[Federal Register Volume 67, Number 25 (Wednesday, February 6, 2002)]
[Proposed Rules]
[Pages 5704-5710]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-1213]



  Federal Register / Vol. 67, No. 25 / Wednesday, February 6, 2002 / 
Proposed Rules  

[[Page 5704]]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 32, 36, and 64

[CC Docket Nos. 00-199, 97-212, and 80-286; FCC 01-305]


2000 Biennial Regulatory Review--Comprehensive Review of the 
Accounting Requirements and ARMIS Reporting Requirements for Incumbent 
Local Exchange Carriers: Phase 2

AGENCY: Federal Communications Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document seeks comment on fundamental changes to the 
accounting and reporting requirements and on whether these accounting 
and reporting requirements should sunset by a date certain, such as 
three or five years in the future. The Commission seeks comment on 
sunsetting the remaining Class A accounts by a date certain, whether 
ARMIS information (particularly infrastructure data) would be better 
captured through the Local Competition and Broadband Data Gathering 
Program rather than in ARMIS, eliminating the rules for continuing 
property records (CPR), eliminating affiliate transactions rules for 
price cap carriers, and conforming the separations rules to the changes 
to the chart of accounts in the Report and Order.

DATES: Comments (for all issues except the part 36 issue) are due April 
8, 2002; reply comments are due May 7, 2002. For the part 36 issue, 
comments are due March 8, 2002, and replies are due March 25, 2002. 
Written comments by the public on the proposed information collections 
are due April 8, 2002. Written comments must be submitted by the Office 
of Management and Budget (OMB) on the proposed information 
collection(s) on or before April 8, 2002.

ADDRESSES: Federal Communications Commission, 445 12th Street, TW-A325, 
Washington, DC 20554. In addition to filing comments with the 
Secretary, a copy of any comments on the information collections 
contained herein should be submitted to Judy Boley, Federal 
Communications Commission, Room 1-C804, 445 12th Street, SW., 
Washington, DC 20554, or via the Internet to [email protected], and to 
Edward C. Springer, Office of Management and Budget, Office of 
Information and Regulatory Affairs, 725 17th Street, NW., Room 10236, 
NEOB, Washington, DC 20503 or via the Internet to 
[email protected].

FOR FURTHER INFORMATION CONTACT: Tim Peterson, Deputy Division Chief, 
Accounting Safeguards Division, Common Carrier Bureau, at (202) 418-
1575 or Mika Savir, Accounting Safeguards Division, Common Carrier 
Bureau, Legal Branch, at (202) 418-0384. For additional information 
concerning the information collections in this Report and Order, 
contact Judy Boley at (202) 418-0214, or via the Internet at 
[email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's 
Further Notice of Proposed Rulemaking (FNPRM) adopted October 11, 2001 
and released November 5, 2001. The full text of this document is 
available for public inspection and copying during regular business 
hours at 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].
    This FNPRM contains proposed information collections subject to the 
Paperwork Reduction Act of 1995 (PRA), Public Law 10413. It will be 
submitted to the Office of Management and Budget (OMB) for review under 
section 3507(d) of the PRA. OMB, the general public, and other Federal 
agencies are invited to comment on the proposed information collections 
contained in this proceeding.
    Paperwork Reduction Act: This FNPRM contains a proposed information 
collection. The Commission, as part of its continuing effort to reduce 
paperwork burdens, invites the general public to comment on the 
information collections contained in this NPRM, as required by the 
Paperwork Reduction Act of 1995, Public Law 104-13. Public and agency 
comments are due at the same time as other comments on this FNPRM; OMB 
notification of action is due April 8, 2002. Comments should address: 
(a) Whether the proposed collection of information is necessary for the 
proper performance of the functions of the Commission, including 
whether the information shall have practical utility; (b) the accuracy 
of the Commission's burden estimates; (c) ways to enhance the quality, 
utility, and clarity of the information collected; and (d) ways to 
minimize the burden of the collection of information on the 
respondents, including the use of automated collection techniques or 
other form of information technology.
    OMB Control Number: None.
    Title: Phase 3--FNPRM in CC Dockets No. 00-199 and 97-212, 2000 
Biennial Regulatory Review.
    Form Nos.: FCC Form 477, FCC Report 43-07.
    Type of Review: New Collection.
    Respondents: Business or other for-profit.

                                                 Estimated Hours
----------------------------------------------------------------------------------------------------------------
                                                                     Number of                     Total annual
                              Title                                 respondents    Per response       burden
----------------------------------------------------------------------------------------------------------------
Part 32--Uniform Systems of Accounts............................              68          18,373       1,249,364
Local Competition in the Local Exchange Telecommunications                   255          117.34          29,924
 Services Report................................................
FCC Form 4777 ARMIS Infrastructure Report, FCC Report 43-07.....               0               0              0
----------------------------------------------------------------------------------------------------------------
* These are estimated hours if all the proposals are adopted in a Report and Order, with the exception of the
  FCC Report 4777. Estimates provided are current burden estimates.

    Total Annual Burden: 1,279,288.
    Cost to Respondents: $0.
    Needs and Uses: In CC Docket No. 00-199, the Commission seeks 
comment on sunsetting the remaining Class A accounts, whether ARMIS 
information (particularly infrastructure data should be better captured 
through the Local Competition and Broadband Data Gathering Program 
rather than in ARMIS. The Commission also seeks comment on whether all 
filers in the Program should report information on hybrid fiber-copper 
interface locations, number of customer serviced from these interface 
locations, xDSL customer terminations associated with non-hybrid loops, 
among other things. The information is needed so that the Commission 
can fulfill its statutory responsibilities and obligations.

[[Page 5705]]

Summary of the FNPRM

A. Phase 3 (CC Docket Nos. 00-199 and 99-301)

    The Commission is committed to moving forward with Phase 3 of this 
comprehensive review proceeding. As competition continues to develop, 
the original justifications for the Commission's accounting and 
reporting requirements may no longer be valid. The Commission seeks to 
refresh the Phase 3 record. The Commission looks forward to working 
closely with the states, incumbent carriers, and other interested 
parties in this endeavor.
    State regulators have articulated current regulatory needs to 
maintain certain Class A accounts and ARMIS filing requirements for 
various purposes, including assisting their work in promoting local 
competition, developing appropriate prices for unbundled network 
elements, and conducting local ratemaking proceedings. While the 
Commission also uses some of this information, there are certain 
accounts and requirements that appear no longer necessary for federal 
purposes: Account 5040, Private line revenue; Account 5060, Other basic 
area revenue; Account 1500, Other jurisdictional assets--net; Account 
4370, Other jurisdictional liabilities and deferred credits--net; and 
Account 7910, Income effect of jurisdictional ratemaking differences--
net. The Commission believes that, if it cannot identify a federal need 
for a regulation, it is not justified in maintaining such a requirement 
at the federal level. At the same time, however, the Commission 
recognizes that an immediate end to such requirements could cause 
severe problems for state regulators. The Commission would like to work 
with the states to arrange an orderly transition to a mechanism in 
which states undertake responsibility for collecting this information. 
The Commission tentatively concludes that these federal requirements 
should remain in place for a period of three years to enable states to 
develop alternative means of gathering this information, after which 
the federal requirements would terminate. The Commission seeks comment 
on this proposal. Commenters should address whether three years is a 
sufficient amount of time to transition from federal to state 
information gathering mechanisms. Commenters should also address 
whether it would be necessary for each state to set up its own 
mechanism or whether states might work collectively to set up a 
mechanism to collect information for multiple states. The Commission 
understands that some states are required by state law to mirror 
federal accounting requirements. The Commission asks that those states 
identify themselves and describe the precise nature of their state 
statutory constraints. The Commission also seeks comment on whether, 
rather than sunsetting these federal requirements, there are other 
means to reform federal requirements that serve only state regulatory 
needs.
    For other accounting and reporting requirements, the Commission 
continues to have a federal need for this information, such as 
administering current support mechanisms for universal service and 
price cap regulation. The Commission believes that the benefits of 
continuing these federal requirements, at present, outweigh the 
potential burdens, the assessment of that calculation is likely to 
change as technological and market conditions continue to evolve. The 
Commission seeks comment on alternatives to the current accounting and 
reporting requirements.
    The Commission also encourages the state colleagues to consider 
alternative sources of such information at the state level. There may 
well come a time in the relatively near future when the Commission 
concludes that there is no ongoing federal need to maintain these 
requirements at the federal level. The Commission seeks comment on 
these tentative views.
    The Commission asks commenters to consider whether any of these 
accounting and reporting requirements should sunset by a date certain, 
such as three or five years in the future. In particular, should the 
Commission sunset the remaining Class A accounts by a date certain? 
Should the Commission maintain the practice of imposing different 
accounting requirements on classes of carriers based on their size? If 
so, and if the Commission allows Class A carriers to shift to Class B 
accounting, are there additional accounts that should be eliminated 
from the Class B system for small and mid-sized carriers by a date 
certain? Should the requirement to maintain either Class A or Class B 
accounts be replaced with a rule requiring adherence to generally 
accepted accounting principles (GAAP)? Should any or all of the 
Commission's ARMIS reporting requirements sunset by a date certain? The 
Commission encourages commenters to discuss the implications of any 
accounting reforms they recommend on the appropriate scope of ARMIS 
reporting obligations. To the extent commenters argue that certain part 
32 or part 64 rules, or reporting requirements imposed pursuant to 47 
U.S.C. 43.21, should not sunset by a date certain, they should identify 
with specificity which rules should remain in place and provide a full 
analysis of the justification for that rule, on a rule-by-rule basis.
    The Commission seeks comment on the advantages and disadvantages of 
adopting any of these sunset approaches, as opposed to concluding that 
requirements should be eliminated only upon the attainment of certain 
indices associated with the development of a competitive marketplace? 
For example, if the Commission were to eliminate Class A accounts or 
shift to a policy of relying on GAAP, could it develop accurate inputs 
for our universal service cost model by relying on specific, ad hoc 
data requests? Moreover, what impact would elimination by a date 
certain of accounting and reporting rules have on attainment of 
statutory goals, such as the preservation and advancement of universal 
service and ensuring that pole attachment rates are just and 
reasonable? Could the Commission satisfy other federal regulatory needs 
by making data requests on an ad hoc basis and relying on other 
existing data collection mechanisms, such as the Local Competition and 
Broadband Data Gathering Program? If the Commission ultimately decides 
not to sunset certain rules, but instead eliminate those rules only 
upon attainment of certain indices associated with competition, what 
costs would be imposed on both regulators and the industry by future 
administrative proceedings to determine whether those triggers have 
been met, particularly if proceedings were undertaken on a carrier-by-
carrier basis?
    The Commission also seeks comment from state commissions and all 
other interested parties on whether ARMIS information (particularly 
infrastructure data) would be better captured through the Local 
Competition and Broadband Data Gathering Program rather than in ARMIS. 
The Local Competition and Broadband Data Gathering Program seeks to 
develop the Commission's understanding of the deployment and 
availability of broadband services and the development of local 
telephone service competition in order to comply with section 706 of 
the 1996 Act. The Local Competition and Broadband Data Gathering 
Program was established for a five-year period, unless the Commission 
acts to extend it. The Commission seeks comment on the costs and 
benefits associated with collecting infrastructure information through 
the Local Competition and Broadband Data Gathering Program for all 
affected parties, including potential filers and

[[Page 5706]]

federal, state, and local regulators. In particular, the Commission 
seeks comment on whether information currently collected in ARMIS 43-07 
should instead be collected through the Local Competition and Broadband 
Data Gathering Program, which imposes a reporting obligation on a 
larger universe of carriers. In addition, the Commission seeks comment 
on collecting such data through the Local Competition and Broadband 
Data Gathering Program, but requiring only the mandatory price cap 
companies to report. The Commission also seeks comment on whether all 
filers in the Local Competition and Broadband Data Gathering Program 
should report information on hybrid fiber-copper loop interface 
locations, number of customers served from these interface locations, 
xDSL customer terminations associated with hybrid fiber-copper loops, 
and xDSL customer terminations associated with non-hybrid loops. 
Lastly, the Commission seeks comment on whether to gather information 
on new technologies that indicate how carriers are upgrading the public 
switched network, e.g., information for switches capable of 
transmitting ATM protocol, and data on SMDS, internet routers, and 
frame relay service, through the Local Competition and Broadband Data 
Gathering Program.
    In addition, the Commission seeks comment on eliminating the rules 
for continuing property records (CPR), specifically Sec. 32.2000(e) and 
(f) of the Commission's rules, 47 CFR 32.2000(e) and (f). States assert 
that they have an ongoing need for this information in order to support 
state ratemaking proceedings. The Commission seeks comment on whether 
there are alternative avenues for states to gather whatever information 
pertaining to property records they need for state regulatory 
proceedings. Incumbent LECs are subject to a number of other regulatory 
constraints and appear to have ample incentives to maintain a detailed 
inventory of their property. Moreover, the record shows that detailed 
requirements, which include rigid rules for recording property, impose 
substantial burdens on incumbent LECs. In light of all these factors, 
the Commission tentatively concludes that the detailed CPR rules should 
be eliminated in three years. The Commission seeks comment on this 
proposal. Commenters should address whether there are any federal or 
state regulatory needs served by the CPR rules that cannot be met 
through alternative mechanisms. The Commission also seeks further 
comment on the costs and burdens of maintaining these CPR rules. 
Additionally, commenters should address whether three years is too 
little or too much time for states that rely upon the existence of 
federal CPR rules to transition to alternative mechanisms. Commenters 
should include an analysis of the costs and benefits of maintaining the 
CPR rules for a different length of time.
    The Commission also seeks comment on alternative approaches to 
streamline the CPR rules. In earlier comments in this proceeding, 
Verizon proposed that the Commission should eliminate most of the CPR 
requirements, but retain the requirement that property records be (1) 
Subject to internal accounting controls; (2) auditable; (3) equal in 
the aggregate to the total investment reflected in the financial 
accounts; and (4) maintained for the life of the property. Moreover, 
Verizon suggested that CPR rules should provide that (1) records be 
maintained by original cost where appropriate, and otherwise, be 
maintained using averages or estimates; (2) average costs may be used 
for plants consisting of a large number of similar units, and units of 
similar size and type within each specified account may be grouped; and 
(3) in cases where the actual original cost of property cannot be 
ascertained, such as pricing for inventory for the initial entry of a 
continuing property record or the pricing of an acquisition for which 
the continuing property record has not been maintained, the original 
cost may be estimated. In cases where estimates are used, any estimate 
shall be consistent with accounting practices in effect at the time the 
property was constructed. The Commission seeks comment on the 
advantages and disadvantages associated with Verizon's proposal.
    Finally, the Commission seeks to refresh the record on the 
affiliate transactions rules. To what extent do these rules remain 
necessary for price cap carriers? Do price cap carriers that have 
obtained pricing flexibility, and have thus waived low-end formula 
adjustments, retain any incentive or ability to engage in improper 
cost-shifting or cross-subsidization? What impact, if any, would 
elimination of these rules for price cap carriers have on state 
ratemaking processes? What impact would there be on carriers if the 
Commission elects to retain these rules?
    The Commission seeks comment on whether it should maintain 
affiliate transactions rules, or adopt revised rules, to govern 
transactions that are subject to section 272 of the Communications Act, 
47 U.S.C. 272? Section 272(b)(2) requires that the affiliate required 
by that section maintain ``books, records, and accounts in the manner 
prescribed by the Commission which shall be separate from the books, 
records, and accounts maintained by the Bell operating company of which 
it is an affiliate.'' Section 272(b)(5) requires that the separate 
affiliate conduct all transactions with the Bell operating company ``on 
an arm's length basis.'' The nondiscrimination requirement found in 
section 272(c) requires the BOC to ``account for all transactions with 
an affiliate * * * in accordance with accounting principles designed by 
or approved by the Commission.'' Section 272(e)(4) specifies that the 
BOC may provide interLATA facilities or services to its interLATA 
affiliate if such services or facilities are made available to all 
carriers at the same rates and on the same terms and conditions, and so 
long as the costs are appropriately allocated.'' The Commission seeks 
comment on the advantages or disadvantages of applying one set of rules 
to transactions between BOCs and their section 272 affiliates and 
another set of rules (or no rules) to other transactions between 
incumbent LECs and other types of affiliates? How would this be 
implemented in situations where an affiliate engages in some activities 
that are subject to section 272 and other activities that are not?
    The Commission seeks comment on the proposal of USTA and BellSouth 
to modify the centralized service exception to the affiliate 
transactions rules. That rule states that all services received by a 
carrier from an affiliate that exists solely to provide services to 
members of the carrier's corporate family shall be recorded at cost. 
For these types of affiliates, no fair market valuations are required. 
USTA and BellSouth have argued that this rule is too restrictive, 
imposes large costs on carriers to comply, and can cause an affiliate 
to lose its overall exemption from fair market valuation of all of its 
services if one service is provided outside of the corporate family. 
USTA and BellSouth argue that, rather than applying the exception on an 
affiliate-by-affiliate basis, the exception should be applied on a 
service-by-service basis. This would allow carriers to record services 
provided solely within the corporate family at fully distributed cost 
without fair market valuation, whether or not the affiliate also 
provided other services outside the corporate family.
    The Commission seeks comment on a possible de minimis exception 
that would mitigate some of the consequences of the current rules. The 
Commission asks commenters to address whether the Commission should 
adopt a threshold of $500,000 for

[[Page 5707]]

services provided by an affiliate outside the corporate family. If the 
Commission adopted such a threshold, an affiliate could provide up to 
$500,000 in services outside the corporate family without causing other 
services it provides solely to the corporate family to undergo fair 
market valuation. The Commission also asks if there is a different 
appropriate dollar value threshold. Alternatively, the Commission seeks 
comment on whether the exception should be based on a percentage of 
transactional volume of the service. For example, if a service is 
provided outside the corporate family and the transactional volume 
amounts to only five or ten percent of all of the affiliate's services 
volume, should transactions within the corporate family remain exempt 
from the fair market valuation requirement? If the Commission adopts a 
percentage threshold, should that threshold be five percent, ten 
percent, or some other percentage?

B. Conforming Amendments to Part 36 Separations Rules (CC Docket No. 
80-286)

    Most of the part 32 revisions adopted in the Phase 2 Report and 
Order (published elsewhere in this issue) consolidate Class A accounts 
to the Class B level. The Commission tentatively concludes that the 
elimination of Class A summary accounts will require clarifying 
revisions to part 36. For example, the elimination of Account 6110, 
Network support expense, from Class A accounting will require 
Secs. 36.310 and 36.311 of the Commission's rules to be revised to 
reflect Network support expenses as the sum of accounts 6112, 6113, and 
6114. In contrast, Class B accounting will retain Account 6110. 
Therefore Secs. 36.310 and 36.311 will remain intact for Class B 
carriers, but must be revised to clarify that the use of Account 6110 
is for Class B carriers only.
    The Commission also tentatively concludes that other changes to 
part 36 are required as a result of the elimination of Accounts 2215, 
3500, 3600, 5000, 5080, 5084, and 6710 from both Class A and Class B 
accounting. The part 36 sections referencing these accounts will 
require revisions to reflect the respective accounts now utilized. The 
Commission proposes to revise, wherever necessary, those part 36 
sections affected by the revisions adopted in the Phase 2 Report and 
Order. The Commission seeks comment on these proposed conforming 
amendments.
    In the Phase 2 Report and Order, the Commission adopted subaccounts 
for five existing accounts: 2212, Digital electronic switching; 2232, 
Circuit equipment, 6212, Digital electronic switching expense; 6232, 
Circuit equipment expense; and 6620, Services. For now, these accounts 
will continue to be separated in accordance with current part 36 rules, 
including the requirements of Jurisdictional Separations Reform and 
Referral to the Federal-State Joint Board, CC Docket No. 80-286, Report 
and Order, 66 FR 33202 (6-21-2001) (Separations Freeze Order), and are 
subject to the conforming part 36 amendments proposed in the preceding 
paragraph. The Commission seeks comment on whether the creation of 
subaccounts warrants any modification to the separations treatment of 
these accounts.
    Commenters should also suggest any additional particular part 36 
rules that should be revised, how they should be revised, and which 
part 32 modification in the Phase 2 Report and Order forms the basis 
for each suggested revision. The Commission also seeks comment on 
interplay of the recent Separations Freeze Order with any suggested 
revisions.
    Finally, the Commission welcomes input from the Federal-State Joint 
Board on Separations on these issues.

Initial Regulatory Flexibility Analysis

    As required by the Regulatory Flexibility Act (RFA), the Commission 
has prepared this present Initial Regulatory Flexibility Analysis 
(IRFA) of the possible significant economic impact on small entities by 
the policies and rules proposed in this Further Notice of Proposed 
Rulemaking (FNPRM). 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 this FNPRM, which are set out in 
paragraphs 226-230 of the Report and Order and Further Notice of 
Proposed Rulemaking. The Commission will send a copy of this FNPRM, 
including this IRFA, to the Chief Counsel for Advocacy of the Small 
Business Administration (SBA). In addition, this FNPRM and IRFA (or 
summaries thereof) will be published in the Federal Register.
    Need for, and Objectives of, the Proposed Action: The Commission 
has initiated this FNPRM to seek comment on whether we should sunset 
our accounting and reporting rules; whether ARMIS information, 
particularly infrastructure data, would be better captured in the Local 
Competition and Broadband Data Gathering Program instead of through 
ARMIS; eliminating or streamlining our rules for continuing property 
records and our affiliate transactions rules; and what, if any, 
conforming amendments the Commission should make to its part 36 rules 
to reflect the revisions to the part 32 rules set forth in the Phase 2 
Report and Order. The first issue, which discusses in general terms 
sunsetting the Commission's accounting rules, would not increase the 
reporting or recordkeeping requirements for small entities. The third 
and fourth issues, regarding streamlining or eliminating our continuing 
property records rules and our affiliate transactions rules, would 
probably not significantly affect small entities. Our proposals in 
these two areas would, if adopted, result in decreasing recordkeeping 
requirements and reducing the number of fair market value estimations. 
The fifth issue merely seeks to conform part 36 to the rule changes 
adopted in the Phase 2 Report and Order. The second issue, however, 
would probably impact small entities. The second issue addresses the 
means by which the Commission collects ARMIS data, particularly 
infrastructure data. The Commission seeks comment on whether such 
collection should be implemented through the Local Competition and 
Broadband Data Gathering Program instead of through ARMIS. Under the 
Local Competition and Broadband Data Gathering Program, facilities-
based service providers with at least 250 full or one-way broadband 
lines or wireless channels in a given state complete applicable 
portions of the Form 477 for that state and local exchange carriers 
with 10,000 or more local telephone service lines, or fixed wireless 
channels, in a state must complete the applicable portions of the Form 
477 for each state in which they serve 10,000 or more subscribers. This 
is a larger group of service providers than the 30 mandatory price cap 
LECs that file infrastructure reporting requirements. The objective for 
this proposed action--to collect this data from smaller companies, in 
addition to the Bell Operating Companies--would be to give the 
Commission more information about the infrastructure of these 
companies.
    Legal Basis. The legal basis for the action as proposed for this 
rulemaking is contained in sections 1-5, 10, 11, 201-205, 215, 218-220, 
251-271, 303(r), 332, 403, 502, and 503 of the Communications Act of 
1934, as amended, 47 U.S.C. 151-155, 160, 161, 201-205, 215, 218-220, 
251-271, 303(r), 332, 403, 502, and 503.
    Description and Estimate of the Number of Small Entities to which 
the

[[Page 5708]]

Proposed Action May Apply. The Commission seeks comment on whether it 
should revise its rules so that data collection in ARMIS, particularly 
infrastructure data, should be collected pursuant to the Local 
Competition and Broadband Data Gathering Program. Under the Local 
Competition and Broadband Data Gathering Program, facilities-based 
service providers with at least 250 full or one-way broadband lines or 
wireless channels in a given state complete applicable portions of the 
Form 477 for that state. In addition, local exchange carriers with 
10,000 or more local telephone service lines, or fixed wireless 
channels, in a state must complete the applicable portions of the Form 
477 for each state in which they serve 10,000 or more subscribers. 
Currently, 30 mandatory price cap LECs file infrastructure reporting 
requirements. Fifty-two LECs file the financial ARMIS reports. 
Additional LECs are subject to service quality reporting requirements. 
Thus, if ARMIS information were captured pursuant to the Local 
Competition and Broadband Data Gathering Program, the data would be 
collected from more entities than from which the ARMIS data are 
collected today. The Commission sets out below a description of the 
types of entities that could possibly be required to comply with the 
proposed reporting
    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. To estimate the number of 
small entities that may be affected by the proposed rules, 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 
SBA. Recently, the SBA has defined a small business for ``wired 
telecommunications carriers,'' ``paging,'' ``cellular and other 
wireless telecommunications,'' and ``telecommunications resellers'' to 
be small entities when they have no more than 1,500 employees.
    The most reliable source of information regarding the total numbers 
of common carrier and related providers nationwide, as well as the 
numbers of commercial wireless entities, appears to be data derived 
from filings made in connection with the Telecommunications Reporting 
Worksheet (FCC Form 477). According to data in the most recent report, 
there are 4,822 interstate service providers. These providers 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.
    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, therefore, 
has included small incumbent LECs in this RFA analysis, although this 
RFA action has no effect on Commission analyses and determinations in 
other, non-RFA contexts.
    Total Number of Telephone Companies Affected: The Commission's 
Industry Analysis Division of the Common Carrier Bureau complies a 
report, Trends in Telephone Service, based on data from various 
sources, including the FCC Form 499-A worksheets filed by 
telecommunications carriers. According to Trends in Telephone Service, 
there were 4,822 service providers filing the FCC Form 499-A on April 
1, 2000. Of these carriers, 3,875 had, in combination with affiliates, 
1,500 or fewer employees and 947 had, in combination with affiliates, 
more than 1,500 employees. These numbers 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, personal communications service (PCS) providers, 
covered specialized mobile radio (SMR) providers, and resellers. It 
seems certain that some of those telephone service firms may not 
qualify as small entities or small incumbent LECs because they are not 
``independently owned and operated.'' 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 seems 
reasonable to conclude, therefore, that fewer than 3,875 telephone 
service firms are small entity telephone service firms or small 
incumbent LECs that may be affected by the decisions and rules proposed 
in the FNPRM.
    Wireline carriers (incumbent LECs). According to Trends in 
Telephone Service, there were 1,335 incumbent local exchange carriers 
filing the FCC Form 499-A on April 1, 2000. Of these carriers, 1,037 
had, in combination with affiliates, 1,500 or fewer employees and 298 
had, in combination with affiliates, more than 1,500 employees. Some of 
these carriers may not be independently owned or operated, but we are 
unable at this time to estimate with greater precision the number of 
wireline carriers that would qualify as small business concerns under 
SBA's definition. Consequently, the Commission estimates that there are 
fewer than 1,037 wireline small entities that may be affected by the 
decisions and rules proposed in the FNPRM.
    Other wireline carriers (other than incumbent LECs). According to 
Trends in Telephone Service, there were 496 fixed local service 
providers, other than incumbent LECs, filing the FCC Form 499-A on 
April 1, 2000. Of these carriers, 439 had, in combination with 
affiliates, 1,500 or fewer employees and 57 had, in combination with 
affiliates, more than 1,500 employees. These companies include 
competitive access providers, competitive local exchange providers, 
resellers, and other local exchange carriers. Some of these carriers 
may not be independently owned or operated, but we are unable at this 
time to estimate with greater precision the number of wireline carriers 
(other than incumbent LECs) that would qualify as small business 
concerns under SBA's definition. Consequently, we estimate that there 
are fewer than 439 wireline small entities (other than incumbent LECs) 
that may be affected by the decisions and rules proposed in the FNPRM.
    Wireless telecommunications service providers. According to Trends 
in Telephone Service, there were 1,495 wireless service providers 
filing the FCC Form 499-A on April 1, 2000. Of these carriers, 989 had, 
in combination with affiliates, 1,500 or fewer employees and 506 had, 
in combination with affiliates, more than 1,500 employees. The wireless 
service providers include

[[Page 5709]]

cellular, PCS, SMR, paging and messaging service, SMR dispatch, 
wireless data service providers, and other mobile service providers. 
Some of these carriers may not be independently owned and operated; 
however, the Commission is unable at this time to estimate with greater 
precision the number of wireless carriers and service providers that 
would qualify as small business concerns under SBA's definition. 
Consequently, the Commission estimates that there are fewer than 989 
small entity ``cellular and other wireless telecommunications'' 
providers that may be affected by the rules proposed in the FNPRM.
    Payphone service providers. According to Trends in Telephone 
Service, there were 758 payphone service providers filing the FCC Form 
499-A on April 1, 2000. Of these carriers, 755 had, in combination with 
affiliates, 1,500 or fewer employees and 3 had, in combination with 
affiliates, more than 1,500 employees. Some of these companies may not 
be independently owned and operated; however, the Commission is unable 
at this time to estimate with greater precision the number of payphone 
service providers that would qualify as small business concerns under 
SBA's definition. Consequently, the Commission estimates that there are 
fewer than 755 small entity payphone service providers that may be 
affected by the rules proposed in the FNPRM.
    Toll service providers. According to Trends in Telephone Service, 
there were 738 toll service providers filing the FCC Form 499-A on 
April 1, 2000. Of these carriers, 656 had, in combination with 
affiliates, 1,500 or fewer employees and 82 had, in combination with 
affiliates, more than 1,500 employees. The toll service providers 
include interexchange carriers, operator service providers, prepaid 
calling card providers, satellite service providers, toll resellers, 
and other toll carriers. Some of these carriers may not be 
independently owned and operated; however, the Commission is unable at 
this time to estimate with greater precision the number of toll service 
providers that would qualify as small business concerns under SBA's 
definition. Consequently, the Commission estimates that there are fewer 
than 656 small entity toll service providers that may be affected by 
the rules proposed in the FNPRM.
    Description of Proposed Reporting, Recordkeeping, and Other 
Compliance Requirements: The FNPRM seeks comment on whether ARMIS 
information, particularly infrastructure data, would be better captured 
in the Commission's Local Competition and Broadband Data Gathering 
Program. Pursuant to the current Local Competition and Broadband Data 
Gathering Program, certain providers of broadband services and of local 
telephone services must complete FCC Form 477, which collects data on 
their deployment of those services. Specifically, under the Local 
Competition and Broadband Data Gathering Program, facilities-based 
service providers with at least 250 full or one-way broadband lines or 
wireless channels in a given state complete applicable portions of the 
FCC Form 477 for that state. In addition, local exchange carriers with 
10,000 or more local telephone service lines, or fixed wireless 
channels, in a state must complete the applicable portions of the Form 
477 for each state in which they serve 10,000 or more subscribers. 
These reporting entities may include more companies than the incumbent 
LECs currently reporting in ARMIS.
    Currently, 30 mandatory price cap LECs, the operating companies of 
Verizon, BellSouth, SBC, and Qwest, file infrastructure reporting 
requirements. The financial ARMIS reports are filed by 52 local 
exchange carriers. Additional LECs are subject to service quality 
reporting requirements; however, service quality reporting issues are 
not addressed in this proceeding. Thus, if ARMIS information were 
captured pursuant to the Local Competition and Broadband Data Gathering 
Program, the data may be collected from more entities than from which 
the ARMIS data is collected today. The FNPRM also seeks comment on 
whether the data discussed in the Phase 3 Report and Order should be 
captured in the Local Competition and Broadband Data Gathering Program, 
instead of ARMIS.
    Steps Taken to Minimize Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered: The RFA 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 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.
    The FNPRM seeks comment on whether the Commission should sunset the 
accounting and reporting rules; whether ARMIS information, particularly 
infrastructure data, would be better captured in the Local Competition 
and Broadband Data Gathering Program instead of through ARMIS; and 
what, if any, conforming amendments the Commission should make to its 
part 36 rules to reflect the revisions to the part 32 rules set forth 
in the Phase 2 Report and Order. The first, third, and fourth issues, 
which seek comment on reducing accounting and reporting requirements in 
the future and discusses sunsetting accounting rules and reporting 
requirements, would not increase reporting or recordkeeping 
requirements for small entities. The fifth issue merely seeks to 
conform part 36 to the rule changes adopted in the Phase 2 Report and 
Order. This is needed due to the consolidation of several Class B 
accounts that are also used in part 36. The alternative to conforming 
our part 36 rules would be not to streamline the part 32 rules. Without 
the part 32 rule changes, there would be no need to conform the part 36 
rules. The part 32 rule changes in the Phase 2 Report and Order, 
however, represent a significant reduction in both Class A and Class B 
accounts. Therefore, conforming amendments to the part 36 
jurisdictional separations rules would be a result of the consolidation 
of part 32 accounts and should not be a significant economic impact on 
small entities.
    The data collection issue, however, would probably have a reporting 
and recordkeeping requirement impact on some small entities. This issue 
addresses the means in which the Commission collects ARMIS data, 
particularly infrastructure data. The Commission seeks comment on 
whether such collection should be implemented through the Local 
Competition and Broadband Data Gathering Program instead of through 
ARMIS. Currently, the Local Competition and Broadband Data Gathering 
Program does not collect infrastructure data, and any rule change 
adopted to expand that program in order to collect data currently 
collected in ARMIS may involve information collection from more 
entities, including small entities. With respect to minimizing the 
significant economic impact on small entities, the Commission could 
reduce the data requested from the rows currently reported in the 
relevant ARMIS reports. Any such reporting on the part of small 
entities would, however, be an increase over the current reporting 
requirement, as these entities do not currently report ARMIS 
infrastructure data at all. With

[[Page 5710]]

respect to significant alternatives, the Commission could continue to 
collect such information in ARMIS. Currently, the infrastructure data 
in ARMIS 43-07 are collected from 30 mandatory price cap carriers 
(operating companies of Verizon, SBC, BellSouth, and Qwest.) The 
Commission does not collect this information from other, smaller 
entities. If the Commission does not adopt such a rule change, small 
entities will not be affected. Alternatively, the Commission could 
adopt the rule change but specify that the data collection applies only 
to the mandatory price cap companies. The Commission seeks comment on 
these options.
    Federal Rules that may Duplicate, Overlap, or Conflict With the 
Proposed Rules. None.
    Report to Congress: the Consumer Information Bureau, Reference 
Information Center, shall provide a copy of this IRFA to the Chief 
Counsel for Advocacy of the SBA, and include it in the report to 
Congress pursuant to the SBREFA.

Ordering Clauses

    Pursuant to the authority contained in sections 4(i), 4(j), 11, 
201(b), 303(r), and 403 of the Communications Act of 1934, as amended, 
47 U.S.C. sections 154(i), 154(j), 161, 201(b), 303(r), and 403, this 
Further Notice of Proposed Rulemaking in CC Docket Nos. 80-286, 99-301, 
and 00-199 is adopted.
    The Commission's Consumer Information Bureau, Reference Information 
Center, shall send a copy of this Report and Order and Further Notice 
of Proposed Rulemaking, including the two Regulatory Flexibility 
Analyses, to the Chief Counsel for Advocacy of the Small Business 
Administration.

List of Subjects

47 CFR Part 32

    Communications Common Carriers, Reporting and recordkeeping 
requirements, Telephone, Uniform System of Accounts.

47 CFR Part 36

    Communications Common Carriers, Reporting and recordkeeping 
requirements, Telephone.

47 CFR Part 64

    Communications Common Carriers, Reporting and recordkeeping 
requirements, Telephone.

    Federal Communications Commission.
William F. Caton,
Deputy Secretary.
[FR Doc. 02-1213 Filed 2-5-02; 8:45 am]
BILLING CODE 6712-01-P