[Federal Register Volume 69, Number 57 (Wednesday, March 24, 2004)]
[Proposed Rules]
[Pages 13794-13803]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-6560]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 54, 61, and 69

[CC Docket Nos. 00-256 and 96-45; FCC 04-31]


Multi-Association Group (MAG) Plan for Regulation of Interstate 
Services of Non-Price Cap Incumbent Local Exchange Carriers and 
Interexchange Carriers; Federal-State Joint Board on Universal Service

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: By this Second Further Notice of Proposed Rulemaking (NPRM), 
the Commission initiates an NPRM seeking comment on two specific plans 
that propose establishing optional alternative regulation mechanisms 
for rate-of-return carriers. In conjunction with the consideration of 
those alternative regulation proposals, the Commission also seeks 
comment on modifications that would permit a rate-of-return carrier to 
adopt an alternative regulation plan for some study areas, while 
retaining rate-of-return regulation for other of its study areas.

DATES: Comments are due on or before April 23, 2004. Written comments 
by the public on the proposed information collections are due on or 
before April 23, 2004. Reply comments are due on or before May 10, 
2004. Written reply comments by the public on the proposed information 
collections are due on or before May 10, 2004. Written comments must be 
submitted by the Office of Management and Budget (OMB) on the proposed 
information collection(s) on or before May 24, 2004.

ADDRESSES: All filings must be sent to the Commission's Secretary, 
Marlene H. Dortch, Office of the Secretary, Federal Communications 
Commission, Room TW-A325, 445 Twelfth Street SW., Washington, DC 20554. 
In addition to filing comments with the Secretary, a copy of any 
comments on the information collections contained herein must be 
submitted to Judith Boley Herman, Federal Communications Commission, 
Room 1-C804, 445 Twelfth Street SW., Washington, DC 20554, or via the 
Internet to [email protected], and to Kim A. Johnson, OMB Desk 
Officer, Room 10236 NEOB, 725 17th Street NW., Washington, DC 20503, or 
via the Internet to [email protected].

FOR FURTHER INFORMATION CONTACT: Douglas Slotten, Wireline Competition 
Bureau, Pricing Policy Division, 202-418-1572, or Ted Burmeister, 
Wireline Competition Bureau, Telecommunications Access Policy Division, 
202-418-7389. For additional information concerning the information 
collection(s) contained in this document, contact Judith Boley Herman 
at 202-418-0214, or via the Internet at [email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Second 
Further Notice of Proposed Rulemaking (NPRM) in CC Docket Nos. 96-45 
and 00-256, adopted on February 12, 2004, and released on February 26, 
2004. The complete text of this NPRM is available for public inspection 
Monday through Thursday from 8 a.m. to 4:30 p.m. and Friday from 8 a.m. 
to 11:30 a.m. in the Commission's Consumer and Governmental Affairs 
Bureau, Reference Information Center, Room CY-A257, 445 Twelfth Street, 
SW., Washington, DC 20554. The complete text is also available on the 
Commission's Internet site at www.fcc.gov. Alternative formats are 
available to persons with disabilities by contacting Brian Millin at 
202-418-7426 or TTY 202-418-7365. The complete text of the NPRM may be 
purchased from the Commission's duplicating contractor, Qualex 
International, Room CY-B402, 445 Twelfth Street, SW., Washington, DC 
20554, telephone 202-863-2893, facsimile 202-863-2898, or e-mail at 
[email protected].

Synopsis of Notice of Proposed Rulemaking

    1. The Commission seeks additional comment on incentive regulation 
and on the all-or-nothing rule. CenturyTel, Inc. (CenturyTel) and a 
group of carriers (ALLTEL Communications, Inc. (ALLTEL), Madison River 
Communications, LLC (Madison River), and TDS Telecommunications 
Corporation (TDS)) filed separate alternative regulation proposals as 
ex parte filings in response to the 2001 notice. These two proposals 
each contain a feature that would permit a rate-of-return carrier to 
elect to move some, but not all, of its study areas to incentive 
regulation.
    2. CenturyTel proposes a five-year plan that would modify the 
Commission's price cap rules to permit rate-of-return carriers to elect 
a modified

[[Page 13795]]

form of price cap regulation on a study area basis. The plan would 
eliminate the all-or-nothing rules contained in Sec.  61.41(c)(2) and 
(3) so that rate-of-return carriers that acquire price cap exchanges 
need not convert to price caps at the holding company level. CenturyTel 
also proposes that the Commission eliminate Sec.  61.41(b) so that 
rate-of-return carriers can elect price cap regulation on a study area 
basis.
    3. Under CenturyTel's proposal, average traffic-sensitive (ATS) 
target rates would be established. These target traffic-sensitive rates 
in electing study areas would depend on line density at the holding 
company level, excluding lines acquired from mandatory price cap 
carriers. The plan would set the target rates at the lesser of: (1) 
$0.0125 per minute, or the actual rate for carriers with a line density 
of less than 15 lines per square mile; or (2) $0.0095 per minute, or 
the actual rate for carriers with a line density of at least 15, but 
less than 19, lines per square mile; or (3) the current levels up to a 
maximum ATS rate of $0.0095 per minute for carriers with a line density 
higher than 19 lines per square mile for carriers newly electing the 
plan. CenturyTel would have the Commission set the productivity factor, 
or X-Factor, at GDP-PI for carriers electing price caps under this 
plan. The plan would contain a low-end adjustment set at 10.25 percent 
to ensure reasonable earnings opportunities. Finally, the CenturyTel 
plan would permit a rate-of-return carrier to elect price caps for some 
study areas and remove those study areas from the National Exchange 
Carrier Association (NECA) pools, while leaving its other study areas 
in the NECA pools subject to rate-of-return regulation. CenturyTel 
proposes that rate-of-return carriers be able to choose alternative 
regulation at any annual or semi-annual tariff filing to be effective 
for the remainder of the five-year plan.
    4. CenturyTel's plan would permit an electing rate-of-return 
carrier to move its rate to a target rate on a revenue-neutral basis by 
allowing a rate-of-return carrier to recover the difference between the 
target rate and its existing revenue requirement through an ATS 
additive to ICLS; the plan would freeze the ATS additive on a study 
area basis for the duration of the plan. The plan would also freeze 
Interstate Common Line Support (ICLS) and Long Term Support (LTS) on a 
per-line basis for electing carriers for the plan's duration, as well 
as freezing Local Switching Support (LSS) on a study area basis for the 
plan's duration. The $650 million fund of interstate CALLS support 
would not be available to the new price cap carriers. High-cost loop 
support would be frozen on a per-line basis, subject to adjustment for 
GDP-CPI.
    5. The Rate-of-Return Carrier Tariff Option, filed by AllTel, 
Madison River, and TDS, would extend the current Sec.  61.39 small 
carrier tariff option to all rate-of-return carriers, not just those 
serving 50,000 or fewer lines. Under this option, electing rate-of-
return carriers would file tariffs for a two-year period, with rates 
based on historical costs and demand. Initial traffic-sensitive rates 
would be established using costs and demand for the previous calendar 
year, while rates for succeeding tariff periods would be based on the 
actual costs and demand of the two preceding years. Thus, efficiencies 
achieved during the two-year tariff period would not be reflected in 
the form of rates until the next two-year tariff period. Electing rate-
of-return carriers would develop Subscriber Line Charges (SLCs) and 
other end user charges based on historical costs, just as they do for 
traffic-sensitive charges.
    6. The Rate-of-Return Carrier Tariff Option would initially 
establish per-line, common line support at the historical level of 
costs recovered through universal service divided by the historical 
level of access lines. Specifically, the historical interstate common 
line revenue requirement, including line port and Transport 
Interconnection Charge (TIC) reallocations, would be reduced by SLC 
revenues, the Special Access Surcharge, the Line Port Costs in Excess 
of Basic Analog Service, and universal service funding assessments 
recovered from end users. The proposal would reassess the level of 
support every two years, based on the cost and demand levels during the 
previous two-year period. Finally, the proposal would not alter the 
manner in which LSS and high-cost loop support is calculated or 
obtained.
    7. With the NPRM, the Commission takes a more focused look at the 
issues surrounding alternative regulation plans for rate-of-return 
carriers based on the two proposals presented to the Commission. In 
conjunction with that review, the Commission addresses the issues 
surrounding the retention or modification of the all-or-nothing rule as 
it relates to the ability of rate-of-return carriers to elect to adopt 
an alternative regulation plan for only some of its study areas. The 
Commission builds upon the record of its earlier notice as it proceeds 
with its evaluation of alternative regulation opportunities and the 
all-or-nothing rule.
    8. The two plans each are premised on a carriers ability to elect 
alternative regulation on a study area basis, rather than at the 
holding company level, and thus are dependent on modification of the 
all-or-nothing rule. The Commission tentatively concludes that any 
alternative regulation plan it adopts will be optional on the part of 
the rate-of-return carrier and will permit a rate-of-return carrier to 
elect participation in the alternative plan by study area. The 
Commissions experience over the years in attempting to develop 
incentive regulation for smaller companies has led it to the view that 
it would not be possible to devise a plan suitable for mandatory 
imposition on all rate-of-return carriers. Likewise, it appears that 
most rate-of-return holding company groups are composed of very diverse 
operating companies, and that such companies will not be able to elect 
incentive regulation if they must do it on an all-or-nothing basis. The 
Commission seeks comment on these tentative conclusions, but asks that 
parties evaluate the plans as though they were going to be implemented 
on a study-area basis.
    9. The Commission invites parties to comment on the two alternative 
regulation proposals in the record and asks whether one, both, or 
neither of the plans should be available. Parties may propose 
modifications to the two proposals. In doing so, they should be guided 
by the general inquiries that the Commission made in the 2001 MAG NPRM 
with respect to the evaluation of both alternative plans and the 
modification of the all-or-nothing rule. The Commission also asks 
parties to address the implications of CenturyTels proposed five-year 
time frame on the resolution of long-term access issues raised in the 
intercarrier compensation proceeding.
    10. The CenturyTel plan essentially freezes access rates by 
proposing a productivity factor equal to GDP-PI, while the Rate-of-
Return Carrier Tariff Option would adjust rates every two years to 
reflect any efficiency gains. The Commission invites parties to comment 
on whether these proposals would produce rates that would be just and 
reasonable, as required by section 201(b) of the Act, and not 
unreasonably discriminatory, as required by section 202(a) of the Act. 
Parties are asked to address whether the CenturyTel plan should contain 
a productivity factor other than GDP-PI. Parties proposing such 
productivity factors are asked to explain in detail how such factors 
can be accurately calculated for the diverse group of carriers 
currently subject to rate-of-return regulation. The use of GDP-PI would 
mean that lower traffic-sensitive rates resulting from traffic

[[Page 13796]]

growth would no longer occur as they would under rate-of-return 
regulation. Parties should address whether, as an alternative approach 
to an X-Factor, a G-factor should be used. A G-factor would adjust the 
rate cap for rates of traffic-sensitive services based on the rate of 
growth of the relevant traffic-sensitive measure, e.g., minutes. If so, 
should it be set based on historical data, or based on projections for 
the next tariff period? Alternatively, should the CenturyTel plan 
include a sharing mechanism if a productivity factor higher than that 
proposed, or a G-factor, is not adopted? Parties should address the 
need for, and level of, a low-end adjustment factor and how its level 
should be set in relation to any productivity factor, G-factor, or 
sharing requirement that might be adopted. Finally, the Commission 
invites parties to discuss the implications for the Commissions goals 
if CenturyTel were the only carrier to elect its proposed form of 
alternative regulation.
    11. Parties are also invited to comment on the effect that each 
plan will have on the incentives of electing rate-of-return carriers to 
invest in, and maintain, their exchange access facilities and to ensure 
that service quality is not degraded. The Commission asks parties to 
evaluate the differences between the two plans on this score and to 
address what additional steps, if any, would be necessary to ensure 
that service quality does not decline in the face of any incentive to 
increase profits. The Commission also asks parties to address the 
effects that the option to elect by study area and at a time of the 
rate-of-return carriers choosing would have on these investment and 
service quality considerations.
    12. Parties should also address the universal service aspects of 
the two plans. To what extent is either the CenturyTel plan or the 
Rate-of-Return Carrier Tariff Option likely to increase the size of the 
universal service fund, and how would support levels change over time? 
What effect, if any, would adoption of either plan have on the overall 
sustainability of universal service? What incentives would be created 
if, as CenturyTel proposes, high-cost loop support is fixed on a per-
line basis and grows by GDP-PI, without regard to investment in loop 
facilities? With respect to either proposal, commenters should provide 
a detailed explanation as to how support should be calculated and the 
administrative burdens entailed. Commenters should also address how the 
proposal would serve the principles of section 254 of the Act.
    13. The Commission tentatively concludes that the opportunity to 
elect alternative regulation on a study area basis should be available 
only to holding company groups in which all non-average schedule 
companies file their own cost-based tariffs. The Commission is 
especially concerned about the ability of any NECA internal process, or 
formula, to insulate the remaining pool members from the risk that may 
be introduced by a carriers adoption of an alternative regulation plan. 
It will also be important to consider the extent to which pool 
participation makes cost shifting more difficult to detect. Parties 
should also address what modifications in tariff cost support rules 
and/or reporting requirements would be necessary under two scenarios: 
(1) The Commission were to require holding companies electing 
alternative regulation to remove all study areas from the NECA pools, 
and (2) the Commission were to permit some or all study areas of rate-
of-return carriers electing alternative regulation to participate in 
the NECA pools.
    14. The Commission tentatively concludes that existing accounting 
and regulatory processes should permit parties and the Commission to 
detect cost shifting by the rate-of-return carriers that file cost-
based access tariffs. Interexchange carriers (IXCs) and competitors 
argue that the incentive for rate-of-return carriers to shift costs 
continues to exist and that existing processes are inadequate to check 
such cost shifting. The Commission notes that this debate has been 
joined in very general terms, with little in the way of specific 
detail. The Commission asks parties to identify the most significant 
means by which a rate-of-return carrier could shift costs from a study 
area electing an alternative regulation plan to a study area subject to 
rate-of-return regulation. Parties should also describe why existing 
procedures will, or will not, permit the cost shift to be identified 
and quantified. To the extent parties argue that existing processes are 
inadequate, the Commission invites them to identify with specificity 
what additional reporting or regulatory procedures would allow the 
parties and the Commission to identify and quantify cost shifts.
    15. The debate over incentive regulation is often clouded by 
uncertainty as to whether the CALLS plan contemplated that additional 
study areas would enter that plan during its five-year term. Three 
years have passed and no rate-of-return carrier has sought entry. To 
eliminate the uncertainty, the Commission tentatively concludes that 
the CALLS plan was not designed to be open to new carriers or study 
areas. The CALLS plan began as a voluntarily negotiated agreement among 
price cap carriers and certain IXCs that addressed pricing and 
universal service concerns as a package, without consideration of 
possible participation by carriers that were then under rate-of-return 
regulation. That CALLS was not intended to accommodate additional entry 
is most clearly indicated by the fact that in adopting the plan, the 
Commission made no provision for how the universal service component of 
the CALLS plan would address future expansion to new carriers. The 
Commission therefore believes the rules should be amended to clarify 
that new carriers or carrier study areas may not elect this plan. The 
Commission invites parties to comment on this tentative conclusion.
    16. The Commission also tentatively concludes that, whatever final 
rule it adopts with respect to the election of alternative regulation 
on a study area basis, that rule should also apply when carriers under 
different regulatory plans come together by merger or acquisition. This 
would include those cases in which a price cap carrier acquired a rate-
of-return study area, but could not bring it into the CALLS plan, if 
the Commission adopts its tentative conclusion in the previous 
paragraph. Thus, if the Commission were to permit rate-of-return 
carriers to elect alternative regulation by study area, the current 
ALLTEL/Aliant, Verizon/PRTC, and Valor/Kerrville waivers of the all-or-
nothing rule would no longer be necessary. Under this tentative 
conclusion, affected carriers would continue to receive universal 
service support through the preexisting support mechanism(s). The 
Commission seeks comment on this tentative conclusion. Parties opposing 
this approach should indicate how they would harmonize the interrelated 
considerations arising from mergers or acquisitions between carriers 
subject to different regulatory regimes.

Procedural Matters

Ex Parte Requirements

    17. This proceeding will continue to be governed by ``permit-but-
disclose'' ex parte procedures that are applicable to non-restricted 
proceedings under 47 CFR 1.1206. Parties making oral ex parte 
presentations are reminded that memoranda summarizing the presentation 
must contain a summary of the substance of the presentation and not 
merely a listing of the subjects discussed. More than a one- or two-
sentence description of the views and arguments presented generally is

[[Page 13797]]

required. See 47 CFR 1.1206(b)(2). Other rules pertaining to oral and 
written presentations are set forth in Sec.  1.1206(b) as well. 
Interested parties are to file any written ex parte presentations in 
this proceeding with the Commission's Secretary, Marlene H. Dortch, 445 
12th Street, SW., TW-B204, Washington, DC 20554, and serve with one 
copy: Pricing Policy Division, Wireline Competition Bureau, 445 12th 
Street, SW., Room 5-A452, Washington, DC 20554, Attn: Douglas Slotten. 
Parties shall also serve with one copy: Qualex International, Portals 
II, 445 12th Street, SW., Room CY-B402, Washington, DC 20554, (202) 
863-2893, [email protected].

Paperwork Reduction Act Analysis

    18. The NPRM contains either a proposed or modified information 
collection. As part of the continuing effort to reduce paperwork 
burdens, the Commission invites the general public and the OMB to 
comment on the information collections contained in this NPRM, as 
required by the Paperwork Reduction Act of 1995, 44 U.S.C. 3501 et seq. 
Public and agency comments are due at the same time as other comments 
on this NPRM; OMB comments are due 60 days from the date of publication 
of this NPRM in the Federal Register. Comments should address: (1) 
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; (2) the accuracy 
of the Commission's burden estimates; (3) ways to enhance the quality, 
utility, and clarity of the information collected; and (4) ways to 
minimize the burden of the collection of information on the 
respondents, including the use of automated collection techniques or 
other forms of information technology.

Initial Regulatory Flexibility Act Analysis

    19. The Regulatory Flexibility Act of 1980, as amended (RFA), 
requires that an initial regulatory flexibility analysis be prepared 
for notice-and-comment rule making proceedings, unless the agency 
certifies that ``the rule will not, if promulgated, have a significant 
economic impact on a substantial number of small entities.'' The RFA 
generally defines the term ``small entity'' as having the same meaning 
as the terms ``small business,'' ``small organization,'' and ``small 
governmental jurisdiction.'' In addition, the term ``small business'' 
has the same meaning as the term ``small business concern'' under the 
Small Business Act. A ``small business concern'' is one which: (1) Is 
independently owned and operated; (2) is not dominant in its field of 
operation; and (3) satisfies any additional criteria established by the 
SBA.
    20. As required by the RFA, the Commission has prepared this IRFA 
of the possible significant economic impact on a substantial number of 
small entities by the policies and rules proposed in this NPRM. Written 
public comments are requested on this IRFA. Comments must be identified 
as responses to the IRFA and must be filed by the deadlines for 
comments on the NPRM.

Need for, and Objectives of, the Proposed Rules

    21. The Commission continues to explore means of providing 
incentives for smaller telephone companies to become more efficient and 
innovative in ways that benefit both rate-of-return carriers and their 
customers. The NPRM seeks additional comment on two alternative 
incentive regulation proposals for all rate-of-return carriers, and on 
the closely related all-or-nothing rule.
    22. The alternative incentive regulation plans were filed by 
CenturyTel (the CenturyTel Plan) and by ALLTEL, Madison River and TDS 
(the Rate-of-Return Carrier Tariff Option). The CenturyTel Plan 
proposes to lower traffic-sensitive charges, according to participation 
on a study area-by-study area basis, to target rates based on specific 
average traffic-sensitive target rates determined by line density. The 
CenturyTel Plan would apply an X-Factor equal to GDP-PI. The CenturyTel 
Plan would convert universal service support to per-line amounts, with 
ICLS and LSS being frozen for the five-year duration of the proposed 
plan and high-cost loop support being frozen subject to adjustment for 
GDP-CPI. Finally, CenturyTel proposes that carriers should be allowed 
to take certain study areas out of the NECA pools and into alternative 
regulation, while leaving other study areas in the pools, subject to 
rate-of-return regulation. The Rate-of-Return Carrier Tariff Option 
would allow all rate-of-return carriers (not just those serving 50,000 
or fewer lines) to elect to adopt a revised Sec.  61.39 approach under 
which they would file access tariffs every two years based on the 
previous two years' historical cost and demand data. The Rate-of-Return 
Carrier Tariff Option would provide a participating company with a per-
line ICLS based on two years of historical data. Finally, both plans 
would make participation in the alternative regulation plan optional, 
and would allow election by study area.
    23. The NPRM tentatively concludes that any alternative regulation 
plan that the Commission may adopt should be optional on the part of 
the rate-of-return carrier, with participation through election on a 
study area basis. Additionally, such participation should be available 
only to holding company groups in which all non-average schedule 
companies file their own cost-based tariffs. Among the issues on which 
the NPRM seeks comment are whether the two plans will produce rates 
that are just and reasonable and not unreasonably discriminatory for 
all entities, including small entities. The NPRM also asks whether the 
CenturyTel Plan should contain a productivity factor other than GDP-PI, 
whether a G-factor should be used as an alternative approach to an X-
factor, and whether it should be based on historical data or on 
projections for the next tariff period. In addition, the NPRM asks 
about the effect each plan will have on rate-of-return carriers' 
investment and maintenance of their exchange access facilities, whether 
service quality will be degraded, and whether the universal service 
fund will be increased.
    24. The NPRM also tentatively concludes that existing accounting 
and regulatory processes should equip parties and the Commission to 
detect cost-shifting by the rate-of-return carriers that file cost-
based access tariffs. Nonetheless, the Commission asks commenters to 
identify the ways that a rate-of-return carrier could shift costs from 
a study area electing an alternative regulation plan to a study area 
subject to rate-of-return regulation. The Commission also asks 
commenters to identify what additional reporting or regulatory 
procedures would help detect and prevent such cost shifting. The NPRM 
tentatively concludes that the rules should be amended to indicate that 
new carriers or carrier study areas may not elect the CALLS plan 
because it was not designed to be open to new carriers or study areas. 
Finally, the Commission also tentatively concludes that the option to 
elect alternative regulation on a study area basis, if adopted, should 
also be available when carriers under different regulatory plans come 
together by merger or acquisition.

Legal Basis

    25. This rulemaking action is supported by sections 4(i), 4(j), 
201-205, 254, and 403 of the Communications Act of 1934, as amended.

[[Page 13798]]

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

    26. 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 rules proposed herein. In this section, the Commission 
further describes and estimates the number of small entity licensees 
and regulatees that may also be directly affected by proposals 
contained in this NPRM. The most reliable source of information 
regarding the total numbers of certain common carrier and related 
providers nationwide, as well as the number of commercial wireless 
entities, appears to be the data that the Commission publishes in its 
Trends in Telephone Service report. The SBA has developed small 
business size standards for wireline and wireless small businesses 
within the three commercial census categories of Wired 
Telecommunications Carriers, Paging, and Cellular and Other Wireless 
Telecommunications. Under these categories, a business is small if it 
has 1,500 or fewer employees. Below, using the above size standards and 
others, the commission discusses the total estimated numbers of small 
businesses that might be affected by its actions.
    27. The commission includes 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 wired telecommunications carrier 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 
includes small incumbent LECs in this RFA analysis, although it 
emphasizes that this RFA action has no effect on Commission analyses 
and determinations in other, non-RFA contexts.
    28. Wired Telecommunications Carriers. The SBA has developed a 
small business size standard for Wired Telecommunications Carriers, 
which consists of all such companies having 1,500 or fewer employees. 
According to Census Bureau data for 1997, there were 2,225 firms in 
this category, total, that operated for the entire year. Of this total, 
2,201 firms had employment of 999 or fewer employees, and an additional 
24 firms had employment of 1,000 employees or more. Thus, under this 
size standard, the majority of firms can be considered small.
    29. Incumbent Local Exchange Carriers (LECs). Neither the 
Commission nor the SBA has developed a size standard for small 
businesses specifically applicable to incumbent local exchange 
services. The closest applicable size standard under SBA rules is for 
Wired Telecommunications Carriers. Under that size standard, such a 
business is small if it has 1,500 or fewer employees. According to 
Commission data, 1,337 carriers reported that they were engaged in the 
provision of local exchange services. Of these 1,337 carriers, an 
estimated 1,032 have 1,500 or fewer employees and 305 have more than 
1,500 employees. Consequently, the Commission estimates that most 
providers of incumbent local exchange service are small businesses that 
may be affected by the proposed rules and policies.
    30. Competitive Local Exchange Carriers (CLECs), Competitive Access 
Providers (CAPs), and ``Other Local Exchange Carriers.'' Neither the 
Commission nor the SBA has developed a size standard for small 
businesses specifically applicable to providers of competitive exchange 
services or to competitive access providers or to ``Other Local 
Exchange Carriers,'' all of which are discrete categories under which 
TRS data are collected. The closest applicable size standard under SBA 
rules is for Wired Telecommunications Carriers. Under that size 
standard, such a business is small if it has 1,500 or fewer employees. 
According to Commission data, 609 companies reported that they were 
engaged in the provision of either competitive access provider services 
or competitive local exchange carrier services. Of these 609 companies, 
an estimated 458 have 1,500 or fewer employees and 151 have more than 
1,500 employees. In addition, 35 carriers reported that they were 
``Other Local Service Providers.'' Of the 35 ``Other Local Service 
Providers,'' an estimated 34 have 1,500 or fewer employees and one has 
more than 1,500 employees. Consequently, the Commission estimates that 
most providers of competitive local exchange service, competitive 
access providers, and ``Other Local Exchange Carriers'' are small 
entities that may be affected by the proposed rules and policies.
    31. Interexchange Carriers (IXCs). Neither the Commission nor the 
SBA has developed a size standard for small businesses specifically 
applicable to interexchange services. The closest applicable size 
standard under SBA rules is for Wired Telecommunications Carriers. 
Under that size standard, such a business is small if it has 1,500 or 
fewer employees. According to Commission data, 261 companies reported 
that their primary telecommunications service activity was the 
provision of interexchange services. Of these 261 companies, an 
estimated 223 have 1,500 or fewer employees and 38 have more than 1,500 
employees. Consequently, the Commission estimates that the majority of 
interexchange service providers are small entities that may be affected 
by the proposed rules and policies.
    32. Operator Service Providers (OSPs). Neither the Commission nor 
the SBA has developed a size standard for small businesses specifically 
applicable to operator service providers. The closest applicable size 
standard under SBA rules is for Wired Telecommunications Carriers. 
Under that size standard, such a business is small if it has 1,500 or 
fewer employees. According to Commission data, 23 companies reported 
that they were engaged in the provision of operator services. Of these 
23 companies, an estimated 22 have 1,500 or fewer employees and one has 
more than 1,500 employees. Consequently, the Commission estimates that 
the majority of operator service providers are small entities that may 
be affected by the proposed rules and policies.
    33. Payphone Service Providers (PSPs). Neither the Commission nor 
the SBA has developed a size standard for small businesses specifically 
applicable to payphone service providers. The closest applicable size 
standard under SBA rules is for Wired Telecommunications Carriers. 
Under that size standard, such a business is small if it has 1,500 or 
fewer employees. According to Commission data, 761 companies reported 
that they were engaged in the provision of payphone services. Of these 
761 companies, an estimated 757 have 1,500 or fewer employees and four 
have more than 1,500 employees. Consequently, the Commission estimates 
that the majority of payphone service providers are small entities that 
may be affected by the proposed rules and policies.
    34. Prepaid Calling Card Providers. The SBA has developed a size 
standard for a small business within the category of Telecommunications 
Resellers. Under that SBA size standard, such a business is small if it 
has 1,500 or fewer employees. According to Commission data, 37 
companies reported that they were engaged in the provision of prepaid 
calling cards. Of these 37 companies, an estimated 36 have 1,500 or 
fewer employees and one has more

[[Page 13799]]

than 1,500 employees. Consequently, the Commission estimates that the 
majority of prepaid calling card providers are small entities that may 
be affected by the proposed rules and policies.
    35. Other Toll Carriers. Neither the Commission nor the SBA has 
developed a size standard for small businesses specifically applicable 
to ``Other Toll Carriers.'' This category includes toll carriers that 
do not fall within the categories of interexchange carriers, operator 
service providers, prepaid calling card providers, satellite service 
carriers, or toll resellers. The closest applicable size standard under 
SBA rules is for Wired Telecommunications Carriers. Under that size 
standard, such a business is small if it has 1,500 or fewer employees. 
According to Commission's data, 92 companies reported that their 
primary telecommunications service activity was the provision of other 
toll carriage. Of these 92 companies, an estimated 82 have 1,500 or 
fewer employees and ten have more than 1,500 employees. Consequently, 
the Commission estimates that most ``Other Toll Carriers'' are small 
entities that may be affected by the proposed rules and policies.
    36. Paging. The SBA has developed a small business size standard 
for Paging, which consists of all such firms having 1,500 or fewer 
employees. According to Census Bureau data for 1997, in this category 
there was a total of 1,320 firms that operated for the entire year. Of 
this total, 1,303 firms had employment of 999 or fewer employees, and 
an additional seventeen firms had employment of 1,000 employees or 
more. Thus, under this size standard, the majority of firms can be 
considered small.
    37. Cellular and Other Wireless Telecommunications. The SBA has 
developed a small business size standard for Cellular and Other 
Wireless Telecommunication, which consists of all such firms having 
1,500 or fewer employees. According to Census Bureau data for 1997, in 
this category there was a total of 977 firms that operated for the 
entire year. Of this total, 965 firms had employment of 999 or fewer 
employees, and an additional twelve firms had employment of 1,000 
employees or more. Thus, under this size standard, the majority of 
firms can be considered small.
    38. Broadband Personal Communications Service. The broadband 
Personal Communications Service (PCS) spectrum is divided into six 
frequency blocks designated A through F, and the Commission has held 
auctions for each block. The Commission defined ``small entity'' for 
Blocks C and F as an entity that has average gross revenues of $40 
million or less in the three previous calendar years. For Block F, an 
additional classification for ``very small business'' was added and is 
defined as an entity that, together with its affiliates, has average 
gross revenues of not more than $15 million for the preceding three 
calendar years.'' These standards defining ``small entity'' in the 
context of broadband PCS auctions have been approved by the SBA. No 
small businesses, within the SBA-approved small business size standards 
bid successfully for licenses in Blocks A and B. There were 90 winning 
bidders that qualified as small entities in the Block C auctions. A 
total of 93 small and very small business bidders won approximately 40 
percent of the 1,479 licenses for Blocks D, E, and F. On March 23, 
1999, the Commission re-auctioned 347 C, D, E, and F Block licenses. 
There were 48 small business winning bidders. On January 26, 2001, the 
Commission completed the auction of 422 C and F Broadband PCS licenses 
in Auction No. 35. Of the 35 winning bidders in this auction, 29 
qualified as ``small'' or ``very small'' businesses. Based on this 
information, the Commission concludes that the number of small 
broadband PCS licenses will include the 90 winning C Block bidders, the 
93 qualifying bidders in the D, E, and F Block auctions, the 48 winning 
bidders in the 1999 re-auction, and the 29 winning bidders in the 2001 
re-auction, for a total of 260 small entity broadband PCS providers, as 
defined by the SBA small business size standards and the Commission's 
auction rules. The Commission notes that, as a general matter, the 
number of winning bidders that qualify as small businesses at the close 
of an auction does not necessarily represent the number of small 
businesses currently in service. Also, the Commission does not 
generally track subsequent business size unless, in the context of 
assignments or transfers, unjust enrichment issues are implicated.
    39. Narrowband Personal Communications Services. To date, two 
auctions of narrowband personal communications services (PCS) licenses 
have been conducted. For purposes of the two auctions that have already 
been held, ``small businesses'' were entities with average gross 
revenues for the prior three calendar years of $40 million or less. 
Through these auctions, the Commission has awarded a total of 41 
licenses, out of which 11 were obtained by small businesses. To ensure 
meaningful participation of small business entities in future auctions, 
the Commission has adopted a two-tiered small business size standard in 
the Narrowband PCS Second Report and Order. A ``small business'' is an 
entity that, together with affiliates and controlling interests, has 
average gross revenues for the three preceding years of not more than 
$40 million. A ``very small business'' is an entity that, together with 
affiliates and controlling interests, has average gross revenues for 
the three preceding years of not more than $15 million. The SBA has 
approved these small business size standards. In the future, the 
Commission will auction 459 licenses to serve Metropolitan Trading 
Areas (MTAs) and 408 response channel licenses. There is also one 
megahertz of narrowband PCS spectrum that has been held in reserve and 
that the Commission has not yet decided to release for licensing. The 
Commission cannot predict accurately the number of licenses that will 
be awarded to small entities in future actions. However, four of the 16 
winning bidders in the two previous narrowband PCS auctions were small 
businesses, as that term was defined under the Commission's Rules. The 
Commission assumes, for purposes of this analysis, that a large portion 
of the remaining narrowband PCS licenses will be awarded to small 
entities. The Commission also assumes that at least some small 
businesses will acquire narrowband PCS licenses by means of the 
Commission's partitioning and disaggregation rules.
    40. 220 MHz Radio Service--Phase I Licensees. The 220 MHz service 
has both Phase I and Phase II licenses. Phase I licensing was conducted 
by lotteries in 1992 and 1993. There are approximately 1,515 such non-
nationwide licensees and four nationwide licensees currently authorized 
to operate in the 220 MHz band. The Commission has not developed a 
small business size standard for small entities specifically applicable 
to such incumbent 220 MHz Phase I licensees. To estimate the number of 
such licensees that are small businesses, the Commission applies the 
small business size standard under the SBA rules applicable to 
``Cellular and Other Wireless Telecommunications'' companies. This 
standard provides that such a company is small if it employs no more 
than 1,500 persons. According to Census Bureau data for 1997, there 
were 977 firms in this category, that operated for the entire year. Of 
this total, 965 firms had employment of 999 or fewer employees, and an 
additional 12 firms had employment of 1,000

[[Page 13800]]

employees or more. If this general ratio continues in the context of 
Phase I 220 MHz licensees, the Commission estimates that nearly all 
such licensees are small businesses under the SBA's small business size 
standard.
    41. 220 MHz Radio Service--Phase II Licensees. The 220 MHz service 
has both Phase I and Phase II licenses. The Phase II 220 MHz service is 
a new service, and is subject to spectrum auctions. In the 220 MHz 
Third Report and Order, the Commission adopted a small business size 
standard for ``small'' and ``very small'' businesses for purposes of 
determining their eligibility for special provisions such as bidding 
credits and installment payments. This small business size standard 
indicates that a ``small business'' is an entity that, together with 
its affiliates and controlling principals, has average gross revenues 
not exceeding $15 million for the preceding three years. A ``very small 
business'' is an entity that, together with its affiliates and 
controlling principals, has average gross revenues that do not exceed 
$3 million for the preceding three years. The SBA has approved these 
small business size standards. Auctions of Phase II licenses commenced 
on September 15, 1998, and closed on October 22, 1998. In the first 
auction, 908 licenses were auctioned in three different-sized 
geographic areas: Three nationwide licenses, 30 Regional Economic Area 
Group (EAG) Licenses, and 875 Economic Area (EA) Licenses. Of the 908 
licenses auctioned, 693 were sold. Thirty-nine small businesses won 
licenses in the first 220 MHz auction. The second auction included 225 
licenses: 216 EA licenses and 9 EAG licenses. Fourteen companies 
claiming small business status won 158 licenses.
    42. 800 MHz and 900 MHz Specialized Mobile Radio Licenses. The 
Commission awards ``small entity'' and ``very small entity'' bidding 
credits in auctions for Specialized Mobile Radio (SMR) geographic area 
licenses in the 900 MHz bands to firms that had revenues of no more 
than $15 million in each of the three previous calendar years, or that 
had revenues of no more than $3 million in each of the previous 
calendar years. The SBA has approved these size standards. The 
Commission awards ``small entity'' and ``very small entity'' bidding 
credits in auctions for Specialized Mobile Radio (SMR) geographic area 
licenses in the 800 MHz bands to firms that had revenues of no more 
than $40 million in each of the three previous calendar years, or that 
had revenues of no more than $15 million in each of the previous 
calendar years. These bidding credits apply to SMR providers in the 800 
MHz and 900 MHz bands that either hold geographic area licenses or have 
obtained extended implementation authorizations. The Commission does 
not know how many firms provide 800 MHz or 900 MHz geographic area SMR 
service pursuant to extended implementation authorizations, nor how 
many of these providers have annual revenues of no more than $15 
million. One firm has over $15 million in revenues. The Commission 
assumes, for purposes here, that all of the remaining existing extended 
implementation authorizations are held by small entities, as that term 
is defined by the SBA. The Commission has held auctions for geographic 
area licenses in the 800 MHz and 900 MHz SMR bands. There were 60 
winning bidders that qualified as small or very small entities in the 
900 MHz SMR auctions. Of the 1,020 licenses won in the 900 MHz auction, 
bidders qualifying as small or very small entities won 263 licenses. In 
the 800 MHz auction, 38 of the 524 licenses won were won by small and 
very small entities. The Commission notes that, as a general matter, 
the number of winning bidders that qualify as small businesses at the 
close of an auction does not necessarily represent the number of small 
businesses currently in service. Also, the Commission does not 
generally track subsequent business size unless, in the context of 
assignments or transfers, unjust enrichment issues are implicated.
    43. Private and Common Carrier Paging. In the Paging Third Report 
and Order, the Commission developed a small business size standard for 
``small businesses'' and ``very small businesses'' for purposes of 
determining their eligibility for special provisions such as bidding 
credits and installment payments. A ``small business'' is an entity 
that, together with its affiliates and controlling principals, has 
average gross revenues not exceeding $15 million for the preceding 
three years. Additionally, a ``very small business'' is an entity that, 
together with its affiliates and controlling principals, has average 
gross revenues that are not more than $3 million for the preceding 
three years. The SBA has approved these size standards. An auction of 
Metropolitan Economic Area licenses commenced on February 24, 2000, and 
closed on March 2, 2000. Of the 985 licenses auctioned, 440 were sold. 
Fifty-seven companies claiming small business status won. At present, 
there are approximately 24,000 Private-Paging site-specific licenses 
and 74,000 Common Carrier Paging licenses. According to the most recent 
Trends in Telephone Service, 471 carriers reported that they were 
engaged in the provision of either paging and messaging services or 
other mobile services. Of those, the Commission estimates that 450 are 
small, under the SBA business size standard specifying that firms are 
small if they have 1,500 or fewer employees.
    44. 700 MHz Guard Band Licensees. In the 700 MHz Guard Band Order, 
the Commission adopted a small business size standard for ``small 
businesses'' and ``very small businesses'' for purposes of determining 
their eligibility for special provisions such as bidding credits and 
installment payments. A ``small business'' as an entity that, together 
with its affiliates and controlling principals, has average gross 
revenues not exceeding $15 million for the preceding three years. 
Additionally, a ``very small business'' is an entity that, together 
with its affiliates and controlling principals, has average gross 
revenues that are not more than $3 million for the preceding three 
years. An auction of 52 Major Economic Area (MEA) licenses commenced on 
September 6, 2000, and closed on September 21, 2000. Of the 104 
licenses auctioned, 96 licenses were sold to nine bidders. Five of 
these bidders were small businesses that won a total of 26 licenses. A 
second auction of 700 MHz Guard Band licenses commenced on February 13, 
2001 and closed on February 21, 2001. All eight of the licenses 
auctioned were sold to three bidders. One of these bidders was a small 
business that won a total of two licenses.
    45. Rural Radiotelephone Service. The Commission has not adopted a 
size standard for small businesses specific to the Rural Radiotelephone 
Service. A significant subset of the Rural Radiotelephone Service is 
the Basic Exchange Telephone Radio System (BETRS). The Commission uses 
the SBA's small business size standard applicable to ``Cellular and 
Other Wireless Telecommunications,'' i.e., an entity employing no more 
than 1,500 persons. There are approximately 1,000 licensees in the 
Rural Radiotelephone Service, and the Commission estimates that there 
are 1,000 or fewer small entity licensees in the Rural Radiotelephone 
Service that may be affected by the proposed rules and policies.
    46. Air-Ground Radiotelephone Service. The Commission has not 
adopted a small business size standard specific to the Air-Ground 
Radiotelephone Service. The Commission will use SBA's small business 
size standard applicable to ``Cellular and Other Wireless 
Telecommunications,'' i.e., an entity employing no more than 1,500 
persons.

[[Page 13801]]

 There are approximately 100 licensees in the Air-Ground Radiotelephone 
Service, and the Commission estimates that almost all of them qualify 
as small under the SBA small business size standard.
    47. Aviation and Marine Radio Services. Small businesses in the 
aviation and marine radio services use a very high frequency (VHF) 
marine or aircraft radio and, as appropriate, an emergency position-
indicating radio beacon (and/or radar) or an emergency locator 
transmitter. The Commission has not developed a small business size 
standard specifically applicable to these small businesses. For 
purposes of this analysis, the Commission uses the SBA small business 
size standard for the category ``Cellular and Other 
Telecommunications,'' which is 1,500 or fewer employees. Most 
applicants for recreational licenses are individuals. Approximately 
581,000 ship station licensees and 131,000 aircraft station licensees 
operate domestically and are not subject to the radio carriage 
requirements of any statute or treaty. For purposes of its evaluations 
in this analysis, the Commission estimates that there are up to 
approximately 712,000 licensees that are small businesses (or 
individuals) under the SBA standard. In addition, between December 3, 
1998 and December 14, 1998, the Commission held an auction of 42 VHF 
Public Coast licenses in the 157.1875-157.4500 MHz (ship transmit) and 
161.775-162.0125 MHz (coast transmit) bands. For purposes of the 
auction, the Commission defined a ``small'' business as an entity that, 
together with controlling interests and affiliates, has average gross 
revenues for the preceding three years not to exceed $15 million. In 
addition, a ``very small'' business is one that, together with 
controlling interests and affiliates, has average gross revenues for 
the preceding three years not to exceed $3 million. There are 
approximately 10,672 licensees in the Marine Coast Service, and the 
Commission estimates that almost all of them qualify as ``small'' 
businesses under the above special small business size standards.
    48. Fixed Microwave Services. Fixed microwave services include 
common carrier, private operational-fixed and broadcast auxiliary radio 
services. At present, there are approximately 22,015 common carrier 
fixed licensees and 61,670 private operational-fixed licensees and 
broadcast auxiliary radio licensees in the microwave services. The 
Commission has not created a size standard for a small business 
specifically with respect to fixed microwave services. For purposes of 
this analysis, the Commission uses the SBA small business size standard 
for the category ``Cellular and Other Telecommunications,'' which is 
1,500 or fewer employees. The Commission does not have data specifying 
the number of these licensees that have more than 1,500 employees, and 
thus is unable at this time to estimate with greater precision the 
number of fixed microwave service licensees that would qualify as small 
business concerns under the SBA's small business size standard. 
Consequently, the Commission estimates that there are up to 22,015 
common carrier fixed licensees and up to 61,670 private operational-
fixed licensees and broadcast auxiliary radio licensees in the 
microwave services that may be small and may be affected by the 
proposed rules and policies. The Commission notes, however, that the 
common carrier microwave fixed licensee category includes some large 
entities.
    49. Offshore Radiotelephone Service. This service operates on 
several UHF television broadcast channels that are not used for 
television broadcasting in the coastal areas of states bordering the 
Gulf of Mexico. There are presently approximately 55 licensees in this 
service. The Commission is unable to estimate at this time the number 
of licensees that would qualify as small under the SBA's small business 
size standard for ``Cellular and Other Wireless Telecommunications'' 
services. Under that SBA small business size standard, a business is 
small if it has 1,500 or fewer employees.
    50. Wireless Communications Services. This service can be used for 
fixed, mobile, radiolocation, and digital audio broadcasting satellite 
uses. The Commission established small business size standards for the 
wireless communications services (WCS) auction. A ``small business'' is 
an entity with average gross revenues of $40 million for each of the 
three preceding years, and a ``very small business'' is an entity with 
average gross revenues of $15 million for each of the three preceding 
years. The SBA has approved these small business size standards. The 
Commission auctioned geographic area licenses in the WCS service. In 
the auction, there were seven winning bidders that qualified as ``very 
small business'' entities, and one that qualified as a ``small 
business'' entity. The Commission concludes that the number of 
geographic area WCS licensees affected by this analysis includes these 
eight entities.
    51. 39 GHz Service. The Commission created a special small business 
size standard for 39 GHz licenses--an entity that has average gross 
revenues of $40 million or less in the three previous calendar years. 
An additional size standard for ``very small business'' is: An entity 
that, together with affiliates, has average gross revenues of not more 
than $15 million for the preceding three calendar years. The SBA has 
approved these small business size standards. The auction of the 2,173 
39 GHz licenses began on April 12, 2000 and closed on May 8, 2000. The 
18 bidders who claimed small business status won 849 licenses. 
Consequently, the Commission estimates that 18 or fewer 39 GHz 
licensees are small entities that may be affected by the proposed rules 
and policies.
    52. Multipoint Distribution Service, Multichannel Multipoint 
Distribution Service, and ITFS. Multichannel Multipoint Distribution 
Service (MMDS) systems, often referred to as ``wireless cable,'' 
transmit video programming to subscribers using the microwave 
frequencies of the Multipoint Distribution Service (MDS) and 
Instructional Television Fixed Service (ITFS). In connection with the 
1996 MDS auction, the Commission established a small business size 
standard as an entity that had annual average gross revenues of less 
than $40 million in the previous three calendar years. The MDS auctions 
resulted in 67 successful bidders obtaining licensing opportunities for 
493 Basic Trading Areas (BTAs). Of the 67 auction winners, 61 met the 
definition of a small business. MDS also includes licensees of stations 
authorized prior to the auction. In addition, the SBA has developed a 
small business size standard for Cable and Other Program Distribution, 
which includes all such companies generating $12.5 million or less in 
annual receipts. According to Census Bureau data for 1997, there were a 
total of 1,311 firms in this category, total, that had operated for the 
entire year. Of this total, 1,180 firms had annual receipts of under 
$10 million and an additional 52 firms had receipts of $10 million or 
more but less than $25 million. Consequently, the Commission estimates 
that the majority of providers in this service category are small 
businesses that may be affected by the proposed rules and policies. 
This SBA small business size standard also appears applicable to ITFS. 
There are presently 2,032 ITFS licensees. All but 100 of these licenses 
are held by educational institutions. Educational institutions are 
included in this analysis as small entities. Thus, the Commission

[[Page 13802]]

tentatively concludes that at least 1,932 licensees are small 
businesses.
    53. Local Multipoint Distribution Service. Local Multipoint 
Distribution Service (LMDS) is a fixed broadband point-to-multipoint 
microwave service that provides for two-way video telecommunications. 
The auction of the 1,030 Local Multipoint Distribution Service (LMDS) 
licenses began on February 18, 1998 and closed on March 25, 1998. The 
Commission established a small business size standard for LMDS licenses 
as an entity that has average gross revenues of less than $40 million 
in the three previous calendar years. An additional small business size 
standard for ``very small business'' was added as an entity that, 
together with its affiliates, has average gross revenues of not more 
than $15 million for the preceding three calendar years. The SBA has 
approved these small business size standards in the context of LMDS 
auctions. There were 93 winning bidders that qualified as small 
entities in the LMDS auctions. A total of 93 small and very small 
business bidders won approximately 277 A Block licenses and 387 B Block 
licenses. On March 27, 1999, the Commission re-auctioned 161 licenses; 
there were 40 winning bidders. Based on this information, the 
Commission concludes that the number of small LMDS licenses consists of 
the 93 winning bidders in the first auction and the 40 winning bidders 
in the re-auction, for a total of 133 small entity LMDS providers.
    54. 218-219 MHz Service. The first auction of 218-219 MHz spectrum 
resulted in 170 entities winning licenses for 594 Metropolitan 
Statistical Area licenses. Of the 594 licenses, 557 were won by 
entities qualifying as a small business. For that auction, the small 
business size standard was an entity that, together with its 
affiliates, has no more than a $6 million net worth and, after federal 
income taxes (excluding any carry over losses), has no more than $2 
million in annual profits each year for the previous two years. In the 
218-219 MHz Report and Order and Memorandum Opinion and Order, the 
Commission established a small business size standard for a ``small 
business'' as an entity that, together with its affiliates and persons 
or entities that hold interests in such an entity and their affiliates, 
has average annual gross revenues not to exceed $15 million for the 
preceding three years. A ``very small business'' is defined as an 
entity that, together with its affiliates and persons or entities that 
hold interests in such an entity and its affiliates, has average annual 
gross revenues not to exceed $3 million for the preceding three years. 
The SBA has approved these size standards. The Commission cannot 
estimate, however, the number of licenses that will be won by entities 
qualifying as small or very small businesses under the Commission's 
rules in future auctions of 218-219 MHz spectrum.
    55. 24 GHz--Incumbent Licensees. This analysis may affect incumbent 
licensees who were relocated to the 24 GHz band from the 18 GHz band, 
and applicants who wish to provide services in the 24 GHz band. The 
applicable SBA small business size standard is that of ``Cellular and 
Other Wireless Telecommunications'' companies. This category provides 
that such a company is small if it employs no more than 1,500 persons. 
According to Census Bureau data for 1997, there were 977 firms in this 
category that operated for the entire year. Of this total, 965 firms 
had employment of 999 or fewer employees, and an additional 12 firms 
had employment of 1,000 employees or more. Thus, under this size 
standard, the great majority of firms can be considered small. These 
broader census data notwithstanding, the Commission believes that there 
are only two licensees in the 24 GHz band that were relocated from the 
18 GHz band, Teligent and TRW, Inc. It is the Commission's 
understanding that Teligent and its related companies have less than 
1,500 employees, though this may change in the future. TRW is not a 
small entity. Thus, only one incumbent licensee in the 24 GHz band is a 
small business entity.
    56. 24 GHz--Future Licensees. With respect to new applicants in the 
24 GHz band, the small business size standard for ``small business'' is 
an entity that, together with controlling interests and affiliates, has 
average annual gross revenues for the three preceding years not in 
excess of $15 million. ``Very small business'' in the 24 GHz band is an 
entity that, together with controlling interests and affiliates, has 
average gross revenues not exceeding $3 million for the preceding three 
years. The SBA has approved these small business size standards. These 
size standards will apply to the future auction, if held.

Description of Projected Reporting, Recordkeeping, and Other Compliance 
Requirements

    57. The NPRM explores options for developing an alternative 
regulatory structure that would be available to those rate-of-return 
carriers electing it. It considers the widely varying operating 
circumstances of rate-of-return carriers, the implications of 
competitive and intrastate regulatory conditions on the options 
available, and the need to facilitate and ensure the deployment of 
advanced services in rural America. If adopted, alternative regulation 
may require additional recordkeeping. For example, during CenturyTel's 
five-year plan, line density averages would have to be reported in 
order to assess applicable ATS target rates. Furthermore, under the 
Rate-of-Return Carrier Tariff Option, electing rate-of-return carriers 
would file tariffs for a two-year period, with rates based on 
historical costs and demand. The NPRM also addresses the continued need 
for the Commission's all-or-nothing rule, seeking comment on whether 
repeal or modification of the all-or-nothing rule could involve 
additional reporting or regulatory procedures to prevent cost shifting.

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

    58. 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.
    59. The two alternative incentive regulation proposals in the 
Second NPRM could have varying positive or negative impacts on small 
rate-of-return carriers. The proposals involve elective options, so 
that a small entity should be able to assess the potential impacts as 
part of its decision-making process. Nonetheless, public comments are 
welcomed on any modifications to the proposals contained in the Second 
NPRM that would reduce potential adverse impacts on small entities. 
Specifically, suggestions are sought on different compliance or 
reporting requirements that would take into account the resources of 
small entities; and clarification, consolidation, or simplification of 
compliance and reporting requirements for small entities that would be 
subject to the rules. What are the relative merits between applying an 
X-factor, based on GDP-PI or some other productivity factor, and a G-
factor, based on growth, as they relate to small entities under the 
CenturyTel Plan? How can the Commission ensure that

[[Page 13803]]

adequate investment and service quality levels are maintained? How 
would the adoption of an incentive regulation plan affect small 
carriers, and how would a low-end adjustment affect such plan? How 
would the adoption of either alternative regulation plan affect 
universal service? If the Commission should repeal or modify the 
Commission's all-or-nothing rule, how can it prevent the danger of cost 
shifting for small carriers? How would the proposals impact NECA 
pooling from the perspective of small carriers? Comments should be 
supported by specific economic analysis.

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

    60. None.

Report to the Small Business Administration

    61. The Commission will send a copy of the NPRM, including this 
IRFA, to the Chief Counsel for Advocacy of the Small Business 
Administration (SBA). In addition, the NPRM and IRFA (or summaries 
thereof) will be published in the Federal Register.

Filing of Comments and Reply Comments

    62. Pursuant to sections 1.415 and 1.419 of the Commission's rules, 
47 CFR 1.415 and 1.419, interested parties may file comments on or 
before 30 days and reply comments on or before 45 days of publication 
of this NPRM in the Federal Register. Comments may be filed using the 
Commission's Electronic Comment Filing System (ECFS) or by filing paper 
copies. Comments filed through the ECFS can be sent as an electronic 
file via the Internet to http://www.fcc.gov/cgb/ecfs. Generally, only 
one copy of an electronic submission must be filed. If multiple docket 
or rulemaking numbers appear in the caption of this proceeding, 
however, commenters must transmit one electronic copy of the comments 
to each docket or rulemaking number referenced in the caption. In 
completing the transmittal screen, commenters should include their full 
name, U.S. Postal Service mailing address, and the applicable docket or 
rulemaking number. Parties may also submit an electronic comment by 
Internet e-mail. To get filing instructions for e-mail comments, 
commenters should send an e-mail to [email protected], and should include 
the following words in the body of the message: ``get form your e-mail 
address.'' A sample form and directions will be sent in reply. 
Commenters also may obtain a copy of the ASCII Electronic Transmittal 
Form (FORM-ET) at http://www.fcc.gov/e-file/email.html.
    63. Parties who choose to file by paper must file an original and 
four copies of each filing. If more than one docket or rulemaking 
number appear in the caption of this proceeding, commenters must submit 
two additional copies for each additional docket or rulemaking number.
    64. Filings can be sent by hand or messenger delivery, by 
commercial overnight courier, or by first-class or overnight U.S. 
Postal Service mail (although the Commission continues to experience 
delays in receiving U.S. Postal Service mail). The Commission's 
contractor, Natek, Inc., will receive hand-delivered or messenger-
delivered paper filings for the Commission's Secretary at 236 
Massachusetts Avenue, NE., Suite 110, Washington, DC 20002.
     The filing hours at this location are 8 a.m. to 
7 p.m.
     All hand deliveries must be held together with 
rubber bands or fasteners.
     Any envelopes must be disposed of before 
entering the building.
     Commercial overnight mail (other than U.S. 
Postal Service Express Mail and Priority Mail) must be sent to 9300 
East Hampton Drive, Capitol Heights, MD 20743.
     All filings must be addressed to the 
Commission's Secretary, Office of the Secretary, Federal Communications 
Commission.
    65. Regardless of whether parties choose to file electronically or 
by paper, parties should also file one copy of any documents filed in 
this docket with the Commission's copy contractor, Qualex 
International, Portals II, 445 12th Street SW., Washington, DC 20554 
(telephone 202-863-2893; facsimile 202-863-2898) or via e-mail at 
[email protected]. In addition, one copy of each submission must be 
filed with the Chief, Pricing Policy Division, 445 12th Street SW., 
Washington, DC 20554. Documents filed in this proceeding will be 
available for public inspection during regular business hours in the 
Commission's Reference Information Center, 445 12th Street SW., 
Washington, DC 20554, and will be placed on the Commission's Internet 
site. For further information, contact Douglas Slotten at (202) 418-
1572, or Ted Burmeister at (202) 418-7389.
    66. Written comments by the public on the proposed and/or modified 
information collections are due on the same day as comments on the 
NPRM, i.e., on or before 30 days after publication of the NPRM in the 
Federal Register. Written comments must be submitted by OMB on the 
proposed and/or modified information collections on or before 60 days 
after publication of the NPRM in the Federal Register. In addition to 
filing comments with the Secretary, a copy of any comments on the 
information collections contained herein should be submitted to Judith 
B. Herman, Federal Communications Commission, 445 12th Street SW., 
Washington, DC 20554, or via the Internet to [email protected], and to 
Jeanette Thornton, OMB Desk Officer, Room 10236 NEOB, 725 17th Street 
NW., Washington, DC 20503, or via the Internet to [email protected].
    67. Accessible formats (computer diskettes, large print, audio 
recording and Braille) are available to persons with disabilities by 
contacting the Consumer & Governmental Affairs Bureau, at (202) 418-
0531, TTY (202) 418-7365, or at [email protected].
    68. Pursuant to the authority contained in sections 4(i), 4(j), 
201-205, 254, and 403 of the Communications Act of 1934, as amended, 47 
U.S.C. 154(i), 154(j), 201-205, 254, and 403, this Second Further 
Notice of Proposed Rulemaking is adopted.
    69. The Commission's Consumer and Governmental Affairs Bureau, 
Reference Information Center, shall send a copy of this Second Further 
Notice of Proposed Rulemaking, including the Initial Regulatory 
Flexibility Analysis, to the Chief Counsel for Advocacy of the Small 
Business Administration.

List of Subjects

47 CFR Part 54

    Communications common carriers, Telecommunications, Telephone.

47 CFR Parts 61 and 69

    Communications common carriers, Telephone.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 04-6560 Filed 3-23-04; 8:45 am]
BILLING CODE 6712-01-U