[Federal Register Volume 69, Number 140 (Thursday, July 22, 2004)]
[Rules and Regulations]
[Pages 43762-43771]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-16728]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 51

[CC Docket No. 01-338; FCC 04-164]


Review of the Section 251 Unbundling Obligations of Incumbent 
Local Exchange Carriers

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: On August 21, 2003, the Commission initiated a Further Notice 
of Proposed Rulemaking to determine whether it should change its 
interpretation of section 252(i) of the Communications Act of 1934, as 
amended (the Act), as implemented by Sec.  51.809 of the Commission's 
rules (the ``pick-and-choose'' rule). In this Order, the Commission 
replaces the current

[[Page 43763]]

pick-and-choose rule with an ``all-or-nothing rule'' that requires a 
requesting carrier seeking to avail itself of terms in an 
interconnection agreement to adopt the agreement in its entirety, 
taking all rates, terms, and conditions from the adopted agreement. The 
Commission determines in this Order that the pick-and-choose rule is a 
disincentive to give and take in interconnection negotiations. In 
addition, the Commission finds that other provisions of the Act provide 
adequate protection for requesting carriers from discrimination.

DATES: Effective August 23, 2004.

FOR FURTHER INFORMATION CONTACT: Christi Shewman, Attorney, Competition 
Policy Division, Wireline Competition Bureau, at (202) 418-1686, or at 
[email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Second 
Report and Order (Order) in CC Docket No. 01-338, FCC 04-164, adopted 
July 8, 2004, and released July 13, 2004. The complete text of this 
Order 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, Best 
Copy and Printing, Inc., 445 12th Street, SW., Room CY-B402, 
Washington, DC 20554, telephone (800) 378-3160 or (202) 863-2893, 
facsimile (202) 863-2898, or via e-mail at http://www.bcpiweb.com. It 
is also available on the Commission's Web site at http://www.fcc.gov.

Synopsis of the Order

    1. Background. Section 252(i) of the Act provides that a ``local 
exchange carrier shall make available any interconnection, service or 
network element provided under an agreement approved under [section 
252] to which it is a party to any other requesting carrier upon the 
same terms and conditions as those provided in the agreement.'' In the 
Local Competition Order (61 FR 45476, August 29, 1996), the Commission 
interpreted section 252(i) to mean that requesting carriers can choose 
among individual provisions contained in publicly filed interconnection 
agreements without being required to accept the terms and conditions of 
the entire agreement.
    2. On review, the U.S. Court of Appeals for the Eighth Circuit (the 
Eighth Circuit) vacated the pick-and-choose rule stating that the 
Commission's interpretation did not balance the competing policies of 
sections 251 and 252, and that the rule hindered voluntarily negotiated 
agreements. The Supreme Court reversed the Eighth Circuit decision and 
reinstated the pick-and-choose rule, holding that the Commission's 
interpretation of section 252(i) was reasonable.
    3. On May 25, 2001, Mpower filed a petition for forbearance and 
rulemaking to establish a ``New Flexible Contract Mechanism Not Subject 
to `Pick and Choose,' '' and sought relief from the Commission's pick-
and-choose requirement on the grounds that it inhibited innovative 
deal-making during negotiations. Although Mpower subsequently withdrew 
this petition, incumbent LECs have argued that abandoning the rule 
would promote mutually beneficial commercial business relationships 
between incumbent local exchange carriers (LECs) and competitive LECs.
    4. On August 21, 2003, the Commission initiated the Further Notice 
of Proposed Rulemaking (FNPRM) (68 FR 52307, September 2, 2003) to 
determine whether it should eliminate the pick-and-choose rule and 
replace it with an alternative interpretation of section 252(i). The 
Commission requested comment on three tentative conclusions: that the 
Commission has legal authority to alter its interpretation of section 
252(i), so long as the new rule remains a reasonable interpretation of 
the statutory text; that the current rule discourages give-and-take 
bargaining; and that the Commission should reinterpret section 252(i) 
so that if an incumbent LEC files for and obtains state approval for a 
statement of generally available terms (SGAT), the current pick-and-
choose rule would apply only to that SGAT, and all other 
interconnection agreements would be subject to an all-or-nothing rule 
requiring carriers to adopt another carrier's interconnection agreement 
in its entirety (the conditional SGAT proposal).
    5. Discussion. In the Order, the Commission adopts the tentative 
conclusion from the FNPRM that it has the legal authority to 
reinterpret section 252(i), and that the language in section 252(i) 
does not limit the Commission to a single construction. The Commission 
reached this conclusion based on the plain meaning of the section's 
text giving rise to two different, reasonable interpretations, and 
because the Supreme Court expressly recognized, in Iowa Utilities Board 
v. FCC, that the Commission has the expertise to determine a reasonable 
interpretation of section 252(i). The Supreme Court, however, did not 
hold that the Commission's current interpretation of section 252(i) is 
compelled by the statute. Had it done so, the Court would not have had 
to reach the question of whether the Commission's interpretation is 
reasonable, nor would it have acknowledged that the ability to 
interpret section 252(i) is a matter ``eminently within the expertise'' 
of the Commission, and would have necessarily foreclosed our ability to 
make any other interpretation. The Supreme Court has routinely 
recognized that government agencies have discretion to change 
interpretations of ambiguous statutes, and that an agency is not 
estopped from changing its view.
    6. The Commission concludes that the burdens of the current pick-
and-choose rule outweigh its benefits, and that the existing pick-and-
choose rule fails to promote the meaningful, give-and-take negotiations 
envisioned by the Act. The Commission finds that the current pick-and-
choose rule is not compelled by section 252(i) and an all-or-nothing 
approach better achieves statutory goals. Therefore, the Commission 
eliminates the pick-and-choose rule and replaces it with an all-or-
nothing rule, requiring that a carrier that seeks to adopt terms and 
conditions under section 252(i) may only adopt an effective 
interconnection agreement in its entirety, taking all rates, terms, and 
conditions of the adopted agreement. In the Order, the Commission 
declines to adopt the FNPRM's conditional SGAT proposal. The Commission 
also clarifies that in order to facilitate compromise, the new all-or-
nothing rule will apply to all effective interconnection agreements, 
including those approved and in effect before the date the new rule 
goes into effect. As of the effective date of the new rule, the pick-
and-choose rule will no longer apply to any interconnection agreement.
    7. ``All or Nothing'' Rule. Based on the record of evidence in the 
Order, the Commission finds the pick-and-choose rule is a disincentive 
to give and take in interconnection negotiations by ``making it 
impossible for favorable interconnection-service or network-element 
terms to be traded off against unrelated provisions.'' The Commission 
concludes that the all-or-nothing approach is a reasonable 
interpretation of section 252(i) that will provide incentives to 
negotiate while continuing to provide safeguards against 
discrimination. The pick-and-choose rule has resulted in the adoption 
of largely standardized agreements with little compromise between the 
incumbent LEC and the requesting carrier. Incumbent LECs persuasively 
demonstrate that they seldom make

[[Page 43764]]

significant concessions in return for some trade-off for fear that 
third parties will obtain the equivalent benefits without making any 
trade-off at all. In addition, the record demonstrates that the pick-
and-choose rule imposes material costs and delay on both parties and 
serves as a regulatory obstacle to mutually beneficial transactions. 
The Commission finds that the record evidence supports its conclusion 
that an all-or-nothing rule would better serve the goals of sections 
251 and 252 to promote negotiated interconnection agreements because it 
would encourage incumbent LECs to make trade-offs in negotiations that 
they are reluctant to accept under the existing rule.
    8. Incumbent LEC commenters show that, when there are proposed 
trade-offs that would be beneficial to their interests, they expend 
significant resources conferring internally to assess the risks of the 
pick-and-choose rule and to attempt to craft language that adequately 
limits the risk that a requesting carrier would be able to adopt a 
provision without associated trade-offs. Moreover, incumbent LECs 
submitted evidence showing that that the pick-and-choose rule deters 
them from testing and implementing mutually beneficial innovative 
business arrangements through interconnection agreements. Based on the 
record, the Commission determines that the pick-and-choose rule 
undermines negotiations by unreasonably constraining incentives to 
bargain during negotiations.
    9. The Commission rejects arguments that incumbent LECs will have 
no incentive to bargain fairly with requesting carriers without the 
pick-and-choose rule, and that more negotiations will end inevitably in 
costly and burdensome arbitrations. The Commission finds that any 
hypothetical disadvantage in negotiating leverage is outweighed by the 
potential creativity in negotiation that an all-or-nothing rule would 
help promote. Under the new rule, requesting carriers should be able to 
negotiate individually tailored interconnection agreements designed to 
fit their business needs more precisely. Requesting carriers with 
limited resources will have the option of adopting a suitable agreement 
in its entirety if they decline to pursue negotiated interconnection 
agreements. The Commission recognizes that while the potential costs of 
arbitrations are not insignificant, the benefits of an all-or-nothing 
approach outweigh these transaction costs. Indeed, the arbitration 
process created in the Act is often invoked under the current pick-and-
choose rule and will remain as a competitive safeguard for all parties.
    10. Based on the record, Commission concludes that the pick-and-
choose rule has not expedited the competitive entry process, as the 
Commission expected, and that an all-or-nothing rule would be 
beneficial because competitive LECs that are sensitive to delay could 
adopt whole agreements, while others could reach agreements on 
individually tailored provisions more efficiently. The Commission 
states that disputes over obligations under the pick-and-choose rule 
have become a significant obstacle to efficient negotiations of 
interconnection between incumbent LECs and requesting carriers. The 
Commission finds that the ``legitimately related'' requirement has 
become an obstacle to give-and-take negotiations rather than an 
incentive for give and take. Additionally, the record demonstrates that 
attempts by requesting carriers to pick and choose often devolve into 
protracted disputes with accusations of anticompetitive motives on both 
sides. As a result, negotiations are delayed, incumbent LECs are 
reluctant to engage in give-and-take negotiations even where terms 
might be legitimately related for fear of having to defend against 
unreasonable pick-and-choose requests, and requesting carriers are 
denied the benefits of individualized agreements that meet their 
business needs. The Commission concludes that the pick-and-choose rule 
has proven to be difficult to administer in practice and has impeded 
productive give-and-take negotiations as intended by the Act. The 
Commission expects the all-or-nothing rule to produce fewer disputes 
over implementation because compliance will be more easily identifiable 
and administrable, and will provide increased incentive for incumbent 
LECs to grant concessions in return for trade-offs in the normal course 
of negotiations.
    11. Protections Against Discrimination. The Order concludes that 
existing state and federal safeguards against discriminatory behavior 
are sufficient and that any additional protection that the current 
pick-and-choose rule may provide is unnecessary. The current record 
demonstrates that in practice competitive LECs frequently adopt 
agreements in their entirety. The Commission believes that this 
practice indicates that the pick-and-choose protections against 
discrimination are superfluous and that the pick-and-choose rule does 
not afford requesting carriers protections against discrimination 
beyond those that would be in place under the all-or-nothing rule. The 
pick-and-choose rule does not provide added protection against 
discrimination but serves a disincentive to negotiations. Under an all-
or-nothing rule, an incumbent LEC will not be able to reach a 
discriminatory agreement for interconnection, services, or network 
elements with a particular carrier without making that agreement in its 
entirety available to other requesting carriers. If the agreement 
includes terms that materially benefit the preferred carrier, other 
requesting carriers will likely have an incentive to adopt that 
agreement to gain the benefit of the incumbent LEC's discriminatory 
bargain. Because these agreements will be available on the same terms 
and conditions to requesting carriers, the all-or-nothing rule should 
effectively deter incumbent LECs from engaging in such discrimination.
    12. Section 251(c) requires incumbent LECs to provide 
interconnection, unbundled network elements, telecommunications 
services for resale, and collocation on nondiscriminatory terms and 
conditions. If negotiations reach an impasse, either party may petition 
for arbitration by the state commission. Section 252 imposes deadlines 
for approvals and arbitrations that ensure that interconnection 
agreements are finalized in a timely manner. Section 252(e)(1) requires 
carriers to file any negotiated or arbitrated interconnection agreement 
with the relevant state commission for approval. Under section 
252(e)(2)(A)(i), state commissions may reject a negotiated agreement if 
``the agreement (or any portion thereof) discriminates against a 
telecommunications carrier not a party to the agreement. * * *'' 
Following a state commission determination, any party may bring an 
action in an appropriate federal district court to determine whether 
the agreement meets the requirements of sections 251 and 252. In 
addition, requesting carriers seeking remedies for alleged violations 
of section 252(i) may file complaints pursuant to section 208. Given 
the statutory nondiscrimination provisions and the procedural 
mechanisms to ensure compliance with the Act's nondiscrimination 
requirements at both the state and federal levels, the Commission 
concludes that the Act provides requesting carriers with adequate 
protections against discrimination without the pick-and-choose rule.
    13. The Commission rejects commenters' arguments that under an all-
or-nothing rule, incumbent LECs will insert onerous terms or ``poison 
pills'' into agreements to discourage competitive LECs from adopting

[[Page 43765]]

agreements in whole. They argue that to avoid such onerous terms, 
requesting carriers will be forced into lengthy and expensive 
negotiations and ultimately, arbitration. The Commission states above 
that the Act provides adequate protection against discrimination, 
including poison pills, under an all-or-nothing rule, and that the 
record does not demonstrate that concerns with regard to poison pills 
have materialized over the eight years of experience with negotiated 
interconnection agreements. Additionally, the Commission is not 
persuaded that the pick-and-choose rule must be retained at a minimum 
for interconnection agreements between incumbent LECs and their 
affiliates (including wireless and section 272 separate affiliates) due 
to a higher risk of discrimination by incumbent LECs in favor of 
affiliates. The Commission states that the Act's nondiscrimination 
provisions discussed in the Order apply to incumbent LECs' 
interconnection agreements with affiliates.
    14. The Commission concludes that the benefits of the pick-and-
choose rule, in terms of protection against discrimination, do not 
outweigh the significant disincentive it creates to negotiated 
interconnection agreements. The Commission recognizes that requesting 
carriers will be protected against discrimination under the all-or-
nothing rule and other statutory provisions, and therefore, eliminates 
the pick-and-choose rule and replaces it with the all-or-nothing rule.
    15. The Proposed SGAT Condition. The Commission declines to adopt 
the tentative conclusion that the current pick-and-choose rule would 
continue to apply to all approved interconnection agreements if the 
incumbent LEC does not file and obtain state approval for an SGAT. The 
record of this proceeding reflects widespread opposition to the 
proposed SGAT condition. Incumbent LECs, competitive LECs, wireless 
carriers, and state commissions generally agree that there are 
significant legal and practical concerns with this proposal and that an 
SGAT condition would not afford competitors additional protection from 
discrimination.
    16. Based on the record, the Commission agrees with opponents to 
this proposal and finds that an SGAT condition would impose significant 
burdens on incumbent LECs, requesting carriers, and state commissions 
that outweigh any benefit in the form of additional protection against 
discrimination. Specifically, the SGAT condition would impose costs and 
administrative burdens on incumbent LECs to file SGATs in states 
currently without SGATs; on requesting carriers to participate in state 
SGAT proceedings; and on state commissions to conduct proceedings to 
review and approve the SGATs. At the same time, the Commission 
recognizes that section 252 does not require state review before SGATs 
take effect; nor does it require timely updates. As described in the 
Order, the Commission concludes that the existing safeguards against 
discrimination, including the section 252(e)(1) filing requirement and 
state commission approval, afford competitors adequate protection under 
an all-or-nothing rule. Moreover, if the SGAT condition were needed to 
protect against discrimination, the fact that the SGAT provision of the 
Act does not apply to non-BOC incumbent LECs would limit the 
Commission's ability to impose a uniform rule.

Final Regulatory Flexibility Analysis

    17. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), an Initial Regulatory Flexibility Analysis (IRFA) was 
incorporated in the FNPRM. The Commission sought written public comment 
on the proposals in the FNPRM, including comment on the IRFA. No 
comments were received on the IRFA. This present Final Regulatory 
Flexibility Analysis (FRFA) conforms to the RFA.
    18. Need for, and Objectives of, the Rule: This Order ensures that 
market-based incentives exist for incumbent and competitive LECs to 
negotiate innovative commercial interconnection arrangements. The 
current pick-and-choose rule implementing section 252(i) may discourage 
give-and-take negotiation because incumbent LECs may be reluctant to 
make significant concessions (in exchange for negotiated benefit) if 
those concessions become automatically available--without any trade-
off--to every potential market entrant. The Commission adopts an 
alternative approach to implementing section 252(i), requiring third 
parties to opt into entire agreements, to promote more innovative and 
flexible arrangements between parties. This Order declines to adopt the 
approach proposed in the FNPRM that would eliminate the current pick-
and-choose regime for incumbent LECs only where the incumbent LEC has 
filed and received state approval of an SGAT. Instead, this Order 
eliminates the pick-and-choose rule and replaces it with an all-or-
nothing rule, regardless of whether the state has an effective SGAT.
    19. Summary of Significant Issues Raised by Public Comments in 
Response to the IRFA: There were no comments raised that specifically 
addressed the proposed rules and policies presented in the IRFA. 
Nonetheless, the agency considered the potential impact of the rules 
proposed in the IRFA on small entities.
    20. Description and Estimate of the Number of Small Entities To 
Which the Proposed Rules Would Apply: 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 adopted 
herein. The RFA generally defines the term ``small entity'' as having 
the same meaning as the terms ``small business,'' ``small 
organization,'' and ``small governmental jurisdiction.'' In addition, 
the term ``small business'' has the same meaning as the term ``small 
business concern'' under the Small Business Act. A ``small business 
concern'' is one which: (1) Is independently owned and operated; (2) is 
not dominant in its field of operation; and (3) satisfies any 
additional criteria established by the Small Business Administration 
(SBA).
    21. In this section, the Commission further describes and estimates 
the number of small entity licensees and regulates that may be affected 
by rules adopted in this Order. 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 these actions.
    22. Small incumbent local exchange carriers are included 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 local exchange carriers are not dominant in their field of 
operation because any such dominance is not ``national'' in scope. The 
Commission has therefore included small incumbent local exchange 
carriers in this RFA analysis, although they emphasize that this RFA 
action has no effect on Commission

[[Page 43766]]

analyses and determinations in other, non-RFA contexts.
    23. 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 great majority of firms can be considered small.
    24. Incumbent Local Exchange Carriers. Neither the Commission nor 
the SBA has developed a small business size standard specifically for 
incumbent local exchange services. The appropriate size standard under 
SBA rules is for the category 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 have reported 
that they are engaged in the provision of incumbent 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 our 
proposed action.
    25. Competitive Local Exchange Carriers, Competitive Access 
Providers (CAPs), ``Shared-Tenant Service Providers,'' and ``Other 
Local Service Providers.'' Neither the Commission nor the SBA has 
developed a small business size standard specifically for these service 
providers. The appropriate size standard under SBA rules is for the 
category 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 carriers have reported that they are engaged in 
the provision of either competitive access provider services or 
competitive local exchange carrier services. Of these 609 carriers, an 
estimated 458 have 1,500 or fewer employees and 151 have more than 
1,500 employees. In addition, 16 carriers have reported that they are 
``Shared-Tenant Service Providers,'' and all 16 are estimated to have 
1.500 or fewer employees. In addition, 35 carriers have reported that 
they are ``Other Local Service Providers.'' Of the 35, 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, 
``Shared-Tenant Service Providers,'' and ``Other Local Service 
Providers'' are small entities that may be affected by our proposed 
action.
    26. Interexchange Carriers (IXCs). Neither the Commission nor the 
SBA has developed a small business size standard specifically for 
providers of interexchange services. The appropriate size standard 
under SBA rules is for the category 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 carriers have 
reported that they are engaged in the provision of interexchange 
service. Of these, 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 IXCs are small entities that may be 
affected by our proposed action.
    27. Operator Service Providers. Neither the Commission nor the SBA 
has developed a small business size standard specifically for operator 
service providers. The appropriate size standard under SBA rules is for 
the category 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 carriers have reported that they are 
engaged in the provision of operator services. Of these, 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 OSPs are 
small entities that may be affected by our proposed action.
    28. 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, 32 
companies reported that they were engaged in the provision of prepaid 
calling cards. Of these 32 companies, an estimated 31 have 1,500 or 
fewer employees and one has more than 1,500 employees. Consequently, 
the Commission estimates that the great majority of prepaid calling 
card providers are small entities that may be affected by the rules and 
policies adopted herein.
    29. 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, OSPs, 
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, 42 companies reported that their primary 
telecommunications service activity was the provision of payphone 
services. Of these 42 companies, an estimated 37 have 1,500 or fewer 
employees and five have more than 1,500 employees. Consequently, the 
Commission estimates that most ``Other Toll Carriers'' are small 
entities that may be affected by the rules and policies adopted herein.
    30. Wireless Service Providers. The SBA has developed a small 
business size standard for wireless firms within the two broad economic 
census categories of ``Paging'' and ``Cellular and Other Wireless 
Telecommunications.'' Under both SBA categories, a wireless business is 
small if it has 1,500 or fewer employees. For the census category of 
Paging, Census Bureau data for 1997 show that there were 1,320 firms in 
this category, total, that operated for the entire year. Of this total, 
1,303 firms had employment of 999 or fewer employees, and an additional 
17 firms had employment of 1,000 employees or more. Thus, under this 
category and associated small business size standard, the great 
majority of firms can be considered small. For the census category 
Cellular and Other Wireless Telecommunications, Census Bureau data for 
1997 show that there were 977 firms in this category, total, 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 second category and size 
standard, the great majority of firms can, again, be considered small.
    31. Broadband PCS. The broadband 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

[[Page 43767]]

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. Subsequent events, concerning Auction 305, including 
judicial and agency determinations, resulted in a total of 163 C and F 
Block licenses being available for grant. In addition, 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.
    32. Narrowband Personal Communications Services. The Commission 
held an auction for Narrowband PCS licenses that commenced on July 25, 
1994, and closed on July 29, 1994. A second auction commenced on 
October 26, 1994 and closed on November 8, 1994. For purposes of the 
first two Narrowband PCS auctions, ``small businesses'' were entities 
with average gross revenues for the prior three calendar years of $40 
million or less. Through these auctions, the Commission awarded a total 
of 41 licenses, 11 of which were obtained by four small businesses. To 
ensure meaningful participation by small business entities in future 
auctions, the Commission 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. A third 
auction commenced on October 3, 2001 and closed on October 16, 2001. 
Here, five bidders won 317 (Metropolitan Trading Areas and nationwide) 
licenses. Three of these claimed status as a small or very small entity 
and won 311 licenses.
    33. 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 
definition of 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 category provides that a 
small business is a wireless company employing no more than 1,500 
persons. According to the Census Bureau data for 1997, only twelve 
firms out of a total of 1,238 such firms that operated for the entire 
year in 1997, had 1,000 or more employees. 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 standard.
    34. 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 defining ``small'' and ``very small'' businesses for 
purposes of determining their eligibility for special provisions such 
as bidding credits and installment payments. This small business 
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 defined as 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 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 373 
licenses in the first 220 MHz auction. A second auction included 225 
licenses: 216 EA licenses and 9 EAG licenses. Fourteen companies 
claiming small business status won 158 licenses. A third auction 
included four licenses: 2 BEA licenses and 2 EAG licenses in the 220 
MHz Service. No small or very small business won any of these licenses.
    35. Specialized Mobile Radio. The Commission awards ``small 
entity'' bidding credits in auctions for Specialized Mobile Radio (SMR) 
geographic area licenses in the 800 MHz and 900 MHz bands to firms that 
had revenues of no more than $15 million in each of the three previous 
calendar years. The Commission awards ``very small entity'' bidding 
credits to firms that had revenues of no more than $3 million in each 
of the three previous calendar years. The SBA has approved these small 
business size standards for the 900 MHz Service. The Commission has 
held auctions for geographic area licenses in the 800 MHz and 900 MHz 
bands. The 900 MHz SMR auction began on December 5, 1995, and closed on 
April 15, 1996. Sixty bidders claiming that they qualified as small 
businesses under the $15 million size standard won 263 geographic area 
licenses in the 900 MHz SMR band. The 800 MHz SMR auction for the upper 
200 channels began on October 28, 1997, and was completed on December 
8, 1997. Ten bidders claiming that they qualified as small businesses 
under the $15 million size standard won 38 geographic area licenses for 
the upper 200 channels in the 800 MHz SMR band. A second auction for 
the 800 MHz band was held on January 10, 2002 and closed on January 17, 
2002 and included 23 BEA licenses. One bidder claiming small business 
status won five licenses.
    36. Common Carrier Paging. The SBA has developed a small business 
size standard for wireless firms within the broad economic census 
categories of ``Cellular and Other Wireless Telecommunications.'' Under 
this SBA category, a wireless business is small if it has 1,500 or 
fewer employees. For the census category of Paging, Census Bureau data 
for 1997 show that there were 1,320 firms in this category, total, that 
operated for the entire year. Of this total, 1,303 firms had employment 
of 999 or fewer employees, and an additional 17 firms had employment of 
1,000 employees or more. Thus, under this category and associated small 
business size standard, the great majority of firms can be considered 
small.

[[Page 43768]]

    37. In the Paging Second Report and Order, the Commission adopted a 
size standard for ``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. The SBA has 
approved this definition. An auction of Metropolitan Economic Area 
(MEA) licenses commenced on February 24, 2000, and closed on March 2, 
2000. Of the 2,499 licenses auctioned, 985 were sold. Fifty-seven 
companies claiming small business status won 440 licenses. An auction 
of MEA and Economic Area (EA) licenses commenced on October 30, 2001, 
and closed on December 5, 2001. Of the 15,514 licenses auctioned, 5,323 
were sold. One hundred thirty-two companies claiming small business 
status purchased 3,724 licenses. A third auction, consisting of 8,874 
licenses in each of 175 EAs and 1,328 licenses in all but three of the 
51 MEAs commenced on May 13, 2003, and closed on May 28, 2003. Seventy-
seven bidders claiming small or very small business status won 2,093 
licenses. Currently, there are approximately 74,000 Common Carrier 
Paging licenses. According to the most recent Trends in Telephone 
Service, 608 private and common carriers reported that they were 
engaged in the provision of either paging or ``other mobile'' services. 
Of these, an estimated 589 are small, under the SBA-approved small 
business size standard, and the majority of common carrier paging 
providers would qualify as small entities under the SBA definition.
    38. 700 MHz Guard Band Licenses. In the 700 MHz Guard Band Order, 
the Commission adopted size standards 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 in this service is an entity that, together 
with its affiliates and controlling principals, has average gross 
revenues not exceeding $40 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 $15 million for the preceding three years. SBA 
approval of these definitions is not required. 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.
    39. 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 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 rules and 
policies adopted herein.
    40. 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. 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.
    41. 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 our 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 
dollars. 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 dollars. 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.
    42. 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 are 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 rules 
and policies proposed herein. The Commission noted, however, that the 
common carrier microwave fixed licensee category includes some large 
entities.
    43. Offshore Radiotelephone Service. This service operates on 
several ultra high frequencies (UHF) television broadcast channels that 
are not used for television broadcasting in the coastal

[[Page 43769]]

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.
    44. Wireless Communications Services. This service can be used for 
fixed, mobile, radiolocation, and digital audio broadcasting satellite 
uses. The Commission defined ``small business'' for the wireless 
communications services (WCS) auction as an entity with average gross 
revenues of $40 million for each of the three preceding years, and a 
``very small business'' as an entity with average gross revenues of $15 
million for each of the three preceding years. The SBA has approved 
these definitions. The Commission auctioned geographic area licenses in 
the WCS service. In the auction, which commenced on April 15, 1997 and 
closed on April 25, 1997, there were seven bidders that won 31 licenses 
that qualified as very small business entities, and one bidder that won 
one license that qualified as a small business entity. An auction for 
one license in the 1670-1674 MHz band commenced on April 30, 2003 and 
closed the same day. One license was awarded. The winning bidder was 
not a small entity.
    45. 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 rules and 
policies proposed herein.
    46. Multipoint Distribution Service, Multichannel Multipoint 
Distribution Service, and Instructional Television Fixed Service. 
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 defined 
``small business'' as an entity that, together with its affiliates, has 
average gross annual revenues that are not more than $40 million for 
the preceding three calendar years. The SBA has approved of this 
standard. The MDS auction resulted in 67 successful bidders obtaining 
licensing opportunities for 493 Basic Trading Areas (BTAs). Of the 67 
auction winners, 61 claimed status as a small business. At this time, 
the Commission estimates that of the 61 small business MDS auction 
winners, 48 remain small business licensees. In addition to the 48 
small businesses that hold BTA authorizations, there are approximately 
392 incumbent MDS licensees that have gross revenues that are not more 
than $40 million and are thus considered small entities.
    47. 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.
    48. Finally, while SBA approval for a Commission-defined small 
business size standard applicable to ITFS is pending, educational 
institutions are included in this analysis as small entities. There are 
currently 2,032 ITFS licensees, and all but 100 of these licenses are 
held by educational institutions. Thus, the Commission tentatively 
concludes that at least 1,932 ITFS licensees are small businesses.
    49. 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 986 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 32 small and very small winning businesses that won 119 
licenses.
    50. 218-219 MHz Service. The first auction of 218-219 MHz 
(previously referred to as the Interactive and Video Data Service or 
IVDS) spectrum resulted in 178 entities winning licenses for 594 
Metropolitan Statistical Areas (MSAs). Of the 594 licenses, 567 were 
won by 167 entities qualifying as a small business. For that auction, 
the Commission defined a small business as 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 defined 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 
exceeding $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 exceeding $3 million 
for the preceding three years. The SBA has approved of these 
definitions. At this time, the Commission cannot estimate the number of 
licenses that will be won by entities qualifying as small or very small 
businesses under our rules in future auctions of 218-219 MHz spectrum. 
Given the success of small businesses in the previous auction, and the 
prevalence of small businesses in the subscription television services 
and message communications industries, the Commission assumes for 
purposes of this analysis that in future auctions, many, and perhaps 
all, of the licenses may be awarded to small businesses.
    51. Incumbent 24 GHz 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

[[Page 43770]]

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, 
total, 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 our 
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.
    52. Future 24 GHz Licensees. With respect to new 
applicants in the 24 GHz band, the Commission has defined ``small 
business'' as an entity that, together with controlling interests and 
affiliates, has average annual gross revenues for the three preceding 
years not exceeding $15 million. ``Very small business'' in the 24 
GHz band is defined as 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 definitions. The Commission will not know how many 
licensees will be small or very small businesses until the auction, if 
required, is held.
    53. Internet Service Providers. The SBA has developed a small 
business size standard for Internet Service Providers. This category 
comprises establishments ``primarily engaged in providing direct access 
through telecommunications networks to computer-held information 
compiled or published by others.'' Under the SBA size standard, such a 
business is small if it has average annual receipts of $21 million or 
less. According to Census Bureau data for 1997, there were 2,751 firms 
in this category that operated for the entire year. Of these, 2,659 
firms had annual receipts of under $10 million, and an additional 67 
firms had receipts of between $10 million and $24,999,999. Thus, under 
this size standard, the great majority of firms can be considered small 
entities.
    54. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements for Small Entities: In this Order, the 
Commission eliminates the current pick-and-choose rule. The changes 
will restrict competitive LECs' choices to opt into specific terms and 
conditions of existing interconnection agreements, requiring 
competitors to opt into entire agreements or negotiate their own 
agreements with incumbents. The Commission does not expect the new rule 
to impose additional burdens beyond those under the existing rule.
    55. Steps Taken to Minimize Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered: The RFA requires an 
agency to describe any significant alternatives that it has considered 
in developing its 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 and 
reporting requirements under the rule for such 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 such small 
entities.''
    56. In this Order, the Commission amends the pick-and-choose rule 
in a manner that encourages more customized contracts between 
competitive and incumbent LECs, as envisioned by the Act. The Order 
seeks to remove disincentives to the ability of incumbent LECs and 
competitive LECs to negotiate more customized agreements, including 
agreements that may include significant concessions in exchange for 
negotiated benefits. Changing the current rules, in favor of an 
approach where competitive LECs--including small entities--must opt 
into entire agreements, rather than individual terms and conditions, 
may impose additional burdens on these parties than they currently 
bear. The Commission finds that the current rules, however, expose 
incumbent LECs to the risk that subsequent entrants may reap a one-
sided benefit from negotiated concessions made between the incumbent 
LEC and the actual contracting competitive LEC, and this creates a 
disincentive to negotiation to both negotiating parties. This may, in 
turn, impose additional burdens on competitors and incumbents as the 
parties attempt to reach agreements and resolve disputes, often through 
arbitration and litigation, in a regulatory environment that creates 
disincentives for either party to compromise. For this reason, the 
Commission does not establish a separate pick-and-choose regime to 
govern small business incumbents or competitors. The Commission 
believes the alternative adopted in this Order will serve the 
Commission's goal of encouraging negotiation while protecting the 
rights and interests of competitors, including small businesses. The 
Commission believes that this approach is the least burdensome way to 
achieve market-driven contract negotiations. Alternatives proposed to 
address small business concerns were not adopted because they do not 
accomplish the Commission's objectives in this proceeding.
    57. Report to Congress: The Commission will send a copy of the 
Order, including this FRFA, in a report to be sent to Congress pursuant 
to the Congressional Review Act. In addition, the Commission will send 
a copy of the Order, including this FRFA, to the Chief Counsel for 
Advocacy of the SBA. A copy of the Order and FRFA (or summaries 
thereof) will also be published in the Federal Register.

Final Paperwork Reduction Act Analysis

    58. This Order does not contain information collection(s) subject 
to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13.

Ordering Clauses

    59. Accordingly, IT IS ORDERED that pursuant to sections 1, 3, 4, 
252(i), and 303(r) of the Communications Act of 1934, as amended, 47 
U.S.C. 151, 153, 154, 252(i), 303(r), the Second Report and Order in CC 
Docket No. 01-338 IS ADOPTED, and that part 51 of the Commission's 
rules, 47 CFR part 51, is amended as set forth in Appendix B of the 
Order. The requirements of this Order shall become effective August 23, 
2004.
    60. It is further ordered that the Commission's Consumer and 
Governmental Affairs Bureau, Reference Information Center, SHALL SEND a 
copy of this ORDER, including the Final Regulatory Flexibility 
Analysis, to the Chief Counsel for Advocacy of the Small Business 
Administration.

List of Subjects in 47 CFR Part 51

    Interconnection, Telecommunications.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.

Rule Changes

0
For the reasons discussed in the preamble, the Federal Communications 
Commission amends 47 CFR part 51 as follows:

[[Page 43771]]

PART 51--INTERCONNECTION

0
1. The authority citation for part 53 continues to read as follows:

    Authority: Sections 1-5, 7, 201-05, 207-09, 218, 225-27, 251-54, 
256, 271, 303(r), 332, 48 Stat. 1070, as amended, 1077; 47 U.S.C. 
151-55, 157, 201-05, 207-09, 218, 225-27, 251-54, 256, 271, 303(r), 
332, 47 U.S.C. 157 note, unless otherwise noted.

0
2. Revise Sec.  51.809 to read as follows:


Sec.  51.809  Availability of agreements to other telecommunications 
carriers under section 252(i) of the Act.

    (a) An incumbent LEC shall make available without unreasonable 
delay to any requesting telecommunications carrier any agreement in its 
entirety to which the incumbent LEC is a party that is approved by a 
state commission pursuant to section 252 of the Act, upon the same 
rates, terms, and conditions as those provided in the agreement. An 
incumbent LEC may not limit the availability of any agreement only to 
those requesting carriers serving a comparable class of subscribers or 
providing the same service (i.e., local, access, or interexchange) as 
the original party to the agreement.
    (b) The obligations of paragraph (a) of this section shall not 
apply where the incumbent LEC proves to the state commission that:
    (1) The costs of providing a particular agreement to the requesting 
telecommunications carrier are greater than the costs of providing it 
to the telecommunications carrier that originally negotiated the 
agreement, or
    (2) The provision of a particular agreement to the requesting 
carrier is not technically feasible.
    (c) Individual agreements shall remain available for use by 
telecommunications carriers pursuant to this section for a reasonable 
period of time after the approved agreement is available for public 
inspection under section 252(h) of the Act.

[FR Doc. 04-16728 Filed 7-21-04; 8:45 am]
BILLING CODE 6712-01-P