[Federal Register Volume 67, Number 183 (Friday, September 20, 2002)]
[Proposed Rules]
[Pages 59236-59239]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-23200]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 64

[CC Docket Nos. 96-115, 96-149, FCC 02-214]


Implementation of the Telecommunications Act of 1996: 
Telecommunications Carriers' Use of Customer Proprietary Network 
Information and Other Customer Information; Implementation of the Non-
Accounting Safeguards of Sections 271 and 272 of the Communications Act 
of 1934, as Amended; 2000 Biennial Regulatory Review--Review of 
Policies and Rules Concerning Unauthorized Changes of Consumers' Long 
Distance Carriers

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: In this document, the Commission seeks to refresh the record 
on two issues raised in the CPNI Order Further NPRM (63 FR 45140, 
August 24, 1998) and requests comment on customer proprietary network 
information (CPNI) implications when a carrier goes out of business, 
sells all or part of its customer base, or seeks bankruptcy protection.

DATES: Comments are due October 21, 2002, and Reply Comments are due 
November 19, 2002.

FOR FURTHER INFORMATION CONTACT: Marcy Greene, Attorney-Advisor, 
Competition Policy Division, Wireline Competition Bureau, at (202) 418-
1580, or via the Internet at [email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Third 
Further Notice of Proposed Rulemaking (Third Further NPRM) in CC Docket 
Nos. 96-115, 96-149 and 00-257, adopted July 16, 2002, and released 
July 25, 2002. The complete text of this Third Further 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-A257, 
Washington, DC, 20554, telephone 202-863-2893, facsimile 202-863-2898, 
or via e-mail at [email protected]. It is also available on the 
Commission's Web site at http://www.fcc.gov.

Synopsis of Third Further NPRM

    1. The Third Further Notice of Proposed Rulemaking (Third Further 
NPRM) seeks to refresh the record on regulation of foreign storage of 
and access to domestic CPNI, and the need for additional enforcement 
mechanisms or protections for carrier proprietary information. Finally, 
the Third Further NPRM seeks comment on the implications of the 
Commission's CPNI regulations when carriers leave the market.

Initial Regulatory Flexibility Act Analysis

    2. As required by the Regulatory Flexibility Act (RFA), 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 Third Further Notice of 
Proposed Rulemaking (Third Further 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 Third 
Further NPRM provided herein. The Commission will send a copy of the 
Third Further NPRM, including this IRFA, to the Chief Counsel for 
Advocacy of the Small Business Administration. In addition, the Third 
Further NPRM and IRFA (or summaries thereof) will be published in the 
Federal Register.

Need for, and Objectives of, the Proposed Rules

    3. The Commission is issuing the Third Further NPRM to refresh the 
record on two issues raised in the CPNI Order Further NPRM, and to seek 
comment on the CPNI implications when a carrier goes out of business, 
sells all or part of its customer base, or seeks bankruptcy protection. 
Specifically, the Third Further NPRM seeks comment on: (1) Foreign 
storage of and access to domestic CPNI; (2) CPNI safeguards and 
enforcements mechanisms; and (3) appropriate regulations governing the 
CPNI held by carriers that go out of business, sell all or part of 
their

[[Page 59237]]

customer base, or seek bankruptcy protection.
    4. In a July 8, 1997 Ex Parte letter, the FBI requested that the 
Commission regulate the foreign storage of and foreign-based access to 
CPNI of U.S. customers who use domestic telecommunications services. 
The Commission requested comment on this proposal in its CPNI Order 
Further NPRM. As an alternative, the FBI suggested that foreign storage 
or access to domestic CPNI be permitted only upon informed written 
customer approval. To the degree that CPNI is stored in a foreign 
country, the FBI asked that the Commission require carriers to keep a 
copy of customers' CPNI records within the U.S. for public safety, law 
enforcement, and national security reasons. The FBI also requested that 
we require carriers to maintain copies of the CPNI of all U.S.-based 
customers because of the need for prompt and secure law enforcement 
purposes. The Commission now requests that commenters refresh the 
record on this topic. Specifically, it requests that commenters 
consider the FBI proposal in light of heightened national security 
concerns. In addition, the Commission requests input as to whether any 
of the concerns raised by the FBI have been illustrated by actual 
incidents during the period since comments were received on this topic. 
Finally, it asks commenters to provide estimates of the costs that 
would be incurred if we were to mandate carriers to maintain the 
domestic storage of, and access to, domestic CPNI.
    5. In the CPNI Order Further NPRM, the Commission sought comment on 
what safeguards in addition to those adopted in the CPNI Order (63 FR 
20326, April 24, 1998), if any, are needed to protect the 
confidentiality of carrier proprietary information, including that of 
resellers and ISPs. The CPNI Order Further NPRM also sought comment on 
what, if any, further enforcement mechanisms the Commission should 
adopt to ensure carrier compliance with our CPNI policies and rules. 
The Commission seeks to refresh the record on this topic. Specifically, 
it requests that carriers and other interested parties describe any 
actual experience with problems since we originally issued the CPNI 
Order Further NPRM.
    6. Finally, in light of inquiries the Commission has received in 
the face of recent carrier bankruptcies, mergers, and asset sales, the 
Commission seeks comment on carrier use and disclosure of CPNI when it 
sells its assets or goes out of business. It seeks comment on whether 
an exiting carrier should be able to use CPNI for transition of its 
customers to another carrier. If commenters believe that an exiting 
carrier should be able to disclose CPNI to the acquiring carrier, we 
seek comment on whether we should require the exiting carrier to state 
that fact in advance notice provided to customers acquired by the sale 
or transfer from another carrier in compliance with our authorization 
and verification (slamming) rules. Further, the Commission asks, to the 
degree that the exiting carrier has obtained CPNI approvals from its 
customer, whether the new carrier should be deemed to have received 
such approvals, or whether it should be required to provide notice and 
obtain approval for CPNI use and disclosure from the acquired 
customers. Further, it seeks comment on whether the Commission should 
recognize a difference between service types. The Commission also seeks 
comment on whether carriers can sell CPNI as an asset and on whether 
such regulations would go beyond the scope of section 222 or the 
Commission's authority.

Legal Basis

    7. The Third Further NPRM is adopted pursuant to sections 1, 4(i), 
222, and 303(r) of the Communications Act of 1934, as amended, 47 
U.S.C. 151, 154(i), 222, and 303(r).

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

    8. 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, if adopted. 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 that: (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).
    9. The most reliable source of information regarding the total 
numbers of certain common carrier and related providers nationwide 
appears to be data the Commission publishes annually in its 
Telecommunications Provider Locator report, derived from filings made 
in connection with the Telecommunications Relay Service (TRS). 
According to data in the most recent report, there are 5,679 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 service, providers of 
telephone exchange service, and resellers.
    10. The Commission has included small incumbent local exchange 
carriers (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. It 
has 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.
    11. Total Number of Telephone Companies Affected. The U.S. Bureau 
of 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. This number contains a variety of 
different categories of carriers, including LECs, interexchange 
carriers, competitive access providers, operator service providers, pay 
telephone operators, and resellers. It seems certain that some of these 
3,497 telephone service firms may not qualify as small entities or 
small incumbent LECs because they are not ``independently owned and 
operated.'' It seems reasonable to conclude that fewer than 3,497 
telephone service firms are small entity telephone service firms that 
may be affected by these rules.
    12. Wireline Carriers and Service Providers. The SBA has developed 
a definition of small entities for telephone communications companies 
other than 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 (wireless) company is one employing no more than 1,500 
persons. All but 26 of the 2,321 non-radiotelephone (wireless) 
companies listed by the Census Bureau were reported to have fewer than 
1,000 employees. Even if all 26 of the remaining companies had more 
than

[[Page 59238]]

1,500 employees, there would still be 2,295 non-radiotelephone 
(wireless) companies that might qualify as small entities or small 
incumbent LECs. Although it seems certain that some of these carriers 
are not independently owned and operated, we are unable at this time to 
estimate with greater precision the number of wireline carriers and 
service providers that would qualify as small business concerns under 
SBA's definition. Therefore, we estimate that fewer than 2,295 small 
telephone communications companies other than radiotelephone (wireless) 
companies are small entities that may be affected by these rules.
    13. Local Exchange Carriers. Neither the Commission nor the SBA has 
developed a definition of small providers of local exchange services. 
The closest applicable definition under the SBA's rules is for 
telephone communications companies other than radiotelephone (wireless) 
companies. The most reliable source of information regarding the number 
of LECs nationwide of which we are aware appears to be the data that we 
collect annually in connection with the Telecommunications Relay 
Service (TRS). According to the Commission's most recent data, there 
are 1,329 local exchange carriers, including incumbent LECs. Although 
it seems certain that some of these carriers are not independently 
owned and operated, or have more than 1,500 employees, we are unable at 
this time to estimate with greater precision the number of LECs that 
would qualify as small business concerns under the SBA's definition. 
Consequently, we estimate that they are fewer than 1, 329 small entity 
LECs that may be affected by the proposals in the Second Further Notice 
(66 FR 50140, October 2, 2001).
    14. Interexchange Carriers. Neither the Commission nor the SBA has 
developed a definition of small entities specifically applicable to 
providers of interexchange services (IXCs). The closest applicable 
definition under the SBA's rules is for telephone communications 
companies other than radiotelephone (wireless) companies. The most 
reliable source of information regarding the number of IXCs nationwide 
of which we are aware appears to be the data that we collect annually 
in connection with TRS. According to our most recent data, 229 
companies reported that they were engaged in the provision of 
interexchange services. Although it seems certain that some of these 
carriers are not independently owned and operated, or have more than 
1,500 employees, we are unable at this time to estimate with greater 
precision the number of IXCs that would qualify as small business 
concerns under the SBA's definition. Consequently, we estimate that 
there are fewer than 229 small entity IXCs that may be affected by this 
order.
    15. Competitive Access Providers. Neither the Commission nor the 
SBA has developed a definition of small entities specifically 
applicable to providers of competitive access services (CAPs). The 
closest applicable definition under the SBA's rules is for telephone 
communications companies other than radiotelephone (wireless) 
companies. The most reliable source of information regarding the number 
of CAPs nationwide of which we are aware appears to be the data that we 
collect annually in connection with the TRS. According to our most 
recent data, 532 companies reported that they were engaged in the 
provision of either competitive access services or competitive local 
exchange service. Although it seems certain that some of these carriers 
are not independently owned and operated, or have more than 1,500 
employees, we are unable at this time to estimate with greater 
precision the number of CAPs that would qualify as small business 
concerns under the SBA's definition. Consequently, we estimate that 
there are fewer than 532 small entity CAPs that may be affected by this 
order.
    16. 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's rules is for telephone communications companies other than 
radiotelephone (wireless) companies. The most reliable source of 
information regarding the number of operator service providers 
nationwide of which we are aware appears to be the data that we collect 
annually in connection with the TRS. According to our most recent data, 
22 companies reported that they were engaged in the provision of 
operator services. Although it seems certain that some of these 
companies are not independently owned and operated, or have more than 
1,500 employees, we are unable at this time to estimate with greater 
precision the number of operator service providers that would qualify 
as small business concerns under the SBA's definition. Consequently, we 
estimate that there are fewer than 22 small entity operator service 
providers that may be affected by this order.
    17. Pay Telephone Providers. Neither the Commission nor the SBA has 
developed a definition of small entities specifically applicable to pay 
telephone providers. The closest applicable definition under the SBA's 
rules is for telephone communications companies other than 
radiotelephone (wireless) companies. The most reliable source of 
information regarding the number of pay telephone operators nationwide 
of which we are aware appears to be the data that we collect annually 
in connection with the TRS. According to our most recent data, 936 
companies reported that they were engaged in the provision of pay 
telephone services. Although it seems certain that some of these 
carriers are not independently owned and operated, or have more than 
1,500 employees, we are unable at this time to estimate with greater 
precision the number of pay telephone operators that would qualify as 
small business concerns under the SBA's definition. Consequently, we 
estimate that there are fewer than 936 small entity pay telephone 
operators that may be affected by this order.
    18. Wireless Carriers. Wireless telephony includes cellular, 
personal communications services (PCS) or specialized mobile radio 
(SMR) service providers. The SBA has developed a definition of small 
entities for radiotelephone (wireless) companies; however, neither the 
Commission nor the SBA has developed a definition of small entities 
applicable to cellular licensees, or to providers of paging and 
messaging services. Though categorized under the same size standard as 
the other wireless services discussed in this paragraph, paging is now 
considered a separate industry. The closest applicable definition under 
the SBA's rules is for telephone communications companies other than 
radiotelephone (wireless) companies. According to the SBA's definition, 
a small business radiotelephone company is one employing no more than 
1,500 persons. According to the most recent Provider Locator data, 858 
carriers reported that they were engaged in the provision of wireless 
telephony and 576 companies reported that they were engaged in the 
provision of paging and messaging services. Although it seems certain 
that some of these carriers are not independently owned and operated, 
we are unable at this time to estimate with greater precision the 
number of radiotelephone carriers and service providers that would 
qualify as small business concerns under the SBA's definition. 
Consequently, we estimate that there are fewer than 858 small carriers 
providing wireless telephony services and fewer than 576 small 
companies providing paging and

[[Page 59239]]

messaging services that may be affected by these rules.
    19. Resellers. Neither the Commission nor the SBA has developed a 
definition of small entities specifically applicable to resellers. The 
closest applicable definition under the SBA's rules is for all 
telephone communications companies. The most reliable source of 
information regarding the number of toll resellers nationwide of which 
we are aware appears to be the data that we collect annually in 
connection with the TRS. According to our most recent data, 710 
companies reported that they were engaged in the resale of telephone 
services. Although it seems certain that some of these carriers are not 
independently owned and operated, or have more than 1,500 employees, we 
are unable at this time to estimate with greater precision the number 
of resellers that would qualify as small business concerns under the 
SBA's definition. Consequently, we estimate that there are fewer than 
710 small entity resellers that may be affected by this order.

Description of Projected Reporting, Recordkeeping and Other Compliance 
Requirements

    20. The Commission has discussed generally in the Third Further 
NPRM, supra paras. 143-147, the possibility that its tentative policies 
and rules, if adopted, might entail additional obligations for 
carriers. The Commission asks for comment on any reporting, record 
keeping, or compliance requirements that might arise that could impact 
any entities, large and small, affected by such requirements.

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

    21. 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.
    22. Section 222 applies to all telecommunications carriers, and 
therefore, any rules that we adopt will be applicable to all carriers. 
Accordingly, the Commission cannot exempt small entities from complying 
with any rules that we adopt. It has, however, taken the limited 
resources of small entities into account in promulgating certain 
existing CPNI rules, and intend to do so again in addressing the issues 
that are addressed in the Third Further NPRM. In response to the IRFA 
issued in connection with the Clarification Order and Second Further 
Notice of Proposed Rulemaking (66 FR 53545, October 23, 2001 and 66 FR 
50140, October 2, 2001), the Commission notes that some commenters 
asserted that, because the statute requires a universal standard, it 
had not adequately taken notice of the issues of small entities in this 
area. That is untrue; it is of particular concern to the Commission 
that the interests of small entities be addressed.
    23. In this Third Further NPRM, the Commission seeks comment on 
whether it should regulate the foreign storage or foreign-based access 
to the CPNI of U.S. customers who use domestic telecommunications 
services. Specifically, it seeks comment on whether foreign storage or 
foreign access to domestic CPNI should be permitted only upon informed 
customer approval. The Commission also requests comment upon whether it 
should require that copies of domestic CPNI should be maintained within 
the United States. If it adopts rules governing foreign storage of and 
access to CPNI, all telecommunications carriers, including small 
entities, must comply with such rules. While additional rules could 
place a burden upon small entities in terms of developing, tracking and 
maintaining customer consent or in terms of creating copies of customer 
CPNI, such actions would only be required to the extent carriers choose 
to store domestic CPNI outside of the United States. Carriers could 
decide whether the burdens of any such regulations outweigh the benefit 
to the carrier of foreign storage of or access to domestic CPNI.
    24. The Commission also seeks to refresh the record on what, if 
any, additional safeguards may be needed to protect the confidentiality 
of carrier proprietary information, as well as what further enforcement 
mechanisms, if any, may be necessary. In addition, it seeks comment on 
the use and disclosure of CPNI in the event a carrier goes out of 
business or sells its assets. Because the Commission has not proposed 
any rules at this time, it is unable to forecast the economic impact on 
small entities. Overall, comments are requested in response to this 
IRFA on what competitive or economic impact any proposed rules in these 
areas would have on small entities and on whether there is any 
alternative form or proposals that we should consider to minimize the 
economic impact on them. Further, while the Commission does not 
anticipate that any adopted rules will have a different impact upon 
small entities, it seeks comment in particular from small entities that 
have concerns about the affect the proposed policies or rules, if 
adopted, might have on them if they later go out of business or sell 
their assets.

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

    None.

Ordering Clauses

    25. Accordingly, pursuant to the authority contained in sections 2, 
4(i)-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 Third Further 
Notice of Proposed Rulemaking is adopted.
    26. The Commission's Consumer Information Bureau, Reference 
Information Center, shall send a copy of this Third Further NPRM, 
including the Initial Regulatory Flexibility Analysis, to the Chief 
Counsel for Advocacy of the Small Business Administration.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 02-23200 Filed 9-19-02; 8:45 am]
BILLING CODE 6712-01-P