrees with the Advisory Council and the Fund 
Administrator's recommendation that the TRS Center Data Request should 
be expanded to include specific sections to capture separately VRS 
costs and minutes for this service. The data provided to NECA by VRS 
providers demonstrate that VRS costs and payment requirements are 
materially different from those for traditional TRS. In light of the 
differences in technology and the reportedly higher cost associated 
with providing VRS, the Commission will require NECA to expand the TRS 
Data Request to include data that are specific to VRS. Thus, the 
Commission adopts these two aspects of the Advisory Council and the 
Fund Administrator's Recommendation regarding cost recovery for VRS.
    12. The Commission declines at this time, however, to adopt 
permanently the Advisory Council and the Fund Administrator's 
recommendations to use the same methodology for rate development in 
place today for traditional TRS interstate cost recovery, and to 
develop a VRS reimbursement rate based on completed conversation 
minutes of use at a national average reimbursement rate. Although the 
national average compensation methodology has all the benefits that we 
described above, the Commission is not convinced that this methodology 
will provide adequate incentives to carriers to provide video relay 
services. The Commission finds that additional comments on this 
recommendation are necessary and seek comment in the Further NPRM 
related to this MO&O (Published elsewhere in this issue of the Federal 
Register.).
    13. In the interim, the Commission directs the TRS administrator to 
establish an interim VRS cost recovery rate using the average per 
minute compensation methodology used for traditional TRS. The interim 
rate shall be in effect until such time that the Commission is able to 
collect and assess additional data regarding what the permanent VRS 
compensation methodology should be.

Petition for Clarification

    14. In this MO&O the Commission clarifies that Sec. 64.603 of the 
Commission's rules mandates the provision of STS generally, this 
mandate does not extend to relay service providers in their provision 
of VRS because VRS is in its infancy. Because the provision of VRS is 
not mandatory at this time, the Commission does not wish to make it 
more burdensome for the providers that wish to provide VRS on a 
voluntary basis. If, however, VRS providers choose to offer speech-to-
speech service they will be eligible for reimbursement from the TRS 
fund. As VRS is deployed and demand for the service increases, the 
Commission may reexamine this issue.
    15. The Commission also clarifies that, under the current rules, 
VRS providers are not required to provide Spanish relay service at this 
time. The Commission find that because VRS is still in its infancy and 
is not yet required, it is not feasible to require that it be provided 
in languages other than American Sign Language (ASL). If, however, VRS 
providers choose to offer Spanish relay service they will be eligible 
for reimbursement from the TRS fund. As Spanish relay services are 
deployed and demand for the service increases, the Commission may 
reexamine this issue.

Final Paperwork Reduction Act Analysis

    16. This MO&O contains some new information collections for the 
cost recovery mechanism, which will be submitted to OMB for approval, 
as prescribed by the Paperwork Reduction Act.

Final Regulatory Flexibility Analysis

    17. As required by the Regulatory Flexibility Act of 1980, as 
amended, (RFA), 5 U.S.C. 603, an Initial Regulatory Flexibility 
Analysis (IRFA) was incorporated in the Federal Register summary for 
the Interstate Fund Advisory Council and the TRS Fund Administrator's 
Recommended TRS Cost Recovery Guidelines. The Commission sought written 
public comment on the proposals in the cost recovery guidelines, 
including comment on the IRFA. The comments received addressed only the 
general recommendations, not the IRFA. This present Final Regulatory 
Flexibility Analysis (FRFA) conforms to the RFA. 5 U.S.C. 604.

Need for, and Objective of this Memorandum Opinion and Order

    18. This proceeding was initiated to formulate an appropriate 
method of cost recovery for TRS, VRS and STS relay service providers. 
These cost recovery methods take into account changes in the TRS market 
and technology as well as the development of the new VRS and STS 
services. The new cost recovery guidelines will allow all relay 
providers to efficiently and effectively recover their reimbursable 
costs. Such reimbursement will also encourage the development of new 
technologies to aid individuals with speech and hearing disabilities.

Summary of Significant Issues Raised by Public Comments in Response 
to the IRFA

    19. No comments were filed in response to the IRFA in this 
proceeding. The Commission has nonetheless considered any potential 
significant economic impact of the rules on small entities. The 
comments filed in this proceeding address the recommendations of the 
Interstate Fund Advisory council and the TRS Fund

[[Page 4206]]

Administrator and do not specifically address small entities.

Description and Estimate of the Number of Small Entities to Which 
the Actions Taken Will Apply

    20. The RFA 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 rules, if adopted. 5 U.S.C. 604(a)(3). The RFA 
defines the term ``small entity'' as having the same meaning as the 
terms ``small business,'' ``small organization,'' and ``small 
governmental jurisdiction.'' 5 U.S.C. 601(6). In addition, the term 
``small business'' has the same meaning as the term ``small business 
concern'' under the Small Business Act. 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 Small Business Administration 
(SBA). 15 U.S.C. 632. We note that any small entities affected by 
action taken herein should not be adversely affected. Furthermore, like 
all other entities affected, this action aids small businesses by 
allowing them to recover costs for providing relay services. Below, we 
further describe and estimate the number of small entity licensees and 
regulatees that may be affected by these rules. 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 TRS.
    21. TRS Providers. Neither the Commission nor the SBA has developed 
a definition of ``small entity'' specifically applicable to providers 
of telecommunications relay services (TRS). The closest applicable 
definition under the SBA rules is for telephone communications 
companies other than radiotelephone (wireless) companies. The SBA 
defines such establishments to be small businesses when they have no 
more than 1,500 employees. According to the FCC's most recent data, 
there are approximately 12 interstate TRS providers, which consist of 
interexchange carriers, local exchange carriers, state-managed 
entities, and non-profit organizations. Approximately five or fewer of 
these entities are small businesses. The FCC notes that these providers 
include several large interexchange carriers and incumbent local 
exchange carriers. Some of these large carriers may only provide TRS 
service in a small area but they nevertheless are not small business 
entities. Consequently, the FCC estimates that there are fewer than 5 
small TRS providers that may be affected by the proposed rules, if 
adopted.
    22. 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. 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. 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 26 of these 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 local exchange carriers (LECs). The FCC 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 FCC estimates that fewer than 2,295 small 
telephone communications companies other than radiotelephone companies 
are small entities or small incumbent LECs.
    23. We have 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 
(i.e., a telephone communications business having 1,500 or fewer 
employees), and ``is not dominant in its field of operation.'' 15 
U.S.C. 632. 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. We 
have therefore included small incumbent LECs in this RFA analysis, 
although we emphasize that this RFA action has no effect on FCC 
analyses and determinations in other, non-RFA contexts.

Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements

    24. The cost recovery requirements adopted herein should not 
require additional recordkeeping requirements for relay service 
providers. Providers have already been using similar methods to recover 
costs for traditional TRS and these methods are also similar to the new 
STS and VRS cost recovery guidelines. Furthermore, we are not mandating 
specific recordkeeping and compliance requirements. Rather, we are 
informing carriers that if they are seeking reimbursement there are 
guidelines to follow. How they record their data, however, is the 
carriers' choice. If any additional costs are imposed, they should be 
minimal because the tracking procedures are similar to those already in 
place for traditional TRS. Furthermore, these costs will impose no 
greater burden on small entities because all carriers must provide the 
same data for cost recovery. In addition, these measures will promote 
more efficient service and allow the TRS providers to be reimbursed 
more accurately for their costs, thus negating any minimal costs 
imposed by these requirements. Furthermore, the money received by small 
entities will enable them to more effectively compete in other areas 
such as the development of new technologies.

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

    25. The RFA requires an agency to describe any significant 
alternatives that it has considered in reaching its approach, which may 
include the following four alternatives: (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. 5 
U.S.C. 603(c).
    26. The Commission concludes that the cost recovery guidelines 
adopted herein will have no adverse economic impact on small entities 
because these rules are designed to allow all providers, including all 
small entities to be accurately reimbursed. Furthermore, the Advisory 
Council, which proposed guidelines for the rules herein, consists of 
members of state regulatory bodies, relay users, members of the 
disabilities community, large and small TRS providers, and large and 
small TRS contributors. As a result, the cost recovery measures adopted 
herein are the result of input from the industry, including small 
business entities.

[[Page 4207]]

    27. The Commission considered certain alternatives and found the 
measures adopted herein to be the most appropriate. For example, for 
Spanish language relay, we considered the alternative of requiring 
these costs to be collected separately and tested to determine whether 
they are significantly different from English relay costs. After 
careful analysis, however, we concluded that Spanish and English relay 
costs were sufficiently similar to calculate reimbursement based on 
completed conversation minutes for both Spanish and English relay.
    28. In addition, because of the unique characteristic of the 
developing VRS market, we declined to adopt permanently the 
alternatives suggested by the Advisory Council and the Fund 
Administrator, i.e. the recommendation to use the same methodology for 
rate development in place today for traditional TRS interstate cost 
recovery for the development of a VRS reimbursement rate. We also 
declined to develop, as an alternative, a VRS reimbursement rate based 
on completed conversation minutes of use at a national average 
reimbursement rate. Although the national average compensation 
methodology has all the benefits that we described above, we are not 
convinced that this methodology will provide adequate incentives to 
carriers to provide video relay services. Instead, we found that 
additional comments on these recommendations are necessary and seek 
comment in the Further NRPM related to this MO&O (Published elsewhere 
in this issue of the Federal Register.).
    29. Accordingly, this MO&O directs the TRS administrator to adopt 
an interim VRS cost recovery rate using the average per minute 
compensation methodology used for traditional TRS. Such an interim 
methodology will allow the Commission time to further consider VRS cost 
recovery and evaluate the comments on these recommendations that will 
be received in response to the Further NPRM related to this MO&O.
    30. Thus, while significant alternatives have been considered, we 
believe that the actions taken herein are in the best interests of all 
entities, including small businesses.

Report to Congress

    31. The Commission will send a copy of the Memorandum Opinion and 
Order, including this FRFA, in a report to be sent to Congress pursuant 
to the Congressional Review Act. 5 U.S.C. 801(a)(1)(A). In addition, 
the Commission will send a copy of the Memorandum Opinion and Order 
including FRFA, to the Chief Counsel for Advocacy of the Small Business 
Administration. A copy of the Memorandum Opinion and Order and FRFA (or 
summaries thereof) will also be published in the Federal Register. 5 
U.S.C. 604(b).

Ordering Clauses

    32. Pursuant to the authority contained in Sec. 64.604 of the 
Commission's Rules, 47 CFR 64.604, and in sections 1, 2, 4, 225, 255 
and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C. 
151, 152, 154, 225, 255, 303(r) the recommendations of the Advisory 
Council and the Fund Administrator relating to traditional TRS and STS 
are adopted to the extent described herein.
    33. Pursuant to the authority contained in Sec. 64.604 of the 
Commission's Rules, 47 CFR 64.604, and in sections 1, 2, 4, 225, 255 
and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C. 
151, 152, 154, 225, 255, 303(r) the recommendations of the Advisory 
Council and the Fund Administrator relating to the need for a separate 
reimbursement rate for VRS and expansion of the TRS Data Center Request 
to include specific sections for VRS reporting are adopted as described 
herein.
    34. Pursuant to the authority contained in Sec. 64.604 of the 
Commission's Rules, 47 CFR 64.604, and in sections 1, 2, 4, 225, 255 
and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C. 
151, 152, 154, 225, 255, 303(r) the TRS administrator shall use the TRS 
reimbursement rate methodology, on an interim basis, to develop the VRS 
reimbursement rate, pending further action by the Commission.
    35. Pursuant to the authority contained in Sec. 64.603 of the 
Commission's Rules, 47 CFR 64.603, and in sections 1, 2, 4, 225, 255 
and 303(r), of the Communications Act of 1934, as amended, 47 U.S.C. 
151, 152, 154, 225, 255, 303(r) Sec. 64.603 of the Commission's rules 
does not require VRS providers to offer Speech-to-Speech services or 
Spanish relay services at this time.
    36. The collections of information contained herein are contingent 
upon approval by the Office of Management and Budget and will go into 
effect upon announcement in the Federal Register.
    37. The Commission's Consumer Information Bureau, Reference 
Information Center, shall send a copy of this Memorandum Opinion and 
Order, including the Final Regulatory Flexibility Analysis, to the 
Chief Counsel for Advocacy of Small Business Administration.

Federal Communications Commission.
William F. Caton,
Deputy Secretary.
[FR Doc. 02-1982 Filed 1-28-02; 8:45 am]
BILLING CODE 6712-01-P