[Federal Register Volume 69, Number 184 (Thursday, September 23, 2004)]
[Proposed Rules]
[Pages 56976-56987]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-20705]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 22, 24 and 64

[ET Docket No. 04-295; FCC 04-187]


Communications Assistance for Law Enforcement Act

AGENCY: Federal Communications Commission.

ACTION: Proposed rule.

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SUMMARY: This document launches a thorough examination of the 
appropriate legal and policy framework of the 1994 Communications 
Assistance for Law Enforcement Act (``CALEA''). We initiate this 
proceeding at the request of, and in response to, a joint petition 
filed by the Department of Justice, Federal Bureau of Investigation, 
and the Drug Enforcement Administration (collectively, ``Law 
Enforcement'').

DATES: Comments must be filed on or before November 8, 2004, and reply 
comments must be filed on or before December 7, 2004.

FOR FURTHER INFORMATION CONTACT: Rodney Small, Office of Engineering 
and Technology, (202) 418-2454, e-mail: [email protected], TTY (202) 
418-2989.

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice 
of Proposed Rule Making, ET Docket No. 04-295, FCC 04-187, adopted 
August 4, 2004, and released August 9, 2004. The full text of this 
document is available for inspection and copying during normal business 
hours in the FCC Reference Center (Room CY-A257), 445 12th Street, SW., 
Washington, DC 20554. The complete text of this document also may be 
purchased from the Commission's copy contractor, Best Copy and 
Printing, Inc., 445 12th Street, SW., Room, CY-B402, Washington, DC 
20554. The full text may also be downloaded at: http://www.fcc.gov. 
Alternate formats are available to persons with disabilities by 
contacting Brian Millin at (202) 418-7426 or TTY (202) 418-7365.
    Pursuant to Secs. 1.415 and 1.419 of the Commission's rules, 47 CFR 
1.415, 1.419, interested parties may file comments on or before 
November 8, 2004, and reply comments on or before December 7, 2004. 
Comments may be filed using the Commission's Electronic Comment Filing 
System (ECFS) or by filing paper copies. See Electronic Filing of 
Documents in Rulemaking Proceedings, 63 FR 24121, May 1, 1998. Comments 
filed through the ECFS can be sent as an electronic file via the 
Internet to http://www.fcc.gov/e-file/ecfs.html. 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

[[Page 56977]]

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 .'' A sample form and directions will be sent in reply. 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 appears in 
the caption of this proceeding, commenters must submit two additional 
copies for each additional docket or rulemaking number.
    All filings must be addressed to the Commission's Secretary, Office 
of the Secretary, Federal Communications Commission. 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 we 
continue 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. 
U.S. Postal Service first-class mail, Express mail, and Priority Mail 
should be addressed to 445 12th Street, SW., Washington, DC 20554.

Summary of the Notice of Proposed Rulemaking

Overview

    1. In the Notice of Proposed Rulemaking (``NPRM''), the Commission 
examines issues relating to the scope of CALEA's applicability to 
packet-mode services, such as broadband Internet access, and 
implementation and enforcement issues. The Commission tentatively 
conclude that: (1) Congress intended the scope of CALEA's definition of 
``telecommunications carrier'' to be more inclusive than that of the 
Communications Act; (2) facilities-based providers of any type of 
broadband Internet access service, whether provided on a wholesale or 
retail basis, are subject to CALEA; (3) ``managed'' Voice over Internet 
Protocol (``VoIP'') services are subject to CALEA; (4) the phrase in 
Sec. 102 of CALEA ``a replacement for a substantial portion of the 
local telephone exchange service'' calls for assessing the replacement 
of any portion of an individual subscriber's functionality previously 
provided via ``plain old telephone service'' (``POTS''); and (5) call-
identifying information in packet networks is ``reasonably available'' 
under Sec. 103 of CALEA if the information is accessible without 
``significantly modifying a network.'' We seek comment on: (1) the 
feasibility of carriers relying on a trusted third party to manage 
their CALEA obligations and to provide to law enforcement agencies 
(``LEAs'') the electronic surveillance information they require in an 
acceptable format; and (2) whether standards for packet technologies 
are deficient and should not serve as safe harbors for complying with 
Sec. 103 capability requirements.
    2. We also propose mechanisms to ensure that telecommunications 
carriers comply with CALEA. Specifically, we propose to restrict the 
availability of compliance extensions under CALEA Sec. 107(c) and 
clarify the role and scope of CALEA Sec. 109, which addresses the 
payment of costs of carriers to comply with the Sec. 103 capability 
requirements. Additionally, we consider whether, in addition to the 
enforcement remedies through the courts available to LEAs under CALEA 
Sec. 108, we may take separate enforcement action against carriers that 
fail to comply with CALEA. We tentatively conclude that carriers are 
responsible for CALEA development and implementation costs for post-
January 1, 1995 equipment and facilities; seek comment on cost recovery 
issues for wireline, wireless and other carriers; and refer to the 
Federal-State Separations Joint Board cost recovery issues for carriers 
subject to Title II of the Communications Act.

Background

    3. CALEA, which was enacted in 1994, requires telecommunications 
carriers to incorporate into their networks technical capabilities to 
enable law enforcement to conduct lawful electronic surveillance. See 
Public Law 103-414, 108 Stat. 4279 (1994) (codified as amended in 18 
U.S.C. 2522 and 47 U.S.C. 229, 1001-1010). CALEA does not authorize 
electronic surveillance; rather, it is intended to ensure that law 
enforcement has the ability to conduct electronic surveillance 
effectively and efficiently in the face of rapid advances in 
telecommunications technology. The various statutory provisions of 
CALEA are focused on the following topics: assistance capability to law 
enforcement; system capacity for simultaneous wiretaps, implementation 
and enforcement.
    4. The Commission initiated this rulemaking proceeding in response 
to a joint petition for rulemaking filed by the Department of Justice, 
Federal Bureau of Investigation and Drug Enforcement Administration on 
March 10, 2004. The petition requested the Commission to resolve 
outstanding issues regarding CALEA implementation, including 
identifying the types of packet-mode services and entities providing 
such services that are subject to CALEA, establishing benchmarks and 
deadlines for CALEA packet-mode compliance, establishing procedures for 
enforcement action by the Commission, and clarifying certain cost 
recovery issues.

Introduction

    5. In the NPRM, we addressed the types of services and entities 
encompassed by the terms ``broadband access service'' and ``broadband 
telephony service.'' We rely on Law Enforcement's definitions to a 
large extent in this endeavor. We attempt to identify services and 
processes that provide broadband access to the public Internet, 
focusing primarily on those services and entities using packet-mode 
technology. In the NPRM, we refer to ``broadband access service'' and 
``broadband Internet access service'' interchangeably. Law Enforcement 
does not define the term ``broadband,'' and thus we will rely on 
previous uses we have made of this term, i.e., those services having 
the capability to support upstream or downstream speeds in excess of 
200 kilobits per second (``kbps'') in the last mile. Finally, this NPRM 
addresses broadly CALEA compliance for any packet-mode application and 
focuses specifically on voice communications. We recognize that 
although broadband access for voice telephony communications could be 
provided using various packet-mode technologies, most packet voice 
communications in commercial use today are provided using the Internet 
Protocol and are commonly referred to as ``VoIP.'' Thus, we refer to 
VoIP rather than ``broadband telephony service'' in the NPRM.
    6. In the NPRM, we also addressed several other issues raised by 
Law Enforcement. Law Enforcement urges the Commission to take a more 
active role in CALEA implementation by, for example, establishing 
benchmarks and deadlines for packet-mode compliance and enforcement of 
CALEA requirements. We seek comment on these proposals, as well as 
alternatives, all designed with the goal of moving carriers toward full 
CALEA compliance

[[Page 56978]]

rapidly. We therefore explore alternative methods of achieving the same 
objective. Finally, LEAs are very concerned about the cost of 
conducting electronic surveillance and believe that increased rates for 
such surveillance might hamper their ability to rely on this important 
investigative tool. As the number of electronic surveillances has 
increased, so have the rates carriers charge LEAs. In the NPRM, we 
clarify and seek comment on various cost and cost recovery issues.

Applicability of CALEA to Broadband Internet Access and VoIP Services

    7. We tentatively conclude that facilities-based providers of any 
type of broadband Internet access service, whether provided on a 
wholesale or retail basis, are subject to CALEA because, under the 
``Substantial Replacement Provision'' of Sec. 102(8)(B)(ii) of CALEA, 
they provide a replacement for a substantial portion of the local 
telephone exchange service used for dial-up Internet access service and 
treating such providers as telecommunications carriers for purposes of 
CALEA is in the public interest. Broadband Internet access providers 
include, but are not limited to, wireline, cable modem, satellite, 
wireless, and broadband access via powerline companies. We seek comment 
on this tentative conclusion. In addition, we tentatively conclude that 
providers of VoIP services that Law Enforcement characterizes as 
``managed'' or ``mediated'' are subject to CALEA as telecommunications 
carriers under Sec. 102(8)(B)(ii) of CALEA. Law Enforcement describes 
managed or mediated VoIP services as those services that offer voice 
communications calling capability whereby the VoIP provider acts as a 
mediator to manage the communication between its end points and to 
provide call set up, connection, termination, and party identification 
features, often generating or modifying dialing, signaling, switching, 
addressing or routing functions for the user. Law Enforcement 
distinguishes managed communications from ``non-managed'' or ``peer-to-
peer'' communications, which involve disintermediated communications 
that are set up and managed by the end user via its customer premises 
equipment or personal computer. In these non-managed, or 
disintermediated, communications, the VoIP provider has minimal or no 
involvement in the flow of packets during the communication, serving 
instead primarily as a directory that provides users' Internet web 
addresses to facilitate peer-to-peer communications. We request comment 
on the appropriateness of this distinction between managed and non-
managed VoIP communications for purposes of CALEA.
    8. Law Enforcement asserts that CALEA applies to broadband Internet 
access service and mediated VoIP services and that application is 
critical to its efforts to combat crime and terrorism. We base our 
tentative conclusion that those services are subject to CALEA on an 
analysis of the statute and its legislative history--which demonstrate 
that the meaning of ``telecommunications carrier'' in CALEA is broader 
than its meaning under the Communications Act--and on Congress's stated 
intent ``to preserve the government's ability, pursuant to court order 
or other lawful authorization, to intercept communications involving 
advanced technologies such as digital or wireless transmission modes.'' 
See, H.R. Rep. No. 103-827(I)(1994).
    9. CALEA requires ``telecommunications carriers'' to ensure that 
their equipment, facilities, and services are capable of providing 
surveillance capabilities to LEAs, and CALEA contains its own unique 
definition of ``telecommunications carrier.'' CALEA defines this term 
in section 102(8). See 47 U.S.C. 1001(8). For purposes of CALEA, a 
``telecommunications carrier'' is ``a person or entity engaged in the 
transmission or switching of wire or electronic communications as a 
common carrier for hire,'' but also includes entities that provide ``a 
replacement for a substantial portion of the local telephone exchange 
service'' if the Commission deems those entities to be 
``telecommunications carriers'' as well, 47 U.S.C. 1001(8).
    10. We tentatively conclude that Congress intended the scope of 
CALEA's definition of ``telecommunications carrier'' to be more 
inclusive than that of the Communications Act. We base this tentative 
conclusion on the facial differences in the statutory language 
discussed below. We acknowledge the Commission's previous statement 
that it expected ``in virtually all cases that the definitions of the 
two Acts will produce the same results,'' see, Second R&O at 7112, 
[para] 13. In making that statement, however, the Commission 
foreshadowed the possibility that the definitions under each of the two 
statutes may differ when it also concluded that it is ``a matter of law 
that the entities and services subject to CALEA must be based on the 
CALEA definition * * * independently of their classification for the 
separate purposes of the Communications Act.'' We seek comment on our 
analysis.
    11. In the past, the Commission has never before exercised its 
Sec. 102(8)(B)(ii) discretion to identify additional entities that fall 
within CALEA's definition of ``telecommunications carrier.'' Moreover, 
it has never, until now, solicited comment on the discrete components 
of this section or on specific classes of entities to which this 
section might apply. We therefore seek comment on what criteria we 
should apply to deem an entity a ``telecommunications carrier'' under 
the Substantial Replacement Provision and to which services CALEA 
should apply.
    12. The Commission seeks comment on the three articulated 
components of the Substantial Replacement Provision. First, we seek 
comment on the phrase ``engaged in providing wire or electronic 
communication switching or transmission service,'' see 47 U.S.C. 
1001(8)(B)(ii); see also 47 U.S.C. 1001(8)(A). Because of Congress's 
stated purpose to require compliance with CALEA ``with respect to 
services or facilities that provide a customer or subscriber with the 
ability to originate, terminate or direct communication,'' see 47 
U.S.C. 1002(a), we read the phrase ``switching or transmission 
service'' broadly here. Specifically, we interpret ``switching'' in 
this section to include routers, softswitches, and other equipment that 
may provide addressing and intelligence functions for packet-based 
communications to manage and direct the communications along to their 
intended destinations. These functions are similar to the switching 
functions in a circuit-switched network and thus we believe CALEA's 
explicit inclusion of the word ``switching'' is meant to include these 
capabilities. With regard to ``transmission,'' we note that CALEA does 
not limit ``transmission'' in Sec. 102 to transmission ``without change 
in the form or content of the information as sent or received,'' as 
does the Communications Act. Thus, we would interpret the ``switching 
or transmission'' component of the Substantial Replacement Provision to 
include entities that provide the underlying broadband transmission 
capability of Internet access services. The Commission seeks comment on 
this analysis and inquire specifically what types of ``switching or 
transmission'' satisfy this component of the Substantial Replacement 
Provision.
    13. Second, we consider the meaning of the phrase ``a replacement 
for a substantial portion of the local telephone exchange service.'' We 
tentatively conclude that the phrase ``a replacement for a substantial 
portion of the local telephone exchange service'' reaches the 
replacement of any portion

[[Page 56979]]

of an individual subscriber's functionality previously provided via 
POTS, e.g., the telephony portion of dial-up Internet access 
functionality when replaced by broadband Internet access service. 
Finally, we seek comment on the meaning of ``public interest'' under 
Sec. 102(8)(B)(ii) of CALEA.
    14. Law Enforcement seeks a Commission declaration that all forms 
of broadband Internet access are subject to CALEA. Law Enforcement 
asserts that these services are so clearly subject to CALEA that the 
Commission should issue a ruling declaring so. While we agree with 
commenters that we must develop a more complete record on the 
substantial factual and legal issues involved before we can make final 
determinations, we tentatively conclude that facilities-based providers 
of any type of broadband Internet access, including but not limited to 
wireline, cable modem, satellite, wireless, and broadband access via 
the powerline, whether provided on a wholesale or retail basis, are 
subject to CALEA because they provide replacement for a substantial 
portion of the local telephone exchange service used for dial-up 
Internet access service and such treatment is in the public interest. 
We base this belief on our reading of CALEA and its legislative history 
as well as the record thus far.
    15. In reaching this tentative conclusion, the Commission 
tentatively determine that such broadband Internet access service 
providers satisfy each of the three prongs of the Substantial 
Replacement Provision: broadband Internet access includes the switching 
(routing) and transmission functionality; it replaces a substantial 
portion of the local telephone exchange service used for narrowband 
Internet access; and the public interest factors we consider at a 
minimum, i.e., the effect on competition, the development and provision 
of new technologies and services, and public safety and national 
security, weigh in favor of subjecting these broadband Internet access 
services to CALEA.
    16. There may exist discrete groups of entities for which the 
public interest may not be served by including them under the 
Substantial Replacement Provision. As discussed in the NPRM, we will 
base such determination on the three public interest factors, at a 
minimum, including: whether it would promote competition, encourage the 
development of new technologies, and protect public safety and national 
security. For example, entities that deploy broadband capability to 
consumers in underserved areas may fall in this category because of the 
potential deterrent effect it could have on deployment in particular 
circumstances (negatively impacting the first and second factors, i.e., 
protecting competition and encouraging the development of new 
technologies).
    17. We do not believe that CALEA's exclusion for information 
services should alter our tentative conclusion. Congress expressly 
excluded ``persons or entities insofar as they are engaged in providing 
information services'' see 47 U.S.C. 1001(6)(B) & (C), from CALEA's 
definition of ``telecommunications carrier.'' See 47 U.S.C. 
1001(8)(C)(i); see also 47 U.S.C. 1002(b)(2)(A) (stating that CALEA's 
capability requirements do not apply to information services). (We 
refer to this as the ``Information Services Exclusion.'') We also note 
that Sec. 103(b)(2)(A) of CALEA provides that the CALEA capability 
requirements do not apply to information services. CALEA's definition 
of ``information services'' is very similar to that of the 
Communications Act,'' see 47 U.S.C. 153(20). For purposes of the 
Communications Act, the Commission has concluded that cable modem 
service is an information service and has tentatively concluded that 
wireline broadband Internet access service is also an information 
service. Assuming those determinations become final, those services 
would, nonetheless, have to be evaluated under CALEA's separate 
definition of ``telecommunications carrier'' which is broader than the 
definition in the Communications Act. Where a service provider is found 
to fall within CALEA's Substantial Replacement Provision it would be 
deemed a ``telecommunications carrier'' for purposes of CALEA to which 
CALEA obligations would apply. If, at the same time, we interpreted 
CALEA's Information Services Exclusion to apply, it would present an 
irreconcilable tension; that is, particular service providers would 
find themselves at the same time subject to CALEA under the Substantial 
Replacement Provision and exempted from it by virtue of the Information 
Services Exclusion. We believe that the better reading of the statute 
is to recognize and give full effect to CALEA's broader definition of 
``telecommunications carrier'' and to interpret the statute to mean 
that where a service provider is determined to fall within the 
Substantial Replacement Provision, by definition it cannot be providing 
an information service for purposes of CALEA.
    18. VoIP Services. There is a wide array of packet-based services 
currently using IP as well as numerous ways that VoIP capabilities 
might be provided to consumers. For example, one VoIP service in 
particular, which we refer to in this proceeding as ``managed'' VoIP, 
may be offered to the general public as a means of communicating with 
anyone, including parties reachable only through the public switched 
telephone network (``PSTN''). Other VoIP offerings involve the 
capability to communicate on a peer-to-peer basis only with other 
members of a closed user group or groups. Still other VoIP capabilities 
may be additional features of other services or applications that 
enable voice communications with a particular user group.
    19. We tentatively conclude that providers of managed VoIP 
services, which are offered to the general public as a means of 
communicating with any telephone subscriber, including parties 
reachable only through the PSTN, are subject to CALEA. We believe that 
such VoIP service providers satisfy each of the three prongs of the 
Substantial Replacement Provision with respect to their VoIP services. 
That is, they provide an electronic communication switching or 
transmission service that replaces a substantial portion of local 
exchange service for their customers in a manner functionally the same 
as POTS service; and the public interest factors we consider at a 
minimum--i.e., the effect on competition, the development and provision 
of new technologies and services, and public safety and national 
security--support subjecting these providers to CALEA. We believe there 
is an overriding public interest in maintaining Law Enforcement's 
ability to conduct wiretaps of on-going voice communications that are 
taking place over networks that are rapidly replacing the traditional 
circuit-switched network, yet providing consumers essentially the same 
calling capability that exists with legacy POTS service. We understand 
that basic capabilities essential to Law Enforcement's surveillance 
efforts, such as access to call management information (e.g., call 
forwarding, conference call features such as party join and drop) and 
call set up information (e.g., real time speed dialing information, 
post-dial digit extraction information) may not be reasonably available 
to the broadband access provider. Consequently, subjecting only the 
broadband access provider to CALEA without including managed VoIP 
service providers could undermine Law Enforcement's surveillance 
efforts. We seek comment on this analysis.
    20. The Commission also seeks comment on our tentative conclusion 
that providers of non-managed, or disintermediated, communications

[[Page 56980]]

should not be subject to CALEA. Non-managed VoIP services, such as 
peer-to-peer communications and voice enabled Instant Messaging, as 
currently provided, do not appear to be subject to CALEA for two 
reasons. First, because they are confined to a limited universe of 
users solely within the Internet or a private IP-network, they may be 
more akin to private networks, which Congress expressly excluded from 
section 103's capability requirements. Therefore, they do not appear to 
replace a substantial portion of local exchange service; as such they 
do not appear to fall within the Substantial Replacement Provision. 
Second, they may be excluded information services under 
Sec. 103(b)(2)(A). We seek comment on this issue.
    21. Identification of Future Services and Entities Subject to 
CALEA. We tentatively conclude that it is unnecessary for us to adopt 
Law Enforcement's proposal regarding the identification of future 
services and entities subject to CALEA. We recognize Law Enforcement's 
need for more certainty regarding the applicability of CALEA to new 
services and technologies. We expect, however, the Commission's Report 
and Order in this proceeding to provide substantial clarity on the 
application of CALEA to new services and technologies that should 
significantly resolve Law Enforcement's and industry's uncertainty 
about compliance obligations in the future.

Requirements and Solutions

    22. Packet technologies are fundamentally different from the 
circuit switched technologies that were the primary focus of the 
Commission's earlier decisions on CALEA. These differences have led to 
disagreements among Law Enforcement and industry as to how to interpret 
and apply telecommunications carriers' obligations under Sec. 103 of 
CALEA. Telecommunications carriers are required, under Sec. 103 of 
CALEA, to enable LEAs, pursuant to a court order or other lawful 
authorization, (1) to intercept, to the exclusion of other 
communications, wire and electronic communications carried by the 
carrier to or from a subject, and (2) to access call-identifying 
information that is reasonably available to the carrier, subject to 
certain conditions. Further, the interception of communications or 
access to call-identifying information is to be delivered to LEAs in a 
format that may be transmitted, over the equipment, facilities or 
services procured by LEAs, to a location other than the provider's 
premises and in a way that protects the privacy and security of 
communications and information not authorized to be intercepted or 
accessed.
    23. CALEA defines call-identifying information as ``dialing or 
signaling information that identifies the origin, direction, 
destination, or termination of each communication generated or received 
by a subscriber by means of any equipment, facility, or service of a 
telecommunications carrier,'' 47 U.S.C. 1001(2). We believe that 
carriers, manufacturers and Law Enforcement have applied the statutory 
definition of call-identifying information, as well as the Commission's 
definitions for the terms origin, destination, direction and 
termination, in developing standards or proprietary solutions for 
packet-mode technologies. However, the exact application of these terms 
is not always clear because call-identifying information may be found 
within several encapsulated layers of protocols.
    24. We seek comment on whether the Commission needs to clarify the 
statutory term ``call-identifying information'' for broadband access 
and VoIP services. We ask that commenters provide specific suggestions 
for these definitional issues. A more precise understanding of these 
terms would support the Commission's efforts to encourage carriers' 
compliance with their CALEA obligations whether in acting on petitions 
filed under Sec. 107(c) or 109(b) or in pursuing enforcement actions 
for violations of the Commission's rules. We also invite comment as to 
how the Commission should apply the term ``reasonably available'' to 
broadband access.
    25. We tentatively conclude that we should apply the same criteria 
that we applied to circuit-mode technology--i.e. information may not be 
``reasonably'' available if the information is only accessible by 
significantly modifying a network--to broadband access and VoIP 
providers. We seek comment on this tentative conclusion. We recognize 
that, when looking at end-to-end service architectures, it is not 
always readily apparent where call-identifying information is 
available. We seek comment on where content and various kinds of call-
identifying information are available in the network and further 
whether the information is reasonably available to the carrier.
    26. Compliance solutions based on use of a ``trusted third party.'' 
Telecommunications carriers under CALEA may use a variety of means for 
making content or call-identifying information available to LEAs. We 
seek comment on one approach that, although it would not relieve 
carriers of their obligation to comply with CALEA, may simplify or ease 
the burden on carriers and manufacturers in providing packet content 
and call-identifying information. We refer to this approach as the 
``trusted third party'' approach, that is being used today both in the 
United States and elsewhere. A trusted third party is a service bureau 
with a system that has access to a carrier's network and remotely 
manages the intercept process for the carrier. The service bureau may 
manage CALEA operations for multiple carriers, and the service bureau's 
system may be completely external to all of those carriers' networks.
    27. The trusted third party approach recognizes that, even if a 
carrier does not process certain call-identifying information, that 
information may be extracted from that carrier's network and delivered 
to a LEA. The trusted third party obtains the call content and call-
identifying information in either of two ways. The trusted third party 
could rely on a mediation device to collect separated call content and 
call-identifying information from various points in the network and to 
deliver the appropriate information to a LEA. Alternatively, the 
trusted third party could rely on an external system to collect 
combined call content and call-identifying information and to deliver 
the appropriate information to a LEA. We believe that the availability 
of a trusted third party approach makes call-identifying information 
``reasonably'' available to a telecommunications carrier under 
Sec. 103(a)(2). We seek comment on this analysis.
    28. We seek comment on the feasibility of using a trusted third 
party approach to extract the content and call-identifying information 
of a communication from packets. In particular, we seek comment on 
whether an external system would be an efficient method to extract 
information from packets. It seems that external systems might provide 
economies of scale for small carriers. What would be the approximate 
relative costs of internal versus external systems for packet 
extraction?
    29. We recognize, however, that there may be some tension between 
relying on a trusted third party model and relying on ``safe harbor'' 
standards for complying with CALEA Sec. 103 capability requirements. 
For example, if a trusted third party approach makes call-identifying 
information ``reasonably'' available to a telecommunications carrier, 
should a standard that requires a carrier to provide only the 
information it uses to process a packet be considered a ``safe harbor'' 
if a LEA would not have all call-identifying information for the 
communication?

[[Page 56981]]

    30. Finally, we seek comment on how a telecommunications carrier 
that relies on a trusted third party would meet its obligations under 
Sec. 103(a) of CALEA, e.g., to protect the privacy and security of 
communications and call-identifying information not authorized to be 
intercepted, as well as to protect information regarding the 
government's interception of communications and access to call-
identifying information.
    31. Compliance solutions based on CALEA ``Safe Harbor'' standards. 
Subsection 107(a)(2) of CALEA states that ``[a] telecommunications 
carrier shall be found to be in compliance with the assistance 
capability requirements under Sec. 103, and a manufacturer of 
telecommunications transmission or switching equipment or a provider of 
telecommunications support services shall be found to be in compliance 
with section 106, if the carrier, manufacturer, or support service 
provider is in compliance with publicly available technical 
requirements or standards adopted by an industry association or 
standard-setting organization, or by the Commission under subsection 
(b), to meet the requirements of Sec. 103.'' See, 47 U.S.C. 1001(2). We 
ask parties to comment on industry standards for packet-mode 
technologies in an attempt to determine whether any of these standards 
are deficient and thus preclude carriers, manufacturers and others from 
relying on them as safe harbors in complying with CALEA Sec. 103. By 
doing so, however, we do not intend to inhibit the ongoing work by 
standards organizations, carriers and manufacturers to develop and 
deploy CALEA-compliant facilities and services. We recognize that CALEA 
provides that carriers and others may rely on publicly available 
technical requirements or standards adopted by an industry association 
or standard-setting organization to meet the requirements of CALEA 
Sec. 103, unless the Commission takes specific action in response to a 
petition.
    32. CALEA compliance for satellite networks based on system-by-
system agreements. We note that satellite carriers have used a CALEA 
approach based on negotiation with LEAs, resulting in private 
agreements to provide information to LEAs. Satellite networks differ in 
fundamental ways not only from terrestrial networks but also from each 
other. These differences arise from unique aspects of the type of 
satellite used in the network (e.g., non-geostationary vs. 
geostationary satellites) and the gateway earth stations that may be 
located both within and outside the United States. System-by-system 
agreements between LEAs and satellite carriers account for the unique 
aspects of each system. We tentatively conclude that continued use of 
system-by-system arrangements is the appropriate method for satellite 
systems and will aid in meeting CALEA's goals. We seek comment on this 
tentative conclusion.

CALEA Compliance Extension Petitions

    33. We propose to restrict the availability of compliance 
extensions under Sec. 107(c), particularly in connection with packet-
mode requirements, and we clarify the role and scope of CALEA 
Sec. 109(b), which provides that the Commission may find that 
compliance with CALEA Sec. 103 is not reasonable achievable, leaving it 
to the Attorney General to determine whether to pay telecommunications 
carriers' compliance costs, see 47 U.S.C. 1008(b)(2)(A).
    34. We recognize that carriers have continued to rely on CALEA 
Sec. 107(c) when submitting extension requests for packet-mode 
compliance. We intend to resolve the status of those petitions in this 
proceeding, but in a way that is not unduly disruptive. Accordingly, we 
intend to afford all carriers a reasonable period of time in which to 
comply with, or seek relief from, any determinations that we eventually 
adopt. We tentatively conclude that a ``reasonable period of time'' is 
90 days and request comment on this tentative conclusion. We may, on 
less than 90 days notice, require any or all carriers to provide 
additional information to support their extension requests. We seek 
comment on all issues identified in the following analysis, as well as 
any other issues that relate to disposition of pending and future 
extension requests.
    35. Section 107(c) expressly limits extensions to cases where the 
petitioning carrier proposes to install or deploy, or has installed or 
deployed, its ``equipment, facility, or service prior to the effective 
date of Sec. 103 * * * '' i.e., prior to October 25, 1998. See 47 
U.S.C. 1006(c)(1). Given this limitation, we believe that a Sec. 107(c) 
extension is not available to cover equipment, facilities, or services 
installed or deployed after October 25, 1998. This interpretation of 
the scope of Sec. 107(c) would likely preclude granting Sec. 107(c) 
relief in connection with packet-mode applications because, in our 
experience, most if not all carrier packet-based ``equipment, 
facilit[ies], or service'' have been installed or deployed after the 
Sec. 107(c)-mandated cut-off date. We seek comment on this analysis.
    36. Moreover, we believe that carriers face a high burden in making 
an adequate showing to obtain alternative relief pursuant to 
Sec. 109(b). Under the requirements of that section, carriers must 
demonstrate that compliance is not reasonably achievable, and we must 
evaluate submitted petitions under the criteria set out in 
Sec. 109(b)(1), including cost and cost-related criteria and an 
assessment of the effect of any granted extension ``on public safety 
and national security.'' It would be difficult for a petitioner to make 
such a showing unless the request was made in connection with precisely 
identified ``equipment, facilities, or services.'' We seek comment on 
this analysis.
    37. Under this interpretation of the applicability and scope of 
Sec. 107(c) and 109(b), we believe that many carriers could find it 
difficult to obtain either CALEA compliance extensions or exemptions in 
connection with packet requirements. As a result, they may become 
immediately subject to enforcement action. This outcome could be 
precisely what Congress intended, because it would encourage carriers 
to press for the development of CALEA standards by industry-staffed 
committees and for solutions from manufacturers. Under this reading of 
the statute, neither Sec. 107(c) nor Sec. 109(b) provides a permanent 
exemption from CALEA's Sec. 103 compliance mandate. And it reflects a 
statutory expectation that whenever a carrier replaces or upgrades its 
network architecture after Sec. 107(c)'s mandated compliance date, it 
must do so by employing CALEA-compliant equipment, or explain why it 
could not do so under the stringent requirements of a Sec. 109(b) 
petition. We seek comment on this interpretation of the relationship of 
CALEA Sec. 103, 107(c), and 109(b) and the likely effects if we apply 
it to pending packet-mode Sec. 107(c) extension petitions.

Enforcement of CALEA

    38. We consider whether, in addition to the enforcement remedies 
through the courts available to LEAs under Sec. 108 of CALEA, see 47 
U.S.C. 1007, the Commission may take separate enforcement action 
against telecommunications carriers, manufacturers and providers of 
telecommunications support services that fail to comply with CALEA. The 
Commission has broad authority to enforce its rules under the 
Communications Act. Section 229(a) of the Communications Act provides 
broad authority for the Commission to adopt rules to implement CALEA 
and, unlike Sec. 229(b), does not limit such rulemaking authority to 
common carriers. While the ``penalties'' provision of Sec. 229(d) of 
the Communications Act refers to CALEA violations ``by the carrier,'' 
nothing in

[[Page 56982]]

Sec. 229(d) appears to limit the Commission's general enforcement 
authority under the Communications Act. As such, it appears the 
Commission has general authority under the Communications Act to 
promulgate and enforce CALEA rules against carriers as well as non-
common carriers. We seek comment on this analysis. We also seek comment 
on whether CALEA Sec. 108 and/or 201 impose any limitations on the 
nature of the remedy that the Commission may impose (e.g. injunctive 
relief) and whether CALEA Sec. 106 imposes any limitations on the 
Commission's enforcement authority over manufacturers and support 
service providers.
    39. We seek comment on how the Commission would enforce the 
assistance capability requirements under Sec. 103 of CALEA. To 
facilitate enforcement, we tentatively conclude that, at a minimum, we 
should adopt the requirements of Sec. 103 as Commission rules. We ask 
whether, given this tentative conclusion, the lack of Commission-
established technical requirements or standards under Sec. 107(b) for a 
particular technology would affect the Commission's authority to 
enforce Sec. 103. How would the lack of publicly available technical 
requirements or standards from a standard-setting organization impact 
the Commission's authority/ability to enforce Sec. 103? In addition, we 
ask whether there are other provisions of CALEA, such as Sec. 107(a)'s 
safe harbor provisions, that the Commission should adopt as rules in 
order to effectively enforce CALEA. How would the upgrade of a standard 
by a standard-setting organization impact the application of 
Sec. 107(a)'s safe harbor provision?
    40. We believe it is in the public interest for covered carriers to 
become CALEA compliant as expeditiously as possible and recognize the 
importance of effective enforcement of Commission rules affecting such 
compliance. We seek comment on whether the Commission's general 
enforcement procedures are sufficient for purposes of CALEA 
enforcement. The Commission has broad authority to enforce its rules 
under the Communications Act. It can, for example, issue monetary 
forfeitures and cease and desist orders against common carriers and 
non-common carriers alike for violation of Commission rules. Is this 
general enforcement authority sufficient or should we implement some 
special procedures for purposes of CALEA enforcement? Would an 
established enforcement scheme expedite the CALEA implementation 
process? We seek comment on any other measures we should take into 
consideration in deciding how best to enforce CALEA requirements.

Cost and Cost Recovery Issues

    41. We seek comment on various cost determination and recovery 
issues that different telecommunications carriers face in complying 
with CALEA. We seek comment on whether individual carriers should bear 
responsibility for the costs of CALEA compliance. We further seek 
comment on specific jurisdictional issues, depending on whether 
carriers provide wireline or wireless service that may affect our 
determinations concerning what responsibilities they should have in 
bearing those costs.
    42. CALEA Sec. 109 places financial responsibility on the Federal 
Government for CALEA implementation costs related to equipment deployed 
on or before January 1, 1995. See 47 U.S.C. 1008(a), (d). Where the 
Federal Government refuses to pay for such modifications, a carrier's 
pre-1995 deployed equipment and facilities will be considered CALEA 
compliant until such equipment or facility ``is replaced or 
significantly upgraded or otherwise undergoes major modification'' for 
purposes of normal business operations. See, 47 U.S.C. 1008(d). See 
also, CALEA Sec. 108(c)(3), 47 U.S.C. 1007(c)(3). However, for CALEA 
implementation costs associated with equipment deployed after January 
1, 1995, Sec. 109 places financial responsibility on the 
telecommunications carriers unless the Commission determines compliance 
is not ``reasonably achievable.'' See, 47 U.S.C. 1008(b)(1). Based on 
CALEA's delineation of responsibility for compliance costs, we 
tentatively conclude that carriers bear responsibility for CALEA 
development and implementation costs for post-January 1, 1995 equipment 
and facilities. We seek comment on this analysis.
    43. We also seek comment on other cost recovery options that could 
reduce CALEA-related burdens otherwise imposed on carriers and their 
customers. Given the public benefits of CALEA-supported surveillance of 
criminals and terrorists, does it make sense to consider cost recovery 
devices that more equitably spread costs among the general public? For 
example, should CALEA costs be recovered directly from 
telecommunications and other consumers by means of a Commission-
mandated, flat monthly charge similar to the current subscriber line 
charge (``SLC'')? Does the Commission have authority to impose such a 
charge? How would such a charge be developed? Our experience to date 
evaluating circuit-based CALEA-related costs indicates that developing 
an appropriate cost analysis for packet capabilities could be complex 
and difficult. We seek comment on how to assess the scope of CALEA-
related costs in this proceeding. We ask commenters to submit cost 
calculations and analysis, and to identify any conditions or factors 
that may affect our ability to determine the true scope of CALEA-
related costs.
    44. We seek specific comment about how cost and cost-recovery 
issues connected with CALEA affect small and rural carriers. Should we 
adopt specific rules and policies to help ensure that such carriers can 
become CALEA compliant? Is it sufficient that such carriers have 
recourse to the CALEA Sec. 109(b) petition process to seek funding from 
the Attorney General? Would exclusive reliance on CALEA Sec. 109(b) 
tend to encourage hundreds of rural carriers to file such petitions? If 
the Attorney General finds, in such a case, that it cannot pay for 
CALEA compliance upgrades, successful petitioners would be deemed CALEA 
compliant. Is this result desirable from the perspective of providing 
for the reasonable needs of LEAs to engage in intercept activities in 
rural areas?
    45. We also seek comment on whether we should distinguish carrier 
recovery of CALEA-incurred capital costs generally from recovery of 
specific intercept-related costs. We seek comment on whether CALEA 
limits the available cost recovery for intercept provisioning, and on 
whether carriers should be allowed to adjust their charges for such 
intercept provisioning to cover costs for CALEA-related services, which 
would include CALEA-related intercept provisioning charges. We seek 
comment as to whether recovery for capital costs associated with 
intercept provisioning should be different in the circuit-mode and 
packet-mode contexts, and if so, why.
    46. In 1997, the Commission referred CALEA cost recovery issues to 
the Federal-State Joint Board on Jurisdictional Separations (``Federal-
State Separations Joint Board''). At that time, parties were focused on 
cost recovery issues related to deployment of CALEA capabilities in 
circuit-switched networks of telecommunications carriers; standards for 
CALEA implementation had not yet been developed. Since then, a number 
of significant technological, marketplace, and regulatory developments 
have taken place, including the development of standards for circuit-
mode and packet-mode CALEA implementation and widespread deployment of 
packet-

[[Page 56983]]

switching capabilities. Meanwhile, the Federal-State Separations Joint 
Board recommended, and the Commission adopted, an interim freeze on 
further modifications to the Commission's jurisdictional separations 
rules. The separations freeze went into effect on July 1, 2001 and is 
scheduled to end on June 30, 2006, absent further action by the 
Commission.
    47. As a result of the separations freeze, the Federal-State 
Separations Joint Board has not had the opportunity to consider fully 
CALEA cost recovery issues and their implications for the Commission's 
jurisdictional separations rules. We therefore refer to the Federal-
State Separations Joint Board the following CALEA-related cost recovery 
issues: (i) Whether costs for circuit-based capabilities should be 
separated, and if so, how the associated costs and revenues should be 
allocated for jurisdictional separations purposes; (ii) whether costs 
for packet-mode capabilities should be separated, and if so, how the 
associated costs and revenues should be allocated for jurisdictional 
separations purposes. We emphasize that our separations rules apply 
only to incumbent local exchange carriers under the Communications Act, 
and do not apply to entities that may be deemed telecommunications 
carriers under CALEA. As such, the Federal-State Separations Joint 
Board shall focus on the foregoing questions only insofar as they 
pertain to entities subject to jurisdictional separations.
    48. In addition, we ask parties to refresh the record on the CALEA 
issues identified in the Separations NPRM, i.e., whether costs should 
be allocated in a new CALEA-specific category or in previously-existing 
categories, whether revenues received from the Attorney General should 
be allocated in a particular manner (and if so, how), and whether 
CALEA-related revenues could be allocated to the jurisdictions based on 
relative-use factors derived from the relative electronic surveillance 
requirements of Federal, State, and local LEAs. Finally, because of the 
national importance of CALEA issues, we request that the Federal-State 
Separations Joint Board issue its recommended decision no later than 
one year from the release of this NPRM.

Effective Dates of New Rules

    49. If the Commission ultimately decides, as discussed in the NPRM, 
that broadband access providers or additional entities are subject to 
CALEA, entities that heretofore have not been subject to CALEA will 
have to comply with its requirements. Thus, entities previously 
identified as information service providers under the Commission's 
previous decisions would be subject to CALEA and would have to comply 
with various requirements, including the assistance capability 
requirements in CALEA Sec. 103, the capacity requirements in CALEA 
Sec. 104, and the system security requirements in CALEA Sec. 105 and in 
Sec. 229(b) of the Communications Act.
    50. If the Commission ultimately decides that entities that 
heretofore have not been subject to CALEA will have to comply with its 
requirements, we seek comment on what would be a reasonable amount of 
time for those entities to come into compliance with Secs. 103 and 105 
of CALEA. Should newly-identified entities either come into compliance 
with or seek relief from Sec. 103 requirements within 90 days, as we 
propose for carriers that have filed Sec. 107(c) petitions? Or should 
newly-identified entities have 15 months to come into compliance with 
Sec. 103, as Law Enforcement suggests, or is some other amount of time 
reasonable? Regarding compliance with CALEA Sec. 105 and Sec. 229(b) of 
the Communications Act, should newly-identified carriers comply with 
the system security requirements previously adopted by the Commission 
within 90 days, which was the amount of time the Commission provided 
when it adopted those rules, or is some other amount of time 
reasonable? Commenters should address factors that would support their 
suggestions for Secs. 103, 105 and 229(b) compliance deadlines.

Ordering Clauses

    51. Pursuant to sections 1, 4(i), 7(a), 229, 301, 303, 332, and 410 
of the Communications Act of 1934, as amended, and sections 103, 106, 
107, and 109 of the Communications Assistance for Law Enforcement Act, 
47 U.S.C. 151, 154(i), 157(a), 229, 301, 303, 332, 410, 1002, 1005, 
1006, and 1008, the Notice of Proposed Rulemaking is hereby Adopted.
    52. Pursuant to section 410(c) of the Communications Act of 1934, 
47 U.S.C. 410(c), the Federal-State Joint Board on Jurisdictional 
Separations is requested to review the CALEA cost recovery issues of 
the NOTICE OF PROPOSED RULEMAKING and to provide recommendations to the 
Commission.
    53. The Joint Petition for Expedited Rulemaking, filed by the 
Department of Justice, Federal Bureau of Investigation, and Drug 
Enforcement Administration on March 10, 2004, Is Granted to the Extent 
Indicated in the NPRM.
    54. The Commission's Consumer Information and Governmental Affairs 
Bureau, Reference Information Center, SHALL SEND a copy of this Notice 
of Proposed Rulemaking, including the Initial Regulatory Flexibility 
Analysis, to the Chief Counsel for Advocacy of the Small Business 
Administration.

Initial Regulatory Flexibility Analysis

    55. As required by the Regulatory Flexibility Act of 1980, as 
amended (``RFA''),\1\ the Commission has prepared this Initial 
Regulatory Flexibility Analysis (``IRFA'') of the possible significant 
economic impact on a substantial number of small entities by the 
policies and rules proposed in this Notice of Proposed Rule Making 
(``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 provided above. The 
Commission will send a copy of the Notice of Proposed Rule Making, 
including this IRFA, to the Chief Counsel for Advocacy of the Small 
Business Administration (``SBA'').\2\ In addition, the Notice of 
Proposed Rule Making (or summaries thereof), including the IRFA, will 
be published in the Federal Register.\3\
---------------------------------------------------------------------------

    \1\ See 5 U.S.C. 603. The RFA, see 5 U.S.C. 601-612, has been 
amended by the Contract With America Advancement Act of 1996, Public 
Law 104-112, 110 Stat. 847 (1996) (CWAAA). Title II of the CWAAA is 
the Small Business Regulatory Enforcement Fairness Act of 1966 
(SBREFA).
    \2\ 5 U.S.C. 603(a).
    \3\ Id.
---------------------------------------------------------------------------

A. Need for, and Objectives of, the Proposed Rules

    56. The NPRM proposes to permit law enforcement agencies (``LEAs'') 
to better perform electronic surveillance of telecommunications 
carriers under several existing statutes by tentatively concluding that 
new broadband Internet services and ``managed'' Voice over Internet 
Protocol (``VoIP'') services--i.e., services that offer voice 
communications calling capability whereby the VoIP provider acts as a 
mediator to manage the communication between its end points and to 
provide, e.g., call set up, connection, termination, and party 
identification features--are subject to the assistance capability 
requirements of the 1994 Communications Assistance for Law Enforcement 
Act (``CALEA''). The NPRM also proposes steps to ensure that 
telecommunications carriers comply with CALEA. However, the NPRM 
tentatively concludes that non-managed VoIP services are not subject to 
CALEA, and does not propose to establish a pre-approval process for new 
technologies and services that would determine whether they are subject 
to CALEA, as

[[Page 56984]]

requested by the Law Enforcement Petition. The Commission believes that 
these proposals strike an appropriate balance between better permitting 
LEAs to combat crime and terrorism and the limited scope of CALEA.

B. Legal Basis

    57. This proposed action is authorized pursuant to sections 1, 
4(i), 7(a), 229, 301, 303, 332, and 410 of the Communications Act of 
1934, as amended, and sections 103, 106, 107, and 109 of the 
Communications Assistance for Law Enforcement Act, 47 U.S.C. 151, 
154(i), 157(a), 229, 301, 303, 332, 410, 1002, 1005, 1006, and 1008.

C. Description and Estimate of the Number of Small Entities to Which 
the Proposed Rule Will Apply

    58. The RFA directs agencies to provide a description of and, where 
feasible, an estimate of the number of small entities that will be 
affected by the proposed rules.\4\ The RFA generally defines the term 
``small entity'' as having the same meaning as the terms ``small 
business,'' ``small organization,'' and ``small governmental 
jurisdiction.'' \5\ In addition, the term ``small business'' has the 
same meaning as the term ``small business concern'' under the Small 
Business Act.\6\ 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.\7\
---------------------------------------------------------------------------

    \4\ 5 U.S.C. 603(b)(3), 604(a)(3).
    \5\ Id. 601(6).
    \6\ Id. 601(3) (incorporating by reference the definition of 
``small business concern'' in the Small Business Act, 15 U.S.C. 
632). Pursuant to 5 U.S.C. 601(3), the statutory definition of a 
small business applies ``unless an agency, after consultation with 
the Office of Advocacy of the Small Business Administration and 
after opportunity for public comment, establishes one or more 
definitions of such terms which are appropriate to the activities of 
the agency and publishes such definitions(s) in the Federal 
Register.''
    \7\ 15 U.S.C. 632.
---------------------------------------------------------------------------

Telecommunications Service Entities

Wireline Carriers and Service Providers

    59. We have included small incumbent local exchange carriers 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.'' 
\8\ 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.\9\ 
We have therefore included small incumbent local exchange carriers in 
this RFA analysis, although we emphasize that this RFA action has no 
effect on Commission analyses and determinations in other, non-RFA 
contexts.
---------------------------------------------------------------------------

    \8\ Id. 632.
    \9\ Letter from Jere W. Glover, Chief Counsel for Advocacy, SBA, 
to William E. Kennard, Chairman, FCC (May 27, 1999). The Small 
Business Act contains a definition of ``small-business concern,'' 
which the RFA incorporates into its own definition of ``small 
business.'' See 15 U.S.C. 632(a) (Small Business Act); 5 U.S.C. 
601(3) (RFA). SBA regulations interpret ``small business concern'' 
to include the concept of dominance on a national basis. See 13 CFR 
121.102(b).
---------------------------------------------------------------------------

    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.\10\ According to Commission data,\11\ 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 
action.
---------------------------------------------------------------------------

    \10\ 13 CFR 121.201, NAICS code 517110 (changed from 513310 in 
Oct. 2002).
    \11\ FCC, Wireline Competition Bureau, Industry Analysis and 
Technology Division, ``Trends in Telephone Service'' at Table 5.3, 
Page 5-5 (Aug. 2003) (hereinafter ``Trends in Telephone Service''). 
This source uses data that are current as of December 31, 2001.
---------------------------------------------------------------------------

    Competitive Local Exchange Carriers, Competitive Access Providers, 
``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.\12\ According to 
Commission data,\13\ 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 action.
---------------------------------------------------------------------------

    \12\ 13 CFR 121.201, NAICS code 517110 (changed from 513310 in 
Oct. 2002).
    \13\ ``Trends in Telephone Service'' at Table 5.3.
---------------------------------------------------------------------------

    Payphone Service Providers. Neither the Commission nor the SBA has 
developed a small business size standard specifically for payphone 
services 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.\14\ According to Commission data,\15\ 761 carriers have 
reported that they are engaged in the provision of payphone services. 
Of these, 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 our action.
---------------------------------------------------------------------------

    \14\ 13 CFR 121.201, NAICS code 517110 (changed from 513310 in 
Oct. 2002).
    \15\ ``Trends in Telephone Service'' at Table 5.3.
---------------------------------------------------------------------------

    Interexchange Carriers. 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.\16\ According to Commission data,\17\ 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 action.
---------------------------------------------------------------------------

    \16\ 13 CFR 121.201, NAICS code 517110 (changed from 513310 in 
Oct. 2002).
    \17\ ``Trends in Telephone Service'' at Table 5.3.
---------------------------------------------------------------------------

    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

[[Page 56985]]

category Wired Telecommunications Carriers. Under that size standard, 
such a business is small if it has 1,500 or fewer employees.\18\ 
According to Commission data,\19\ 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 action.
---------------------------------------------------------------------------

    \18\ 13 CFR 121.201, NAICS code 517110 (changed from 513310 in 
Oct. 2002).
    \19\ ``Trends in Telephone Service'' at Table 5.3.
---------------------------------------------------------------------------

    Prepaid Calling Card Providers. Neither the Commission nor the SBA 
has developed a small business size standard specifically for prepaid 
calling card providers. The appropriate size standard under SBA rules 
is for the category Telecommunications Resellers. Under that size 
standard, such a business is small if it has 1,500 or fewer 
employees.\20\ According to Commission data,\21\ 37 carriers have 
reported that they are engaged in the provision of prepaid calling 
cards. Of these, an estimated 36 have 1,500 or fewer employees and one 
has more than 1,500 employees. Consequently, the Commission estimates 
that the majority of prepaid calling card providers are small entities 
that may be affected by our action.
---------------------------------------------------------------------------

    \20\ 13 CFR 121.201, NAICS code 517310 (changed from 513330 in 
Oct. 2002).
    \21\ ``Trends in Telephone Service'' at Table 5.3.
---------------------------------------------------------------------------

Wireless Telecommunications Service Providers

    60. Wireless Service Providers. The SBA has developed a small 
business size standard for wireless firms within the two broad economic 
census categories of ``Paging'' \22\ and ``Cellular and Other Wireless 
Telecommunications.'' \23\ 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.\24\ 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.\25\ Thus, under this category and associated small business 
size standard, the 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.\26\ 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.\27\ Thus, under this second 
category and size standard, the majority of firms can, again, be 
considered small.
---------------------------------------------------------------------------

    \22\ 13 CFR 121.201, NAICS code 513321 (changed to 517211 in 
October 2002).
    \23\ 13 CFR 121.201, NAICS code 513322 (changed to 517212 in 
October 2002).
    \24\ U.S. Census Bureau, 1997 Economic Census, Subject Series: 
``Information,'' Table 5, Employment Size of Firms Subject to 
Federal Income Tax: 1997, NAICS code 513321 (issued October 2000).
    \25\ Id. The census data do not provide a more precise estimate 
of the number of firms that have employment of 1,500 or fewer 
employees; the largest category provided is ``Firms with 1000 
employees or more.''
    \26\ U.S. Census Bureau, 1997 Economic Census, Subject Series: 
``Information,'' Table 5, Employment Size of Firms Subject to 
Federal Income Tax: 1997, NAICS code 513322 (issued October 2000).
    \27\ Id. The census data do not provide a more precise estimate 
of the number of firms that have employment of 1,500 or fewer 
employees; the largest category provided is ``Firms with 1000 
employees or more.''
---------------------------------------------------------------------------

    Cellular Licensees. The SBA has developed a small business size 
standard for wireless firms within the broad economic census category 
``Cellular and Other Wireless Telecommunications.'' \28\ Under this SBA 
category, a wireless business is small if it has 1,500 or fewer 
employees. For the census category Cellular and Other Wireless 
Telecommunications firms, Census Bureau data for 1997 show that there 
were 977 firms in this category, total, that operated for the entire 
year.\29\ 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.\30\ Thus, under this category and size standard, the great 
majority of firms can be considered small. According to the most recent 
Trends in Telephone Service data, 719 carriers reported that they were 
engaged in the provision of cellular service, Personal Communications 
Service (``PCS''), or Specialized Mobile Radio Telephony services, 
which are placed together in the data.\31\ We have estimated that 294 
of these are small, under the SBA small business size standard.\32\
    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.'' \33\ 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.\34\ 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.\35\ Thus, under this category 
and associated small business size standard, the great majority of 
firms can be considered small. In the Paging Third Report and Order, we 
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.\36\ 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.\37\ The SBA has 
approved these small business size standards.\38\ An auction of

[[Page 56986]]

Metropolitan Economic Area licenses commenced on February 24, 2000, and 
closed on March 2, 2000.\39\ Of the 985 licenses auctioned, 440 were 
sold. Fifty-seven companies claiming small business status won. 
According to the most recent Trends in Telephone Service, 433 carriers 
reported that they were engaged in the provision of paging and 
messaging services.\40\ Of those, we estimate that 423 are small, under 
the SBA approved small business size standard.\41\
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    \28\ 13 CFR 121.201, NAICS code 513322 (changed to 517212 in 
October 2002).
    \29\ U.S. Census Bureau, 1997 Economic Census, Subject Series: 
``Information,'' Table 5, Employment Size of Firms Subject to 
Federal Income Tax: 1997, NAICS code 513322 (issued October 2000).
    \30\ Id. The census data do not provide a more precise estimate 
of the number of firms that have employment of 1,500 or fewer 
employees; the largest category provided is ``Firms with 1000 
employees or more.''
    \31\ FCC, Wireline Competition Bureau, Industry Analysis and 
Technology Division, ``Trends in Telephone Service'' at Table 5.3, 
page 5-5 (August 2003). This source uses data that are current as of 
December 31, 2001.
    \32\ FCC, Wireline Competition Bureau, Industry Analysis and 
Technology Division, ``Trends in Telephone Service'' at Table 5.3, 
page 5-5 (August 2003). This source uses data that are current as of 
December 31, 2001.
    \33\ 13 CFR 121.201, NAICS code 513322 (changed to 517212 in 
October 2002).
    \34\ U.S. Census Bureau, 1997 Economic Census, Subject Series: 
``Information,'' Table 5, Employment Size of Firms Subject to 
Federal Income Tax: 1997, NAICS code 513321 (issued October 2000).
    \35\ Id. The census data do not provide a more precise estimate 
of the number of firms that have employment of 1,500 or fewer 
employees; the largest category provided is ``Firms with 1000 
employees or more.''
    \36\ Amendment of Part 90 of the Commission's Rules To Provide 
for the Use of the 220-222 MHz Band by the Private Land Mobile Radio 
Service, PR Docket No. 89-552, Third Report and Order and Fifth 
Notice of Proposed Rulemaking, 12 FCC Rcd 10943, 11068-70, 62 FR 
16004 (April 3, 1997), paras. 291-295.
    \37\ See Letter to Amy Zoslov, Chief, Auctions and Industry 
Analysis Division, Wireless Telecommunications Bureau, Federal 
Communications Commission, from A. Alvarez, Administrator, SBA (Dec. 
2, 1998).
    \38\ ``Revision of Part 22 and Part 90 of the Commission's Rules 
To Facilitate Future Development of Paging Systems,'' Memorandum 
Opinion and Order on Reconsideration and Third Report and Order, 14 
FCC Rcd 10030, at paragraphs 98-107 (1999).
    \39\ Revision of Part 22 and Part 90 of the Commission's Rules 
To Facilitate Future Development of Paging Systems, Memorandum 
Opinion and Order on Reconsideration and Third Report and Order, 14 
FCC Rcd 10030, 10085 para. 98 (1999).
    \40\ FCC, Wireline Competition Bureau, Industry Analysis and 
Technology Division, ``Trends in Telephone Service'' at Table 5.3, 
page 5-5 (August 2003). This source uses data that are current as of 
December 31, 2001.
    \41\ FCC, Wireline Competition Bureau, Industry Analysis and 
Technology Division, ``Trends in Telephone Service'' at Table 5.3, 
page 5-5 (August 2003). This source uses data that are current as of 
December 31, 2001.
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    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 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.\42\ 
The Commission auctioned geographic area licenses in the wireless 
communications services. In the auction, there were seven winning 
bidders that qualified as ``very small business'' entities, and one 
that qualified as a ``small business'' entity.
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    \42\ See Letter to Amy Zoslov, Chief, Auctions and Industry 
Analysis Division, Wireless Telecommunications Bureau, Federal 
Communications Commission, from A. Alvarez, Administrator, Small 
Business Administration (December 2, 1998).
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    Wireless Telephony. Wireless telephony includes cellular, personal 
communications services, and specialized mobile radio telephony 
carriers. As noted earlier, the SBA has developed a small business size 
standard for ``Cellular and Other Wireless Telecommunications'' 
services.\43\ Under that SBA small business size standard, a business 
is small if it has 1,500 or fewer employees.\44\ According to the most 
recent Trends in Telephone Service data, 719 carriers reported that 
they were engaged in the provision of wireless telephony.\45\ We have 
estimated that 294 of these are small under the SBA small business size 
standard.
---------------------------------------------------------------------------

    \43\ 13 CFR 121.201, NAICS code 513322 (changed to 517212 in 
October 2002).
    \44\ 13 CFR 121.201, NAICS code 513322 (changed to 517212 in 
October 2002).
    \45\ FCC, Wireline Competition Bureau, Industry Analysis and 
Technology Division, ``Trends in Telephone Service'' at Table 5.3, 
page 5-5 (August 2003). This source uses data that are current as of 
December 31, 2001.
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    Broadband Personal Communications Service. 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.\46\ 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.'' \47\ These 
standards defining ``small entity'' in the context of broadband PCS 
auctions have been approved by the SBA.\48\ 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.\49\ 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 35, including judicial and agency determinations, resulted in a 
total of 163 C and F Block licenses being available for grant. In 
addition, we note 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.
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    \46\ See Amendment of Parts 20 and 24 of the Commission's Rules-
-Broadband PCS Competitive Bidding and the Commercial Mobile Radio 
Service Spectrum Cap, WT Docket No. 96-59, Report and Order, 11 FCC 
Rcd 7824, 61 FR 33859 (July 1, 1996); see also 47 CFR 24.720(b).
    \47\ See Amendment of Parts 20 and 24 of the Commission's Rules-
-Broadband PCS Competitive Bidding and the Commercial Mobile Radio 
Service Spectrum Cap, WT Docket No. 96-59, Report and Order, 11 FCC 
Rcd 7824, 61 FR 33859 (July 1, 1996).
    \48\ See. e.g., Implementation of Section 309(j) of the 
Communications Act--Competitive Bidding, PP Docket No. 93-253, Fifth 
Report and Order, 9 FCC Rcd 5332, 59 FR 37566 (July 22, 1994).
    \49\ FCC News, Broadband PCS, D, E and F Block Auction Closes, 
No. 71744 (released January 14, 1997). See also Amendment of the 
Commission's Rules Regarding Installment Payment Financing for 
Personal Communications Services (PCS) Licenses, WT Docket No. 97-
82, Second Report and Order, 12 FCC Rcd 16436, 62 FR 55348 (October 
24,1997).
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Cable Operators

    61. Cable and Other Program Distribution. This category includes 
cable systems operators and other program distribution services. The 
SBA has developed small business size standard for this census 
category, which includes all such companies generating $12.5 million or 
less in revenue annually.\50\ 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.\51\ 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 rules and 
policies adopted herein.
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    \50\ 13 CFR 121.201, North American Industry Classification 
System (NAICS) code 513220 (changed to 517510 in October 2002).
    \51\ U.S. Census Bureau, 1997 Economic Census, Subject Series: 
Information, ``Establishment and Firm Size (Including Legal Form of 
Organization),'' Table 4, NAICS code 513220 (issued October 2000).
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    Cable System Operators (Rate Regulation Standard). The Commission 
has developed its own small business size standard for cable system 
operators, for purposes of rate regulation. Under the Commission's 
rules, a ``small cable company'' is one serving fewer than 400,000 
subscribers nationwide.\52\ The most recent estimates indicate that 
there were 1,439 cable operators who qualified as small cable system 
operators at the end of 1995.\53\ Since then, some of those companies 
may

[[Page 56987]]

have grown to serve over 400,000 subscribers, and others may have been 
involved in transactions that caused them to be combined with other 
cable operators. Consequently, the Commission estimates that there are 
now fewer than 1,439 small entity cable system operators that may be 
affected by the rules and policies adopted in the NPRM.
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    \52\ 47 CFR 76.901(e). The Commission developed this definition 
based on its determination that a small cable system operator is one 
with annual revenues of $100 million or less. Implementation of 
Sections of the 1992 Cable Act: Rate Regulation, Sixth Report and 
Order and Eleventh Order on Reconsideration, 10 FCC Rcd 7393 (1995), 
60 FR 10534 (Feb. 27, 1995).
    \53\ Paul Kagan Associates, Inc., Cable TV Investor, February 
29, 1996 (based on figures for December 30, 1995).
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    Cable System Operators (Telecom Act Standard). The Communications 
Act of 1934, as amended, also contains a size standard for small cable 
system operators, which is ``a cable operator that, directly or through 
an affiliate, serves in the aggregate fewer than 1 percent of all 
subscribers in the United States and is not affiliated with any entity 
or entities whose gross annual revenues in the aggregate exceed 
$250,000,000.'' \54\ The Commission has determined that there are 
67,700,000 subscribers in the United States.\55\ Therefore, an operator 
serving fewer than 677,000 subscribers shall be deemed a small 
operator, if its annual revenues, when combined with the total annual 
revenues of all its affiliates, do not exceed $250 million in the 
aggregate.\56\ Based on available data, the Commission estimates that 
the number of cable operators serving 677,000 subscribers or fewer, 
totals 1,450.\57\ The Commission neither requests nor collects 
information on whether cable system operators are affiliated with 
entities whose gross annual revenues exceed $250 million,\58\ and 
therefore are unable, at this time, to estimate more accurately the 
number of cable system operators that would qualify as small cable 
operators under the size standard contained in the Communications Act 
of 1934.
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    \54\ 47 U.S.C. 543(m)(2).
    \55\ See FCC Announces New Subscriber Count for the Definition 
of Small Cable Operator, Public Notice DA 01-158 (Jan. 24, 2001).
    \56\ 47 CFR 76.901(f).
    \57\ See FCC Announces New Subscriber Count for the Definition 
of Small Cable Operators, Public Notice, DA-01-0158 (rel. January 
24, 2001).
    \58\ The Commission does receive such information on a case-by-
case basis if a cable operator appeals a local franchise authority's 
finding that the operator does not qualify as a small cable operator 
pursuant to 76.901(f) of the Commission's rules. See 47 CFR 
76.909(b).
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Internet Service Providers

    62. Internet Service Providers. The SBA has developed a small 
business size standard for Internet Service Providers (``ISPs''). ISPs 
``provide clients access to the Internet and generally provide related 
services such as Web hosting, Web page designing, and hardware or 
software consulting related to Internet connectivity.'' \59\ Under the 
SBA size standard, such a business is small if it has average annual 
receipts of $21 million or less.\60\ According to Census Bureau data 
for 1997, there were 2,751 firms in this category that operated for the 
entire year.\61\ 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. Consequently, we estimate that the majority of these 
firms are small entities that may be affected by our action.
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    \59\ U.S. Census Bureau, ``2002 NAICS Definitions: 518111 
Internet Service Providers'' (Feb. 2004) www.census.gov.
    \60\ 13 CFR 121.201, NAICS code 518111 (changed from previous 
code 514191, ``On-Line Information Services,'' in Oct. 2002).
    \61\ U.S. Census Bureau, 1997 Economic Census, Subject Series: 
Information, ``Establishment and Firm Size (Including Legal Form of 
Organization),'' Table 4, NAICS code 514191 (issued Oct. 2000).
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D. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements

    63. The proposed rules require that telecommunications carriers 
providing Internet broadband access and managed VoIP services be CALEA-
compliant.\62\ The proposed rules also limit extensions of compliance 
deadlines under CALEA Sec. 107(c), which authorizes extensions if 
technology is not available to carriers to meet the assistance 
capability requirements of CALEA Sec. 103.\63\ We also note that 
telecommunications carriers, including small entities, may petition the 
Commission under CALEA Sec. 109(b) and argue that CALEA compliance is 
not reasonably achievable for a variety of reasons, including a 
carrier's financial resources.
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    \62\ See [para][para] 1, 13, 20, and 0, supra.
    \63\ See [para][para] 2 and 39, supra.
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E. Steps Taken To Minimize Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered

    64. 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.\64\
---------------------------------------------------------------------------

    \64\ 5 U.S.C. 603(c).
---------------------------------------------------------------------------

    We also note that telecommunications carriers, including small 
entities, may petition the Commission under CALEA Sec. 109(b) and argue 
that CALEA compliance is not reasonably achievable for a variety of 
reasons, including a carrier's financial resources. We believe that 
this provision safeguards small entities from any significant adverse 
economic impacts of CALEA compliance. We are unaware of any 
alternatives that would better safeguard small entities, but we solicit 
comment on any such alternatives.

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

    65. None.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 04-20705 Filed 9-22-04; 8:45 am]
BILLING CODE 6712-01-P